PALADIN ENERGY LTD
ANNUAL REPORT
2009
A GLOBAL PERSPECTIVE
REALISING TODAY’S OPPORTUNITIES
AND IDENTIFYING TOMORROWS
Langer Heinrich
CONTENTS
Highlights
Chairman’s Letter
Nuclear Power – Resilience & Growth
Management Discussion And Analysis
Review Of Operations
Health & Safety
Financial Review
Sustainable Development
Environment
Social Responsibility
Our People
Corporate Governance Statement
2
4
6
10
16
32
34
44
45
49
52
54
Directors’ Report
Remuneration Report
Contents Of The Financial Report
Consolidated Income Statements
Consolidated Balance Sheets
62
68
77
78
79
Consolidated Statements Of Changes In Equity 80
Parent Entity Statements Of Changes In Equity
Consolidated Cash Flow Statements
81
82
Notes To The Consolidated Financial Statements 83
Directors’ Declaration
Independent Audit Report
Additional Information
Corporate Directory
158
159
161
165
COmpaNy prOfilE
Paladin Energy Ltd’s principal activity is the acquisition, exploration, evaluation, development and operation of uranium
mines and the sale and trading of uranium oxide (U3O8).
It is listed on the Australian Securities Exchange (Member of S&P/ASX100), the Toronto Stock Exchange and the Namibian
Stock Exchange under the symbol “PDN” and currently operates two uranium mines in Namibia (Langer Heinrich) and
Malawi (Kayelekera).
Paladin is a world leader in modern uranium extraction, with its two mines being the first new conventional uranium mines
developed in the past 25 years, both at the forefront of new technology.
COrpOra TE ValUES
CrEaTE
shareholder wealth and develop the
considerable opportunities it has
generated to become a major player in
the global uranium supply market.
CONTriBUTE
OpEraTE
with a safe best practice philosophy
having due regard for the environment.
rESpOND
rEWarD
employee performance and provide a
fulfilling work environment.
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.
to the attitudes and expectations of the
communities in which it operates as
part of its corporate social responsibility
obligations.
aCT
with integrity, honesty and cultural
sensitivity in all of its dealings.
The Annual Report covers both Paladin Energy Ltd (referred throughout as the Company or Paladin)
as an individual entity and the Group consisting of Paladin Energy Ltd and its controlled entities.
HiGHliGHTS
KEy aCHiEVEmENTS fOr THE yEar
2008
2009
AUGUST
Langer Heinrich
Resource
increased by
64%
New Ore
Reserve
Estimate 75%
increase
OCTOBER
Langer Heinrich
SEPTEMBER
reached
nameplate
production for
September
quarter
Interest in Deep
Yellow Limited
(ASX: “DYL”)
increased from
15.3% to 19.6%
OCTOBER
Angela/Pamela
Exploration
Licence
granted to
Cameco/
Paladin joint
venture
NOVEMBER
Kayelekera
Resource
increased by
27%
JANUARY
Valhalla
Resource
increased by
18.5%
MARCH
Initial investment
in NGM
Resources
Limited
(ASX: “NGM”)
(14%) with
exploration
holdings in Niger
60%
INCREASE IN
PRODUCTION
36%
INCREASE IN
GROSS PROFIT
16.4%
INCREASE IN
MEASURED &
INDICATED
RESOURCES
372Mlb
TOTAL
RESOURCES
2.74Mlb
TOTAL
PRODUCTION
FOR YEAR
$12.2M
TOTAL
EXPLORATION
SPEND
2
Annual Report 2009
Mr John Borshoff
Managing Director/CEO
APRIL
Kayelekera Mine
officially opened
MARCH
Skal Resource
increased by
46%
APRIL
Takeover
of Fusion
Resources Ltd
adds 7Mlb of
resources
MARCH
Paladin
completes
A$429M private
placement
JUNE
Langer Heinrich
Stage III
expansion
to 5.2Mlb pa
receives Board
approval and
Project Finance
Completion Test
Satisfied
AUGUST
First drawdown
of Kayelekera
US$167M
project finance
facility
JUNE
Paladin added
to MSCI Global
Standard
Indices for
Australia, and
Dow Jones
African Titans
50 Index
OVER 30
ANALYSTS
COVER
PALADIN
2nd
Mine
COMMISSIONED
IN 2 YEARS
3 Year Production Outlook
ACTUAL
FORECAST
Mlb
U3O8
10
9
8
7
6
5
4
3
2
1
0
2007/08
2008/09
2009/10
2010/11
2011/12
Langer Heinrich Production
Kayelekera Production
Paladin Energy Ltd
3
CHairmaN’S lETTEr
In June 2009, The Board approved
a further expansion (Stage III) to
the Langer Heinrich Mine which will
increase production from 3.7Mlb pa
to 5.2Mlb pa.
Langer Heinrich Mine
Operating Mine Plus Expansion
Reserves 66Mlb
Resource 164Mlb
4
Annual Report 2009
A growing international presence
Rick Crabb
Chairman
The 2008/09 financial year may have been
tumultuous on credit and equity markets,
but the economic turmoil had no impact
on the business at hand for Paladin.
Thanks to a clear strategy, dedicated staff,
a stable contracted uranium price and
comfortable cash reserves, the Company
continued to develop its two uranium
mines and various exploration and pre-
development projects.
Certainly the Company’s share price
retreated during the stock market trough,
to a low of A$1.60, but responded well to
reach a high of A$5.47 on 3 June 2009. In
my view, this recovery reflects the positive
outlook for nuclear power and thus for
the uranium market. More particularly, it
reflects what I believe to be the unique
characteristics of Paladin, namely proven
capacity to build and operate new mines;
a large resource base and substantially
uncommitted future production. My
Board also has a firmly-held view that
Paladin should remain independent and
thus we have not taken the path of some
other uranium companies in bringing
power utilities or other nuclear industry
participants onto the share register. We
believe that the world needs another
major independent uranium producer and
that Paladin has the capacity to fulfil that
role.
In April 2009, the President of Malawi,
Dr Bingu wa Mutharika, officially opened
the Kayelekera Mine. This operation is
ramping up production and is achieving
expectations. It will make a significant
contribution to shareholder wealth and
to the Malawian economy. Sadly, after a
sustained injury free period throughout an
intensive development programme, fatal
accidents have occurred on site during
this year, underscoring the risks inherent
in large-scale construction enterprises.
A thorough review of safety procedures
is being undertaken, as the expectation
of all involved in our Company is that
workplace safety is paramount.
Our flagship project, the Langer Heinrich
Mine, has comfortably performed above
design capacity for Stage I despite the
challenges of operational coexistence
with the Stage II expansion project, which
will boost production to 3.7Mlb U3O8.
Although some delay was experienced
with construction of Stage II, it was
substantially completed by June 2009 and
is now nearing full operational capacity.
As announced on 30 June, the Board has
approved the Stage III expansion, which
will take nominal production to 5.2Mlb pa
U3O8, utilising existing water and power
infrastructure. By 2011, therefore, Langer
Heinrich will be a true world class mine
with at least a 20-year life in a stable
regime.
The Company continued to build its
Mount Isa uranium resource base,
both by ongoing exploration drilling of
existing projects and by the acquisition
of additional ground through the takeover
of Fusion Resources Limited. Work is
continuing on the project pre-feasibility
study and we would expect to progress
to a full feasibility study during 2010. As
I have stated before, Paladin is prepared
to progress this project whilst patiently
awaiting Queensland’s uranium policy
to come into line with the position of
the Federal Government and the other
resource-based States.
Following the change of government in
Western Australia to one supportive of
uranium mining, the Company has re-
activated work on its Manyingee in-situ
recovery uranium project. Initial work
will focus on resource expansion and
environmental evaluation.
The Board and management continued
during the year to evaluate a number of
international acquisition opportunities
within clearly understood parameters
designed to achieve the Company’s
strategic goals. This process will
be ongoing and I feel confident that
rewarding outcomes for shareholders will
eventuate.
I believe that I should inform shareholders
of the Board’s current position concerning
executive remuneration. During the past
year, employee salaries, as a general
rule, were increased in accordance with
movement of the Consumer Price Index
only. This applied also to our Managing
Director/CEO. Bonuses were paid to
modest levels, having regard to the
outstanding achievements of management
in delivering the only new conventional
uranium mines built in the world for
more than a decade. The Remuneration
Committee resolved to offer a bonus
of A$720,000 to Managing Director/
CEO John Borshoff, recognising his
achievements on a number of fronts (as
detailed elsewhere in this Annual Report),
however Mr Borshoff chose not to receive
any bonus, as he felt it was important to
show leadership and restraint - a selfless
act in these extraordinary times.
Nevertheless, shareholders do need
to understand that the market is very
competitive for experienced personnel
in the uranium business. Due to its early
mover status, Paladin is fortunate having
a strong contingent of people rich with
uranium experience (and enhanced
by Paladin’s own activities over recent
years). The Company therefore needs to
remunerate its key staff appropriately to
ensure that we retain them.
For the past financial year, Directors’ fees
remained unchanged and the Board has
resolved that this should be the case also
for this current financial year.
Once again, it is my pleasure to thank
John Borshoff and his dedicated team
in Australia, Africa and elsewhere for
another year of hard work and outstanding
achievements.
I commend you to closely study the
information provided in this Annual
Report, as I think it will provide you with
good insight into the uranium market and
the great potential that I firmly believe
Paladin offers its shareholders, customers
and stakeholders in this dynamic industry.
Mr Rick Crabb
Chairman
Paladin Energy Ltd
5
NUClEar pOWEr -
rESiliENCE & GrOWTH
The Kayelekera Mine was officially
opened by the President of Malawi,
Dr. Bingu wa Mutharika, in April 2009.
Kayelekera
6
Annual Report 2009
Kayelekera Mine
Mine in ramp-up
Reserves 29Mlb
Resource 44Mlb
Increasing mine production capacity
Mr Dustin Garrow
Executive General Manager
- Marketing
Mr James Eggins
General Manager
- Sales and Contract Adminstraton
The global recession’s dramatic impact on
demand for most major commodities has
highlighted by exception the fundamental
resilience of the nuclear electricity industry
and emphasises why sustained long-term
growth in nuclear power is inevitable.
Despite a fall in primary energy
consumption worldwide as a result
of decreased economic activity, the
production of electricity by nuclear
generators remained unchanged at 2601
terawatt hours (TWh) in 2008 compared
with 2608 TWh in 2007. Nuclear electricity
again accounted for about 15% of world
electricity production.
In June 2008, there were 439 nuclear
power plants in operation and 35 new
plants under construction. In June this
year, the number is 436 in operation, the
decline due to the final shutdown of three
plants, and 49 under construction. There
are now 136 nuclear power plants in the
planned category (93 in June 2008) and
a further 277 (218 in June 2008) in the
proposed category. 68 of the new reactors
will be built in Asia, with 31 planned for
China alone over the next 12 years.
The robustness of nuclear electricity during
the serious economic downturn illustrates
the low cost base load characteristic
of its contribution to power supply and
confirms the determination of many
countries to maintain and expand nuclear
power regardless of short-term economic
conditions.
The International Atomic Energy Agency’s
2008 forecasts of nuclear power
generation in 2030 have been significantly
increased from their 2007 estimates,
raising the high case to 748 gigawatt
electric (GWe), which is double today’s
capacity, and forecasting a low case of
473 GWe. The 2007 estimates were a high
case of 691 GWe and a low case of 447
GWe.
Stability of reactor operations means that
demand for nuclear fuel has not been
negatively affected by the recession,
which makes it virtually unique, and the
medium to long-term outlook is similarly
undiminished.
On the uranium supply side, the shortfall
between uranium production and reactor
requirements remains significant. World
uranium production increased in 2008 by
6.5%, still leaving a gap between supply
and demand of more than 33% of reactor
requirements. The major contributor to
the production increase was Kazakhstan
where production rose 28% from 2007
making Kazakhstan the second largest
uranium producer and pushing Australia
into third place. Namibia also increased
uranium production significantly due to the
increasing output at Langer Heinrich as
well as at Rössing Uranium.
Paladin Energy Ltd
7
NUCLEAR POWER - RESILIENCE & GROWTH
Kayelekera
As of 1 August 2009, a total
of 436 commercial nuclear
reactors were operating
globally while a further 49
new nuclear units were under
active construction.
8
Annual Report 2009
An interesting development has been the aggressive
movement of uranium consumer groups, either directly
or by proxy through trading organisations or state-owned
foreign investment entities, into the direct acquisition of
uranium resources considered feasible for development
or into joint venture arrangements with more experienced
partners to pursue new mine and mill construction. This
phenomenon is a characteristic of recent Kazakhstan
developments, but is also evident in Australia and the USA.
The willingness of buyer groups to finance new mining
operations is indicative of the strategic challenges facing
uranium supply in the future.
It is interesting to note, however, that despite several
years of strong uranium prices in a positive political and
economic environment for the growth of nuclear electricity
there has not yet been a significant diversification of the
global uranium supply base. In fact, the only new country
to enter the commercial uranium market in volume since
the shift of traditional uranium production from Ontario
to Saskatchewan in Canada, and from post-war small
production in Queensland, South Australia and the
Northern Territory to the Alligator Rivers region of the
Northern Territory in Australia, both in the early eighties,
is Malawi with the commissioning of Paladin’s Kayelekera
mine in early 2009.
mine in early 2009.
Current and Long-Term Market Outlook
The future role of nuclear power in the global energy
mix remains highly encouraging. Escalating concerns
regarding climate change and the basic need for electricity
are driving an increasing number of countries to either
actively pursue the nuclear option or, at least, seriously
consider the technology.
As of 1 August 2009, a total of 436 commercial nuclear
reactors were operating globally while a further 49 new
nuclear units were under active construction. China leads
the way with 15 reactors under construction followed by
the Russian Federation (9 reactors), India (6 reactors) and
South Korea (5 reactors). The number of reactors either on
order or planned has risen to 136 involving a broad range
of countries including Egypt, Indonesia, South Africa, the
United States, Thailand, Turkey and the UAE. Importantly,
an additional 277 reactors are now proposed to be built in
a spectrum of countries across the globe.
China remains the centre of expected nuclear power
growth. Projected installed nuclear generating capacity is
expected to rise from its current level of less than 10,000
up to more than 80,000 Mwe by 2020.
In the United States, more than half (54) of the operating
reactors (104) have now been granted license extensions
which permit a further 20 years of operation.
Uranium production continues to lag growing worldwide
demand. During 2008, aggregate global uranium
production (114Mlb) fell well short of estimated uranium
requirements (170Mlb). Since 2004 when total world
uranium production was 104.5Mlb, global output of
uranium has increased less than 10%. Some of the major
producing countries such as Australia and Canada actually
experienced declines in production (6.4% and 22.3%)
during that period while Kazakhstan (130%) and Namibia
(44%) experienced significant percentage increases.
Uranium prices continued to moderate over the year, failing
to reflect the persistent imbalance in uranium demand and
supply forecast for the mid-to-long term. Spot uranium
prices declined from around US$65.00/lb in September
2008 down to US$52.00/lb by end of calendar year 2008,
influenced to a great degree by the de-leveraging of
investment funds which were forced to liquidate physical
inventories. Since early 2009, the spot price has remained
somewhat volatile, declining to US$40.00/lb before rising
into the US$54.00-55.00/lb range. As of late August,
reported spot prices stood at US$47.00/lb.
Paladin Energy Ltd
9
maNaGEmENT DiSCUSSiON aND aNalySiS
During the 2008/09 financial
year the Langer Heinrich Mine
produced 2.7Mlb of U3O8 versus
1.71Mlb U3O8 the previous year,
an increase of over 60%.
Langer Heinrich Mine
10
Annual Report 2009
Building geographic diversity
Mr Simon Solomons
Executive General Manager
- Operations Development
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 2009. The effective
date of this report is 24 September 2009.
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
2009 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.
Paladin Energy Ltd
11
MANAGEMENT DISCUSSION AND ANALYSIS
Overview
Paladin is a uranium production company with projects
currently in Australia and two operating mines in Africa
with a strategy to become a major uranium mining
house. The Company is incorporated under the laws of
Western Australia with a primary share market listing on
the Australian Securities Exchange (ASX) 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.
Langer Heinrich Mine, Namibia
During the 2008/09 financial year, the Langer Heinrich Mine
(LHM) produced 2.7Mlb of U3O8 versus 1.71Mlb U3O8
the previous year, an increase of over 60%. At the end of
June 2009, LHM had exceeded Stage I design of 2.6Mlb
pa over the 12 month period. Stage II construction, which
will expand production to 3.7Mlb pa, was completed by
the end of June 2009 and commissioning is well underway
with design parameters expected to be met during the
September quarter of 2009.
Mining activities, through the contractor Karibib Mining
and Construction Company, are continuing and the mining
fleet was expanded at the beginning of 2009 in preparation
for the additional feed required for the Stage II expansion.
Both operations and construction teams worked closely
throughout the year as the expansion project was finalised,
limiting disruptions caused by construction activities.
The Board has approved a further expansion (Stage III)
which will increase production from 3.7Mlb pa to 5.2Mlb pa.
Initial construction will begin in the September 2009 quarter
at an estimated capital cost of US$71M. Construction is
expected to take 12 months.
In summary, the Langer Heinrich operations performed well
during the year. The operation will ramp up production of
the Stage II expansion in the new financial year which will
further enhance the performance of this already successful
operation. The Company is proud of the achievement of
everyone at LHM and considers this operation to be one of
the cornerstones for continued growth in the Company. The
announced Stage III expansion will position the operation in
the top-tier of global uranium operations.
Kayelekera Mine, Malawi
During the past year, efforts focused on final construction,
with the project remaining within 5% of its capital works
budget at an estimated US$215M cost. This construction
project was the first of its type and magnitude ever to be
undertaken in Malawi and was achieved with an average of
over 75% of the workforce being Malawian.
The 3.3Mlb pa Kayelekera Mine (KM) was officially opened
on 17 April 2009 by his Excellency, Dr. Bingu wa Mutharika,
President of Malawi. Final commissioning of this operation
commenced in the June quarter of 2009. Currently the
operation has a commercial life of 12-14 years, however,
exploration at the minesite and within the immediate district
could add to the existing resource base. Commercial
scale production is expected to be achieved during the
September 2009 quarter and first product has made its
journey through Zambia to Walvis Bay in Namibia for
shipment.
Kayelekera
12
Annual Report 2009
Kayelekera represents Paladin’s second conventional
uranium mining operation put into production over the last
four years, and the first commercial mining venture for
Malawi. A 15% equity interest in the subsidiary, Paladin
(Africa) Ltd (PAL), the holder of the Kayelekera Mining
Licence, is held by the Government of Malawi. The project
will be the most significant contributor to the GDP of
Malawi.
As of year end mill throughput has been maintained
at around 110t per hour and will be stepped to design
capacity of 190t per hour. Kayelekera’s commissioning
remains on track for nameplate capacity by early 2010.
Exploration And Evaluation
Across the Group, exploration and evaluation expenditures
totalled US$12.2M to aggressively advance organic growth
opportunities in Australia, in particular the Mount Isa
Uranium Joint Venture and Isa North Uranium Project in
Queensland, as well as the Angela Uranium Joint Venture in
the Northern Territory.
Following completion of resource drilling in 2008, new
estimates were completed for both Valhalla and Skal. The
Valhalla Mineral Resource now stands at 30,630t (67.5Mlb)
U3O8 and at Skal, resources for the Skal East deposit were
added to the existing resources for the Skal Far North,
North and South estimates for a total of 5,560t (12.3Mlb)
U3O8. Both areas have now been subjected to extensive
ground geophysical surveys and associated geological
mapping and this is expected to aid in further drill planning.
Following the granting of an exploration licence to the
Cameco Australia/Paladin Angela Joint Venture, a resource
definition and validation programme was commenced. At
year end, the Joint Venture partners had completed some
11,649m of RC and diamond drilling and the balance of
14,593m is expected to be completed by the end of the
September 2009 quarter.
Following a change of government in Western Australia
which saw the lifting of the administrative ban on uranium
mining, Paladin has re-commenced work on both the
Manyingee and Oobagooma projects, compiling and re-
evaluating the historical data for the deposits as well as the
Spinifex Well prospect located near Manyingee. Following
this period of re-assessment, planning for a resource
definition drilling programme was completed for Manyingee
and Spinifex Well and access approval and agreements are
being negotiated. In conjunction with this work, the granting
of the Oobagooma tenement application is being actively
pursued.
This construction project was the
first of its type and magnitude ever
to be undertaken in Malawi and was
achieved with an average of over 75%
of the workforce being Malawian.
Paladin Energy Ltd
13
MANAGEMENT DISCUSSION AND ANALYSIS
Several promising areas adjacent to KM in Malawi were also
drilled during the latter part of the year following on from
extensive ground and airborne surveys completed in late
2008. Whilst the majority of the work is still at an early stage,
preliminary results are very encouraging.
Exploration of EPL3500 at Langer Heinrich started in 2008
with a helicopter borne EM survey to better define the
palaeochannel. Widespaced follow-up drilling has now
been completed. A new drilling programme is currently
being carried out to better define any possible westward
extensions of the uranium mineralisation.
Health & Safety
Paladin is committed to achieving the highest performance
in Occupational Health and Safety to create and maintain
a safe and healthy workplace. Paladin’s approach to health
and safety management is guided by its policy where the
safety, health and well being of employees, contractors and
the community are of core value to Paladin’s operations.
A healthy workforce contributes to business success.
Paladin’s aim is for zero injuries and to achieve this
objective, the Company:
•
•
•
•
•
•
•
established a mindset in the workforce that injuries
are preventable;
implemented and assigned accountability for the
Company’s policies, standards, guidelines, systems
and procedures;
encouraged safe behaviour by employees
and contractors;
promoted management leadership in safety;
provided ongoing education and training in safety;
provided the correct and safe equipment
to the workforce; and
conducted hazard identification, risk assessments
and proposed risk management measures
Corporate Social Responsibility
The work Paladin does in relation to its host countries and
neighbouring communities strives to achieve a balance
between economic, social and environmental needs.
The Company maintains significant social development
in-house capability and undertakes community assistance
programmes with the objective of building strong communal
bonds within the communities in which it operates. In
Malawi, the Company has committed under the terms
of its Development Agreement, to expend US$10M on
social infrastructure projects agreed in consultation with
the Government of Malawi and the community and has
undertaken a significant number of community projects in
Namibia during the year.
14
Annual Report 2009
Corporate
Paladin successfully achieved project financing of
US$167M for KM, provided by a syndicate of banks
made up of Société Générale, Standard Bank Limited and
Nedbank Capital, the same syndicate that provided project
finance for LHM. With the support of the Export Credit
Insurance Corporation of South Africa and the commitment
to source materials from South Africa during construction,
Paladin achieved a very competitive cost of funding. The
successful drawdown on this facility in August, 2009, in
the face of difficult credit markets, stands testament to the
robust economics of the mine and the ongoing support from
the lenders.
The takeover of Fusion Resources Limited (Fusion) by
Paladin was completed in April 2009. This added Fusion’s
Valhalla North Project uranium resources, including Honey
Pot and Duke Batman, on 622km2 of prospective ground to
the suite of Queensland uranium properties.
Paladin continues to maintain an aggressive M&A strategy.
Our People
Paladin’s employee numbers increased across the Group,
with the impact of the Global Financial Crisis increasing the
availability of skilled and experienced candidates. In the
face of improving economies and competition across the
uranium sector, the Company will continue to create relevant
and globally competitive compensation strategies to both
attract and retain a quality workforce.
Australia’s Uranium Politics
At its national conference in April 2007, the Federal
Australian Labor Party abandoned its traditional opposition
to the development of new uranium mines. Subsequent
to this change, the Labor Party was elected to Federal
Government in November 2007. Its policy is to encourage
further development of the uranium industry. As a result
of this change in policy and government, approval or
prohibition of uranium mining is now a matter within the
residual jurisdiction of each state government to decide.
The Labor governments of South Australia and the Northern
Territory support existing mines and are receptive to new
uranium projects in those states.
A state election held in Western Australia on 6 September
2008 resulted in a change of government from Labor to
a Liberal-National Party coalition, which is committed to
allowing uranium mining in Western Australia. This has
reversed the no-development policy of the former state
Labor Government, which held power in Western Australian
for seven years. The change of policy has triggered a
resurgence of uranium activity in Western Australia and
clears the way for further work on the Company’s Manyingee
and Oobagooma Projects in the State.
Mr Justin Reid
General Manager
- Corporate Development
At present, the State Labor Government in Queensland will
not grant a mining licence for a uranium mine. To progress
the currently defined uranium resources at Valhalla and
Skal to reserve status will require a State Government
policy change in Queensland either by a change to
state Labor’s existing policy or a change in government.
Through membership of industry bodies, such as the
Australian Uranium Association and the Queensland
Resources Council, Paladin is involved in debate and
research to facilitate a change in government policy.
Although Queensland Premier Bligh recently reiterated her
government’s opposition to uranium mining, the Federal
Minister for Resources, the Hon Martin Ferguson, has
recently publicly stated that he considers uranium mining in
Queensland is inevitable.
Current Market And Long-Term Uranium Outlook
Although the underlying imbalance between uranium
supply and demand has not changed significantly over
the last 12 months, the global recession has undoubtedly
put pressure on the published uranium spot market
and long-term market prices. The liquidation of trading
positions which was visible last year continued into early
2009 causing the spot price to reach a low of US$40/lb
U3O8 in April 2009 before recovering to US$52/lb U3O8
by June 2009. The published long-term price declined
from $90/lb U3O8 to US$65/lb U3O8 over the same period.
The volatility in the spot price has been accompanied
by historically high volumes which have in turn pushed
back some utility long-term procurement and temporarily
retarded the long-term price. Nevertheless, the Company
is of the firm view that the continued growth in demand for
uranium for existing and new plants is superimposed on
a constrained supply base which creates conditions for
strong pricing and good business opportunities well into
the future.
Paladin Energy Ltd
15
MANAGEMENT DISCUSSION AND ANALYSIS
Review of Operations
Review of Operations
Paladin’s total Mineral Resource inventory includes 83,380t U3O8 (183.8Mlb of U3O8) at 0.074% U3O8 in the Indicated and
Measured categories, a 16% increase from that reported in the previous year. Paladin also holds 69,300t of U3O8 (152.8Mlb of
U3O8) at 0.06% U3O8 in the Inferred Resource category, a 2% 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
Paladin
Attribution
Location
Deposit
Type
Measured
& Indicated
Resources
Inferred
Resource
Historic
Resources
(non-JORC
compliant)
Mining
Method
Previous
Owners
Langer
Heinrich
Mine*
Kayelekera
Mine*
Manyingee
Project**
Oobagooma
Project
Valhalla
Deposit*
Skal
Deposit*
Bigrlyi
Deposit*
Angela
Deposit
100%
100%
100%
100%
91%
91%
42.06%
50%
Namibia,
Southern
Africa
Malawi,
Southern
Africa
West Pilbara,
Western
Australia
West
Kimberley,
Western
Australia
Queensland,
Australia
Queensland,
Australia
Northern
Territory,
Australia
Northern
Territory,
Australia
Calcrete
Sandstone
Sandstone
Sandstone
Metasomatic Metasomatic
Sandstone
Sandstone
56.4Mt
@ 0.06%
(32,858t
U3O8)
72.4Mlb
70.7Mt @
0.06% U3O8
(41,557t
U3O8)
91.6Mlb
22.2Mt @
0.08% U3O8
(17,767t U3O8)
39.2Mlb
7.9Mt @
0.1% U3O8
(8,080t U3O8)
17.8Mlb
3.9Mt @
0.06% U3O8
(2,152t U3O8)
4.7Mlb
5.5Mt @
0.05% U3O8
(2,810t U3O8)
6.2Mlb
-
-
-
-
-
Conventional
open pit
Conventional
open pit
In-Situ
Leach
Cogema
(French
utility)
Central
Electricity
Generating
Board (UK
utility)
Gencor
Limited
(South
African
Mining
Company)
and Acclaim
8.3Mt @
0.12%-
0.14% U3O8
(9,950t U3O8)
21.9Mlb
In-Situ
Leach
Cogema
(French
utility)
-
27.8Mt @
0.09% U3O8
(24,765t
U3O8)
54.6Mlb
2.7Mt @
0.15% U3O8
(4,190t U3O8)
9.2Mlb
7.3Mt @
0.08% U3O8
(5,864t U3O8)
12.9Mlb
11.5Mt @
0.05% U3O8
(5,560t U3O8)
12.3Mlb
4.5Mt @
0.11% U3O8
(5,150t U3O8)
11.4Mlb
-
-
-
-
-
11Mt @
0.1%-0.13%
U3O8 (12,000-
13,000t U3O8)
26-28Mlb
Open pit /
Underground
Open pit /
Underground
Open pit /
Underground
Open pit /
Underground
Queensland
Mines Ltd
Queensland
Mines Ltd
AGIP
Australia Pty
Ltd
Uranerz
Australia Pty
Ltd
16
Annual Report 2009
Criteria
Activity
Periods
Project
Status
Project
Significance
Timeframe
Paladin Uranium Project Summary (continued)
Langer
Heinrich
Mine*
1973 - 1980,
1999 to
present
Kayelekera
Mine*
Manyingee
Project**
Oobagooma
Project
Valhalla
Deposit*
Skal
Deposit*
Bigrlyi
Deposit*
Angela
Deposit
1982 – 1990,
1998 to present
1979 - 1988
Acquired
1998
1982 - 1985
Acquired
1998
1968 - 1972,
1997 to
present
1970 - 1980,
2005 to
present
1974 - 1983,
2005 to
present
1972 – 1983,
2009 to
present
Resource
definition
drilling in
progress.
Resource
definition
drilling in
progress.
Resource
definition
drilling in
progress.
Resource
definition and
confirmation
drilling
underway.
Re-
assessment
underway.
Resource
definition
drilling
required.
Large
resource
potential.
Large
uranium
resource.
Large
uranium
resource.
High
uranium
grades.
Large
uranium
resource.
3 year
staged
feasibility
study
required.
2 year
reserve /
resource
drilling
required.
Development
dependent
on
Queensland
Government
U Policy
changes.
Development
dependent on
Queensland
Government
U Policy
changes.
Prefeasibility
Study if
sufficient
resources.
Prefeasibility
Study
to follow
resource
validation.
Stage III
planning
underway.
Ramp-up
commenced.
Resource
definition
planning
commenced.
One of
only three
Australian
advanced
ISL projects.
Significant
contributor
to Malawi
economy.
Approx. 10%
GDP.
Commissioning
commenced in
early 2009.
11 year project
life.
Ramp-up to
3.3Mlb/pa
underway.
Globally first
new uranium
mine and
mill in a
decade.
Production
commenced
in 2007.
27 year
project life.
Ramp-up to
3.7Mlb/pa
September
quarter
2009.
Expansion
to 5.2Mlb/pa
2010
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.
For Kayelekera, the Government of Malawi holds a 15% equity interest in the subsidiary, Paladin (Africa) Ltd, the holder of the Kayelekera Mining Licence
Paladin Energy Ltd
17
MANAGEMENT DISCUSSION AND ANALYSIS
Review of Operations
NGM Resources Ltd
Exploration
19.9% Interest (ASX: “NGM”)
Niger
Bigrlyi
Advanced Exploration
Resource 21Mlb
Darwin
Oobagooma
Exploration
Historical Resource ~22Mlb
Manyingee
Advanced Exploration
Resource 24Mlb
WA
Perth
Angela / Pamela
Resource Definition
Historical Resource ~28Mlb
Mount Isa Projects
Pre Development
Resource 107Mlb
QLD
Brisbane
NT
Alice
Springs
SA
Adelaide
NSW
Sydney
0
1000
Kilometres
VIC
Melbourne
Australia
TAS
Paladin 100%
Paladin 42.06%
Paladin 50% JV Cameco
Mount Isa Projects
Resources and Reserves shown above
represent 100% of the resource or reserve -
not the participant’s share
Namibia
Angola
Zambia
Malawi
Langer Heinrich
Operating Mine plus Expansion
Reserves of 66Mlb
Resources of 164Mlb
Windhoek
Botswana
Swakopmund
Walvis Bay
NAMIBIA
Kayelekera
Production Ramp-Up
Reserves of 29Mlb
Resources of 44Mlb
Karonga
Tanzania
Zambia
Mzuzu
Lake
Malawi
MALAWI
Lilongwe
Mozambique
Blantyre
Atlantic
Ocean
South Africa
0
300
Zimbabwe
Kilometres
0
150
Kilometres
In addition to the resources illustrated above, the Company has a 19.6% interest in Deep Yellow Ltd (ASX: “DYL”) which has projects located near
Langer Heinrich in Namibia and Mount Isa in Australia.
In addition to the resources illustrated above, the Company has a 19.6% interest in Deep Yellow Ltd (ASX: “DYL”)
which has projects located near Langer Heinrich in Namibia and Mount Isa in Australia.
18
Annual Report 2009
NAMIBIA
Langer Heinrich Mine
LHM in Namibia is owned 100% by Paladin through its wholly
owned Namibian subsidiary Langer Heinrich Uranium (Pty) Ltd
(LHUPL). Paladin purchased the Langer Heinrich project in August
2002 and following development and construction commenced
producing in 2008/2009 production of 2.7Mlb of U3O8 achieved.
With the completion of Stage II construction during the year, this
will increase to 3.7Mlb pa. Stage III expansion has been approved
with a forecast increase in production to 5.2Mlb pa. Construction of
Stage III will commence in the September quarter of 2009.
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 the 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.
Resources stand as announced in 2008. The updated resource
announced on 28 August 2008 represented a significant uplift to
the resource previously 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 Mineral Resource is
detailed below at a cut-off grade of 250ppm U3O8.
Mr Wyatt Buck
General Manager
- Production & Langer Heinrich
Operations
Mr David Marsh
General Manager
- Technical Project Development
Paladin Energy Ltd
19
MANAGEMENT DISCUSSION AND ANALYSIS
Review of Operations
Mineral Resource estimate (depleted for mining) for Details 1 to 7:-
250ppm Cut-off
Measured Resources
Indicated Resources
Measured + Indicated
Inferred Resources
Mt
32.8
23.6
56.4
70.7
Grade % U3O8
0.06
0.06
0.06
0.06
t U3O8
19,582
13,276
32,858
41,557
Mlb U3O8
43.158
29.260
72.418
91.591
(Figures may not add due to rounding and are quoted inclusive of any Reserves)
Langer Heinrich Exploration (EPL3500)
EPL3500 abuts the Langer Heinrich Mining Lease to the
west and includes the sediment covered 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 has now been completed.
Results from the 2008 drilling programme indicate that
the channel widens considerably when entering EPL3500
causing the uranium mineralisation to disperse, resulting
in low grade and thin mineralisation. A new drilling
programme is currently being carried out to better define
any possible westward extensions of the Langer Heinrich
uranium mineralisation.
Operations
During the 2008/09 financial year LHM produced 2.7Mlb
of U3O8 versus 1.71Mlb U3O8 the previous year, an
increase of over 60%. At the end of June 2009, LHM
had exceeded Stage I design of 2.6Mlb pa over the 12
month period. Stage II construction, which will expand
production to 3.7Mlb pa, was completed in June 2009 and
commissioning is well underway with design parameters
expected to be met during the September quarter of 2009.
Steady state Stage I production was achieved throughout
the year with limited interruptions related to the tying in of
the Stage II expansion. Both operations and construction
teams worked closely throughout the year. Continued
efforts of improvement by the plant employees resulted in
the operation producing at above original design rates.
A culture of operational improvement, environmental
responsibility and increasing profitability has been adopted
by all employees.
Through the contractor Karibib Mining and Construction
Company, the mining fleet was expanded at the beginning
of 2009 in preparation for the additional feed required for
the Stage II expansion. Mining in the initial two pits has
been completed and has now progressed to the west in Pit
D and to the north at the Pit A extension.
Slurry heating systems are a critical element of LHM and
rely heavily on spiral heat exchangers, The spiral heat
exchangers have performed well throughout the year.
A suitable maintenance regime was implemented to not
only prevent future damage to the units but to also ensure
optimal performance at all times. These units remain critical
to the performance of the operation.
The Board has approved a further expansion (Stage III)
which will increase production from 3.7Mlb pa to 5.2Mlb pa.
Initial construction will begin in the September 2009 quarter
at an estimated capital cost of US$71M. Construction is
expected to take 12 months.
20
Annual Report 2009
Mr Andrew (Jim) Morgan
General Manager
- Project Construction
Mr Ed Becker
General Manager
- Geology & Exploration
MALAWI
Kayelekera Mine
Kayelekera is located in northern Malawi, 52km 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.
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
below surface.
Kayelekera is owned 100% by Paladin through its subsidiary PAL. In
July 2009, Paladin issued 15% of equity in PAL to the Government
of Malawi under the terms of the Development Agreement signed
between PAL and the Government in February 2007.
The Mining Licence, ML152, covering 5,550 hectares was granted
in April 2007 for a period of 15 years, following the completion
of a Development Agreement with the Malawi Government, a
Bankable Feasibility Study and Environmental Impact Assessment.
Construction started in June 2007 and was completed in early 2009.
The mine is currently in the commissioning phase, ramping-up to full
scale production.
The mine is designed to give an annual production of 3.3Mlb U3O8
from the processing of 1.5Mt pa of sandstone and associated
ores by grinding, acid leaching, resin-in-pulp extraction, elution,
precipitation and drying to produce saleable product.
Paladin Energy Ltd
21
MANAGEMENT DISCUSSION AND ANALYSIS
Review of Operations
New Resources and Reserves Estimation
Ore Reserve at 400ppm U3O8 Cut-off
New JORC and Canadian National Instrument 43-101
(NI 43-101) Mineral Resource and Reserve estimations
were reported in November 2008 for the Kayelekera ore
body. The results include all data from the 2008 infill and
extension drilling programme totalling 132 holes and
9,955m.
Results are as follows:
Mineral Resource at 300ppm U3O8 Cut-off
Mt
Grade
ppm
U3O8
Tonnes
U3O8
Mlb
U3O8
Measured
Resources
Indicated
Resources
3.42
1,211
4,141
9.1
18.78
725
13,616
30.0
Total Measured
& Indicated
22.20
800
17,757
39.1
Inferred
Resources
3.9
552
2,152
4.7
(Figures may not add due to rounding and are quoted inclusive of any
Ore Reserves)
The previously reported mineral resources (at 300ppm
U3O8 cut-off) were 15.31Mt of Measured and Indicated
Resources grading 886ppm U3O8 (13,573t or 29.9Mlb of
contained U3O8) and 3.4Mt of Inferred Resources grading
596ppm (2,040t or 4.5Mlb of contained U3O8).
The Resources for Kayelekera have been increased by
27% with the majority of the deposit reporting as Measured
and Indicated Resources. At the 300ppm U3O8 cut-off limit,
the Measured and Indicated Mineral Resources amount to
22.20Mt grading 0.08% U3O8 versus the previously stated
15.31Mt grading 0.09% U3O8.
Ore Reserves
Economic analysis on this Resource has indicated a break-
even cut-off grade of 400ppm. This is unchanged from the
previous Resource due to a number of contributing factors
including the changing dynamics of selling price, use of
RIP processing and reagent costs.
Mt
Grade
ppm
U3O8
Tonnes
U3O8
Mlb
U3O8
Proved
Reserve
Probable
Reserve
Total Ore
Reserve
2.87
1,373
3,943
8.7
9.75
959
9,342
20.6
12.62
1,053
13,285
29.3
Compared to the previous Ore Reserve of 25.1Mlb
announced in 2007 (also reported at a 400ppm U3O8
cut-off), the new 2008 Reserve estimate outlined herein
represents a 17% increase in contained U3O8.
The cost parameters used in the reserve estimation are
now well developed and include contracted schedules for
such items as reagents and contract mining, and as such
their inclusion can be reasonably justified. The revenue rate
used in the estimate was US$60/lb.
The 2008 Reserve suggests an increase in mine life of 1½
years to 9 years at the annual design production rate after
year 1 of 3.3Mlb U3O8 when the Inferred material occurring
within the pit design is included. Processing of marginal
ores at the end of mine life is expected to add an additional
3 - 4 years to the mine life.
The 2008 drilling has also shown that the mineralisation is
not yet fully delineated, particularly in the north-west and
west, and thus potential exists to easily identify additional
resources with future drilling which is expected to provide
for in-pit extensions.
Resource Drilling
Resource definition drilling to accurately define the new
limits of the ore body and further upgrade the Inferred
Resources to Indicated and Measured status, comprising
7,061m in 67 holes, was completed during July 2009. An
updated resource and reserve estimation is currently being
carried out.
22
Annual Report 2009
Kayelekera Exploration
Exploration in 2008 identified the Mpata Prospect on EPL
170 and the Juma Prospect on EPL 169. Two short RC
scout drilling programmes totalling 5,839m in 50 holes
were completed on the Mpata Prospect in September
2008 and June 2009. The drilling identified two mineralised
arkose units within a relatively small area with significant
intersections including:
Hole
MMP17
MP31
MP35
MP49
From
(m)
18
23
24
14
To
(m)
28
29
27
19
Thickness Provisional
Grade eU3O8
(m)
10
600ppm
6
4
4
350ppm
750ppm
490ppm
The intersections above have a cut-off grade of 200ppm
U3O8 and maximum width of included waste of 1m and
cover two zones of approximately 200m of strike length
each.
Scout RC drilling at the Juma Prospect, 5km south of the
Kayelekera mine site, started in August 2008.
Exploration evaluated the Uliwa limestone deposit,
70km south of Karonga, in October/November 2008.
Geological mapping and limited RC drilling identified an
area of limestone of sufficient quality to be used in tailings
neutralisation at Kayelekera.
Project Development
Construction of Kayelekera began in June 2007 at a
budgeted cost of US$200M with total construction taking
almost two years. During this period Paladin completed
major infrastructure upgrades to the local roads, initiated
substantial earth works and commenced commissioning.
The construction workforce peaked at around 2000
persons, with more than 75% of workers being Malawian
nationals.
The mine 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, elution, precipitation and drying to produce
saleable product. Kayelekera represents Paladin’s second
construction project and the first commercial mining
venture in Malawi’s history contributing around 10% of
Malawi’s GDP.
The project currently remains within 5% of its capital works
budget coming in at an estimated US$215M.
Operations
The mine, Paladin’s second, was officially opened on 17
April 2009 by his Excellency, Dr. Bingu wa Mutharika,
President of Malawi. Final commissioning commenced in
the June quarter of 2009, with all major process areas now
in the production ramp-up phase. The sulphuric acid plant
is the last critical component to be integrated.
The uranium plant produced its first product during April
2009 with all production related areas operating under the
management of the operations group. Production levels
are expected to increase steadily during the September
quarter. Transport of the first containerised drummed
product consignment to Walvis Bay, Namibia via Zambia
took place on 17 August 2009.
Mining operations, which had commenced on a single shift
basis in June 2008, concentrated on providing sufficient
ore in stockpiles ahead of plant commissioning. During the
year, approximately 2.4Mt were mined comprising 0.2Mt
averaging 1,030 ppm U3O8 and 2.2Mt of waste rock. By the
end of June 2009, there were over 200,000t of ore on the
ROM pad with a further 200,000t of ore exposed within the
pit.
As of year end, mill throughput has been maintained at
around 110t per hour and will be stepped up to design
capacity of 190t per hour. Modifications of screens,
installation and resizing of pumps and valve re-routing have
addressed a number of minor issues.
Kayelekera’s commissioning remains on track for
nameplate capacity by early 2010.
Paladin Energy Ltd
23
MANAGEMENT DISCUSSION AND ANALYSIS
Review of Operations
310000mE
330000mE
350000mE
370000mE
7820000mN
EPM12572
7800000mN
2
7
5
2
1
M
P
E
Gunpowder
EPM15677
EPM12572
EPM15677
EPM15677
X
Honey Pot
Duke Batman
X
EPM16006
EPM16921
7780000mN
EPM13066
EPM16006
LEGEND
Project
Valhalla North - Fusion
Isa North - Summit
Isa Uranium Joint Venture
Uranium Prospect
Mine
Station
X
EPM9221
EPM13417
EPM16921
Calton Hills
8
5
7
4
1
M
P
E
8
5
7
4
1
M
P
E
8
5
7
4
1
M
P
E
EPM14048
Watta
X
X
Warwai
EPM13415
7760000mN
7740000mN
7720000mN
EPM16921
X
Drum
B a r k l y Hwy
EPM13033
EPM13066
X
Valhalla
Bikini
Mirrioola
X
X
X
Skal
8
1
9
9
M
P
E
New May Downs
EPM15871
EPM14047
X
Andersons
Red Alpha
X
EPM15035
Barkly Hwy
10km
MOUNT ISA
Isa North and Valhalla North Project Areas
Mr Brendan O’Hara
General Manager
- Special Projects & Risk
Executive Chairman
- Summit Resources Ltd.
24
Annual Report 2009
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
1,356km2 and host a number of uranium deposits
and resources including the Valhalla and Skal
deposits.
In January 2009 Paladin completed the takeover of
Fusion. This added Fusion’s Valhalla North Project
uranium resources, including Honey Pot and Duke
Batman, on 622km2 of prospective ground to the
suite of Queensland uranium properties.
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 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 Summit, 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 1,978km2 held 100% and managed
by SRA and Paladin.
Preliminary Assessment
Mineralogical investigations and preliminary
metallurgical testwork programmes have
succeeded in developing a process flowsheet
for the treatment of the Valhalla material which,
together with the current resource model,
was used as the basis for an internal project
assessment. The study was conducted primarily
as a basis for determining resource requirements
for a viable project and to provide some focus for
exploration and further investigations.
The study identified a number of areas where
project economics can be improved particularly
with respect to mining and processing costs.
Exploration efforts are now focused on increasing
the mineable resource base, in close proximity to
Valhalla, to satisfy this production criteria.
Valhalla Uranium Deposit
The Valhalla uranium deposit is located 40km north-west
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 and is
approximately 1,100m in strike length.
The Phase I resource drilling programme at Valhalla,
including 121 RC and diamond holes totalling 34,466m,
was completed in late October 2008 and Summit
announced a new JORC compliant resource in February
2009. The majority of these drill holes have been downhole
gamma logged and gyroscopically surveyed to obtain
an accurate hole orientation using company-owned
equipment. In addition, a significant number of bulk
density determinations have been undertaken. All of this
information has been incorporated into the resource model.
The current Mineral Resource estimate for the Valhalla
uranium deposit is tabulated below and is quoted with
a cut-off grade at 230ppm U3O8 for comparison to the
previous Resource estimate, individual Mineral Resource
figures are quoted on a 100% of project basis.
Updated Valhalla Mineral Resource (at 230ppm U3O8 Cut-off)
Mt
Grade
ppm
U3O8
Tonnes
U3O8
Mlb
U3O8
8.31
883
7,334
16.2
Measured
Resources
Indicated
Resources
Total Measured
& Indicated
Inferred
Resources
27.80
891
24,765
54.6
7.3
799
5,864
12.9
(Figures may not add due to rounding)
The updated resource represents an 18.5% increase in
total contained metal when compared to the previously
announced total resource of 57Mlb and a 46.5% increase
in Measured and Indicated metal content (up from 37Mlb
U3O8 ).
The main Valhalla deposit now has strike length in excess
of 1,100m. The mineralisation extends from surface to a
depth of over 650m and is structurally controlled with a
characteristic southerly plunge. Valhalla South is located
approximately 600m along strike to the south-east of the
main mineralised zone and has a strike length of at least
400m.
A second resource drilling programme including 52 RC
and diamond holes totalling 11,738m was completed at
Valhalla in May 2009. The drilling showed positive results
at the Valhalla South deposit and an updated resource is
expected during the September 2009 quarter.
Skal Uranium Deposit
The Skal uranium deposit is located 32km north of Mount
Isa city on EPM 14048. In December 2008, a 13 hole
drilling programme including 2,670m of RC and 463m of
diamond drilling was completed. The drilling was designed
to test additional resource potential at Skal East, which
had previously been identified by geological mapping and
associated ground geophysical surveys, as well as depth
extensions at Skal South.
At Skal East, located approximately 300m east of Skal
North and South, drilling has identified a new uranium
mineralisation zone in north-east trending albites along a
strike length of 250m. The centre of the mineralisation is up
to 30m thick narrowing to the north and south. Two holes
planned for the extension drilling at Skal South were also
completed.
A new resource estimation for the Skal East deposit was
completed in March 2009 and is detailed below. The
resource dataset comprises both geochemically assayed
grades and downhole gamma logging derived grades
following application of appropriate calibration factors. The
resource has been classified as Inferred due to the current
drilling density.
Skal East Mineral Resource at 250ppm U3O8 Cut-off
Mt
Grade
ppm
U3O8
Tonnes
U3O8
Mlb
U3O8
3.9
455
1,779
3.9
Inferred
Resources
Mt
Grade
ppm
U3O8
Tonnes
U3O8
Mlb
U3O8
11.5
483
5,560
12.3
Inferred
Resources
A drill programme has now been completed to both infill
and extend this promising area as well as add depth and
continuity extensions to the adjacent Skal South deposit.
It is expected that the resource estimation following
this drilling will allow for the re-classification of the Skal
resources to higher categories in the December quarter of
2009.
Paladin Energy Ltd
25
19.49
894
17,431
38.4
Skal (all deposits) Mineral Resource at 250ppm U3O8 Cut-off
MANAGEMENT DISCUSSION AND ANALYSIS
Review of Operations
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 and contains numerous uranium anomalies, most of
which still have to be investigated thoroughly.
Exploration continues on Summit’s 100% owned Mount Isa
North Project where Summit holds 1,356km2 of granted
tenements that are prospective for uranium, copper and
base metals. The tenements are centred on the city of
Mount Isa. The project includes the Bikini, Watta and
Anderson uranium deposits as well as numerous other
uranium prospects.
Detailed geological and geophysical groundwork has
been completed at the Bikini deposits, which include the
Woomera and Mirrioola prospects to the north and south
of Bikini. A drilling programme has been planned for
both Bikini and Woomera where new targets have been
identified. A significant ground mapping programme at the
Andersons deposit has identified a number of additional
mineralised zones and a limited number of RC holes have
been planned to test these targets. Other prospects,
including Spring Creek, have also been selected for scout
drilling in the 2009/10 period.
The detailed evaluation of the airborne radiometric and
regional gravity data has identified 207 anomalies for
follow-up work of which 51 are considered priority 1. This
work was started in 2009 after the wet season which has
allowed for easier ground access to some of the more
remote areas.
Fusion – Valhalla North Project
Paladin 100%
The Fusion takeover by Paladin was completed in April
2009. The Valhalla North Project is located on three
tenements totalling 622km2, situated 40 to 75km north of
the Valhalla deposit. The geological setting is similar to
the Summit/Paladin projects to the south where albitised
basalts with interbedded metasediments are mineralised
along east-west and north-south structures in Eastern
Creek Volcanics.
Resources announced by Fusion in December 2008
include Honey Pot at 3.96Mlb U3O8 (2.56Mt @ 700ppm
U3O8 Inferred) and Duke Batman at 3.1Mlb U3O8 (0.5Mt
@ 780ppm U3O8 Indicated and 1.6Mt @ 630ppm U3O8
Inferred) totalling 7.06Mlb U3O8 at a grade of 690ppm.
These two resources are robust in terms of grade and
geological continuity. Narrow high-grade 500 - 2000ppm
U3O8 zones at Duke Batman were drilled over a strike
length of 600m. Drilling over a strike length of 1.4km at
Honey Pot has defined 5 to 10m wide albitite mineralised
zones grading 300 to 1000ppm U3O8. There is potential to
expand and upgrade these resources, especially at Duke
Batman, with improved geological interpretation, ground
surveys and further drilling. Smaller, less well developed,
prospects at Sunshine, Bohra and Gidgee have potential
to be advanced to resource status. Recommended 2009
programmes include confirmation geological mapping,
ground magnetometer and radiometric surveys, gyro and
downhole gamma surveys and airborne anomaly field
checking of multiple anomalies.
Resource Status Mount Isa Region - All Projects
The total JORC Resources under Summit and Paladin
management in the Mount Isa region are now 55.4Mlb
U3O8 Measured and Indicated Resources and 51.2Mlb
U3O8 Inferred Resources. Of this 50.5Mlb U3O8 Measured
and Indicated Resources as well as 45.4Mlb U3O8Inferred
Resources (which includes the Fusion Mineral Resources)
are attributable to Paladin. 68% of the Mineral Resources
are located at Valhalla; the rest are distributed over the
Bikini, Skal, Andersons, Watta, Duke Batman and Honey
Pot orebodies.
Details are as follows:-
Individual JORC compliant Mineral Resource figures for the Mount Isa area quoted on 100% basis.
Deposit
Measured Resources
Indicated Resources
Inferred Resources
Cut-off Mt Grade ppm
ppm U3O8
t U3O8 Mt Grade ppm
t U3O8
Mt Grade ppm
t U3O8
230
8.31
883
7,334 19.49
894
17,431
7.3
Valhalla
Skal
Bikini
Andersons
Watta
Duke Batman
Honey Pot
250
250
230
230
250
250
0.5
780
388
Total
Total Resource
Attributable to Paladin
8.31
7.55
883
883
7,334 19.99
6,670 18.21
891
889
(14.7Mlb)
17,819
16,233
(35.8Mlb)
26
Annual Report 2009
Paladin
Attribution
91.0%
92.0%
82.0%
82.0%
82.0%
100%
100%
11.5
10.1
2.0
4.2
1.6
2.6
39.3
34.5
799
483
517
5,863
5,560
5,200
1,050
2,100
410
630
700
591
597
1,720
1,016
1,799
23,258
20,606
(45.5Mlb)
OTHER PROJECTS (NON-URANIUM)
Mount Kelly
Mount Isa South, May Downs, Constance Range and
Mount Kelly comprise the non-uranium projects of SRA. A
brief description of these projects follows.
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, through its wholly owned
subsidiary MM Mining Pty Ltd (“MM Mining”), must spend
A$8M by 7 December 2009. MM Mining is the manager.
Over recent years, the focus of Summit has shifted to its
uranium projects to the point that these projects have
assumed overwhelming significance. The joint venture
with MM Mining will allow Summit to concentrate its
management time, in partnership with Paladin, on its
uranium projects.
Mount Isa South
The Mount Isa South Project comprises 9 EPM’s and
applications covering 1,777km2 of prospective proterozoic
terrain along the Mount Isa Paroo Fault 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 consists of three granted EPM’s
covering 689km2, 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 reportedly
identified in excess of 200Mt of iron ore (not conforming to
either JORC or NI 43-101 codes) in a number of deposits,
hosted by the Train Range Ironstone member of the Middle
Proterozoic Mullera Formation, in the area.
The Constance Range project covers 573km2 in five
granted EPM’s. The tenements are centred 30km south-
west to 45km north-west of Zinifex’s Century Zinc mine in
far north-west Queensland.
EPM14694 of 13km2 near CopperCo’s Mount Kelly copper
gold discovery, 95km north-west of Mount Isa, was
granted in October 2005. The target here is copper gold
mineralisation in middle proterozoic shales along north-
west 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
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 (BJV) covers ten granted
Exploration Retention Licences located approximately
390km north-west 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.
Energy Metals Ltd, as manager of the BJV, announced in
May the results of a recently completed resource estimate
for the Bigrlyi uranium project in the Northern Territory. This
resource estimate incorporates the results from an infill
drilling programme (83 holes) which was completed in
December 2008. Results at a 500ppm U3O8 cut-off are as
follows:
Resource
Category
Indicated
Resources
Inferred
Resources
Mt
Grade
ppm
U3O8
Tonnes
U3O8
Mlb
U3O8
2.74
1,530
4,190
9.2
4.53
1,140
5,150
11.4
Paladin Energy Ltd
27
MANAGEMENT DISCUSSION AND ANALYSIS
Review of Operations
The resources were estimated using ordinary kriging
(OK) by Hellman & Schofield Pty Ltd. At a cut-off grade of
500ppm U3O8, the Bigrlyi resource totals 20.6Mlb of U3O8.
45% of the contained uranium metal (or 4.19Kt U3O8) now
reports to the Indicated Resource category, compared with
39% in the previous (March 2008) resource estimate.
Various metallurgical and mining studies have been
completed during the year. The studies concluded that
additional open pit resources were required to maintain a
viable project. Drilling for additional resources will continue.
Angela Joint Venture
Cameco Australia Pty Ltd 50% and Manager
Paladin NT Pty Ltd 50%
In early 2008, the Northern Territory Government advised
a 50:50 Joint Venture between Paladin and Cameco
Australia Pty Ltd (manager) that it had been chosen as the
successful applicant for an exploration licence covering the
Angela and Pamela uranium deposits, located 25km south
of Alice Springs in the Northern Territory. Paladin’s interest
is held through its wholly owned subsidiary, Paladin NT
Pty Ltd. Historical work indicates a potential resource of
between 26 to 28Mlb of U3O8.
In October 2008, an Exploration Licence (EL 25758) was
granted by the Department of Regional Development,
Primary Industry, Fisheries and Resources the government
department responsible for approving the Mining
Management Plan in April 2009. All compliances necessary
to begin exploration were obtained before drilling
commenced on site early in May 2009. Furthermore, an
exploration agreement covering arrangements with Native
Title holders was executed with the Central Land Council in
August 2009.
To end of August 2009 a total of 26,242m of diamond and
RC drilling has been completed. This drilling programme is
scheduled for completion in September 2009 and a JORC
Resource estimate is anticipated to be undertaken in early
2010.
Langer Heinrich
Extensive evaluation work was undertaken previously
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, down
hole gamma surveys and feasibility studies and is in the
process of capturing all the drill hole data digitally and
validating it with the current drill programme results. This
exercise should be completed early in 2010. Preliminary
metallurgical test work and geotechnical investigations
have commenced.
As part of the licence conditions, baseline groundwater
and dust monitoring commenced prior to drilling activities,
and is ongoing as part of a series of environmental
studies, including water, fauna and flora, dust, radiation,
meteorology and soils.
Cameco, the Project Manager, is managing a project
office in Alice Springs and is active in promoting project
awareness programmes within the community and
engaging interested and affected parties.
Previous tonnages, grades, assays and other technical data are
taken from historical records prior to the implementation of JORC
or Canadian National Instrument (NI 43-101). While the data are
believed to have been acquired, processed and disclosed by
persons believed to be technically competent, it is unverifiable
at present. A Competent Person as defined under the JORC
Code or Qualified Person as defined in NI 43-101 has not done
sufficient work to classify the historical estimate as current
Mineral Resources. Paladin is not treating the historical estimates
as current Mineral Resources as defined in either the JORC Code
or NI 43-101 and the historical estimates should not be relied
upon.
28
Annual Report 2009
WESTERN AUSTRALIA
Manyingee Uranium Project
Paladin Energy Minerals NL 100%
The Manyingee Uranium Project is located in the north-west
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 also holds one granted Exploration Licence (EPL
08/1496) totalling 89km2 at Spinifex Well, 25km north-east
of Manyingee.
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 below:
Cut-off Resource Grade
% U3O8
Mt
% U3O8
U3O8
Kt
0.03
7.9
0.10
8.1
0.03
5.5
0.05
2.8
Indicated
Resources
Inferred
Resources
The change of State Government in Western Australia
in late 2008 resulted in the removal of uranium mining
restrictions in Western Australia. Subsequently Paladin
reactivated the Manyingee Project and is planning to
start fi eld exploration at the Manyingee site in early 2010.
Currently work is concentrating on achieving land access
by obtaining all required permits and negotiating an
Exploration Access Agreement with the Traditional Owners.
At Spinifex Well, where previous explorers identifi ed
uranium mineralisation in the same strata which includes
the Manyingee ore body, limited drilling is planned for late
2009.
Oobagooma Uranium Project
Paladin Energy Minerals NL 100%
The Oobagooma Project, benefi cially held 100% by
Paladin, through its wholly owned subsidiary, 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 comprises 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.
Paladin Energy Ltd
29
MANAGEMENT DISCUSSION AND ANALYSIS
Review of Operations
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 the following table:
Non-JORC
Cut-off Resource Grade
% U3O8
Mt
% U3O8
U3O8
Kt
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 north-east 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.
The information above relating to exploration, mineral resources
0.03
8.3
0.12
10.0
and ore reserves is, except where stated, based on information
Historic
Resources
Previous tonnages, grades, assays and other technical data are
taken from historical records prior to the implementation of JORC
or NI 43-101. While the data are believed to have been acquired,
processed and disclosed by persons believed to be technically
competent, it is unverifiable at present. A Competent Person as
defined under the JORC Code or Qualified Person as defined
under NI 43-101 has not done sufficient work to classify the
historical estimate as current Mineral Resources. Paladin is not
treating the historical estimates as current Mineral Resources as
defined in either the JORC Code or NI 43-101 and the historical
estimates should not be relied upon.
In November 2008 the State Government of Western
Australia changed and the restrictions on uranium mining
were lifted. Subsequently Paladin started to engage the
Commonwealth Government Departments of Finance and
Defence to obtain permission to carry out exploration on
the Oobagooma tenement applications. The tenements can
be granted by the Western Australian Department of Mines
and Energy after consent from the land owners, the Federal
Government, has been obtained.
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 north-east 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 (in-situ recovery) 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.
30
Annual Report 2009
compiled by Eduard Becker B.Sc, David Princep B.Sc and
Andrew Hutson B.E., all of whom are members of the AusIMM.
Messrs Becker, Princep and Hutson each have sufficient
experience that is relevant to the style of mineralisation and
type of deposit under consideration and to the activity that he
is undertaking to qualify as Competent Persons as defined in
the 2004 Edition of the “Australasian Code for Reporting of
Exploration Results, Mineral Resources and Ore Reserves”, and
as a Qualified Person as defined in NI 43-101. Messrs Becker,
Princep and Hutson are full-time employees of Paladin Energy
Ltd and consent to the inclusion of this information in the form
and context in which it appears.
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 consisting of
extensive collections of technical, geological, metallurgical,
geophysical and geochemical resources including
resource evaluations, drill hole data, downhole logging
data, airborne radiometric surveys results, open-file data,
and photographic archives.
The library also holds a large collection of topical industry
reference material and country specific information such
as mining laws or investment conditions comprising an
estimated 60,000 individual monographs and conference
papers, project evaluation and exploration reports,
documents, reprints, maps and technical journals kept
in hardcopy, microfiche and a rapidly increasing number
of resources in electronic format, including networked or
internet databases and full-text resources.
Kayelekera
The library is managed through online information
management and retrieval systems enabling the sharing
of knowledge throughout the Company and to quickly
research uranium prospects, deposits and mineralisation
on a country by country basis.
The geology resource database is managed in an
integrated relational database system readily available
for processing of exploration and mining data. The data
continues to be utilised by the Company as an asset for
project generation to evaluate opportunities and generate
new uranium prospects and projects for acquisition and
exploration.
INVESTMENTS
Deep Yellow Ltd (DYL)
Paladin Energy Ltd 19.6%
DYL is a dedicated uranium exploration company listed on
the ASX and the Namibian Stock Exchange with advanced
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 (EPLs) covering 2,872km2 and three joint venture
EPLs covering 1,323km2, (earning 65% from Nova Energy
(Namibia) (Pty) Ltd) in the Namib Naukluft Desert Park
inland from Walvis Bay and south and west of Paladin’s
LHM. Seven RC and one to two diamond rigs are being
used to drill between 9,000m and 12,000m per month on
a number of different projects within these tenements.
Additional JORC resource announcements were made
during the financial year. In Australia, DYL is focused
on uranium exploration in the Mount Isa district in north-
west Queensland and the Tanami Arunta Province in
the Northern Territory. Both RC and diamond drilling is
underway on a number of these projects.
During the year Paladin invested a further A$12.9M to
increase its equity in DYL to 19.6%.
NGM Resources Ltd (NGM)
Paladin Energy Ltd 19.9%
During the year Paladin invested A$800,000 in ASX listed
NGM Resources Limited to allow work on its Niger uranium
concessions.
Subsequent to year end Paladin further increased its
shareholding in NGM to 19.9% with a further investment of
A$1.2M.
NGM is exploring three contiguous exploration licences
in the Tim Mersoi Basin in Northern Niger. Two Areva
operated uranium mines, located 150km north-north-west
of the NGM tenements in the Arlit area of the Tim Mersoi
Basin, have produced in excess of 120,000t of U3O8 since
1975. The Tim Mersoi Basin is known as one of the most
productive uranium provinces in the world.
NGM carried out exploration including a 1,500m drilling
programme in June and July 2009. Early drill results are
encouraging, confirming the prospectivity of the tenements.
Paladin Energy Ltd
31
MANAGEMENT DISCUSSION AND ANALYSIS
Health & Safety
Health & Safety
Paladin is committed to achieving the highest performance
in Occupational Health and Safety to create and maintain
a safe and healthy workplace. Paladin’s approach to health
and safety management is guided by policies where the
safety, health and well being of employees, contractors and
the community are of core value to Paladin’s operations.
A healthy workforce contributes to business success.
Paladin’s aim is for zero injuries and to achieve this
objective, the Company:
•
•
•
•
•
•
•
established a mindset in the workforce that injuries
are preventable;
implemented and assigned accountability for the
Company’s policies, standards, guidelines, systems
and procedures;
encouraged safe behaviour by employees and
contractors;
promoted management leadership in safety;
provided ongoing education and training in safety;
provided the correct and safe equipment to the
workforce; and
conducted hazard identification, risk assessments
and proposed risk management measures.
Lost Time Injury Frequency Rate (LITFR) per million hours worked
Paladin is developing internal Occupational Health and
Safety Standards to be adhered to by all of its operational
subsidiaries and is working to align site standards with
contractors to improve contractor performance. The safety
and health performance of Paladin will be measured
through internal and external internationally recognised
auditing and reporting processes.
Langer Heinrich Mine
During the year under review, LHM continued its focus on
safety, health, environmental and radiation management.
The Company experienced good performance with no
reported lost time injuries (LTI’s) for LHUPL employees and
similarly no LTI’s were reported for the mining contractor
Karibib Mining and Construction Company (KMCC).
During 2007, KMCC achieved a NOSA 5 Star rating for
its Langer Heinrich operations and maintained this rating
during the year. Five LTI’s were, however, reported from the
contractors constructing the Stage II expansion.
At Langer Heinrich, Paladin has sponsored the
establishment of a Uranium-in-Urine testing facility in
Namibia. LHUPL committed more than NAD1M in interest-
free funding to establish the facility. The facility began
operating in Swakopmund in July, following installation of
laboratory equipment imported from the USA.
Langer Heinrich Mine
Kayelekera Mine
Perth
Qld
Group
Operational
Area
LHM
Mining
Employees Contractor
Construction
Contractors
KM
Employees
Mining Construction Head
Contractor Contractors Office
Mount
Isa
Paladin
All
Employees Contractors
Hours
Worked
Lost Time
Injuries
Fatalities
LTIFR
401,021
351,788
961,201
196,540
984,573
4,555,461
89,514
36,790
723,865
6,853,023
0
0
0
0
0
0
5
0
5.2
1
0
5.1
3
0
3
4
2
1.3
0
0
0
0
0
0
1
0
1.4
12
2
2.0
Langer Heinrich Mine
Total LITFR = 2.9
Kayelekera Mine
Total LITFR = 1.7
Paladin Group
Paladin Group + All
LITFR = 1.4
Contractors LITFR = 2.0
32
Annual Report 2009
Previously, samples from Namibian mine workers were sent
to South Africa for analysis of uranium concentrations, a
process which took two to three weeks to complete. The
laboratory is also being used by other companies in the
area.
Kayelekera Mine
For 2008/09, KM had four LTI’s one involving an employee
and three occurring to employees of Mota-Engil, the mining
contractor. None of the LTI’s were of a serious nature.
During construction, however, a flash vapour fire occurred
in an eluate storage tank and resulted in serious burns to
three construction workers working for a sub-contractor.
The injured workers were transferred by air ambulance
to a leading South African burns treatment centre in
Johannesburg. Unfortunately, two of the three workers
subsequently died of their injuries. The third person is
receiving ongoing treatment and making good progress
in his recovery. The Company is undertaking an ongoing
investigation into the cause of the accident. To that
point, Kayelekera during construction had a safety
record of almost three million hours LTI-free. The project
accumulated six million man hours during the construction
period.
In reviewing health and safety performance, the Company
aims to improve contractor performance at its sites and
introduce common site safety systems.
Mount Isa
At Mount Isa there has been a focus on ensuring the
exploration activities are compliant with the requirements of
the Queensland mining safety legislation. A comprehensive
occupational health, safety and environmental
management (OHSE) plan has been developed which
includes radiation safety. This OHSE plan outlines methods
for establishing, assessing and reviewing the effectiveness
of OHSE procedures to protect people and the environment
and comply with the Queensland Mining and Quarrying
Health and Safety legislation. During the year there were no
reported LTI’s from either employees or drilling contractors.
Paladin’s approach to health and
safety management is guided by
policies where the safety, health and
wellbeing of employees, contractors
and the community are of core value
to Paladin’s operations.
Paladin Energy Ltd
33
MANAGEMENT DISCUSSION AND ANALYSIS
Financial Review
34
Annual Report 2009
Financial Review
Income Statements
Revenue from
continuing operations
Gross profit
Exploration and
evaluation expenses
Other expenses net
of other income
Impairment of
exploration and
evaluation
Impairment of
available-for-sale
financial assets
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
2008
US$M
2009
US$M
114.8
101.9
48.4
35.5
(12.2)
(13.1)
(38.4)
(35.7)
(753.8) -
(26.0)
(30.5)
-
(30.7)
(0.9)
(0.2)
237.0
96.2
7.0
1.2
(480.2)
US$
(36)
US$
(0.78)
(0.06)
References to 2008 refer to the equivalent 12 months
ended 30 June 2008.
Revenue from Continuing Operations increased to
US$114.8M in 2009 as a result of increased sales of
uranium of US$111.8M (2008: US$93.8M). Total sales
volume for the year was 2.02Mlb U3O8 (2008: 1.41Mlb)
and total production for the year was 2.70Mlb U3O8 (2008:
1.71Mlb). The average realised uranium sales price in 2009
was US$55/lb U3O8 (2008: US$66/lb). All sales for 2008
and 2009 relate to Stage I of LHM.
Interest income decreased to US$2.7M (2008: US$6.9M) as
a result of decreased cash and cash equivalents.
Gross Profit in 2009 of US$48.4M is higher than in 2008
as a consequence of increased uranium sales and the
improved operating performance of LHM during the year
ended 30 June 2009. The cost of sales decreased in 2009
to US$26/lb U3O8 (2008: US$40/lb).
Exploration and Evaluation Expenditure of US$12.2M
in 2009 related predominantly to the Valhalla/Skal, Isa
North, Bigrlyi, Angela, LHM and KM projects. Of this total,
US$6.4M was spent on the Valhalla/Skal joint venture
project. Aggregate expenditure decreased in 2009
primarily as a result of significant rains throughout the
Mount Isa area.
Other Expenses and Income increased in 2009 by
US$2.7M to US$38.4M predominantly as a result of share-
based payments expense of US$5.7M for the allotment of
a 15% interest in PAL to the Government of Malawi and the
recognition of an impairment of the Paladin Nuclear Ltd
inventory of US$3.7M in the September 2008 quarter. This
was partly offset by a US$1.1M foreign exchange gain in
2009 compared to a US$3.7M foreign exchange loss in
2008 and a one-off sales contract expense of US$2.9M in
2008.
Impairment of Mount Isa exploration and evaluation asset
of US$527.6M (net of Deferred Tax Liability) in the carrying
value of the Mount Isa assets. The Paladin Board has
impaired this asset in the December 2008 quarter in order
to ensure it both retains a transparent and relevant Balance
Sheet as well as demonstrating prudence given the impact
of the global financial crisis. The written down value of this
asset (as yet non-operating) was not significantly different
from the valuation implied by the market capitalisation of
Summit at that time. In impairing this asset, it is important
to note that Paladin is not wavering whatsoever in its belief
in a highly positive uranium outlook and remains resolutely
committed to the development of the Mount Isa assets.
Paladin is maintaining its stated, aggressive exploration
and development programme and budgets for Mount Isa
and its commitment to both uranium and the Mount Isa
region. This is further evidenced by the recent acquisition
of Fusion. Furthermore, assuming a positive feasibility
study, Paladin would develop the assets as soon as the
Queensland State Government Policy allows it to do so.
Impairment of available-for-sale financial assets of
US$26.0M predominantly due to the recognition of an
impairment of the investment in DYL in the quarter ended
31 December 2008. Under the accounting standards, the
Company was required to write down the carrying value of
its investment in listed company DYL to its market price of
US$0.079 per share at 31 December 2008. This does not
in any way reflect the Board’s confidence in DYL’s resource
potential and outlook.
Summary of Quarterly Financial Results
Following the impairment as at 31 December 2008, the DYL
share price has strengthened to US$0.270 per share at 30
June 2009 and accordingly, no further impairment to the
carrying value has been made.
Finance Costs have remained relatively unchanged at
US$30.5M in 2009 despite increased average borrowings
year on year due to a proportion of the interest payable
on the convertible bonds being capitalised as part of
the construction of KM. Finance costs relate primarily to
interest payable on the US$250.0M convertible bonds
issued 15 December 2006 and the US$325.0M convertible
bonds issued 11 March 2008.
Income Tax Benefit of US$237.0M is primarily as a result
of a decrease in deferred tax liabilities. The deferred tax
liability substantively arose from the acquisition accounting
of Summit with the current period decline reflecting both
the impairment of the A$ exploration carrying value and
the foreign exchange movement on this A$ exploration
carrying value.
Minority Interests credit of US$96.2M has been recorded
in 2009 attributable to the 18.0% of Summit not owned by
the Company. The substantial credit reflects the minority
interest share of the impairment in the carrying value of the
Mount Isa exploration and evaluation asset.
The Loss after Tax for 2009 of US$480.2M was higher than
the loss after tax for 2008 of US$36.0M predominantly as a
result of the recognition of an impairment of the Mount Isa
exploration and evaluation asset of US$527.6M net of the
deferred tax liability and of the recognition of an impairment
of the investment in DYL by US$26.0M. The impairment in
2009 was partially offset by improved operating profitability
at LHM.
Total revenues for the quarters ended March and
September have increased for each of the quarters when
compared to the equivalent comparative quarter as a
result of higher contracted sales of uranium and improved
production at LHM.
Total revenues
(Loss)/profit after tax
Basic and diluted loss per share
Total revenues
Loss after tax
Basic and diluted loss per share
2009
Total
US$M
114.8
(480.2)
(0.78)
2008
Total
US$M
101.9
(36.0)
(0.06)
2009
Jun Qtr
US$M
23.2
2.1
-
2008
Jun Qtr
US$M
38.9
(1.9)
(0.01)
2009
Mar Qtr
US$M
25.0
(6.8)
(0.01)
2008
Dec Qtr
US$M
14.2
(470.8)
2008
Sep Qtr
US$M
52.4
(4.7)
(0.76)
(0.01)
2008
Mar Qtr
US$M
2007
Dec Qtr
US$M
2007
Sep Qtr
US$M
15.3
(8.4)
(0.01)
19.4
(11.2)
(0.02)
28.3
(14.5)
(0.02)
Paladin Energy Ltd
35
MANAGEMENT DISCUSSION AND ANALYSIS
Financial Review
Total revenues for the quarters ended June and December
are lower than the comparative quarters due to shipping
and contracted sales schedules.
Balance Sheets
As At 30 June
2009
US$M
2008
US$M
All contracted sales are made in accordance with delivery
schedules agreed with each customer from time to time
and, as a result, delivery quantities and revenues are not
evenly distributed between quarters.
A profit after tax was recorded for the June 2009 quarter
due to the loss before tax for the quarter being offset by
a tax benefit recognised for LHM. Total revenues for the
quarter ended June decreased when compared to the
equivalent comparative quarter as a consequence of lower
contracted sales.
Loss after tax has decreased for the quarters ended
March and September when compared to the equivalent
comparative quarter as a consequence of the increase in
gross profit due to the improving production at LHM and
higher contracted sales.
Loss after tax for the quarter ended December is higher
than the comparative quarter predominantly as a result
of the recognition of an impairment of the Mount Isa
exploration and evaluation asset of US$527.642M net of the
deferred tax liability.
Loss Per Share
The Loss per Share noted on the Income Statements
reflects the underlying result for the specific reported
periods and the additional shares issued in 2009 compared
to 2008.
Segment Disclosure (refer to Note 3)
In the Namibian geographical segment the Company
reflected a higher profit before tax than in 2008 of
US$39.6M as a consequence of the improved operating
performance of LHM and increased sales volume for the
year ended 30 June 2009. The Malawian geographical
segment loss after tax of US$11.2M relates to exploration
and evaluation expenditure, corporate costs and a share-
based payment expense of US$5.7M for the allotment of
15% interest in PAL to the Government of Malawi. In the
Australian geographical segment the Company reflected
the remaining Income Statement activities.
36
Annual Report 2009
Total current assets
182.0
447.9
Total non current assets
1,281.5
2,115.2
Total assets
1,463.5
2,563.1
Total current liabilities
91.3
55.3
Total non current liabilities
741.0
1,078.5
Total liabilities
832.3
1,133.8
Net Assets
631.2
1,429.3
Current Assets have decreased to US$182.0M as at 30
June 2009 due to a decrease in cash and trade receivables
which are partially offset by an increase in inventories.
Cash and cash equivalents has decreased to US$66.2M at
30 June 2009 as a result of expenditure on the construction
of KM and Stage II expansion at LHM, exploration and
evaluation project expenditure, additional DYL share
investment, finance costs, third party uranium purchases
and corporate costs for the year ended 30 June 2009. This
has been partially offset by US$26.9M cash inflow from
LHM operations and the US$9.2M cash held by Fusion,
which was acquired during the March 2009 quarter.
The cash and cash equivalents is currently invested over
a range of maturities with Australian banks with a minimum
AA Standard & Poor’s credit rating.
Trade and other receivables have decreased to US$29.0M
during the year ended 30 June 2009 reflecting the timing of
deliveries and therefore recognition of sales as compared
to June 2008.
Inventories have increased to US$85.8M at 30 June 2009
as a result of higher production levels quarter-on-quarter
relative to sales volumes during the year ended 30 June
2009. Finished goods at cost as at 30 June 2009 have
increased by US$24.4M to US$38.6M. No inventory
has been recognised for KM as the project was in a
commissioning phase as at 30 June 2009. All contracted
sales are made in accordance with delivery schedules
agreed with each customer from time to time and, as a
result, delivery quantities and revenues are not evenly
distributed between quarters.
During the September 2008 quarter, the uranium held by
Paladin Nuclear Ltd, the Company’s marketing entity, was
reduced to net realisable value resulting in an impairment
loss of US$3.7M. There were no further adjustments made
to the uranium held by Paladin Nuclear Ltd.
Non Current Assets have decreased to US$1,281.5M at
30 June 2009 primarily as a result of the foreign exchange
movement on the Australian dollar denominated exploration
assets and an impairment of US$753.8M in the carrying
value of the Mount Isa asset. This was partially offset by the
capital expenditure at LHM and KM.
Current Liabilities have increased from US$55.3M to
US$91.3M as at 30 June 2009 primarily as a result of
construction activities at KM.
Non Current Liabilities have decreased from US$1,078.5M
to US$741.0M at 30 June 2009 primarily as a result of
a decrease in deferred tax liabilities which has been
partially offset by an increase in provisions. The deferred
tax liability which arose from the acquisition accounting of
Summit has decreased due to both the impairment of the
Australian dollar exploration carrying value and the foreign
exchange movement on this Australian dollar exploration
carrying value during the year. Provisions have increased
from US$8.4M to US$32.3M predominantly due to the initial
recognition of rehabilitation and mine closure provisions
for KM, an increase in the rehabilitation and mine closure
provisions for LHM and the initial recognition of the social
responsibility provision of US$9.7M at KM.
Segment Disclosure (refer to Note 3)
In the Balance Sheet as at 30 June 2009, the Company
reflected a decrease in the Australian geographical
segment assets and liabilities for the year as a result of the
impairment in the carrying value of Mount Isa exploration
and evaluation asset, the foreign exchange movement on
the Australian dollar denominated exploration assets and
decreased cash on hand. For the Namibian geographical
segment an increase occurred in the year in assets and
liabilities due to the Stage II expansion, operations and
exploration and evaluation activities for LHM. For the
Malawian geographical segment, an increase occurred
in the year in the assets and liabilities as a result of mine
construction and, exploration and evaluation activities
for KM.
Statements of Changes In Equity
Year Ended 30 June
2008
US$M
2009
US$M
Total equity at the beginning
of the financial year
1,429.3
1,308.3
Loss for the year ended 30 June,
after minority interests
(480.2)
(36.0)
Movement in reserves,
net of foreign currency
Movement in equity,
net of foreign currency
43.9
(10.7)
23.2
13.1
Foreign currency translation
(295.9)
155.8
Minority interests, net of
foreign currency
Total Equity at the End
of the Financial Year
(89.1)
(1.2)
631.2
1,429.3
Loss for the Year Ended 30 June 2009 is discussed under
the Income Statements’ section and is an increase from the
loss in the comparative period.
Foreign Currency Translation Reserve relates to the
translation of subsidiaries with Australian dollar functional
currencies into the Company presentation currency of
US dollars on an ongoing basis and for the comparative
period.
Movement in Other Reserves in 2009 of a US$43.9M
increase relates to the transfer in December 2008 to profit
and loss of the revaluation decrement in DYL (net of tax
and foreign exchange movements) and the subsequent
revaluation increment attributable to the increase in DYL
share price (net of tax and foreign exchange movements)
and the recognised value of unlisted employee options.
Unlisted employee options exercised during the year
amounted to 2,060,000 with exercise prices ranging from
A$2.80 to A$5.50. During the year 1,950,000 employee
options were granted with exercise prices ranging from
A$2.07 to A$4.48 per share, 1,314,617 were forfeited with
exercise prices ranging from A$2.14 to A$8.77 per share
and 2,425,000 expired with exercise prices ranging from
A$2.80 to A$5.50.
Paladin Energy Ltd
37
MANAGEMENT DISCUSSION AND ANALYSIS
Financial Review
Movement in Equity in 2009 of a US$23.2M increase relates
to the issue of 8,135,433 shares as consideration for the
acquisition of Fusion and the exercise of 2,060,000 unlisted
employee options. The number of fully paid ordinary shares
on issue at 30 June 2009 is 623,692,802, an increase of
10,195,433 during the year.
Share options of 15,227,455 remain outstanding at 30 June
2009 to the employees, and consultants directly engaged
in corporate, mine construction, operations, exploration
and evaluation work.
Minority Interests recognised during the year relate to the
18.0% interest in Summit held by third parties and the
15% interest in PAL held by the Government of Malawi.
The minority interest changed from 18.1% during the year
following a renounceable rights issue by Summit.
Cash Flow Statements
Net cash outflow from operating
activities
Net cash outflow from investing
activities
Net cash (outflow)/inflow
from financing activities
Year Ended 30 June
2008
US$M
2009
US$M
(7.9)
(18.4)
(257.9)
(150.9)
(6.7)
324.0
Net increase in cash held
(272.5)
154.7
Cash at the beginning of
financial year
337.6
182.8
Effects of exchange rate changes
1.1
0.1
Cash at the End of the Financial Year
66.2
337.6
Net Cash Outflow from Operating Activities was US$7.9M
in 2009 primarily due to payments to suppliers and
employees of US$105.7M relating to the mine operations
at LHM, the growth of the Company and interest payments
of US$32.3M on project finance facilities and convertible
bonds which was partly offset by increased uranium sales
receipts of US$127.2M.
Net Cash Outflow from Investing Activities was US$257.9M
in 2009 as a result of mine construction at KM, Stage II
expansion at LHM, exploration and evaluation project
expenditure, the acquisition of shares in NGM, the
additional investments in DYL and third party uranium
purchases. This was partially offset by the US$9.2M cash
held by Fusion upon consolidation, which was acquired
during the March 2009 quarter.
Net Cash Outflow from Financing Activities of US$6.7M in
2009 is attributable to the US$12.2M repayment of project
finance facilities for LHM which has been partly offset by
US$5.2M proceeds from the exercise of 2,060,000 unlisted
employee options and US$1.1M net proceeds from third
38
Annual Report 2009
parties from the Summit renounceable rights issue. The net
cash inflow in 2008 was the result of the issue of US$325M
in convertible bonds.
Net Decrease in Cash in 2009 was US$272.5M, as
compared to the net increase in cash over the previous
corresponding period in 2008 of US$154.7M. The change
is predominantly the result of the proceeds from issue of
the US$325M convertible bonds in 2008 and a significant
capital expenditure programme in 2009.
Effect of Exchange Rate Changes is a gain of US$1.1M for
2009.
Liquidity And Capital Resources
The Company’s principal source of liquidity as at 30 June
2009 is cash of US$66.2M (2008: US$337.6M). The cash is
currently invested over a range of maturities with Australian
banks with a minimum AA Standard & Poor’s credit rating.
The Company’s principal sources of cash for the year
ended 30 June 2009 were uranium sales receipts, interest
received from cash investments, proceeds from exercise of
unlisted employee options, the rights issue by Summit and
cash acquired on acquisition of Fusion.
The Company has in place LHM project finance facilities of
US$54.1M which have been fully drawn down.
For KM, the Company has financing totalling US$167M,
consisting of a six year Project Finance Facility of
US$145M, a Standby Cost Overrun Facility of US$12M
and a Performance Bond Facility of US$10M. The facilities
are being provided by Société Générale Corporate
and Investment Banking (as inter-creditor agent and
commercial lender), Nedbank Capital a division of
Nedbank Limited (ECIC lender) and Standard Bank
Limited (as ECIC facility agent and lender). At 30 June
2009, US$Nil had been drawn of the project finance
facilities leaving available facilities of US$167M. On 17
August 2009, the Company announced initial drawdown
of US$84.5M pursuant to this facility. The Company has
drawdown an additional US$47.5M since the year end.
The following is a summary of the Company’s outstanding
commitments as at 30 June 2009:
Payments due
by period
Total Less than 1 to 5yrs 5yrs+ or
unknown
US$M
1 yr
US$M
US$M
US$M
Tenements
15.1
Mine construction
4.4
Operating leases
5.1
7.1
4.4
0.8
8.0
-
2.7
Manyingee
acquisition costs
0.6
-
-
Total Commitments 25.2
12.3
10.7
-
-
1.6
0.6
2.2
In relation to the Manyingee Uranium Project, the
acquisition terms provide for a payment of A$0.75M
(US$0.6M) by the Company to the vendors when all project
development approvals are obtained.
In addition to the outstanding commitments above, the
Company acquired a call option on 19 June 1998 in
relation to the purchase of the Oobagooma Uranium
Project and, in turn, granted a put option to the original
holder of the project. Both the call and put options have an
exercise price of A$0.75M (US$0.6M) and are subject to
the Western Australian Department of Minerals & Energy
granting tenements comprising two exploration licence
applications. The A$0.75M (US$0.6M) is payable by the
Company within 10 business days of the later of the grant
of the tenements or the exercise of either the call or put
option. The options will expire three months after the date
the tenements are granted.
The Company has no other material off balance sheet
arrangements.
Outstanding Share Information
As at 24 September 2009, Paladin had 717,142,802 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 24 September 2009
Outstanding shares
Issuable under Executive
Share Option Plan
Issuable in relation to the
US$250M Convertible Bonds
Issuable in relation to the
US$325M Convertible Bonds
Total
Number
717,142,802
14,050,45
32,530,904
49,317,147
813,041,308
Future Accounting Changes
For a list of Australian Accounting Standards that have
recently been issued or amended but are not yet effective
refer to Note 2(b).
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.
Paladin Energy Ltd
39
MANAGEMENT DISCUSSION AND ANALYSIS
Financial Review
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 (refer to
Note 2(d)). Actual results could differ from these estimates.
Financial Instruments
At 30 June 2009 the Company has exposure to interest rate
risk which is the risk that the Company’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 Company’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 US dollars, and the Company has
adopted a presentation currency of US dollars therefore
eliminating any foreign currency translation risk for
non-monetary assets and liabilities. The Company 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 Company
has adopted a presentation currency of US dollars. The
Company 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.
The Company currently does not engage in any hedging
or derivative transactions to manage interest rate or foreign
currency risks.
The Company’s 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 Company.
The carrying amount of financial assets represents the
maximum credit exposure. The Company trades only
with recognised, credit worthy third parties. In addition,
receivable balances are monitored on an ongoing basis
with the result that the Company’s exposure to bad debts is
not significant.
The Company’s treasury function is responsible for the
Company’s capital management, including management of
the long term debt and cash as part of the capital structure.
This involves the use of corporate forecasting models
which enable analysis of the Company’s financial position
including cash flow forecasts to determine the future capital
management requirements. To ensure sufficient funding for
operational expenditure and growth activities, a range of
assumptions are modelled so as to provide the flexibility in
determining the Company’s optimal future capital structure.
Other Risks And Uncertainties
Risk Factors
The Company is subject to other risks that are outlined in
the Annual Information Form 51-102F2 which is available
on SEDAR at www.sedar.com
Transactions With Related Parties
During the year ended 30 June 2009 no payments were
made to Director related entities. Directors of the Company
receive standard personal based compensation.
Disclosure Controls
The Company has applied its Disclosure Control Policy to
the preparation of the Consolidated Financial Statements
for the year ended 30 June 2009, associated Management
Discussion and Analysis and Report to Shareholders.
An evaluation of the Company’s disclosure controls and
procedures used has been undertaken and concluded that
the disclosure controls and procedures were effective.
40
Annual Report 2009
Internal Controls
The Company has designed appropriate internal controls
over financial reporting (ICFR) and ensured that these were
in place for the year ended 30 June 2009. An evaluation
of the design of ICFR has concluded that it is adequate
to prevent a material misstatement of the Company’s
Consolidated Financial Statements as at 30 June 2009.
During the year the Company 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 Company continues to
address their recommendations. The resultant changes to
the internal controls over financial reporting have improved
and will continue to improve the Company’s framework of
internal control in relation to financial reporting.
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 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
2009 Financial Report:
Langer Heinrich Mine, Namibia Project Finance –
Completion Test Satisfied
On 1 July 2009, the Company announced, in accordance
with the LHM project finance loan, the Completion Test had
been satisfied.
On 30 June 2009, Société Générale advised on behalf
of the Bankers’ Syndicate, which also includes Nedbank
Capital and Standard Bank Limited, that LHM had
successfully met all conditions required by the Project
Lenders including the entire host of Completion Tests.
Additionally, the previously outstanding construction
related condition of leach tank lining remediation had been
satisfied enabling the declaration of Construction Practical
Completion.
As a result of achieving Completion the interest margin
on the outstanding LHM project finance debt will reduce
by 1% per annum and the loan becomes non-recourse to
Paladin.
Issue of Employee Options
On 2 July 2009, the Company announced the granting of
700,000 unlisted incentive options, exercisable at A$4.48
vesting after three years, subject to performance conditions
as outlined in the Executive Share Option Plan, with a five
year expiry.
Kayelekera Mine, Malawi US$167M Project Finance
Completed – First Drawdown
On 17 August 2009, the Company announced the first
drawdown of US$84.5M under the KM Financing Loan
(Facility).
KM is currently in its production ramp-up phase. The first
drawdown was reimbursed to Paladin for expenditure on
the project, with the remainder of the facility to be applied
to the project and working capital expenditure.
The facility is provided by a syndicate of banks made up
of Société Générale, Standard Bank Limited and Nedbank
Capital and is the same syndicate of banks that provided
project finance for LHM Stage I.
Paladin Energy Ltd
41
MANAGEMENT DISCUSSION AND ANALYSIS
Financial Review
The US$167M project finance package consists of:-
•
•
•
US$145M Project Financing Facility – currently drawn
to US$84.5M
US$12M Cost overrun Facility – currently funded with
US$8M cash
US$10M Performance Bond Facility
Increased holding in NGM Resources Limited
On 20 August 2009, the Company announced it will
increase its shareholding from 16.7% to 19.9% following an
additional investment of US$1.5M.
Langer Heinrich Mine, Namibia –
Infill Drilling and Pre Mining Pit Definition Drilling
On 1 September 2009, the Company announced
exploration drilling results from its infill and resource
definition programme at LHM in Namibia.
Recent exploration drilling in the area of Detail 4 in the far
east of Mining Lease ML140 has intersected significant
thicknesses and grades of mineralisation confirming the
value of this area. Previous wide spaced drilling in this
area by Gencor in the early 1980’s had only intersected
limited mineralisation. To date there have been 270 holes
drilled for a total of 6,080m within Details 4 and Detail 6,
immediately to the west of Detail 4. Intersections of 8m @
967ppm eU3O8, 7m @ 1,527ppm eU3O8 and 8m @ 832ppm
eU3O8 have been recorded and are shown on the plan
below. It is expected that drilling results from this area will
be incorporated into an updated Mineral Resource to be
completed late in the December 2009 quarter.
Infill drilling ahead of mining in the areas of Detail 1 and
Detail 2 has also returned appreciable thicknesses and
grades of mineralisation. This information is used to
better define the limits of the current pit design to capture
additional ore and limit the volumes of waste removed. In
the area of Detail 2 this is particularly important as it will
allow for the most efficient conversion of the pit voids to
tailings storage.
All intersections detailed were calculated at a cut-off grade
of 100ppm U3O8 and a maximum included waste of 1m.
Locations of the drilling areas are shown on the plan below.
Detail 2 Drilling
Detail 1 Drilling
Hole
Intersection m
Grade ppm eU3O8
Hole
Intersection m
Grade ppm eU3O8
GC13191
17
GC13214
GC13244
GC17055
7
5
7
GC17093
11
646
872
1295
1163
846
GC10027
GC10198
GC10200
GC10284
11
16
13
18
1356
1191
917
696
42
Annual Report 2009
Acting CFO
On 4 September 2009, the Company announced the
Company’s Acting CFO, Mr Mark Bolton, who had been
employed under contract, will leave the Company to take
up a permanent appointment. He will remain with Paladin
until completion of the September 2009 Quarterly Financial
Statements and his replacement will be announced in due
course.
Institutional Placement of Shares
On 9 September 2009, the Company announced that it
had agreed to undertake an institutional private placement
of 93.45M ordinary shares (representing 15% of Paladin’s
issued capital) to raise approximately A$419M net of fees
payable to the placing agents.
The placement was priced at A$4.60 per share which
represented a 6.1% discount to Paladin’s last closing price
on ASX and a 0.5% discount to Paladin’s 5 day volume
weighted average price on ASX. The transaction was
completed and shares issued on 16 September 2009.
No adjustment will be required to the terms of either of
Paladin’s convertible bond series.
Paladin intends to use the funds raised to:
•
•
•
•
provide Paladin with the financial capacity to
advance M&A and inorganic growth opportunities;
progress the Langer Heinrich Stage III project
(recently approved by the Board);
expand exploration and pre-development
programmes in Australia; and
enhance Paladin’s balance sheet flexibility to ensure
Paladin remains well placed to take advantage of
other international nuclear industry opportunities as
they arise
Paladin Energy Ltd
43
SUSTaiNaBlE DEVElOpmENT
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.
44
Annual Report 2009
Kayelekera Ms Cathy Gupanis
General Manager
- Sustainable Development
A global solution to clean energy
Paladin has committed itself to the
principles of sustainable development
in the conduct of its activities in
Africa and around the world. In
doing so, it is important that Paladin
shares a common understanding
with its stakeholders as to what this
commitment means and how it governs
the Company’s actions and behaviour.
The term “sustainable development”
came into common usage following the
work of a United Nations commission
convened in 1983 to consider the
impact of Mankind’s development of
natural resources on our physical and
social environment. The Brundtland
Commission’s landmark report, “Our
Common Future”, in 1987 termed
a specific definition for sustainable
development as “development that
meets the needs of the present without
compromising the ability of future
generations to meet their own needs.”
The Commission also urged striving
for a balance to be found between
economic, social and environmental
needs and, in particular, for the
needs of the world’s poor to be given
priority. The work that Paladin does
in relation to its own employees and
its host countries and neighbouring
communities reflects its efforts to strive
for that balance and, in so doing, to
operate consistently with the corporate
values that Paladin proudly declares.
Inevitably, it is a work in progress.
Paladin has made a good start and is
particularly proud to have developed
Malawi’s first modern industrial mine.
It will continue to strive to benefit both
present and future generations in all of
its activities.
Environment
Our Commitment
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 its Environmental Policy that
promotes a standard of excellence for
environmental performance across its
operations. The key points of the policy
include:
•
•
•
•
•
•
compliance with applicable
environmental legislation;
developing standards and
systems to identify, assess and
manage environmental risk;
continuous improvement in
environmental performance;
communicating environmental
responsibility to employees and
contractors;
effective consultation with
stakeholders; and
inspections and audits of
environmental performance.
Paladin has developed internal
Environmental Standards for
application in all of its operational
subsidiaries. The Standards
prepared so far are for Environmental
Management System, Environmental
Audit, Closure, Water Use and Water
Quality, Air Quality and Radiation.
Operational compliance with the
Standards will form part of the
Corporate Audit Programme.
Paladin Energy Ltd
45
SUSTAINABLE DEVELOPMENT
Environment
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. LHM
has developed an EMS based on the ISO standard and has
implemented the system across the site operations. In April
2009, LHM obtained ISO14001 certification for its EMS
following certification audits by Lloyds Quality Register.
The KM Environment Department is in the process of
developing an EMS for operations. Once completed,
the EMS will be rolled out and implemented across the
operation.
As part of the EMS, Environmental Management
Plans (EMP) have been prepared for site operations
and submitted for review by Government and other
stakeholders. The EMP’s are regularly updated and revised
as part of the sites’ continual improvement process.
Operational EMP’s for both LHM and KM have been
submitted and reviewed by the respective Governments
and also by international financial lending institutions as
part of the project financing process. A revised EMP for
LHM, including for the Stage II expansion, was submitted
and approved by the Government during the reporting
period. This process involved extensive stakeholder
consultation to ensure any issues and concerns were
addressed.
An Operational EMP for KM was provided to the project
lenders’ technical reviewers as part of the overall
environmental review requirements. The EMP contains
details on the Kayelekera management programmes to be
implemented to minimise potential impacts.
Environmental Impact Assessment
The Environmental Impact Assessment (EIA) process
for the proposed Langer Heinrich Stage III expansion
commenced in early 2009. Stakeholder consultation was
conducted and a Scoping Report prepared and submitted
to Government in May 2009. Various technical specialist
studies were undertaken with the results input into the EIA.
The EIA process will be completed in the latter half of 2009.
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 include 1st, 2nd and 3rd party audits and
ensure that there is not only compliance with regulatory and
Paladin requirements but also with the Equator Principles
and other industry standards, in particular those standards
specified for the uranium industry.
46
Annual Report 2009
Several such audits were undertaken both at LHM and KM
during the reporting period with findings of the inspections
and audits documented and acted upon to close out any
issues.
Water
Water resource is a major issue that requires management
at most mining operations. Paladin’s projects do not differ
in this matter as LHM is located in a desert environment
where water supply is limited, and KM 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
operational sites have prepared detailed water balances,
flow models and have developed water management
strategies and implemented water management measures
to ensure that Paladin’s objective is met.
LHM and KM have each engaged hydrological specialists
to provide advice on the design, construction, operation
and management of water and water infrastructure at
their respective sites. The design and water management
strategies have also been subject to external technical
peer review and audit to provide a level of comfort that
the water management, as proposed, meets international
standards.
Tailings
Tailings management continues to be a high priority at
Paladin’s operational sites. This includes ensuring that the
tailings storage facilities (TSF) are appropriately designed
and operated according to internationally acceptable
standards, and that tailings properties meet design
specifications.
Specialist tailings facility engineers have designed and
defined the operational practice and management of the
TSFs to ensure that tailings are managed in an acceptable
manner, and any potential environmental impacts from
the tailings and TSF are minimised. Independent and
internationally recognised uranium tailings experts conduct
reviews of the design, construction and operations of the
TSF’s and continue to provide an ongoing external review
role. The appointment of tailings management specialists
and the external technical review process ensures that
tailings storage on site meets industry standards and those
specific for uranium tailings.
Land Use and Biodiversity
Land use and biodiversity management is of importance to
Paladin, particularly as LHM is located in a desert National
Park. Extensive biodiversity studies were undertaken in
the Langer Heinrich area during the reporting period with
results of these studies applied in the revision of Langer
Heinrich’s EMP, the Stage III expansion EIA and mine
planning.
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 and that
environmental impacts are minimised so that tenements
can be relinquished without future liability to the Company,
Government or the community.
The Closure Planning Process at LHM progressed during
the year with the establishment of a Closure Steering
Committee which has developed a Mine Closure Strategy
and commenced the preparation of a detailed Draft
Closure Plan.
CO2-e Emissions
Over the last two years Paladin has transitioned from
exploration to mining and has been fully occupied on
ensuring its African projects, in Namibia and Malawi, have
a smooth path into production. At this stage Paladin does
not currently publish greenhouse gas emissions, although
it is in the process of assessing monitoring, measurement
and reporting methodologies to determine how the group
CO2 emissions will be reported.
Currently Paladin is focussed on determining its obligations
to report under Australian greenhouse gas emission and
related legislation. Its limited Australian output, which is
confined to exploration and corporate activities, forms only
one component of its overall activity and does not address
emissions from offshore operations where there is no
legislated requirement to report.
Initial broad base estimations of diesel consumption and
purchased electricity indicates that Paladin will not meet
threshold levels to require registration and reporting
in Australia under the National Greenhouse Emissions
Reporting Act (NGER) 2007.
Paladin’s obligations in this regard are under continual
review with oversight by senior management.
The Garnet Halliday Karonga Water Supply Project
Paladin Energy Ltd
47
SUSTAINABLE DEVELOPMENT
Social Responsibility
The President of Malawi,
Dr. Bingu wa Mutharika, said
the Kayelekera Mine marked
a shift from the Southern
African nation’s dependence on
agriculture.
Industry Bodies
The Company is a participating member of the Australian
Uranium Association (AUA) and, as such, is committed
to abide by and implement the terms of the AUA Industry
Code of Practice. Along with the Code, the Group observes
the AUA’s Charter and Principles of Uranium Stewardship,
which provide a guide to doing business ethically,
responsibly and safely. Together, the Code, Charter
and Stewardship Principles make up a vital standards
framework for the uranium industry.
Paladin regards its membership of the AUA and
observance of the AUA standards framework as part of
its commitment to the safe and responsible conduct of its
business and to ensure its long-term sustainability.
Further information on the AUA can be found on its website
at www.aua.org.au.
The Company is also a member of the Minerals Council of
Australia (MCA) which represents Australia’s exploration,
mining and minerals processing industry, nationally
and internationally, in its contribution to sustainable
development and society. As a member, Paladin supports
the Enduring Value principles as a framework for
sustainable development.
Further information on the MCA can be found on its website
at www.minerals.org.au.
Paladin is also a member of the local Chamber of Mines in
both Malawi and Namibia.
48
Annual Report 2009
SUSTAINABLE DEVELOPMENT
Social Responsibility
Mr Greg Walker
General Manager
- International Affairs
Social Responsibility
Paladin (Africa) Ltd – Kayelekera, Malawi
While Paladin’s focus in Malawi during the past year
has been the successful completion of construction and
commissioning ramp-up of KM, the Company has also
made solid progress in the continued strengthening of
its relationship with the local community and in fulfilling
its Social Responsibility objectives. Paladin’s Social
Responsibility Programme works to address needs in four
key areas: Health Issues, Food Production, Education and
Business Development.
Garnet Halliday Karonga Water Supply Project
Work on the Paladin’s most significant community
assistance project, the Garnet Halliday Karonga Water
Supply Scheme, named in honour of the former Paladin
senior executive, is scheduled to begin delivering potable
water to the town of Karonga by the end of 2009. Paladin
has donated US$8.2M to pay for construction of the
project, being developed in conjunction with Malawi’s
Northern Region Water Board. A 9km pipeline is being laid
from Lake Malawi and a new filtration plant will be installed.
Some 265 local people are working on the project. Karonga
is the northern region’s commercial and administrative
centre and is located near Lake Malawi, some 52km from
the Company’s recently-developed KM. The President of
Malawi, Dr Bingu wa Mutharika, launched the water project
after inaugurating KM in April 2009. Karonga’s 41,000
inhabitants suffer chronic water shortages and the project
will provide the town with a clean and reliable water supply
which will meet projected growth until 2025.
Community Health Care
Paladin has responded to community health care needs at
the Kayelekera Village, located near KM, by establishing
the Kayelekera Medical Clinic. Previously, the nearest
medical assistance was provided at the Wiliro Community
Clinic, located some 17km from Kayelekera. The
Kayelekera Medical Clinic has become the focus of health
care activities for local communities and treats some 600
patients per month.
The clinic is accredited as an HIV/AIDS testing and
counselling centre and the Malawi AIDS Counselling and
Resource Organisation (MACRO) now provides a monthly
clinic in Kayelekera. In regional health care, Paladin has
renovated the Wiliro Medical Clinic, which services 6,000
people in the district and funded connection of the clinic
to the regional power-grid, providing electricity to enable
emergency medical treatment after dark. Paladin has
produced community health literature in the Chitumbuka
language for distribution to local communities, including
advice on “Care of the Newborn,” distributed through
weekly antenatal and paediatric clinics.
Kayelekera Schools Upgrade
Paladin has undertaken a number of renovation and
expansion projects in local primary and secondary
schools, including teacher housing and work is currently
underway on some 10 schools situated between Karonga
and KM. Work involves replacing or repairing cracked
walls and floors; replacing wooden doors and window
frames; repainting renovated buildings and providing basic
school furniture and desks. The Company also pays for an
additional seven teachers at the local village school, which
has 350 pupils.
Other Community Assistance
Paladin is erecting a community hall for Kayelekera Village,
utilising a surplus prefabricated building donated by one
of the construction project contractors, Group 5 Limited.
The Company has upgraded water access in Kayelekera
Village by repairing a bore and installing piping to three
water collection points. Paladin has supplied spares to
enable three broken pumps in local villages to be repaired.
Agricultural Initiatives
Paladin contributes significantly to the economy of the
Karonga region by buying local food and fresh produce
to feed the KM construction and operations workforce,
injecting more than 350M kwacha (US$2.5M) into the
local economy over the past 20 months. At its peak, the
construction workforce numbered 2,500 people and local
food purchases totalled eight tonnes per week - sufficient
to produce 100,000 meals per month. As a result of
post-construction demobilisation, Paladin now purchases
locally about two tonnes of food each week and support of
regional growers will continue with the mining operations.
Paladin’s Agricultural Training Scheme continues in co-
operation with the area’s six regional chiefs, who identify
farmers for training. A project to develop a model vegetable
farm and fruit tree nursery has commenced with the
objective of improving local growers’ incomes by supplying
fruit to KM and the Karonga marketplace.
Paladin Energy Ltd
49
SUSTAINABLE DEVELOPMENT
Social Responsibility
Community Liaison
Paladin engages formally with the Government of Malawi
and with local communities via committees established
for the purpose. A Government of Malawi/Paladin Liaison
Committee has held three meetings to-date. At the local
level, Paladin holds a bi-monthly meeting with community
stakeholders through its Uranium Liaison Committee
(ULICO), which includes local community leadership,
civic societies and senior civil servants. On a quarterly
basis, the Company meets formally with traditional
leaders, headed by the region’s Paramount Chief. Regular
meetings take place with the Karonga Natural Resources
Development Association (KANREDA), which represents
local communities, and the Kayelekera Village Authority,
to discuss local matters such as road safety, water and
hygiene and minimising the impact of unemployment
arising from demobilisation of construction workers.
Business Development
Business development workshops are being held in
Karonga as part of a series initiated and organised by
Paladin to identify opportunities for local entrepreneurs. An
independent presenter provides commercial information
and guidance and local banking institutions are co-
operating. To-date, three workshops have been held,
attended by more than 100 participants.
Communication and Awareness
Paladin employs various initiatives designed to inform the
local and national communities about KM and the mining
and use of uranium.
Paladin supports the Karonga Sustainable Environment
Project (KASEP) initiative, a National Schools Quiz
Programme which has operated in Malawi for several
years. The final round of the 2009 Schools Quiz competition
was held in Lilongwe, with a Karonga school being a finalist
for the first time.
The Company publishes a quarterly KM information
newsletter, “Nkhani ya Mgodi” (News about the Mine),
which is inserted in leading national newspapers and
distributed regionally.
A weekly, Paladin sponsored programme on radio, which
is the most popular medium in Malawi, entitled “Kayelekera
Uranium Corner” continues to attract very positive public
response. The programme provides information about KM,
includes social messages about HIV/AIDS and features
a popular quiz, which recently attracted a response from
Tokyo, from a Malawian student studying in Japan and
accessing the programme via the Internet!
Langer Heinrich Uranium Pty Ltd, Namibia
C28 Highway Upgrade Programme
A 16.5km section of gravel road of the C28 central
Namibian Highway has been upgraded and bituminised
in a NAD4.5M (US$545,000) road improvement project
funded by LHUPL. The Roads Authority of Namibia
completed road works and line marking in July. LHUPL has
contributed some NAD10M (US$1.2M) to the Namibian
Roads Authority over the past three years to fund
improvements to the C28 highway, which is used daily
by LHUPL employees and contractors travelling between
Swapokmund and the mine.
50
Annual Report 2009
The improved road provides for a safer and more
comfortable ride to work for Langer Heinrich employees
and contractors, and also benefits Namibia’s tourism
industry and the country in general. After bituminising,
upkeep on C28 road maintenance has been significantly
lowered, allowing the Namibian Roads Authority to divert
funding to repair roads elsewhere. This contribution was
been very well received by the community, particularly
among local farmers who are regular road users.
Vocational Training Centre Support
LHUPL is assisting the Namibian Institute of Mining and
Technology (NIMT), which operates one of the largest
vocational training centres in Namibia and supplies skilled
workers to the country’s mining sector. The Institute’s
maintenance is government-funded, but the level of
government support has remained unchanged for 10 years
and no longer covers all maintenance costs. There was a
need to replace floor-coverings in its engineering drawing
room, computer training centre and multi-purpose hall
and to tile the 1450m2 floor area of these three facilities.
Funding for this was provided by LHUPL to enable the
NIMT to carry out this necessary upgrade to its facilities.
National Mathematics Congress
In 2009, LHUPL became the main sponsor of Namibia’s
National Mathematics Congress, a programme
aimed to improve mathematics education in the
country. Mathematics has been identified as a major
shortcoming in Namibia and the National Mathematics
Congress is an initiative aimed at upgrading
teaching skills in this area. This year’s Congress
was attended by more than 300 delegates, with
international speakers introducing local teachers to
the latest developments in the education industry.
Campaign Against Gender-based Violence
LHUPL is sponsoring a media campaign being undertaken
by the Namibian Ministry of Gender Equality and Child
Welfare (MGECW) to combat gender-based violence in
Namibia. The MGECW is conducting a national campaign
to promote zero tolerance for gender-based violence,
which is seen to be linked, amongst other things, to the
high rates of HIV/AIDS infections in Namibia. LHUPL is
sponsoring the airing of the campaign on national radio in
five local languages.
Southern Africa HIV Therapeutic Vaccine Project
Paladin and LHUPL are supporting clinical trials in southern
Africa of an HIV therapeutic vaccine developed by the
Melbourne-based biopharmaceutical research firm, Virax
Holdings Limited. The VIR201 vaccine is designed to
treat people already infected by HIV and has been tested
successfully in two clinical trials in Australia. LHUPL and
Paladin have joined a consortium of international mining
companies active in Africa by contributing $US150, 000
towards the cost of the more extensive follow-up trial
currently underway at four HIV/AIDS clinics across South
Africa. Virax has reported good progress with the clinical
trial to-date.
Other Community Assistance
LHUPL continues to support community events and
projects, such as sporting development, school projects
and environmental support initiatives.
Paladin Energy Ltd
51
SUSTAINABLE DEVELOPMENT
Our People
Kauko Immanuel
Junior Electrical Engineer
Langer Heinrich Mine
“I’ve been with Langer Heinrich for 14
months. It is very good that Langer
Heinrich puts great emphasis on
employing local people because
this empowers as many Namibians as
possible so that, in the future when
Langer Heinrich is no longer here,
we have the necessary skills
to continue creating wealth and
employment for the people of Namibia.”
Our People
Most organisations touched by the Global Financial Crisis
in 2008/2009 have had the unfortunate position of reducing
numbers and making hard decisions about their workforce.
In the current Paladin Group, staff numbers have not
decreased, but increased across all sites, to cope with the
continued growth and expansion of Paladin.
The Company’s most valuable asset is its employees
so future workforce strategies will focus on retaining
and developing the current workforce. The focus for the
Company’s sites is to encourage local employment, and
to create an environment where local communities can
develop their skills and provide a future workforce.
As the global economy improves and as competition
in the global uranium mining industry escalates, a key
strategy for maintaining talent is to create relevant and
globally competitive compensation and benefit strategies.
In addition, Paladin believes that employee loyalty and
commitment is closely connected to leadership behavior
and values. The Company will continue to refresh and
create policies and practices which ensure leadership
behaviour characterised by transparency, ethics and
fair treatment of employees, contractors and community
stakeholder groups.
52
Annual Report 2009
Kerrie Garwood
Environmental Technician
Mount Isa, Queensland, Australia
“I moved to Mount Isa in November
2007 to start work as a field
technician. Whilst challenging
and interesting, the development
from exploration to a pre-
feasibility study will provide further
opportunities to advance
and expand on my training,
knowledge and experience.”
Total employees across the Group amounts to 511. At
Head Office, the number of employees increased during
the year from 40 to 53 with new employees within Head
Office bringing a range of skills and experience from many
different industries to the Company.
Langer Heinrich Mine
Employees have increased by 10% with turnover of 12%
and a total of 210 employees at year end. The majority of
employees are Namibian citizens or holders of Resident
Permits (93%) with 80% of this workforce comprising
previously disadvantaged Namibian citizens.
There has been a focus on introducing trainee mechanical
students from Namibian Vocational Training Colleges
with these students participating in onsite training. In
the past year, 26 students completed this training.
In collaboration with the Ministry of Education,
LHM also embarked on an “on the job training
programme” for geologists and metallurgists currently
studying at the Zimbabwe School of Mines.
Ellasy Gulule
Mine Geologist
Kayelekera Mine
“I started working at Kayelekera in
April 2007, this is my first job working
as a geologist after graduating. I
have received a lot of ‘on-the-job’
training from Paladin and I have
visited the Langer Heinrich Mine in
Namibia twice for training and found
that very valuable.”
Dave Princep
Principal Geologist
Perth Head Office, Western Australia
“After having worked with Paladin for
over six years, the diversity and
interest in each day and the freedom
to express myself and further my
experience and knowledge keeps me
a very happy employee. It helps to
know that senior management, all the
way up to John Borshoff, have a level
of dedication and drive that is
rare in today’s mining industry.”
Key Achievements
Kayelekera Mine
•
•
•
•
•
LHUPL was awarded its Affirmative Action
Compliance Certificate during the year.
19 Namibian employees were identified to be trained
as understudies for the non Namibians and training
and development commenced with the respective
non Namibians as mentors.
Two senior employees are currently undergoing
an extensive Executive Development Programme
which will prepare them for future executive position
opportunities within the Group.
Middle management staff were enrolled for an
annual Management Development Programme at the
University of Stellenbosch.
In line with its policy to create HIV/AIDS awareness,
a group of employees were nominated and trained
as HIV/AIDS Peer Educators. On average, this group
reaches out to about 80 employees per month and is
currently very effective. The Chairperson of the group
was elected Best Peer Educator for the year 2008
through the OHEAP (Occupational Health Education
and Awareness Programme), an initiative of the
Namibian Chamber of Mines.
Operational staff numbers at the end of June 2008
totalled 218. There are over 815 construction personnel
on site, which is reducing as construction projects
close over the next year. Of the total operational
workforce, 143 employees are local Malawian staff,
the remainder being expatriate from African nations.
There is a minority of Australian and Canadian
expatriates in senior managerial positions. Turnover
of local staff has been relatively low at 2.8%.
Key Achievements
In 2008/2009, the focus has been on recruiting a solid team
to lead the operation from construction to production. All
senior management roles were filled, and there is a team
of people who will guide the Malawian employees to be a
competent mining workforce for the future. As an example,
there are currently 50 Malawians being trained in the
process plant.
A significant achievement has been the recruitment
of the Malawian workforce using a sophisticated
selection process which focused on ensuring that the
best staff from a non-mining country were selected on
the basis of their innate skills and abilities. Industrial
psychologists were consulted to ensure that the
process was fair, consistent, and could determine
best fit when it is not possible to compare previous
mining experience or work in related areas.
Paladin Energy Ltd
53
COrpOra TE GOVErNaNCE ST aTEmENT
Charlemagne (742 - 814AD) was a Germanic King who ruled with the assistance of his Paladins, a legendary
company of knights who formed the elite of the King’s army. These Paladins later became a source of inspiration for
the romantic poets for whom they symbolised the highest virtues of chivalry and valour.
The word Paladin was originally derived from the early Byzantine era to signify those who were the highest
dignitaries of the Court and usually referred to a lord or chieftain, and later a knight errant - a champion on a quest
for adventure.
Paladin came to describe a person or a special group possessing superlative qualities of loyalty, diligence, and
honesty, which is firm and united in support of an honourable cause or objective.
Paladin is an apt name for our Company.
The Company places a high priority on
communications with and accountability to
shareholders. Company announcements,
project updates and presentations can
all be found on the redesigned website at
www.paladinenergy.com.au
54
Annual Report 2009
Perth, Western Australia Head Office Ms Gillian Swaby
Company Secretary
Taking a world-class approach
Corporate Governance
Framework
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 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.
Information will be communicated to
shareholders by:
•
•
•
•
ensuring that published financial
and other statutory reports are
prepared in accordance with
applicable laws and industry
best practice;
ensuring the disclosure of full
and timely information about
the Company’s activities in
accordance with the general and
continuous disclosure principles
in the ASX Listing Rules, the
Corporations Act in Australia and
all relevant legislation in Canada;
providing detailed reports from
the Chairman and the Managing
Director/CEO at the Annual
General Meeting;
placing all material information
released to the market (including
notices of meeting and
explanatory materials) on the
Company’s website as soon as
practical following release;
Paladin Energy Ltd
55
CORPORATE GOVERNANCE STATEMENT
•
•
•
placing the Company’s market announcements and
financial data for the preceding seven years on its
website;
providing the Annual Report in a “user friendly”
electronic format on its website; and
providing quarterly conference calls incorporating
Q&A together with investor updates.
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. At the 2009
AGM shareholders will be able to directly lodge their votes
online via the Company’s website and the Computershare
voting platform.
Board Of Directors
Role of the Board
The Board guides and monitors the business of Paladin on
behalf of shareholders, by whom they are elected and to
whom they are accountable. The Board is responsible for
setting corporate direction, defining policies and monitoring
the business of the Company, to ensure it is conducted
appropriately and in the best interests of shareholders.
The role of the Board is to oversee and guide the
management of the Company with the aim of protecting
and enhancing the interests of its shareholders, taking
into account the interests of other stakeholders including
employees, customers, suppliers and the wider community.
The Board operates under a Charter and has a written
Code of Conduct which establishes guidelines for its
conduct. The purpose of the Code is to ensure that
Directors act honestly, responsibly, legally and ethically and
in the best interests of the Company.
The Board is responsible for setting the strategic direction
and establishing goals for management and the monitoring
of the achievements against these goals. The Board is also
responsible for CEO succession planning.
Composition of the Board
The Board comprises four Non-executive Directors,
including the Chairman and one Executive Director, being
the Managing Director/CEO.
56
Annual Report 2009
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 evolution from explorer to
miner.
Skill 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 3 day period) and on other occasions, as
required. Video conferencing facilities have been installed
to provide greater ease of communications between
face to face meetings. 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
meet together without the Managing Director/CEO and
management being present, prior to each of the four
principal Board meetings.
The entire Board is required to attend the Annual General
Meeting (AGM) of the Company and all attended the 2008
AGM.
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 is held as part of the budget review
process. The Managing Director/CEO encourages full
access to executive Managers by the Board to ensure
transparency at a senior management level. Non-executive
Directors are encouraged to visit the Company’s operations
and these visits provide the Non-executive Directors with
unlimited access to all site personnel.
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 AGM. Directors who have been appointed by
the Board are required to retire from office at the next AGM
and are not taken into account in determining the number
of Directors to retire by rotation at that AGM. Directors
cannot hold office for a period in excess of three years or
later than the third AGM following their appointment without
submitting themselves for re-election. Retiring Directors
are eligible for re-election by shareholders. Details of those
Directors seeking re-election at the 2009 AGM 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/CEO) will have each served on the
Board for 15 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.
The Board further agrees that time in office should only
be considered from 2004, as the period prior to 2004 the
Company was a junior explorer. It is also noted that the
Company did not enter the ASX/S&P 200 until June 2005.
Nomination and Appointment of New Directors
If it is necessary to appoint a new Director to fill a vacancy
on the Board or to complement the existing Board, a wide
potential base of possible candidates is considered and
external consultants are engaged to assist in the selection
process, if required. The Board assesses the qualifications
of the proposed new Director against a range of criteria
including background, experience, professional skills,
personal qualities, the potential for the candidate’s skills to
augment the existing Board and the candidate’s availability
to commit to the Board’s activities.
If these criteria are met and the Board appoints the
candidate as a Director, that Director must retire at the
next following AGM and will be eligible for re-election by
shareholders at that AGM.
New Directors appointed to the Board are invited to
participate in an induction programme which includes
provision of comprehensive written material regarding the
Company such as:-
•
•
•
•
Information on the financial, strategic and operational
position of the Company;
A comprehensive letter of appointment which sets
out the Company’s expectations on acceptance of
the position;
A written statement which sets out the duties, rights
and responsibilities they undertake on becoming
a Director together with material detailing the
operations, policies and practices of the Company;
and
Copies of previous minutes of Board meetings
together with recent Annual Reports and interim
financial statements.
Further, new Directors are invited to attend briefing
sessions with the Managing Director/CEO 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/CEO or obtain
any other briefings they feel necessary from the Chairman
or the Managing Director/CEO. They are encouraged to
attend site visits in liaison with the Managing Director/
CEO, at appropriate times. Directors agree to participate in
continuous improvement programmes from time to time, as
considered appropriate.
Evaluation of Board Performance
Improvement in Board processes and effectiveness is a
continuing objective and the primary purpose of Board
evaluation is to identify ways to improve performance. The
Chairman is responsible for conducting an annual review of
the Board performance.
An evaluation of the performance of the Board has been
carried out. 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.
Paladin Energy Ltd
57
CORPORATE GOVERNANCE STATEMENT
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. The Company has
implemented a secure electronic information repository to
facilitate access to past and present Board documentation
and other relevant reference material. 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/CEO and the Company Secretary.
These delineate the role and responsibility of each position
and provide clarity on the expectations for those individuals
occupying these key positions within the Company.
Conflicts of Interest
The Code of Conduct for Directors, a copy of which
is available on the Company’s website, sets out the
procedure to be followed if there is, or may be, a conflict
between the personal or other interests of a Director and
the business of the Company. A Director with an actual or
potential conflict of interest in relation to a matter before
the Board does not receive the Board papers relating to
that matter and when the matter comes before the Board
for discussion, the Director withdraws from the meeting for
the period the matter is considered and takes no part in the
discussions or decision-making process.
Minutes reporting on matters in which a Director is
considered to have a conflict of interest are not provided
to that Director, however, the Director is given notice of
the nature of the matter for discussions and, as much as
practicable, of the general nature of the discussion or
decision reached.
Remuneration
Details of the remuneration policies and practices of the
Company and the remuneration paid to the Directors
(Executive and Non-executive) and senior executives
are set out in the Remuneration Report included in the
Directors’ Report. Shareholders will be invited to consider
and to approve the Remuneration Report at the AGM in
November 2009.
58
Annual Report 2009
In relation to the Non-executive Directors there are
no termination or retirement benefits other than those
contained in statutory superannuation plans.
Independent advice
The Board and its Committees may seek advice
from independent experts whenever it is considered
appropriate. With the consent of the Chairman, individual
Directors may seek independent professional advice, at the
expense of the Company, on any matter connected with
the discharge of their responsibilities. No Director availed
himself of this right during the course of the year.
Board Committees
The Board has established Audit, Nomination and
Remuneration Committees which assist in the discharge of
the Board’s responsibilities.
Board approved charters set out the terms of reference and
rules governing these Committees.
Audit Committee
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 Audit
Committee charter is reviewed annually by the Board and
no changes were made to the charter during the financial
year.
The role of the Audit Committee is to:
•
•
•
•
•
Monitor the integrity of the financial statements of the
Company, reviewing significant financial reporting
judgments;
Review the Company’s internal financial control
system and, unless expressly addressed by a
separate risk committee or by the Board itself, risk
management systems;
Monitor and review the effectiveness of the
Company’s internal audit function;
Monitor and review the external audit function
including matters concerning appointment and
remuneration, independence and non-audit services;
and
Perform such other functions as assigned by law, the
Company’s constitution, or the Board.
The Audit Committee comprises three members, all of
whom are independent Non-executive Directors. The
current members of the Audit Committee are:-
•
Donald Shumka – Committee Chairman
(appointed 9 July 2007)
Non-executive, Independent Director
•
•
Sean Llewelyn
Non-executive, Independent Director
Ian Noble
Non-executive, Independent Director
The Audit Committee meets at least once a quarter and at
any other time requested by a Board member, Company
Secretary or external auditor. The external auditors
attend 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 Audit Committee carries out periodic self evaluation of
its effectiveness and performance.
The Chairman of the Board includes an evaluation of the
Audit Committee’s effectiveness and performance within
his overall Board evaluation.
The external auditors are Ernst and Young who were
appointed as the Company’s auditors in June 2005. In
November 2008, the audit partner was changed as part of
the partner rotation process.
The external internal auditors meet with the Audit
Committee without management present periodically
throughout the year.
Nomination Committee
The responsibilities of the Nomination Committee include:
•
•
•
•
•
Reviewing the size and composition of the Board
and making recommendations to the Board on any
appropriate changes;
Developing and planning for identifying, assessing
and enhancing Director competencies;
Making recommendations on the appointment and
removal of Directors;
Evaluating Board performance so that individual
and collective performance is regularly and fairly
assessed; and
Providing new Directors with an induction into the
Company and provide all Directors with access to
ongoing education relevant to their position.
Sean Llewelyn 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
proposed changes in Board membership during the year.
The Chairman of the Board includes an evaluation of the
Nomination Committee’s effectiveness and performance
within his overall Board evaluation.
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:-
•
•
Remuneration packages of executive Directors, Non-
executive Directors and senior executives; and
Employee incentive and equity based plans
including the appropriateness of performance
hurdles and total payments proposed.
The ASX Listing Rules and the Constitution require that
the maximum aggregate amount of remuneration to be
allocated among the Non-executive Directors be approved
by the shareholders in general meeting. In proposing the
maximum amount for consideration by shareholders, and
in determining the allocation, the Remuneration Committee
will take into account the time demands made on Directors
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. Sean Llewelyn is
the Chairman of the Remuneration Committee.
The current members of the Remuneration Committee are:
•
•
•
Sean Llewelyn – Committee Chairman,
Non-executive, Independent Director
Rick Crabb – Non-executive,
Independent Director, Board Chairman
Donald Shumka – Non-executive,
Independent Director
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.
The Chairman of the Board includes an evaluation of the
Remuneration Committee’s effectiveness and performance
within his overall Board evaluation.
Paladin Energy Ltd
59
CORPORATE GOVERNANCE STATEMENT
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/CEO and the Chief
Financial Officer in relation to the Company’s 30 June 2009
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 ASX’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/CEO, 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
60
Annual Report 2009
Managing Director/CEO has the overall responsibility for
the management of risk in the Company. The Managing
Director/CEO 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/CEO, 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/CEO 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.
The Company has developed a Crisis and Emergency
Management System with individual site plans for LHM and
KM. The Company also conducts scenario-based exercises
to practise crisis and emergency response.
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 are required to complete
an application form to gain the written acknowledgement
of either; the Chairman, Managing Director/CEO or the
Company Secretary before they deal in the Company’s
securities.
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.
At the end of 2008 the Company introduced an online
compliance training module to assist in monitoring
understanding of this policy. This was initially trialled
with head office staff and, due to the positive results and
increased awareness of the policy, this will now be rolled-
out to across the Group.
Codes Of Conduct
The Board has approved a Code of Conduct for Directors
(incorporating underlying Guidelines for the Interpretation
of Principles) together with a Code of Business Conduct
and Ethics, which applies to all Directors, Officers and
Employees including those employed by subsidiaries, in
all countries where Paladin does business. A copy of the
Code is available on the Company’s website.
These Codes demonstrate and codify Paladin’s
commitment to appropriate and ethical corporate practices.
Compliance with the Codes will also assist the Company to
effectively manage its operating risks and meeting its legal
and compliance obligations, as well as enhancing Paladin’s
corporate reputation.
The principles outlined in this document are intended to:
•
•
•
•
Establish a minimum global standard of conduct by
which all Paladin employees are expected to abide;
Protect the business interests of Paladin, its
employees and customers;
Maintain Paladin’s reputation for integrity; and
Facilitate compliance by Paladin employees with
applicable legal and regulatory obligations.
The Code of Business Conduct and Ethics addresses
honesty and integrity, following the law, conflicts of interest,
confidentiality, protection of Company assets, dealing with
public officials, responsibility for international operations,
employment practices, record keeping and community
relations.
The Board has appointed the Company Secretary as the
Company’s compliance officer in the case of employees,
and the Chairman of the Audit Committee in the case
of Directors and officers, as the person responsible for
receiving reports of breaches of the Code and this is
the mechanism by which compliance with the Code is
monitored.
The Board has also approved a Whistleblower Policy which
documents commitment to maintaining an open working
environment in which employees and contractors are able
to report instances of unethical, unlawful or undesirable
conduct without fear of intimidation or reprisal.
The purpose of the Whistleblower Policy is to:
•
•
•
Help detect and address unacceptable conduct;
Help provide employees and contractors with a
supportive working environment in which they feel
able to raise issues of legitimate concern to them
and to the Company; and
Help protect people who report unacceptable
conduct in good faith.
The Company has a firm commitment to protecting the
privacy of any personal information that it collects and
holds and 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.
Paladin Energy Ltd
61
DirECTOrS’ rEpOr T
The Kayelekera Mine produced
its first product during April 2009.
Transport of the first containerised
drummed product consignment to
Walvis Bay, Namibia via Zambia
took place on 17 August 2009.
62
Annual Report 2009
Kayelekera Mine Exploring global mining opportunities
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 2009.
The Group’s loss after tax for the
year is US$480.2M (2007:US$36M)
representing an increase of 1,234%
from the previous year.
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/CEO)
Mr Sean Llewelyn
(Non-executive Director)
Mr Ian Noble
(Non-executive Director)
Mr Donald Shumka
(Non-executive Director)
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
10 to 43 of this report under the section
entitled Management Discussion and
Analysis.
Dividends
No dividend has been paid during
the financial year and no dividend is
recommended for the current year.
Significant Changes In The
State Of Affairs
There were no significant changes in
the state of affairs of the Group during
the financial year not otherwise dealt
with in this report.
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 2009
Financial Report.
Langer Heinrich Mine, Namibia
Project Finance – Completion Test
Satisfied
On 1 July 2009, the Company
announced, in accordance with
the LHM project finance loan, the
Completion Test had been satisfied.
Paladin Energy Ltd
63
DIRECTORS’ REPORT
On 30 June 2009, Société Générale advised on behalf
of the Bankers’ Syndicate, which also includes Nedbank
Capital and Standard Bank Limited, that LHM had
successfully met all conditions required by the Project
Lenders including the entire host of Completion Tests.
Additionally, the previously outstanding construction
related condition of leach tank lining remediation had been
satisfied enabling the declaration of Construction Practical
Completion.
As a result of achieving Completion the interest margin
on the outstanding LHM project finance debt will reduce
by 1% per annum and the loan becomes non-recourse to
Paladin.
Issue of Employee Options
On 2 July 2009, the Company announced the granting of
700,000 unlisted incentive options, exercisable at A$4.48
vesting after 3 years, subject to performance conditions as
outlined in the Executive Share Option Plan, with a 5 year
expiry.
Kayelekera Mine, Malawi US$167M Project Finance
Completed – First Drawdown
On 17 August 2009, the Company announced the first
drawdown of US$84.5M under the KM Financing Loan
(Facility). The Company has drawdown an additional
US$47.5M since the year end.
KM is currently in its production ramp-up phase. The first
drawdown was reimbursed to Paladin for funds spent on
completing the project, with the remainder of the facility to
be applied to the project and working capital expenditure.
The facility is provided by a syndicate of banks made up
of Société Générale, Standard Bank Limited and Nedbank
Capital and is the same syndicate of banks that provided
project finance for LHM Stage I.
The US$167M project finance package consists of:-
•
•
•
US$145M Project Financing Facility – currently
drawn to US$84.5M
US$12M Cost overrun Facility – currently funded
with US$8M cash
US$10M Performance Bond Facility
Increased holding in NGM Resources Limited
On 20 August 2009 it was announced that the Company
will increase its shareholding from 16.7% to 19.9%
following an additional investment of US$1.5M.
Langer Heinrich Mine, Namibia – Infill Drilling and Pre
Mining Pit Definition Drilling
On 1 September 2009, the Company announced
exploration drilling results from its infill and resource
definition programme at LHM in Namibia.
Recent exploration drilling in the area of Detail 4 in the far
east of Mining Lease ML140 has intersected significant
thicknesses and grades of mineralisation confirming the
value of this area. Previous wide spaced drilling in this
area by Gencor in the early 1980’s had only intersected
limited mineralisation. To date there have been 270 holes
drilled for a total of 6,080m within Details 4 and Detail 6,
immediately to the west of Detail 4. Intersections of 8m @
967ppm eU3O8, 7m @ 1,527ppm eU3O8 and 8m @ 832ppm
eU3O8 have been recorded and are shown on the plan on
page 42 of this Annual Report. It is expected that drilling
results from this area will be incorporated into an updated
Mineral Resource to be completed late in the December
2009 quarter.
Infill drilling ahead of mining in the areas of Detail 1 and
Detail 2 has also returned appreciable thicknesses and
grades of mineralisation. This information is used to
better define the limits of the current pit design to capture
additional ore and limit the volumes of waste removed. In
the area of Detail 2 this is particularly important as it will
allow for the most efficient conversion of the pit voids to
tailings storage.
All intersections detailed were calculated at a cut off grade
of 100ppm U3O8 and a maximum included waste of 1m.
Locations of the drilling areas are shown on the plan on
page 42 of this Annual Report.
Acting CFO
On 4 September 2009, the Company announced the
Company’s Acting CFO, Mr Mark Bolton, who had been
employed under contract, will leave the Company to take
up a permanent appointment. He will remain with Paladin
until completion of the September 2009 Quarterly Financial
Statements and his replacement will be announced in due
course.
64
Annual Report 2009
Institutional Placement of Shares
Environmental Regulations
On 9 September 2009, the Company announced that it
had agreed to undertake an institutional private placement
of 93.45M ordinary shares (representing 15% of Paladin’s
issued capital) to raise approximately A$419M net of fees
payable to the placing agents.
The placement was priced at A$4.60 per share which
represented a 6.1% discount to Paladin’s last closing price
on ASX and a 0.5% discount to Paladin’s 5 day volume
weighted average price on ASX. The transaction was
completed and shares issued on 16 September 2009.
No adjustment will be required to the terms of either of
Paladin’s convertible bond series.
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.
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 mining and processing operations in
Namibia and Malawi, and exploration projects in Africa
and 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, approvals and licences
for the exploration, development and operation are applied
to the activities conducted at each site. In addition many
other international and industry standards are also 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.
Paladin Energy Ltd
65
DIRECTORS’ REPORT
Information On Directors
Mr Rick Wayne Crabb
(Non-executive Chairman) Age 52
B. Juris (Hons), LLB, MBA, FAICD
Mr John Borshoff
(Managing Director/CEO) Age 64
B.Sc., F.AusIMM, FAICD
Mr Sean Reveille Llewelyn
(Non-executive Director) Age 61
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
Chairman of Remuneration Committee
from 26 November 2008
(member from 1 June 2005)
Chairman of Nomination Committee
from 26 November 2008
(member from 1 June 2005)
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) and Otto
Energy Ltd (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
Royal Resources Limited
from 2004 to 11 August 2009
Port Bouvard Ltd
from 1996 to 30 March 2009
Thundelarra Exploration Ltd
from 2003 to 13 June 2007
Special Responsibilities
Chairman of the Board
Member of Remuneration Committee
from 1 June 2005
Member of Nomination Committee
from 1 June 2005
66
Annual Report 2009
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
Association’s Code of Practice working
committee, and is a Board member
of the Minerals Council of Australia.
Recently, he was awarded the honour of
Ernst & Young Entrepreneur of the Year,
Western Region and goes forward as
a nominee for the Australian National
Awards to be held later this year.
Mr Borshoff founded Paladin Energy
Ltd and was appointed a Director on 24
September 1993.
Special Responsibilities
Managing Director/CEO
Member of Nomination Committee
from 1 June 2005
Mr Donald Shumka
(Non-executive Director) Age 67
B.A., MBA
Mr Ian Urquhart Noble
(Non-executive Director) Age 68
BSc (Metallurgy), F.AusIMM, ARCST
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 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
Paladin Energy Ltd
67
DIRECTORS’ REPORT
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
Ordinary Shares
Number of
Options over
Ordinary Shares
Mr Rick Crabb
Mr John Borshoff
Mr Ian Noble
Mr Sean Llewelyn
Mr Donald Shumka
*4,581,528
21,591,394
21,000
100,000
50,000
-
2,750,000
-
-
-
* Between 11 and 14 April 2008, a secured creditor of Lift Capital
Pty Limited in the exercise of purported rights, sold 6,383,218
ordinary shares on behalf of Mr Rick Crabb and his associates. No
consideration was received by Mr Rick Crabb or his associates from
this involuntary sale. Legal action for the recovery of these shares
which were sold without consent or authority is being pursued.
Company Secretary
Ms Gillian Swaby Age 49
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 a 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 10 years.
Directors’ Meetings
The number of Directors’ meetings and meetings of
committees held in the period each Director held office
during the financial year, and the number of meetings
attended by each Director were:
The Nomination Committee did not meet during the year.
In accordance with the Constitution of the Company, Mr
Donald Shumka 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 (Cth) 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,
managers and secretaries of the Parent and the Group.
Details of Key Management Personnel (including the
five highest paid executives of the Company and the
Group)
Compensation of Key Management Personnel
i)
Compensation Policy
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/CEO), by
way of base salary, superannuation, short-term bonus and
granting of employee options or performance rights. 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
Audit
Committee
Remuneration
Committee
Number
attended
Number
eligible
to attend
Number
attended
Number
eligible
to attend
Number
attended
Number
eligible
to attend
6
6
6
6
6
6
6
6
6
6
-
-
5
5
5
-
-
5
5
5
1
-
1
1
-
1
-
1
1
-
Name
Mr Rick Crabb
Mr John Borshoff
Mr Sean Llewelyn
Mr Donald Shumka
Mr Ian Noble
68
Annual Report 2009
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
(c)
aligning their interests with those of the Company’s
shareholders.
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.
Company Performance
The overall level of compensation takes into account the
Company’s earnings and growth in shareholder wealth of
the Company. Consideration of the Company’s earnings will
be more relevant as the Company matures and becomes
profitable. The chart below compares, assuming an initial
investment of A$100, the yearly percentage change in
the cumulative total shareholder return on the Company’s
Ordinary Shares against the cumulative total shareholder
return of the S&P/ASX 200 Index for the Company’s five most
recently completed financial years.
The company
S&P/ASX200 Index
)
0
0
1
=
e
s
a
B
(
x
e
d
n
I
7,000
6,000
5,000
4,000
3,000
2,000
1,000
-
Jun-04
Jun-05
Jun-06
Jun-07
Jun-08
Jun-09
30
June
30
30
30
June
June
June
2005 2006 2007 2008 2009
30
June
The Company (A$)
869 3,043 6,118 4,747 3,651
S&P/ASX 200 Index (A$) 120
143
177
147
111
Directors’ Fees
Fees payable to Non-executive Directors are set at
A$160,000 per annum each, effective 1 February 2008,
inclusive of any superannuation obligations. The Chairman
of the Audit Committee receives an additional A$20,000
per annum, and the Chairman of the Board receives an
additional A$165,000 per annum. Fees are arrived at on
the basis of a review by external independent remuneration
consultants looking at companies with similar market
capitalisation. There were no fee increases during the
financial year and the Board has resolved to maintain the
current fee level for the 2009/2010 financial year.
Compensation paid to the Managing Director/CEO is set out
under (iii) Contracts for Services.
In addition, the Company’s Constitution provides for
additional compensation to be paid if any of the Directors
are called upon to perform extra services or make any
special exertions on behalf of the Company or the business
of the Company. The Directors may compensate such
Director in accordance with such services or exertions,
and such compensation may be either in addition to or in
substitution for the Directors’ fees referred to above.
Executives
Base Salary
The first step to attracting and retaining talented, qualified
and effective Executives is paying base salaries which are
competitive in the markets in which the Company operates.
As the global economy improves and as competition in the
global uranium mining industry escalates, a key strategy
for maintaining talent is to create relevant and globally
competitive compensation and benefits strategy. Competitive
salary information on companies of a comparable size in
the resource industry is compiled from a variety of sources,
including surveys conducted by independent consultants
and national and international publications. In addition,
external remuneration consultants are involved in the
process of salary determination.
During the past year, employee’s salary, as a general
rule, were increased in accordance with movements of
the Consumer Price Index only. This applied also to the
Managing Director/CEO.
EPS (US$)
(0.01)
(0.01)
(0.07)
(0.06)
(0.78)
Expatriate Benefits
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.
Executives who are required to fulfil their responsibilities as
an expatriate receive benefits which may include relocation
costs, health insurance, housing and car allowances,
educational fees and tax advisory services.
Paladin Energy Ltd
69
DIRECTORS’ REPORT
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 and
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/CEO, 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:
•
•
•
•
•
•
•
•
•
•
production at Langer Heinrich materially in line with,
or better than, guidance;
Kayelekera commissioning and production ramp-up
continuing on schedule;
continued high safety and environmental
achievements;
continued effective social programmes in operational
regions in Namibia and Malawi;
development of the Paladin Nuclear Ltd business
model;
successful M&A activity;
exploration and pre-development work on projects
meeting or exceeding expectations;
ongoing improvement (to handle corporate growth)
of organisational structure, controls, reporting and
infrastructure;
financial performance; and
impact on total shareholder return.
70
Annual Report 2009
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.
During the past financial year, bonuses were paid
to modest levels, having regard to the outstanding
achievements of management in delivering the only new
conventional uranium mines built in the world for more
than a decade. The Remuneration Committee resolved to
offer a bonus of AS$720,000 to Managing Director/CEO
John Borshoff, recognising his achievements on a number
of fronts (as detailed elsewhere in this Annual Report),
however Mr Borshoff chose not to receive any bonus, as he
felt it was important to show leadership and restraint in the
difficult economic times.
Share Incentive Option Plan and
Proposed Performance Rights Plans
The Company believes that encouraging its employees
to become shareholders is the best way of aligning their
interests with those of its shareholders. Equity participation
has been accomplished through the Company’s Executive
Share Option Plan which was approved by shareholders in
November 2006.
A review of the existing Plan, however, has identified a
number of limitations which compromise the Plans’ intent.
That is:
•
•
the existing Plan does not provide certainty as to any
benefits being derived by the employee, irrespective
of their individual contribution to the Company and
or achievement of the hurdles put in place for the
options to vest; and
the capacity of staff to fund the exercise of options,
even when those options are in the money, is often
limited and therefore, the benefits earned cannot be
crystallised.
The above limitations are exacerbated by the taxation
consequences.
The Directors now propose to introduce Performance
Rights Plans for employees and key individual contractors
to become the principal incentive tool. Shareholders will
be asked to approve the new Plans at the forthcoming
2009 Annual General Meeting (full details of the proposed
Performance Rights Plan are set out in the Notice of Annual
General Meeting). This will provide a powerful tool to
achieve the following objectives:
Head Office Staff
•
•
•
•
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 the plan participants
with those of the shareholders; and
provide incentives to plan participants to focus on
superior performance that creates shareholder value.
The existing Share Incentive Option Plan will be retained
but if the proposed Performance Rights Plans are adopted,
the Board proposes that no further options will be issued
under that Plan. The following information in respect of
the Share Incentive Option Plan is provided to provide an
understanding on the basis and terms upon which options
were issued in the past. The Board determined 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 could 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/CEO, 180%; and senior executives
100%.
During the financial year, share 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 EXSOP was designed to create a stronger link between
increasing shareholder value and employee reward. Under
the EXSOP, the exercise price of the options was set at
the market price of the shares on the date of grant and
performance was 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’s ranking against the peer group TSR
growth over the performance period.
•
•
•
•
when Paladin is ranked over the 75
100% of the share options will vest;
th percentile,
for rankings above the 50
percentile, the percentage of options to vest will be
pro-rata between 50% and 100%;
th and below the 75th
when Paladin is ranked at the 50
the share options will vest;
th percentile, 50% of
when Paladin is ranked below the 50
share options will not vest.
th percentile the
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 other than for misconduct or death. In the event
of a change of control all the awards will vest and may be
exercised by the participant.
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
71
DIRECTORS’ REPORT
ii)
Compensation of Key Management Personnel for the year ended 30 June 2009 (Consolidated and Company)
Short-term
Post
Share-
Employment Based
Total
Total
(2)
Payment
Total
Total
Perfor- Perfor-
mance mance
Related Related
Non
Salary
& fees
Cash
bonus Monetary
Benefits
A$’000 A$’000 A$’000
Other Superan- Options
nuation
A$’000 A$’000
A$’000 A$’000 US$’000 A$’000
%
Directors
Mr Rick Crabb
Mr John Borshoff
Mr Sean Llewelyn
Mr Ian Noble
Mr Donald Shumka
Subtotal
Executives
Ms Gillian Swaby
Mr Ron Chamberlain3
Mr Wyatt Buck
Mr Dustin Garrow
Mr Simon Solomons
Mr Ross Glossop4
Mr Mark Bolton5
Subtotal
Total
312
1,813
147
147
180
2,599
-
45
486
808
423
147
241
2,150
4,749
-
-
-
-
-
-
75
-
100
163
20
-
-
358
358
-
-
-
-
-
-
-
-
13
-
-
-
-
13
13
-
-
-
-
-
-
4281
-
-
-
-
1036
-
531
531
14
14
13
13
-
54
-
1
62
-
14
5
9
-
326
240
-
-
3,843
5,670
4,168
3,843
67.7
-
-
-
160
160
180
118
118
132
-
-
-
-
-
-
3,843
6,496
4,776
3,843
361
(116)
411
358
532
(15)
-
864
(70)
1,072
1,329
989
240
250
635
(51)
788
977
727
176
184
436
50.5
-
511
521
552
-
-
-
47.6
39.2
55.8
-
-
91
1,531
4,674
3,436
2,020
145
5,374
11,170
8,212
5,863
(1) Other represents fees paid for company secretarial services to a company of which Ms Gillian Swaby is a director and shareholder.
(2)
Exchange rate used in average for year US$ 1 = AU$ 1.36035
(3) Chief Financial Officer – resigned 18th July 2008
(4) Chief Financial Officer – resigned 27th October 2008
(5) Acting Chief Financial Officer – appointed 17th November 2008
(6)
Ex-gratia termination payment
72
Annual Report 2009
ii)
Compensation of Key Management Personnel for the year ended 30 June 2008 (Consolidated and Company)
Short-term
Post
Share-
Employment Based
Total
Total
(3)
Payment
Total
Total
Perfor- Perfor-
mance mance
Related Related
Non
Salary
& fees
Cash
bonus Monetary
Benefits
A$’000 A$’000 A$’000
Other Superan- Options
nuation
A$’000 A$’000
A$’000 A$’000 US$’000 A$’000
%
Directors
Mr Rick Crabb
Mr John Borshoff
Mr Sean Llewelyn
Mr George Pirie
Mr Ian Noble
Mr Donald Shumka
Subtotal
Executives
Ms Gillian Swaby
Mr Ron Chamberlain
Mr Wyatt Buck
Mr Dustin Garrow
Mr Simon Solomons
Mr Ross Glossop
Subtotal
Total
256
-
1,587
600
127
2
127
151
-
-
-
-
2,250
600
-
272
341
575
211
-
1,399
3,649
35
20
50
-
-
-
105
705
-
-
-
-
-
-
-
-
-
10
-
22
-
32
32
-
-
-
-
-
-
-
390(1)
-
-
-
-
-
390
390
13
13
11
-
11
-
48
-
13
41
-
7
-
-
269
240
-
-
3,145
5,345
4,779
3,745
70.1
-
-
-
-
138
2
138
151
123
2
123
135
-
-
-
-
-
-
-
-
3,145
6,043
5,402
3,745
229
170
598
501
225
15(2)
654
475
1,040
1,076
465
15
585
425
930
962
416
13
264
190
648
501
225
40.4
40.0
62.3
46.6
48.4
15
100.0
61
1,738
3,725
3,331
1,843
109
4,883
9,768
8,733
5,558
(1) Other represents fees paid for company secretarial services to a company of which Ms Gillian Swaby is a director and shareholder.
(2) Options were granted on acceptance of the position prior to commencement
(3)
Exchange rate used in average for year US$ 1 = AU$ 1.11832
Paladin Energy Ltd
73
Mr Ron Chamberlain, Chief Financial Officer
(Resigned 18th July 2008)
Term of agreement – no fixed term.
Base salary, inclusive of superannuation, of A$320,000
effective 1 January 2008.
No termination benefit is specified in the agreement.
Mr Ross Glossop, Chief Financial Officer
(Resigned 27th October 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.
Mr Simon Solomons,
Executive General Manager - Operations Development
Term of agreement – no fixed term.
Base salary, inclusive of superannuation of A$430,000,
increased to A$447,840 effective 1 January 2009.
No termination benefit is specified in the agreement.
Notice period 6 months.
Mr Wyatt Buck, General Manager
– Production & Langer Heinrich Operations
Term of agreement – no fixed term.
Base salary, inclusive of superannuation and expatriate
allowance A$480,000, increased to A$499,200 effective 1
March 2009.
No termination benefit is specified in the agreement.
Notice period 6 months.
Remuneration for all parties referred to above includes
provision of an annual discretionary bonus and initial and
ongoing discretionary participation in the Company’s Share
Incentive Plan.
DIRECTORS’ REPORT
iii)
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/CEO
Term of agreement – 2 years commencing 1 March 2008.
Base salary, inclusive of superannuation, of A$1,800,000
increased to A$1,872,640 effective 1 January 2009.
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 Mark Bolton, Acting Chief Financial Officer
(Commenced 17th November 2008)
Term of agreement – 6 month, then rolling 3 month.
Base salary, inclusive of superannuation of A$375,000.
Notice period 3 months.
Mr Dustin Garrow,
Executive General Manager - Marketing
Term of agreement – no fixed term.
Base salary, of A$600,000, increased to A$782,000
effective 1 January 2009.
No termination benefit is specified in the agreement.
Notice period 6 months.
74
Annual Report 2009
iv)
Compensation Options: Granted and vested during
the year (Consolidated and Company)
During the financial year no options were granted as equity
compensation benefits under the long-term incentive
plan to Key Management Personnel and none lapsed.
In the 2008 financial year options were issued at no
consideration. Each option entitles the holder to subscribe
for one fully paid ordinary share in the entity at the exercise
price. The contractual life of each option granted is five
years. There are no cash settlement alternatives. No
options granted to Key Management Personnel vested
during the financial year.
v)
Shares Issued on exercise of Compensation Options
(Consolidated and Company)
Shares Paid per Unpaid Value at
exercise
issued
date
A$
share
(Note 29)
A$
per
share
A$
No.
30 June 2009
Executives
Mr Wyatt Buck
310,000
A$2.80
-
920,700
Mr Dustin Garrow 600,000
A$2.80
- 2,030,000
Total
910,000
No other Key Management Personnel exercised options
during the year ended 30 June 2009.
vi) Options granted as part of remuneration
30 June 2009
Wyatt Buck
Dustin Garrow
Value of options
exercised during
the year
A$’000
53
350
There were no alterations to the terms and conditions of
options granted as remuneration since their grant date.
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.
Paladin Energy Ltd
75
DIRECTORS’ REPORT
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
1 February 2007
29 January 2008
15 February 2008
15 February 2008
18 April 2008
14 October 2008
1 February 2012
29 January 2013
15 February 2011
15 February 2013
18 April 2013
14 October 2013
11 December 2008
11 December 2013
24 June 2009
Total
24 June 2014
A$8.77
A$4.50
A$5.37
A$5.37
A$4.59
A$2.54
A$2.07
A$2.48
2,697,970
7,377,485
700,000
450,000
1,075,000
750,000
300,000
700,000
14,050,455
No option holder has any right under the options to participate in any other share issue of the Company or of any other entity.
Shares Issued As A Result Of The Exercise Of
Options
Auditor’s Independence Declaration to the
Directors of Paladin Energy Ltd
During the financial year, Directors, employees and
consultants have exercised options to acquire 2,060,000
fully paid ordinary shares in Paladin at a weighted average
price of A$3.32.
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.
76
Annual Report 2009
In relation to our audit of the financial report Paladin
Energy Ltd for the year ended 30 June 2009, 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
G H Meyerowitz
Partner
Perth
24 September 2009
Non-Audit Services
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$788,000
for the year ended 30 June 2009 for the provision of
taxation services.
Signed in accordance with a resolution of the Directors.
Mr John Borshoff
Managing Director/CEO
Perth, Western Australia
24 September 2009
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
78
79
80
81
82
83
83
83
105
107
108
111
112
113
113
114
115
116
117
118
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
119
124
125
125
126
128
130
137
137
145
148
149
151
151
152
Note 30.
Interests In Jointly Controlled Assets 154
Note 31. Asset Acquisition
155
Note 32.
Events After The Balance Sheet Date 155
Note 33. Non-Cash Financing and
Investment Activities
Note 34.
Earnings Per Share
157
157
Paladin Energy Ltd
77
consolidated income Statements
for the year ended 30 June 2009
Revenue
Revenue
Cost of sales
Depreciation and amortisation
Product distribution costs
Royalties
Gross profit
Other income
Exploration and evaluation expenses
Other expenses
Impairment of exploration and evaluation
Impairment of available-for-sale
financial assets
Finance costs
Share of loss of an associate
Notes
4(a)
4(b)
15
4(c)
15
4(d)
11(b)
Consolidated
Parent Entity
2009
US$M
2008
US$M
2009
US$M
2008
US$M
114.8
(53.0)
61.8
(8.8)
(1.3)
(3.3)
48.4
1.1
(12.2)
(39.5)
(753.8)
(26.0)
(30.5)
(0.9)
101.9
(56.7)
45.2
(7.1)
(1.0)
(1.6)
35.5
-
(13.1)
(35.7)
-
-
(30.7)
(0.2)
11.1
-
11.1
-
-
-
11.1
1.9
-
11.2
-
11.2
-
-
-
11.2
-
-
(482.4)
(28.5)
-
(25.9)
(20.4)
-
-
-
(27.1)
-
(44.4)
Net loss before income tax benefit
(813.4)
(44.2)
(515.7)
Income tax benefit
Net loss after tax from
operations
Attributable to:
Minority interests
Members of the parent
Loss per share
5(a)
237.0
7.0
17.9
2.6
(576.4)
(37.2)
(497.8)
(41.8)
22
(96.2)
(480.2)
(1.2)
(36.0)
-
(497.8)
-
(41.8)
US$
US$
Loss after tax from operations
attributable to ordinary equity holders of
the Company
– basic and diluted
34
(0.78)
(0.06)
The above Consolidated Income Statements should be read in conjunction with the accompanying notes.
78
Annual Report 2009
consolidated Balance Sheets
as at 30 June 2009
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
Inventories
Other financial assets
Investment in associate
Deferred borrowing costs
Property, plant and equipment
Mine development
Exploration and evaluation expenditure
Deferred tax assets
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
2009
US$M
2008
US$M
2009
US$M
2008
US$M
6
7
8
9
7
8
10
11
12
13
14
15
5(d)
16
17
18
19
20
17
18
19
5(d)
20
21(a)
21(d)
22
66.2
29.0
85.8
1.0
182.0
2.2
24.9
69.2
-
8.2
457.8
54.2
635.5
3.9
25.6
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
16.8
1.3
-
-
317.4
9.4
-
-
18.1
326.8
498.2
-
612.1
-
-
17.0
-
-
-
-
218.6
-
1,019.7
-
-
17.8
-
-
-
-
1,281.5
1,463.5
2,115.2
1,127.3
2,563.1
1,145.4
1,256.1
1,582.9
67.1
0.2
14.2
9.8
91.3
-
0.2
572.0
136.5
32.3
741.0
832.3
631.2
41.4
0.2
12.2
1.5
55.3
-
0.5
570.3
499.3
8.4
1,078.5
1,133.8
1,429.3
8.7
-
-
1.2
9.9
-
-
532.1
-
0.1
532.2
542.1
603.3
7.5
-
-
1.0
8.5
1.0
-
517.4
10.8
0.1
529.3
537.8
1,045.1
1,111.6
31.9
(581.2)
562.3
68.9
631.2
1,088.4
1,111.6
1,088.4
234.1
(101.0)
1,221.5
207.8
1,429.3
89.1
(597.4)
603.3
-
603.3
56.3
(99.6)
1,045.1
-
1,045.1
The above Consolidated Balance Sheets should be read in conjunction with the accompanying notes.
Paladin Energy Ltd
79
consolidated Statements of changes in equity
for the year ended 30 June 2009
Notes
Contributed
Equity
US$M
Reserves
US$M
Accumulated Minority
Interests
US$M
Losses
US$M
Total
US$M
CONSOLIDATED
At 1 July 2007
Changes in fair value of available-for-sale
financial assets
Foreign currency translation
Income and expense recognised directly in
equity
Loss for the year
Total income and expense for the year
Recognised value of unlisted employee
options over vesting period
Exercise of unlisted employee options
21(b)
2.6
Contributions of equity, net of transactions
costs
Convertible bonds - equity component
Income tax on items taken directly to equity
21(b)
10.5
-
-
1,075.3
113.2
(65.0)
184.8
1,308.3
-
-
-
-
-
-
(44.6)
131.6
87.0
-
87.0
10.6
(2.6)
-
17.8
8.1
-
-
-
(36.0)
(36.0)
-
-
-
-
-
-
24.2
24.2
(1.2)
23.0
-
-
-
-
-
(44.6)
155.8
111.2
(37.2)
74.0
10.6
-
10.5
17.8
8.1
At 30 June 2008
CONSOLIDATED
At 1 July 2008
1,088.4
234.1
(101.0)
207.8
1,429.3
1,088.4
234.1
(101.0)
207.8
1,429.3
Changes in fair value of available-for-sale
financial assets
Transfer of impairment loss to P&L
Foreign currency translation
Income and expense recognised directly in equity
Loss for the year
Total income and expense for the year
Recognised value of unlisted employee
options over vesting period
-
-
-
-
-
-
-
Exercise of unlisted employee options
21(b)
2.8
Contributions of equity, net of transactions
costs
Allotment of 15% interest in Paladin (Africa)
Ltd to Government of Malawi
Income tax on items taken directly to equity
At 30 June 2009
21(b)
20.4
-
-
-
1,111.6
(0.2)
(5.9)
31.9
41.4
0.5
(246.1)
(204.2)
-
-
-
-
-
(480.2)
0.1
-
41.5
0.5
(49.8)
(295.9)
(49.7)
(96.2)
(253.9)
(576.4)
(204.2)
(480.2)
(145.9)
(830.3)
10.9
(2.8)
-
-
-
-
-
(581.2)
-
-
10.9
-
1.1
21.5
5.9
-
68.9
5.7
(5.9)
631.2
The above Consolidated Statements of Changes in Equity should be read in conjunction with the accompanying notes.
80
Annual Report 2009
Parent entity Statements of changes in equity
for the year ended 30 June 2009
Notes
Contributed
Equity
US$M
Reserves
US$M
Accumulated
Losses
US$M
Total
US$M
1,075.3
51.0
(57.8)
1,068.5
PARENT ENTITY
At 1 July 2007
Change in fair value of available-for-sale
financial assets
Foreign currency translation
Income and expense recognised directly in equity
Loss for the year
Total income and expense for the year
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
Income tax on items taken directly to equity
At 30 June 2008
PARENT ENTITY
At 1 July 2008
Change in fair value of available-for-sale
financial assets
Transfer of impairment loss to P&L
Foreign currency translation
21(b)
21(b)
Income and expense recognised directly in equity
Loss for the year
Total income and expense for the year
Recognised value of unlisted employee options
over vesting period
Exercise of unlisted employee options
Contributions of equity, net of transactions
costs
Income tax on items taken directly to equity
21(b)
21(b)
-
-
-
-
-
-
2.6
10.5
-
-
1,088.4
(28.4)
4.7
(23.7)
-
(23.7)
10.6
(2.6)
-
17.8
3.2
56.3
-
-
-
(41.8)
(41.8)
-
-
-
-
-
(28.4)
4.7
(23.7)
(41.8)
(65.5)
10.6
-
10.5
17.8
3.2
(99.6)
1,045.1
1,088.4
56.3
(99.6)
1,045.1
-
-
-
-
-
-
-
2.8
20.4
-
35.5
0.5
(1.0)
35.0
-
35.0
10.9
(2.8)
-
(10.3)
-
-
-
-
35.5
0.5
(1.0)
35.0
(497.8)
(497.8)
(497.8)
(462.8)
-
-
-
-
10.9
-
20.4
(10.3)
At 30 June 2009
1,111.6
89.1
(597.4)
603.3
The above Parent Entity Statements of Changes in Equity should be read in conjunction with the accompanying notes.
Paladin Energy Ltd
81
Payments for available-for-sale financial assets
(11.7)
(17.8)
Payments for controlled entities
net of cash acquired
Investment in subsidiary
10(a)
Proceeds from sale of property, plant & equipment
consolidated cash Flow Statements
for the year ended 30 June 2009
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers
Payments to suppliers and employees
Interest received
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 repaid from controlled entities
Proceeds from sale of tenements
Payments for third party uranium
NET CASH OUTFLOW FROM
INVESTING ACTIVITIES
CASH FLOWS FROM FINANCING ACTIVITIES
Rights issue
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 (OUTFLOW)/INFLOW
FROM FINANCING ACTIVITIES
NET (DECREASE)/INCREASE
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 THE
END OF THE FINANCIAL YEAR
Notes
Consolidated
Parent Entity
2009
US$M
2008
US$M
2009
US$M
2008
US$M
127.2
(105.7)
2.8
(32.3)
0.1
68.4
(77.1)
7.5
(17.4)
0.2
-
(8.6)
2.0
(27.5)
-
-
(9.8)
6.5
(11.2)
-
6(a)
(7.9)
(18.4)
(34.1)
(14.5)
(12.0)
(237.3)
-
-
(11.7)
(99.6)
-
-
8.8
-
0.2
0.1
-
-
1.9
2.1
(6.0)
(25.8)
-
(0.6)
(274.3)
22.1
(11.7)
-
(9.1)
-
-
-
-
(1.1)
(160.9)
14.6
(15.7)
-
-
-
-
-
(257.9)
(150.9)
(273.6)
(163.1)
1.1
5.2
(0.1)
(0.7)
(12.2)
-
-
-
10.5
-
(11.2)
(4.6)
4.3
325.0
-
5.2
-
-
-
-
-
-
10.5
-
(9.7)
-
-
325.0
(6.7)
324.0
5.2
325.8
(272.5)
154.7
(302.5)
148.2
337.6
182.8
317.4
169.7
1.1
0.1
1.9
(0.5)
6
66.2
337.6
16.8
317.4
The above Consolidated Cash Flow Statements should be read in conjunction with the accompanying notes.
82
Annual Report 2009
Notes to the consolidated Financial Statements
for the year ended 30 June 2009
Note 1. Corporate Information
The financial report of Paladin for the year ended 30 June 2009 was authorised for issue in accordance with a resolution of the
Directors on 20 August 2009, subject to final drafting and audit clearance.
Paladin 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 10 to 33.
Note 2. Summary of Significant Accounting Policies
(a)
Basis of preparation and statement of compliance
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
as issued by the International Accounting Standards Board. 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. Where necessary, comparatives have been reclassified and repositioned for consistency
with current year disclosures.
In addition to these Australian requirements further information has been included in the Consolidated Financial
Statements for the year ended 30 June 2009 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)
New accounting standards and interpretations
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
Int.15
Agreements for the
Construction of Real
Estate
This Interpretation
requires that when the
real estate developer is
providing construction
services to the buyer’s
specifications, revenue
can be recorded only as
construction progresses.
Otherwise, revenue
should be recognised on
completion of the relevant
real estate unit.
Application
Date of
Standard
1 January
2009
Application
Date for
Group
1 July 2009
Impact on Group
Financial report
The Group does
not engage in the
construction of real
estate. It is expected
that this Interpretation
will have no impact
on its Financial
Statements.
Paladin Energy Ltd
83
Notes to the Consolidated Financial Statements
for the year ended 30 June 2009
Note 2. Summary of Significant Accounting Policies (continued)
(b)
New accounting standards and interpretations (continued)
Reference Title
Summary
AASB
Int. 16
Hedges of a Net
Investment in a
Foreign Operation
This Interpretation requires
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.
Application
Date of
Standard
1 October
2008
Application
Date for
Group
1 July 2009
Impact on Group
Financial report
The Group does not
engage in hedging
net investments in
foreign operations. It
is expected that this
Interpretation will
have no impact on its
Financial Statements.
AASB
Int. 17
and AASB
2008-13
Distributions of Non-
cash Assets to Owners
and consequential
amendments to
Australian Accounting
Standards AASB 5
and AASB 110
AASB
Int. 18
Transfers of Assets
from Customers
1 July 2009
The Group does
not engage in
the distribution of
non-cash assets to
Owners. It is expected
that this Interpretation
will have no impact
on its Financial
Statements.
1 July 2009
The Group does
not engage in the
transfer of assets
from customers. It
is expected that this
Interpretation will
have no impact on its
Financial Statements.
1 July
2009
The Interpretation outlines
how an entity should
measure distributions of
assets, other than cash,
as a dividend to its owners
acting in their capacity
as owners. This applies
to transactions commonly
referred to as spin-offs, split
offs or demergers and in-
specie distributions.
Applies
prospectively
to transfer of
assets from
customers
received on
or after 1 July
2009
This Interpretation
provides guidance on
the transfer of assets
such as items of property,
plant and equipment or
transfers of cash received
from customers. The
Interpretation provides
guidance on when and
how an entity should
recognise such assets
and discusses the timing
of revenue recognition for
such arrangements and
requires that once the asset
meets the condition to be
recognised at fair value,
it is accounted for as an
‘exchange transaction’.
84
Annual Report 2009
Note 2. Summary of Significant Accounting Policies (continued)
(b)
New accounting standards and interpretations (continued)
Reference
Title
Summary
Application
Date of
Standard
Impact on Group
Financial report
Application
Date for
Group
AASB
Int. 18
(contd)
AASB 8
and AASB
2007-3
Operating Segments
and consequential
amendments to other
Australian Accounting
Standards
Concise Reporting
AASB
1039
(revised)
Once an exchange
transaction occurs the
entity is considered
to have delivered a
service in exchange for
receiving the asset.
Entities must identify
each identifiable service
within the agreement
and recognise revenue
as each service is
delivered.
New Standard
replacing AASB 114
Segment Reporting,
which adopts a
management reporting
approach to segment
reporting.
1 January
2009
1 July 2009
The Group will
assess the impact
this may have on its
Financial Statements.
1 July 2009
The Group does not
prepare a concise
report. This Standard
will have no impact
on its Financial
Statements.
1 January
2009
AASB 1039 was
revised in August 2008
to achieve consistency
with AASB 8 Operating
Segments. The revisions
include changes
to terminology and
descriptions to ensure
consistency with the
revised AASB 101
Presentation of Financial
Statements.
AASB 123
(Revised)
and
AASB
2007-6
Borrowing Costs
and consequential
amendments to other
Australian Accounting
Standards
The amendments to
AASB 123 require that
all borrowing costs
associated with a
qualifying asset be
capitalised.
1 January
2009
1 July 2009
The revised standard
will have no impact
as it is consistent with
current Group policy.
Paladin Energy Ltd
85
Notes to the consolidated Financial Statements
for the year ended 30 June 2009
Note 2. Summary of Significant Accounting Policies (continued)
(b)
New accounting standards and interpretations (continued)
Application
Date of
Standard
1 January
2009
Application
Date for
Group
1 July 2009
Impact on Group
Financial report
The Group will
assess the impact
this may have on its
Financial Statements.
Reference
Title
Summary
AASB 101
(Revised)
AASB
2007-8 and
AASB
2007-10
Presentation of
Financial Statements
and consequential
amendments to other
Australian Accounting
Standards
Introduces a statement
of comprehensive
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.
1 July 2009
The Group will
assess the impact
this may have on its
Financial Statements.
AASB
2008-1
Amendments to
Australian Accounting
Standard –
Share-based Payments:
Vesting Conditions
and Cancellations
1 January
2009
The amendments
clarify the definition of
“vesting conditions”,
introducing the term
“non-vesting conditions”
for conditions other than
vesting conditions as
specifically defined and
prescribe the accounting
treatment of an award
that is effectively
cancelled because a
non-vesting condition is
not satisfied.
AASB
2008-2
Amendments to
Australian Accounting
Standards – Puttable
Financial Instruments
and Obligations arising
on Liquidation
The amendments
provide a limited
exception to the
definition of a liability so
as to allow an entity that
issues puttable financial
instruments with certain
specified features,
to classify those
instruments as equity
rather than financial
liabilities.
1 January
2009
1 July 2009
The Group does
not issue puttable
financial instruments.
It is expected that this
Standard will have no
impact on its Financial
Statements.
86
Annual Report 2009
Application
Date for
Group
1 July 2009
Note 2. Summary of Significant Accounting Policies (continued)
(b)
New accounting standards and interpretations (continued)
Reference
Title
Summary
Application
Date of
Standard
Impact on Group
Financial report
The Group will
assess the impact
this may have on its
Financial Statements.
AASB 3
(Revised)
1 July
2009
Business Combinations The revised Standard
introduces a number
of changes to the
accounting for business
combinations, the most
significant of which
includes the requirement
to have to expense
transaction costs and
a choice (for each
business combination
entered into) to measure
a non-controlling interest
(formerly a minority
interest) in the acquiree
either at its fair value
or at its proportionate
interest in the acquiree’s
net assets. This
choice will effectively
result in recognising
goodwill relating to
100% of the business
(applying the fair value
option) or recognising
goodwill relating to the
percentage interest
acquired. The changes
apply prospectively.
1 July
2009
1 July 2009
The Group will
assess the impact
this may have on its
Financial Statements.
AASB 127
(Revised)
Consolidated and
Separate Financial
Statements
There are a number of
changes arising from
the revision to AASB 12
relating to changes in
ownership interest in a
subsidiary without loss
of control, allocation of
losses of a subsidiary
and accounting for
the loss of control of a
subsidiary. Specifically
in relation to a change
in the ownership interest
of a subsidiary (that
does not result in loss
of control) – such a
transaction will be
accounted for as an
equity transaction.
Paladin Energy Ltd
87
Notes to the consolidated Financial Statements
for the year ended 30 June 2009
Note 2. Summary of Significant Accounting Policies (continued)
(b)
New accounting standards and interpretations (continued)
Reference
Title
Summary
Amendments to
Australian Accounting
Standards arising from
AASB 3 and AASB 127
Amending Standard
issued as a
consequence of
revisions to AASB 3
and AASB 127.
Refer above.
AASB
2008-3
AASB
2008-5
Application
Date of
Standard
Impact on Group
Financial report
1 July
2009
The Group will
assess the impact
this may have on its
Financial Statements.
Application
Date for
Group
1 July 2009
1 July 2009
The Group will
assess the impact
this may have on its
Financial Statements.
Amendments to
Australian Accounting
Standards arising from
the Annual
Improvements
Project
1 January
2009
The improvements
project is an annual
project that provides
a mechanism for
making non-urgent, but
necessary, amendments
to IFRSs. The IASB
has separated into
two parts: Part 1 deals
with 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.
This was the first
omnibus of amendments
issued by the IASB
arising from the Annual
Improvements Project
and it is expected that
going forward, such
improvements will be
issued annually to
remove inconsistencies
and clarify wording in
the standards.
The AASB issued these
amendments in two
separate amending
standards; one dealing
with the accounting
changes effective from
1 January 2009 and
the other dealing with
amendments to AASB 5,
which will be applicable
from 1 July 2009 (refer
below AASB 2008-6).
88
Annual Report 2009
Note 2. Summary of Significant Accounting Policies (continued)
(b)
New accounting standards and interpretations (continued)
Reference
Title
Summary
Application
Date of
Standard
Impact on Group
Financial report
Application
Date for
Group
1 July 2009
AASB
2008-6
AASB
2008-7
Further Amendments to
Australian Accounting
Standards arising from
the Annual
Improvements Project
1 July
2009
This was the second
omnibus of
amendments issued by
the IASB arising from the
Annual Improvements
Project.
The Group will
assess the impact
this may have on its
Financial Statements.
Refer to AASB 2008-5
above for more details.
1 July 2009
The Group will
assess the impact
this may have on its
Financial Statements.
Amendments to
Australian Accounting
Standards – Cost of
an Investment in a
Subsidiary, Jointly
Controlled Entity or
Associate
1 January
2009
The main amendments
of relevance to
Australian entities
are those made to
AASB 127 deleting
the “cost method” and
requiring all dividends
from a subsidiary,
jointly controlled
entity or associate
to be recognised in
or loss in an entity’s
separate profit 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.
Paladin Energy Ltd
89
Notes to the consolidated Financial Statements
for the year ended 30 June 2009
Note 2. Summary of Significant Accounting Policies (continued)
(b)
New accounting standards and interpretations (continued)
Reference
Title
Summary
Application
Date of
Standard
Impact on Group
Financial report
Application
Date for
Group
1 July 2009
The Group does
apply hedge
accounting. It is
expected that this
Standard will have no
impact on its Financial
Statements.
1 July 2009
The Group will
assess the impact
this may have on its
Financial Statements.
AASB
2008-8
Amendments to
Australian Accounting
Standards – Eligible
Hedged Items
1 July
2009
The amendment to
AASB 139 clarifies how
the principles underlying
hedge accounting
should be applied when
(i) a one-sided risk in a
hedged item is being
hedged and (ii) inflation
in a financial hedged
item existed or was likely
to exist.
AASB
2009-2
Amendments to
Australian Accounting
Standards – Improving
Disclosures about
Financial Instruments
(AASB 4, AASB 7,
AASB 1023 &
AASB 1038)
Annual
reporting
periods
beginning
on or after 1
January 2009
that end on or
after 30 April
2009
The main amendment
to AASB 7 requires fair
value measurements
to be disclosed by the
source of inputs, using
the following three-level
hierarchy:
- quoted prices
(unadjusted) in active
markets for identical
assets or liabilities
(Level 1);
- inputs other than
quoted prices included
in Level 1 that are
observable for the asset
or liability, either directly
(as prices) or indirectly
(derived from prices)
(Level 2); and
- inputs for the
asset or liability that
are not based on
observable market data
(unobservable inputs)
(Level 3).
These amendments
arise from the
issuance of Improving
Disclosures about
Financial Instruments
(Amendments to IFRS
7) by the IASB in March
2009.
90
Annual Report 2009
Note 2. Summary of Significant Accounting Policies (continued)
(b)
New accounting standards and interpretations (continued)
Reference
Title
Summary
Application
Date of
Standard
Impact on Group
Financial report
Application
Date for
Group
AASB
2009-2
(contd)
AASB
2009-4
Amendments to
Australian Accounting
Standards arising
from the Annual
Improvements Project
(AASB 2 and AASB 138
and AASB
Interpretations 9 & 16)
The amendments to
AASB 4, AASB 1023 and
AASB 1038 comprise
editorial changes
resulting from the
amendments to AASB 7
1 July
2009
The amendments to
some Standards result
in accounting changes
for presentation,
recognition or
measurement purposes,
while some amendments
that relate to terminology
and editorial changes
are expected to have
no or minimal effect on
accounting.
The main amendment of
relevance to Australian
entities is that made to
IFRIC 16 which allows
qualifying hedge
instruments to be
held by any entity or
entities within the group,
including the foreign
operation itself, as long
as the designation,
documentation
and effectiveness
requirements in AASB
139 that relate to a net
investment hedge are
satisfied. More hedging
relationships will be
eligible for hedge
accounting as a result
of the amendment.
These amendments
arise from the
issuance of the IASB’s
Improvements to IFRSs.
The amendments
pertaining to IFRS 5,
8, IAS 1,7, 17, 36 and
39 have been issued
in Australia as AASB
2009-5 (refer below).
1 July 2009
The Group will
assess the impact
this may have on its
Financial Statements.
Paladin Energy Ltd
91
Notes to the consolidated Financial Statements
for the year ended 30 June 2009
Note 2. Summary of Significant Accounting Policies (continued)
(b)
New accounting standards and interpretations (continued)
Reference
Title
Summary
Application
Date of
Standard
Impact on Group
Financial report
AASB
2009-5
Further Amendments to
Australian Accounting
Standards arising
from the Annual
Improvements Project
(AASB 5, 8, 101, 107,
117, 118, 136 & 139)
The Group will
assess the impact
this may have
on its Financial
Statements.
1 January
2010
The amendments to
some Standards result
in accounting changes
for presentation
recognition or
measurement, purposes
while some amendments
that relate to terminology
and editorial changes
are expected to have
no or minimal effect on
accounting.
Application
Date for
Group
1 July 2010
The main amendment of
relevance to Australian
entities is that made to
AASB 117 by removing
the specific Guidance
on classifying land as
a lease so that only
the general guidance
remains. Assessing
land leases based on
the general criteria
may result in more land
leases being classified
as finance leases and
if so, the type of asset
which is to be recorded
(intangible v property,
plant and equipment)
needs to be determined.
These amendments
arise from the
issuance of the IASB’s
Improvements to IFRSs.
The AASB has issued
the amendments to
IFRS 2, IAS 38, IFRIC 9
as AASB 2009-4 (refer
above).
AASB
2009-Y
Amendments to
Australian Accounting
Standards
(AASB 5, 7, 107, 112,
136 & 139
and Interpretation 17)
These comprise
editorial amendments
and are expected to
have no major impact
on the requirements
of the amended
pronouncements
1 July 2009
1 July 2009
The Group will
assess the impact
this may have
on its Financial
Statements.
92
Annual Report 2009
Note 2. Summary of Significant Accounting Policies (continued)
(b)
New accounting standards and interpretations (continued)
Reference
Title
Summary
Amendments to
IFRS 2
Amendments
to
International
Financial
Reporting
Standards.
The amendments
clarify the accounting
for group cash- settled
share- based payment
transactions, in
particular:
Application
Date of
Standard
1 January
2010
Application
Date for
Group
1 July 2010
Impact on Group
Financial report
The Group will
assess the impact
this may have
on its Financial
Statements.
- the scope of AASB 2;
and
- the interaction between
IFRS 2 and other
standards.
An entity that receives
goods or services in a
share-based payment
arrangement must
account for those goods
or services no matter
which entity in the group
settles the transaction,
and no matter whether
the transaction is settled
in shares or cash.
A “group” has the
same meaning as in
IAS 27 Consolidated
and Separate Financial
Statements, that is, it
includes only a parent
and its subsidiaries.
The amendments also
incorporate guidance
previously included in
IFRIC 8 Scope of IFRS
2 and IFRIC 11 IFRS
2—Group and Treasury
Share Transactions. As a
result, IFRIC 8 and IFRIC
11 have been withdrawn.
Paladin Energy Ltd
93
Notes to the consolidated Financial Statements
for the year ended 30 June 2009
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 2009 and the results of all subsidiaries for the 12 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.
Transactions with minority interests are accounted for using the equity method, whereby the difference between the
consideration paid/received and share of net assets acquired/disposed of is recognised as an equity transaction.
(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; mine development and intangibles
Property, plant and equipment; mine development and intangibles are tested for impairment 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; mine development 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.
94
Annual Report 2009
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)
Rehabilitation provision
The value of this provision represents the discounted value of the present obligation to rehabilitate 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.
(viii)
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.
(ix)
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 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$250M 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.
Paladin Energy Ltd
95
Notes to the consolidated Financial Statements
for the year ended 30 June 2009
Note 2. Summary of Significant Accounting Policies (continued)
(f)
Foreign currency translation (continued)
(iii)
Group companies
Some Group entities have a functional currency of US 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 an Australian dollar functional currency:
–
–
–
–
–
Northern Territory Uranium Pty Ltd
Mount Isa Uranium Pty Ltd
Paladin Energy Minerals NL
Summit Resources (Aust) Pty Ltd
Fusion Resources 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 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.
96
Annual Report 2009
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. Deferred tax assets and liabilities are offset only if a legally enforceable right exists to set off current tax
assets against current tax liabilities and the deferred tax assets and liabilities relate to the same taxable entity and
the same taxation authority.
Paladin and all its wholly-owned Australian resident entities are part of a tax-consolidated group under Australian
tax law. The head entity, Paladin 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 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.
Paladin Energy Ltd
97
Notes to the consolidated Financial Statements
for the year ended 30 June 2009
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 at time of sale 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.
Inventory held for trading by Paladin Nuclear Ltd, the Group’s marketing entity, is valued at net realisable value,
which utilises a blend of spot and long-term prices.
(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.
98
Annual Report 2009
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.
Paladin Energy Ltd
99
Notes to the consolidated Financial Statements
for the year ended 30 June 2009
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. 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.
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
20 years
10 years
Plant and equipment
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.
100
Annual Report 2009
Note 2. Summary of Significant Accounting Policies (continued)
(t)
Exploration and evaluation expenditure
Exploration and evaluation expenditure is charged against earnings as incurred and included as part of cash flows
from investing activities.
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 are 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
Impairment testing
Annually and more frequently when an indication of impairment exists. The amortisation method is reviewed at each
financial year-end.
Paladin Energy Ltd
101
Notes to the consolidated Financial Statements
for the year ended 30 June 2009
Note 2. Summary of Significant Accounting Policies (continued)
(u)
Intangibles (continued)
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.
Kayelekera Mining Lease
Useful lives
Finite
Amortisation method used
Amortised over the life of the mine on a straight-line basis
Impairment testing
Annually and more frequently when an indication of impairment exists. The amortisation method is reviewed at each
financial year-end.
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 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 as a current liability 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.
102
Annual Report 2009
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 Employee Share Incentive
Option Plan (ESOP). Following the implementation of the Paladin 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 tradeable nature of the option, the share price at grant
date and expected price volatility of the underlying share, the expected dividend yield and the risk free
interest rate for the term of the option. 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.
The Group measures the cost of equity-settled transactions with other parties by reference to the fair
value of the goods or services received. Where the fair value of the goods or services cannot be reliably
determined, or where the goods or services cannot be identified, the Group measures the cost of the
transaction by reference to the fair value of the equity instruments granted.
(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.
Paladin Energy Ltd
103
Notes to the consolidated Financial Statements
for the year ended 30 June 2009
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.
(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.
104
Annual Report 2009
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 Group 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, liability and cash flow information regarding geographical
segments for the years ended 30 June 2009 and 30 June 2008.
Year Ended
30 June 2009
Sales to external customers
Other revenue
Total segment revenue
Unallocated revenue
Total consolidated revenue
(Loss)/Profit before income tax and
finance costs
Finance costs
Share of loss of associate
Loss from continuing operations
before income tax benefit/(expense)
Income tax benefit/(expense)
Loss from continuing operations
after income tax benefit
Segment assets/total assets
Segment liabilities/total liabilities
Acquisitions of non current assets
Cash flow information:
Net cash (outflow)/inflow from operating
activities
Net cash outflow from investing activities
Net cash outflow from financing activities
Non cash expenses:
Depreciation and amortisation
Impairment of available-for-sale assets
Impairment of inventory
Impairment of exploration and evaluation
Share-based payments
Borrowing costs
# Recognised in cost of goods sold.
Australia
US$M
Namibia
US$M
Malawi
US$M
Consolidated
US$M
-
0.3
0.3
111.8
-
111.8
-
-
-
(810.3)
39.6
(11.2)
111.8
0.3
112.1
2.7
114.8
(781.9)
(30.5)
(1.0)
(813.4)
246.1
799.4
737.4
14.5
(29.0)
(23.3)
(6.1)
0.6
26.0
3.7
753.8
8.7
14.7
(7.7)
(1.4)
237.0
301.8
37.2
75.7
26.9
(60.5)
-
8.8
-
-
-
1.3#
2.2
362.3
57.7
222.8
(5.8)
(174.1)
(0.6)
0.4
-
-
-
6.6
-
(576.4)
1,463.5
832.3
313.0
(7.9)
(257.9)
(6.7)
9.8
26.0
3.7
753.8
16.6
16.9
Paladin Energy Ltd
105
Notes to the consolidated Financial Statements
for the year ended 30 June 2009
Note 3. Segment Information (continued)
Geographical segments - primary reporting (continued)
Year Ended
30 June 2008
Sales to external customers
Other revenue
Total segment revenue
Unallocated revenue
Total consolidated revenue
(Loss)/Profit before income tax and
finance costs
Finance costs
Share of loss of associate
Loss from continuing operations
before income tax benefit
Australia
US$M
Namibia
US$M
Malawi
US$M
Consolidated
US$M
-
1.2
1.2
93.8
-
93.8
-
-
-
(28.8)
17.4
(1.9)
93.8
1.2
95.0
6.9
101.9
(13.3)
(30.7)
(0.2)
(44.2)
7.0
(37.2)
Income tax benefit
4.4
1.2
1.4
Loss from continuing operations
after income tax benefit
Segment assets/total assets
2,232.0
220.7
110.4
2,563.1
1,106.2
21.0
(29.8)
(56.8)
325.4
0.7
-
-
8.9
11.8
12.0
14.0
12.3
(13.5)
15.6
94.4
1,133.8
129.4
(0.9)
(80.6)
(18.4)
(150.9)
-
(1.4)
324.0
10.0
(2.0)
2.9
1.2#
0.5
0.2
-
-
0.5
-
10.9
(2.0)
2.9
10.6
12.3
Segment liabilities/total liabilities
Acquisitions of non current assets
Cash flow information
Net cash (outflow)/inflow from operating
activities
Net cash outflow from investing activities
Net cash inflow/(outflow) from financing
activities
Non cash expenses:
Depreciation and amortisation
Inventory impairment reversal
Sales contract impairment provision
Share-based payments
Borrowing costs
# Recognised in cost of goods sold.
106
Annual Report 2009
Note 4. Revenues and Expenses
(a)
Revenue
Sale of uranium
Interest income from non-related parties
Interest income from wholly owned Group
Database licence revenue
Other revenue
Total revenue
(b)
Other income
Foreign exchange gain (net)
Total other income
(c)
Other expenses
Corporate and marketing costs
Employee benefits expense
Share-based payments expense
Minimum lease payments – operating lease
Write down of intercompany receivables
Write down of intercompany investments
Sales contracts expense
Impairment of inventory
Movement in financial assets held for trading
Foreign exchange loss (net)
Depreciation – property, plant and equipment
Loss on sale of property, plant and equipment
Consolidated
Parent Entity
2009
US$M
2008
US$M
2009
US$M
2008
US$M
111.8
2.7
-
0.2
0.1
93.8
6.9
-
0.2
1.0
-
2.0
9.1
-
-
-
5.8
3.3
-
2.1
114.8
101.9
11.1
11.2
1.1
1.1
(12.9)
(6.3)
(15.3)
(0.2)
-
-
-
(3.7)
(0.1)
-
(1.0)
-
-
-
1.9
1.9
(11.5)
(5.6)
(10.6)
(0.1)
-
-
(2.9)
-
-
(3.7)
(0.9)
(0.4)
(5.9)
(4.0)
(7.7)
(0.1)
(11.0)
(453.1)
-
-
-
-
(0.6)
-
-
-
(8.6)
(5.3)
(8.9)
(0.1)
(4.8)
(0.1)
-
-
-
(0.1)
(0.6)
-
Total other expenses
(39.5)
(35.7)
(482.4)
(28.5)
(d)
Finance costs
Interest expense
Accretion relating to convertible bonds (non-cash)
Mine closure provision discount interest expense
Facility costs
Total finance costs
(13.6)
(11.1)
(1.0)
(4.8)
(30.5)
(18.4)
(8.6)
(0.5)
(3.2)
(5.7)
(11.1)
-
(3.6)
(30.7)
(20.4)
(16.3)
(8.6)
-
(2.2)
(27.1)
Paladin Energy Ltd
107
Notes to the consolidated Financial Statements
for the year ended 30 June 2009
Note 5. Income Tax
(a)
Income tax benefit
Current income tax
Current income tax credit
Deferred income tax
Consolidated
Parent Entity
2009
US$M
2008
US$M
2009
US$M
2008
US$M
(82.5)
(42.5)
(12.1)
(8.2)
Related to the origination and reversal of temporary
differences
(159.7)
-
24.6
15.1
(34.5)
40.0
-
(4.5)
(4.2)
-
(1.6)
-
-
5.6
-
-
(237.0)
(7.0)
(17.9)
(2.6)
Tax benefits not brought to account
as future income tax benefits
Adjustments relating to prior period
Foreign exchange movement
Income tax benefit reported in the
Income Statement
(b)
Amounts charged or credited directly to equity
Deferred income tax related to items charged
or credited directly to equity:
Unrealised foreign exchange on translation
of investments
Unrealised loss on available for sale investments
Income tax expense reported in equity
(6.3)
12.2
5.9
-
-
-
-
10.3
10.3
-
-
-
(c)
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% (2008 – 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
Income tax benefit reported in the
Income Statement
(813.4)
(244.0)
4.6
15.2
(0.2)
(224.4)
2.1
(4.8)
24.6
(34.5)
(44.2)
(13.3)
(515.7)
(154.7)
2.7
-
(0.4)
(11.0)
0.5
(2.4)
10.4
(4.5)
2.3
-
(3.2)
(155.6)
-
-
137.7
-
(44.4)
(13.3)
2.7
-
(0.4)
(11.0)
-
0.2
8.2
-
(237.0)
(7.0)
(17.9)
(2.6)
108
Annual Report 2009
Note 5. Income Tax (continued)
(d)
Deferred income tax
Deferred tax liabilities
Accelerated prepayment deduction for tax purposes
Accelerated stores and consumables deduction for
tax purposes
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
Impairment of acquired exploration
Foreign currency differences on fair value of
acquired exploration and evaluation expenditure
Delayed revenue recognition for tax purposes
Foreign currency balances
Interest receivable
Recognition of convertible bond for accounting
purposes
Gross deferred tax liabilities
Set off of deferred tax assets
Consolidated
Parent Entity
2009
US$M
2008
US$M
2009
US$M
2008
US$M
(0.1)
(2.7)
(6.1)
-
-
(115.3)
(8.6)
(425.8)
226.1
69.7
(15.6)
(3.9)
-
(0.3)
(0.2)
-
-
-
-
-
(1.8)
2.1
(1.0)
(0.3)
(56.4)
(6.5)
(425.8)
-
(53.2)
-
-
-
-
-
-
(0.5)
-
-
-
(15.6)
-
(6.5)
(7.9)
(12.9)
-
(290.2)
153.7
(556.6)
57.3
(24.4)
24.4
Net deferred tax liabilities
(136.5)
(499.3)
-
Deferred tax assets
Revenue losses available for offset against future
taxable income
Equity raising costs
Provision for audit services
Provisions for employee benefits
Provisions for write-down of intercompany
receivables
Provision for mine rehabilitation
Provision for write-down of intercompany investments
Foreign currency balances
Exploration
Interest Payable
Inventory
Other
191.5
95.3
1.4
-
0.4
-
-
-
-
3.1
1.6
1.1
2.5
0.5
0.1
0.4
-
0.1
-
6.5
-
-
-
-
27.3
0.6
-
0.4
-
-
139.2
-
-
1.6
-
-
Gross deferred tax assets
Set off against deferred tax liabilities
Deferred tax assets not recognised as
probable
201.6
(153.7)
102.9
(57.3)
169.1
(24.4)
27.0
-
(44.0)
(32.6)
(144.7)
(27.0)
Net deferred tax assets recognised
3.9
13.0
-
-
Paladin Energy Ltd
109
-
-
-
-
-
-
-
-
-
(12.9)
(10.8)
-
(10.8)
16.4
0.5
0.1
0.4
9.2
-
0.4
-
-
-
-
-
Notes to the consolidated Financial Statements
for the year ended 30 June 2009
Note 5. Income Tax (continued)
(d)
Deferred income tax (continued)
The net deferred tax assets recognised are attributable to LHUPL, a Namibian company that owns LHM. 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 losses suffered in the current and preceding periods. The
recognition of the net deferred tax assets is supported by the production ramp-up at LHM.
(e)
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
Potential tax benefit at tax rates between
27.5% - 37.5%
This benefit for tax losses will only be obtained if:
Consolidated
Parent Entity
2009
US$M
2008
US$M
2009
US$M
2008
US$M
54.2
105.6
27.9
54.9
-
82.1
-
-
-
-
136.3
105.6
27.9
38.9
31.7
8.4
-
-
54.9
16.5
(i)
(ii)
(iii)
the Consolidated Entity derives future assessable income of a nature and of an amount sufficient to enable
the benefit from the deductions for the losses to be realised;
the Consolidated Entity continues to comply with the conditions for deductibility imposed by tax legislation;
and
no changes in tax legislation adversely affect the Consolidated Entity in realising the benefit from the
deductions for the losses.
(f)
Members of the tax consolidation group and the tax sharing arrangements
Paladin and its 100% owned Australian resident subsidiaries formed a tax consolidated group (the Group) with
effect from 1 July 2003. Paladin is the head entity of the Group. Members of the Group have entered into a tax
sharing agreement that provides that the head entity will be liable for all taxes payable by the Group from the
consolidation date. The parties have agreed to apportion the head entity’s taxation liability within the Group based
on each contributing member’s share of the Group’s taxable income and losses.
110
Annual Report 2009
Note 6. Cash And Cash Equivalents
Cash at bank and in hand
Short-term bank deposits
US$ treasury bonds
Total cash and cash equivalents
Consolidated
Parent Entity
2009
US$M
2008
US$M
2009
US$M
2008
US$M
18.8
47.4
-
66.2
15.5
72.4
249.7
337.6
3.1
13.7
-
16.8
1.4
66.3
249.7
317.4
Total cash and cash equivalents includes US$7.7M restricted to social responsibility projects in Malawi (refer to Note
16(b)(iii)) and US$7.8M in a debt service reserve account in respect of the LHM project finance facility (refer to Note 19).
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.
(a)
Reconciliation of net loss after tax to net
cash flows used in operating activities
Net loss
Adjustments for
Depreciation and amortisation
Exploration expenditure
Provision for non-recovery of intercompany loan
Provision for non-recovery of intercompany investments
Loss recognised on re-measurement to fair value
Loss on disposal of property, plant and equipment
Database licence revenue
Net exchange differences
Share-based payments
Non-cash financing costs
Inventory impairment
Available for sale investment impairment
Exploration impairment
Interest capitalised as property, plant and equipment
Changes in assets and liabilities
Increase in prepayments
Decrease/(increase) in trade and other receivables
Increase in trade and other payables
Increase/(decrease) in provisions
(Increase)/decrease in inventories
Decrease in deferred tax liabilities
Decrease/(increase) in deferred tax assets
Net cash flows used in operating activities
(b)
Disclosure of financing facilities - Refer to Note 19.
(576.4)
(37.2)
(497.8)
(41.8)
9.8
12.2
-
-
1.1
-
(0.2)
(1.1)
15.3
16.9
3.7
26.0
753.8
(17.9)
(1.5)
9.0
18.4
0.6
(40.6)
(246.1)
9.1
(7.9)
10.9
13.1
-
-
-
0.4
(0.2)
3.7
10.6
12.3
-
-
-
(3.9)
(0.8)
(26.0)
5.1
(6.7)
7.3
(4.4)
(2.6)
0.6
-
11.0
453.1
-
-
-
(1.9)
7.7
14.7
-
25.9
-
-
-
(30.8)
1.1
0.2
-
(17.9)
-
0.6
-
4.8
0.1
-
-
-
0.1
8.9
10.8
-
-
-
-
-
(0.4)
4.5
0.5
-
(2.6)
-
(18.4)
(34.1)
(14.5)
Paladin Energy Ltd
111
Notes to the consolidated Financial Statements
for the year ended 30 June 2009
Note 7. Trade And Other Receivables
Current
Trade receivables
Less provision for doubtful debts
Net trade receivables
Interest receivable
Prepayments
GST and VAT
Sundry debtors
Total current receivables
Note
(a)
-
(b)
(c)
Consolidated
Parent Entity
2009
US$M
2008
US$M
2009
US$M
2008
US$M
13.2
-
13.2
-
2.7
11.1
2.0
29.0
28.7
-
28.7
0.1
1.1
5.0
5.1
40.0
-
-
-
-
0.1
0.2
1.0
1.3
-
-
-
0.1
0.3
9.0
9.4
(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. No expense has been
recognised for the current year or the previous 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 an A$0.1M (US$0.1M) (2008: A$3.1M/US$3.0M) debtor due from the sale of
non-uranium properties and Georgina Basin Project held by Summit. Interest is not normally charged and
collateral is not normally obtained. Sundry debtors include amounts receivable by the Company from
subsidiaries of US$0.9M (2008: US$9.0M).
Non Current
Unsecured loans to wholly owned Group
(d)
Less provision for non-recovery
Net unsecured loans to the wholly owned
Group
Sundry debtors
(e)
Total non current receivables
-
-
-
2.2
2.2
-
-
-
-
-
539.8
(41.6)
498.2
-
498.2
249.2
(30.6)
218.6
-
218.6
(d)
Of the unsecured loans to the wholly owned Group, the Company charges interest only on the loan to
Paladin Finance Pty Ltd. The interest rate payable is the one month US$ LIBOR plus 2% (2008: one month
US$ LIBOR plus 2%). In the year ending 30 June 2009 the average rate charged was 3.53% (2008: 6.19%)
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.
(e)
Sundry debtors include an A$2.8M (US$2.2M) (2008: A$Nil/US$Nil) debtor due from the sale of non-uranium
properties and Georgina Basin Project held by Summit . Interest is not normally charged and collateral is not
normally obtained.
112
Annual Report 2009
Note 8. Inventories
Note
Consolidated
Parent Entity
2009
US$M
2008
US$M
2009
US$M
2008
US$M
Current
Stores and spares (at cost)
Stockpiles (at cost)
Work-in-progress (at cost)
Finished goods (at cost)
Third party uranium purchased:
Finished goods (at cost)
Finished goods (at net realisable value)
(b)
Total current inventories at the lower of
cost and net realisable value
12.8
2.3
4.0
38.6
-
28.1
3.9
13.4
5.6
14.2
31.8
-
85.8
68.9
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(a)
Inventory expense
Inventories sold recognised as an expense for the year ended 30 June 2009 totalled US$66.4M (2008: US$66.4M)
for the Group and US$Nil (2008:US$Nil) for the Company. Impairment of inventories included in the cost of sales for
the Consolidated Entity is US$Nil (2008:US$Nil).
(b)
Inventory expense
During the September quarter, the uranium held by Paladin Nuclear Ltd, the Company’s recently-established
marketing entity, was reduced to net realisable value resulting in an impairment loss of US$3.7M for the year.
Non Current
Stockpiles (at cost)
Total non current inventories at the lower
of cost and net realisable value
(c)
24.9
24.9
-
-
-
-
-
-
(c)
Stockpiles at LHM that are unlikely to be processed within 12 months of the Balance Sheet date.
Note 9. Investments Held For Trading
Current
At fair value:
Options – unlisted
Consolidated
Parent Entity
2009
US$M
2008
US$M
2009
US$M
2008
US$M
1.0
1.0
1.4
1.4
- -
- -
The Consolidated Entity has an investment in MM Mining Plc (MMM), an unlisted public UK company that explores
for base metals. At 30 June 2009 the Consolidated Entity holds 20M (2008:20M) warrants. Each warrant entitles it to
acquire one fully paid ordinary share in MMM at an exercise price of 15 GB pence on or before 31 December 2012.
As MMM is unlisted the options have been valued using the Black and Scholes option pricing methodology using
the most recent market transaction to determine the appropriate underlying value.
Paladin Energy Ltd
113
Notes to the consolidated Financial Statements
for the year ended 30 June 2009
Note 10. Other Financial Assets
Notes
Consolidated
Parent Entity
2009
US$M
2008
US$M
2009
US$M
2008
US$M
Non Current
Investments in controlled entities
(a)
Less provision for non-recovery
Net investment in controlled entities
Available-for-sale financial assets
(b)
Total non current other financial assets
-
-
-
69.2
69.2
-
-
-
41.7
41.7
1,018.8
(454.4)
564.4
47.7
612.1
994.4
(1.3)
993.1
26.6
1,019.7
(a)
Investments in material controlled entities
Name
Country of
Incorporation
Investment
Percentage
Interest Held
Cost Of Parent
Entity’s
Interest
2009
%
2008
%
2009
US$M
Paladin Finance Pty Ltd (i)(ii)
Paladin Energy Minerals NL (i)
Eden Creek Pty Ltd (i)(ii)
Paladin (Africa) Ltd (iii)
Kayelekera Holdings SA
Kayelekera Finance BV
Langer Heinrich Uranium (Pty) Ltd
Valhalla Uranium Ltd (i)
Northern Territory Uranium Pty Ltd (ii)(iv)
Mount Isa Uranium Pty Ltd (ii)(iv)
Paladin Nuclear Ltd (i)
Summit Resources Ltd (i)
Summit Resources (Aust) Pty Ltd (ii)(v)
Pacific Mines Ltd (vi)
Australia
Australia
Australia
Malawi
Switzerland
Netherlands
Namibia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
100
100
100
85
100
100
100
100
100
100
100
82
82
82
Fusion Resources Pty Ltd (i)(vii)
Australia
100
Total investments in controlled entities
Less provision for non-recovery of investments
100
100
100
100
100
100
100
100
100
100
100
81.9
81.9
81.9
-
2008
US$M
37.2
-
1.3
-
-
-
-
37.2
-
1.3
-
-
-
-
153.2
153.2
-
-
-
-
-
-
811.3
802.7
-
-
15.8
1,018.8
(454.4)
-
-
-
994.4
(1.3)
Net investments in controlled entities
564.4
993.1
All investments comprise ordinary shares and all shares held are unquoted, with the exception of Summit’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. The conditions precedent and issue of the 15% interest in Paladin (Africa) Ltd to the
Government of Malawi were met on 25 June 2009 and 3 July 2009 respectively.
(iv) Held by Valhalla Uranium Ltd
(v) Held by Summit Resources Ltd
(vi) Held by Summit Resources (Aust) Pty Ltd
(vii) Acquired on 1 April 2009 with the eventual issue of 8,135,433 Paladin shares plus US$0.4M in transaction costs
114
Annual Report 2009
Note 10. Other Financial Assets (continued)
Acquisition Disclosure
Consolidated
Parent Entity
2009
US$M
2008
US$M
2009
US$M
2008
US$M
Inflow of cash on acquisition of controlled entities
Cash balances acquired
Less: Cash consideration
Net inflow of cash
9.2
(0.4)
8.8
-
-
-
- -
- -
- -
(b)
Available-for-sale financial assets
The Consolidated Entity has an investment in DYL and at 30 June 2009 held 220,258,461 (2008: 159,058,461) fully
paid ordinary shares and nil unlisted securities (2008: 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 a 19.61% interest at 30 June 2009 (2008: 14.34% interest)
of the ordinary shares of DYL, a uranium explorer listed on ASX. The market value of the shares and unlisted
securities in DYL at 30 June 2009 is A$73.8M (US$59.4M) (2008: A$42.7M / US$41.1M) based on a share price of
33.5 Australian cents per share (2008: 25.5 Australian cents).
The Consolidated Entity has an investment in NGM and at 30 June 2009 held 24,280,000 (2008: Nil) fully paid
ordinary shares.
The holding of these fully paid ordinary shares represents 16.72% interest at 30 June 2009 (2008: Nil) of the
ordinary shares of NGM, a uranium explorer listed on ASX. The market value of the shares and unlisted securities in
NGM at 30 June 2009 is A$5.5M (US$4.4M) based on a share price of 22.5 Australian cents per share.
The Consolidated Entity also holds minor investments in other companies, including MMM (Refer to Note 11).
Note 11. Investment In Associate
Consolidated
Parent Entity
2009
US$M
2008
US$M
2009
US$M
2008
US$M
(a)
Investment details
Unlisted:
MM Mining Plc – ownership 19% (2008 : 35%)
Investment in associate
-
-
2.6
2.6
- -
- -
The Group, through Summit, has an investment in MMM, an unlisted UK company that explores base metals. At 30
June 2009 it holds 20M (2008:20M) fully paid ordinary shares. This is in addition to the warrants held as disclosed
in Note 9. During the year ended 30 June 2009 MMM ceased to be an associate of the Group and at the date it
ceased to be an associate it was categorised as an Available-for-Sale Financial Asset (Refer to Note 10 (b)).
Paladin Energy Ltd
115
Notes to the consolidated Financial Statements
for the year ended 30 June 2009
Note 11. Investment In Associate (continued)
(b)
Movements in the carrying amount of the Group’s investment in associate
Consolidated
Parent Entity
2009
US$M
2008
US$M
2009
US$M
2008
US$M
MM Mining Plc:
At 1 July
Investment in associate
Transferred to available-for-sale financial assets
Loss on deemed disposal
Share of losses after income tax
At 30 June
(c)
Summarised financial information
The following table illustrates summarised financial
information relating to the Group’s associate.
Extract from the associate’s balance sheet:
Current assets
Non current assets
Current liabilities
Non current liabilities
Net assets
Share of associate’s net assets
Extract from the associate’s income statement
Revenue
Net loss
Note 12. Deferred Borrowing Costs
2.6
-
(1.7)
(0.1)
(0.8)
-
-
-
-
-
-
-
-
-
-
3.3
-
2.8
-
-
(0.2)
2.6
0.3
10.8
11.1
(3.5)
-
(3.5)
7.6
2.6
-
0.6
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Consolidated
Parent Entity
2009
US$M
2008
US$M
2009
US$M
2008
US$M
Non Current
Deferred borrowing costs
8.2
1.7
- -
Deferred borrowing costs represent the initial capitalised costs of establishing project finance for KM.
116
Annual Report 2009
Note 13. Property, Plant And Equipment
Plant and equipment – at cost
Less provision for depreciation
Total plant and equipment
Land and buildings - at cost
Less provision for depreciation
Total land and buildings
Construction work in progress – at cost
Total property, plant and equipment
Consolidated
Parent Entity
2009
US$M
169.4
(22.4)
147.0
6.4
(0.6)
5.8
305.0
457.8
2008
US$M
126.7
(11.4)
115.3
5.3
(0.2)
5.1
109.1
229.5
2009
US$M
19.5
(2.5)
17.0
-
-
-
-
2008
US$M
18.9
(1.1)
17.8
-
-
-
-
17.0
17.8
Property, plant and equipment pledged as security for liabilities
Refer to Note 19 for information on property, plant and equipment pledged as security.
Reconciliations
Reconciliations of the carrying amounts of each class of property, plant and equipment at the beginning and end of
the year are set out below:
Total
Plant and
Equipment
Land and Construction
Building
Work in
Progress
US$M
US$M
US$M
US$M
Consolidated – 2009
Carrying amount at start of year
Additions (1)
Depreciation and amortisation expense
Foreign currency translation
Carrying amount at end of year
Parent Entity - 2009
Carrying amount at start of year
Additions
Depreciation and amortisation expense
Carrying amount at end of year
(1) Includes US$17.9M of capitalised interest.
229.5
241.7
(12.8)
(0.6)
457.8
17.8
0.6
(1.4)
17.0
115.3
44.4
(12.5)
(0.2)
147.0
17.8
0.6
(1.4)
17.0
5.1
1.4
(0.3)
(0.4)
5.8
-
-
-
-
109.1
195.9
-
-
305.0
-
-
-
-
Paladin Energy Ltd
117
Notes to the consolidated Financial Statements
for the year ended 30 June 2009
Note 13. Property, Plant And Equipment (continued)
Total
Plant and
Equipment
US$M
US$M
Land and Construction
Building Work in
Progress
US$M
US$M
Consolidated – 2008
Carrying amount at start of year
Additions (1)
Depreciation and amortisation expense
Disposals
Foreign currency translation
133.1
106.8
(8.4)
(2.3)
0.3
121.8
3.9
(8.2)
(2.3)
0.1
Carrying amount at end of year
229.5
115.3
Parent Entity - 2008
Carrying amount at start of year
Additions
Depreciation and amortisation expense
Carrying amount at end of year
17.3
1.1
(0.6)
17.8
17.3
1.1
(0.6)
17.8
Capital Work in Progress includes US$3.8M of capitalised interest.
3.2
1.9
(0.2)
-
0.2
5.1
-
-
-
-
8.1
101.0
-
-
-
109.1
-
-
-
-
Note 14. Mine Development
Mine development
Less provision for depreciation
Total mine development
Carrying amount at start of year
Additions
Depreciation and amortisation expense
Reallocation from exploration
Carrying amount at end of year
Consolidated
Parent Entity
2009
US$M
2008
US$M
2009
US$M
2008
US$M
57.4
(3.2)
54.2
12.2
43.4
(1.6)
0.2
54.2
13.8
(1.6)
12.2
2.0
4.8
(1.5)
6.9
12.2
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Canadian securities law requires the following description of the Consolidated Entity’s interests in mineral property
tenements:
118
Annual Report 2009
Note 14. Mine Development (continued)
Langer Heinrich Mine (Namibia) - Paladin 100%
LHM 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. LHM is owned
through a wholly owned Namibian entity, LHUPL.
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 2007. Work has now been completed on the Stage II plant upgrade and ramp-up is underway with planning in
progress for a further Stage III upgrade.
LHUPL also holds an exclusive prospecting licence, EPL 3500, covering 30 km2 to the west of the mining licence.
Kayelekera Mine (Malawi) - Paladin 100%
KM consists of one mining licence - ML 152 - covering 5,550 hectares in northern Malawi 650km north of Lilongwe,
the capital of Malawi, and 52km west of the provincial town of Karonga on the shore of Lake Malawi. The licence
was granted on 2 April 2007 for a 15 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 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 KM is held through a Malawian entity, PAL, in which the Government of Malawi has a 15% interest.
A Development Agreement has been entered into between the Government of Malawi and PAL in which Paladin
received certain taxation and royalty concessions and in return the Government of Malawi received a 15% interest
in PAL. Subsequent to the Development Agreement and the acceptance of the project’s Environmental Impact
Assessment the Government of Malawi granted the mining licence covering the project area to PAL. Construction of
the plant was commenced in 2007 and the mine was officially opened in April 2009. It is currently in ramp-up phase.
PAL also holds four exclusive prospecting licences in northern Malawi covering 1,298km2 surrounding and to the
south of the KM mining licence and these are being actively explored.
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$0.75M 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. Following the lifting of the ban on uranium mining in
Western Australia in late 2008 exploration planning has been undertaken with the intention of expediting a drilling
programme.
Paladin Energy Ltd
119
Notes to the consolidated Financial Statements
for the year ended 30 June 2009
Note 15. Exploration and Evaluation Expenditure (continued)
Oobagooma Uranium Project (Australia) - Paladin 100%
The Oobagooma Uranium Project consists of four applications for exploration licences covering 452km2 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$0.75M 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.
Following the change of government in Western Australia in late 2008 the granting of the lease applications is being
actively pursued with both the Federal and State governments.
Valhalla North Uranium Project (Australia) - Paladin 100%
The Valhalla North Uranium Project consists of three granted exploration permits - EPM12572, EPM15677 and
EPM16006 - covering 622km2 to the north of Mount Isa in north-western Queensland. The Consolidated Entity
acquired the Valhalla North Uranium Project following the successful takeover of Fusion in February 2009. EPM
12572 was granted on 11 January 2006, EPM15677 was granted on 8 November 2007 and EPM 16006 was granted
on 26 March 2008, each for a period of five years with the potential to be renewed for further five year periods. The
area was investigated during the 1950’s and resulted in the discovery of the Duke and Batman deposits, with limited
mining of surface high grade mineralisation being undertaken with subsequent treatment at the Mary Kathleen mine.
During the 1970’s the area was explored by both Queensland Mines Limited and Agip Australia Pty Ltd. Prior to
the completion of the takeover, Fusion announced Mineral Resources conforming to the JORC guidelines on two
deposits, Duke Batman and Honeypot. Limited exploration activities have been undertaken to date however this is
expected to change following drill planning and ground geophysical surveys conducted recently.
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 five 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) with Energy Metals Limited being operator and
manager.
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 is ongoing at the
project and an Initial Scoping Study was released in November 2007 and an Updated Scoping Study released in
July 2008. Metallurgical and environmental studies are ongoing with further resource definition drilling expected to
be undertaken in 2009.
Isa Uranium Joint Venture (Australia) - Paladin 90.9%
The IUJV in Northern Queensland is a 50:50 joint venture between SRA (Paladin 81.9% effective ownership) and
MIU (Paladin 100% ownership) with SRA being the operator and manager. The IUJV covers two defined blocks of
land totalling 27km2 containing the Valhalla and Skal uranium deposits. Paladin’s effective equity in the IUJV was
increased from 50% to 90.9% following the acquisition of 81.9% of Summit in 2007.
120
Annual Report 2009
Note 15. Exploration and Evaluation Expenditure (continued)
Valhalla Uranium Deposit (Australia) - Paladin 81.9%
The Valhalla Uranium Deposit is situated on Exploration Permit for Minerals 9221 (EPM 9221) and is located
approximately 40km north of Mount Isa and straddles the Barkly Highway. EPM 9221 was originally granted to SRA
in 1993 with 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 SRA in 1992.
During 2008 resource definition drilling was commenced to enable completion of a detailed scoping study. As a
result of the scoping study additional resource drilling was undertaken in 2009 with the intention of re-estimating the
current resource. Geotechnical and metallurgical studies are ongoing.
Skal Uranium Deposit (Australia) - Paladin 100%
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 IUJV re-commenced drilling in 2005. An initial JORC compliant resource estimate was
completed in mid 2008, with an updated resource reported in early 2009. Additional resource definition drilling has
been undertaken in 2009 with the intention of further updating the existing resource.
Impairment of Mount Isa Exploration and Evaluation Asset
An impairment of US$527.642M (net of Deferred Tax Liability) in the carrying value of the Mount Isa assets was
recognised in the 2009 financial year. The Paladin Board has impaired this asset to reflect its current fair value
less costs to sell and was recognised as a result of changes the current economic climate. In determining the fair
value less costs to sell a variety of valuation techniques were used particularly the discounted cash flow method,
comparable market transactions and market value yardsticks.
Summit Resources Ltd (Australia) - Paladin 81.9%
Paladin acquired an 81.9% interest in Summit as a result of a takeover bid which closed on 1 June 2007. Summit
holds a large number of exploration tenements surrounding and to the north of Mount Isa in Northern Queensland.
Other than the Andersons, Bikini and Watta Projects, for which JORC inferred 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 25758 covering 3,767 hectares was granted on 3 October 2008 for a six
year term with the potential for further renewal and exploration and resource definition drilling are now underway.
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
financial statements.
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.
Paladin Energy Ltd
121
Notes to the consolidated Financial Statements
for the year ended 30 June 2009
Note 15. Exploration and Evaluation Expenditure (continued)
Areas of interest
Valhalla
/Skal(1)
Isa North
Fusion
Angela
Pamela
Bigrlyi
KM
US$M
US$M
US$M
US$M
US$M
US$M
LHM
Other
Uranium
Projects
US$M US$M
Total
US$M
Balance 30 June 2008
1,389.810
389.857
-
Acquisition property
payments
Project exploration and
evaluation expenditure
Tenement costs
Labour
-
-
1.439
Consultants and contractors 0.551
Materials and utilities
Transportation and
communications
Outside services
0.222
0.176
3.389
Legal and accounting
-
Camp expenses
Overheads
0.032
0.288
Joint venture contributions
-
-
6.486
0.050
0.515
0.023
0.023
0.055
0.060
-
0.012
0.056
-
-
0.037
0.009
0.001
0.013
-
-
-
-
-
Other expenses
0.291
0.115
0.006
-
-
-
0.028
0.004
-
0.017
0.034
0.009
-
-
17.052
-
-
0.018
0.005
0.004
0.012
0.004
-
-
-
0.967
0.007
1.304
0.040
-
-
0.001
0.252
0.003
0.238
0.069
0.568
-
0.072
0.036
-
0.009
-
-
-
-
-
-
-
1.279 1,797.998
-
6.486
0.067
0.710
0.065
0.013
0.132
0.122
0.116
-
-
-
-
-
0.007
0.019
0.066
-
0.004
0.118
2.999
0.660
0.501
0.474
4.293
0.016
0.135
0.446
2.271
0.472
Total expenditure
6.388
0.909
0.066
1.066
1.387
1.248
0.122
1.199
12.385
(6.388)
(0.909)
(0.066)
(1.066)
(1.387)
(1.040)
(0.122)
(1.199)
(12.177)
-
-
-
(320.804)
(92.963)
1.569
Impairment of
exploration and evaluation (574.620)
(179.154)
Transferred to
Mine Development
-
-
-
-
Balance 30 June 2009
494.386
117.740
8.055
-
-
-
-
-
-
0.208
(2.769)
-
-
-
-
(0.208)
14.283
-
-
-
-
-
-
-
0.208
(0.208)
(415.175)
-
-
(753.774)
(0.208)
1.071
635.535
(1) 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.
122
Annual Report 2009
Exploration
expenditure expensed
Exploration
expenditure capitalised
Foreign
exchange differences
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:
Other
Uranium
Projects
US$M
Total
US$M
1.129 1,601.389
-
-
Areas of interest
Valhalla
/Skal(1)
Isa North Georgina
Basin
US$M
US$M
US$M
Other
Projects
Non Uranium
US$M
Bigrlyi
KM
LHM
US$M
US$M
US$M
Balance 30 June 2007
1,227.896
344.437
1.178
7.124
15.065
4.560
Acquisition property
payments
Project exploration
and evaluation expenditure
Tenement costs
Labour
-
-
1.213
Consultants and contractors 0.353
Materials and utilities
0.184
Transportation
and communications
Outside services
0.209
5.327
Legal and accounting
-
Camp expenses
Overheads
0.049
0.301
Joint venture contributions
-
-
-
-
0.061
0.383
0.049
0.016
0.086
0.642
0.002
0.015
0.048
-
0.377
0.149
0.063
0.001
-
0.001
0.002
-
0.075
0.045
0.001
0.002
0.010
0.039
0.003
-
0.001
0.005
(1.317)
-
Other expenses
0.215
0.053
0.001
0.001
-
-
0.031
0.003
0.006
0.009
-
-
-
0.023
2.372
0.003
-
0.001
0.430
0.032
0.068
0.170
0.544
(0.015)
0.012
0.025
-
0.341
-
-
-
-
-
-
-
0.038
0.286
0.042
0.019
0.043
1.021
-
-
-
-
-
-
0.020
0.015
0.050
-
0.004
0.552
2.537
0.543
0.296
0.527
7.574
0.012
0.091
0.453
1.055
0.618
Foreign exchange
differences
Transferred to
Mine Development
Total expenditure
7.851
1.355
(0.722)
0.181
2.447
1.608
1.021
0.517
14.258
Exploration expenditure
expensed
(7.851)
(1.355)
(0.463)
(0.181)
(2.447)
(0.290)
-
(0.517)
(13.104)
Exploration expenditure
capitalised
Cost of tenements sold
-
-
-
-
(1.185)
-
-
(7.350)
-
-
161.914
45.420
0.007
0.226
1.987
1.318
1.021
-
-
-
-
-
-
1.154
(7.350)
0.150
209.704
Balance 30 June 2008
1,389.810
389.857
-
-
-
-
-
-
-
(5.878)
(1.021)
-
(6.899)
17.052
-
-
1.279 1,797.998
(1) Summit has a 50% interest in the Valhalla/Skal Projects with the other 50% interest held by the Paladin Group. As a consequence of the takeover of the
Summit Group, the above table now reflects 100% of the Valhalla/Skal Projects with the minority interest reflected on the face of the Balance Sheet.
Paladin Energy Ltd
123
Notes to the consolidated Financial Statements
for the year ended 30 June 2009
Note 16. Intangible Assets
Consolidated
Parent Entity
2009
US$M
2008
US$M
2009
US$M
2008
US$M
(a)
Reconciliation of carrying amount at the
beginning and end of the period
At 1 July - Net of accumulated amortisation
Additions – Kayelekera Mining Lease
Amortisation
At 30 June - Net of accumulated amortisation
At 30 June
Cost
Accumulated amortisation
Net carrying amount of non current intangible assets
16.6
10.0
(1.0)
25.6
27.8
(2.2)
25.6
17.6
-
(1.0)
16.6
17.8
(1.2)
16.6
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Amortisation of US$1.0M (2008: US$1.0M) is included in costs of sales in the Income Statement.
(b)
Movements in intangible assets
Movements in each group of intangible asset during the financial year are set out below:
Consolidated - 2009
Carrying amount at 1 July 2008
Additions
Amortisation expense
Carrying amount at 30 June 2009
Consolidated - 2008
Carrying amount at 1 July 2007
Additions
Amortisation expense
Carrying amount at 30 June 2008
Right
to Supply
of Power
US$M
Right
to Supply
of Water
US$M
Kayelekera
Mining
Lease
US$M
Total
US$M
4.7
-
(0.2)
4.5
4.9
-
(0.2)
4.7
11.9
-
(0.8)
11.1
12.7
-
(0.8)
11.9
-
10.0
-
10.0
-
-
-
-
16.6
10.0
(1.0)
25.6
17.6
-
(1.0)
16.6
124
Annual Report 2009
Note 16. Intangible Assets (continued)
(c)
Description of the Group’s intangible assets (continued)
(i)
Right to supply of power
LHUPL has entered into a contract with NamPower in Namibia for the right to access power at LHM. In
order to obtain this right, the power line connection to the mine was funded by LHM, however, ownership of
the power line rests with NamPower. The amount funded is being amortised over a period of 14.75 years on
a straight-line basis.
(ii)
Right to supply of water
LHUPL has entered into a contract with NamWater in Namibia for the right to access water at LHM. In order
to obtain this right, the water pipeline connection to the mine was funded by LHM; however, ownership of
the pipeline rests with NamWater. The amount funded is being amortised over a period of 14.75 years on a
straight-line basis.
(iii)
Kayelekera Mining Lease
Paladin Energy Minerals NL and PAL have entered into a Development Agreement with the Government
of Malawi for the development of the Garnet Halliday Karonga Water Supply Project and other social
development projects. The amount funded is being amortised over the life of mine on a straight-line basis
(refer to Note 20(b)(iv)).
Note 17. Trade And Other Payables
Current
Trade and other payables
Total current payables
Trade payables are non-interest bearing and are
normally settled on 60 day terms.
Non Current
Unsecured loans from wholly owned
Group Companies
Total non current payables
Consolidated
Parent Entity
2009
US$M
2008
US$M
2009
US$M
2008
US$M
67.1
67.1
41.4
41.4
8.7
8.7
-
-
-
-
-
-
7.5
7.5
1.0
1.0
The unsecured loans from wholly owned Group Companies are interest free and have no fixed terms of repayment,
however, the companies for the foreseeable future have no intention of demanding repayment.
Note 18. Unearned Revenue
Current
Unearned revenue
Non Current
Unearned revenue
Consolidated
Parent Entity
2009
US$M
2008
US$M
2009
US$M
2008
US$M
0.2
0.2
0.2
0.5
- -
- -
Paladin Energy Ltd
125
Notes to the consolidated Financial Statements
for the year ended 30 June 2009
Note 19. Interest Bearing Loans And Borrowings
Maturity
Consolidated
Parent Entity
2009
US$M
2008
US$M
2009
US$M
2008
US$M
Current
Secured bank loan
Non Current
Unsecured convertible bonds
Unsecured convertible bonds
Secured bank loan
Total non current
2011
2013
2012
The above figures include deferred borrowing costs.
Fair value disclosures
14.2
12.2
- -
227.5
304.6
39.9
572.0
218.4
299.0
52.9
570.3
227.5
304.6
-
532.1
218.4
299.0
-
517.4
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$250M 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$212.2M has been initially allocated to interest bearing
loans and borrowings in non current liabilities (underlying effective interest rate of 8.75%) and US$37.8M to non-
distributable convertible bond reserve in equity. A deferred tax liability of US$11.3M 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$325M 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$307.1M has been allocated to interest bearing loans and
borrowings in non current liabilities (underlying effective interest rate of 7.13%) and US$17.8M to non-distributable
convertible bond reserve in equity. A deferred tax liability for the bonds of US$5.4M 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.
Secured bank loan
During the year ended 30 June 2006 the Consolidated Entity obtained project finance facilities amounting to
US$71M for construction of LHM. The financing has been provided by Société Générale Australia Branch, Nedbank
Capital and Standard Bank Limited and consists of a seven year Project Finance Facility of US$65M and a Standby
Cost Overrun Facility of US$6M. The Project Finance Facility bears interest at the London Interbank Offered Rate
(LIBOR) plus 2.5%. 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 LHUPL and its immediate holding
company.
At 30 June 2009, US$54.1M (2008: US$66.3M) had been drawn of the project finance facilities, following principal
repayments of US$12.2m.
126
Annual Report 2009
Note 19. Interest Bearing Loans And Borrowings (continued)
On 31 July 2009, the Company announced the completion of all conditions precedent to enable drawdown under
the US$167M KM project finance. The project finance consists of a six year Project Finance Facility of US$145M,
a Standby Cost Overrun Facility of US$12M and a Performance Bond Facility of US$10M. The facilities are being
provided by Société Générale Corporate and Investment Banking (as inter-creditor agent and commercial lender),
Nedbank Capital a division of Nedbank Limited (ECIC lender) and Standard Bank Limited (as ECIC facility agent
and lender). On 17 August the company announced the first drawdown of US$84.5M under this facility (refer to
Note 32). The Company has drawdown an additional US$47.5M since the year end.
Deferred borrowing costs capitalised during the year relating to establishment of facilities
Consolidated Entity – US$Nil (2008: US$9.9M)
Parent Entity – US$Nil (2008: US$9.8M)
100% of borrowing costs incurred for the construction of any qualifying asset are capitalised.
Financing facilities available
At reporting date, the following financing facilities had been negotiated and were available:
Total facilities:
Unsecured convertible bonds
Secured bank loans
Facilities used at reporting date:
Unsecured convertible bonds
Secured bank loans
Total facilities:
Consolidated
Parent Entity
2009
US$M
2008
US$M
2009
US$M
2008
US$M
575.0
54.1
629.1
575.0
54.1
629.1
575.0
66.3
641.3
575.0
66.3
641.3
575.0
-
575.0
575.0
-
575.0
575.0
-
575.0
575.0
-
575.0
Facilities used at reporting date
629.1
641.3
575.0
575.0
There were no unused facilities as at the reporting date.
Paladin Energy Ltd
127
Notes to the consolidated Financial Statements
for the year ended 30 June 2009
Note 19. Interest Bearing Loans And Borrowings (continued)
Assets pledged as security
The carrying amounts of assets pledged as security for non current interest bearing liabilities (secured bank loans)
are:
Consolidated
Parent Entity
2009
US$M
2008
US$M
2009
US$M
2008
US$M
Current
Floating charge
- Cash and cash equivalents
- Trade and other receivables
-
Inventories
Total current assets pledged as security
Non Current
-
Inventories
- Property, plant and equipment
- Exploration and evaluation expenditure
- Deferred tax asset
-
Intangible assets
Total non current assets pledged as security
Total assets pledged as security
19.6
24.1
52.6
96.3
24.9
153.0
14.6
3.9
15.6
212.0
308.3
14.4
35.8
37.1
87.3
-
103.3
6.3
11.6
16.6
137.8
225.1
-
-
-
-
-
-
-
-
-
- -
-
-
-
-
-
-
-
-
-
-
-
Note 20. Provisions
Current
Social responsibility
Employee benefits
Total current provisions
Non Current
Social responsibility
Employee benefits
Rehabilitation provision
Mine closure
Demobilisation provision
Total non current provisions
128
Annual Report 2009
Note
27
27
Consolidated
Parent Entity
2009
US$M
2008
US$M
2009
US$M
2008
US$M
7.7
2.1
9.8
2.0
0.1
16.7
11.7
1.8
32.3
-
1.5
1.5
-
0.1
4.4
3.9
-
8.4
-
1.2
1.2
-
0.1
-
-
-
0.1
-
1.0
1.0
-
0.1
-
-
-
0.1
Note 20. Provisions (continued)
For a description of the nature and timing of cash flows associated with the above provisions, refer to section (b)
below:
(a)
Movements in provisions
Movements in each class of provision during the financial year, excluding provisions relating to employee benefits,
are set out below :
Demob-
ilisation
US$M
Social
Responsibility
US$M
Rehab-
ilitation
US$M
Mine
Closure
US$M
Total
US$M
Consolidated
At 1 July 2008
Arising during the year
Utilised
Effects of changes in discount rates
Foreign currency movements
At 30 June 2009
2009
Current
Non current
2008
Current
Non current
-
1.5
-
-
0.3
1.8
-
1.8
1.8
-
-
-
-
10.0
(0.3)
-
-
9.7
7.7
2.0
9.7
-
-
-
4.4
11.3
-
0.5
0.5
16.7
-
16.7
16.7
-
4.4
4.4
3.9
6.5
-
0.6
0.7
11.7
-
11.7
11.7
-
3.9
3.9
8.3
29.3
(0.3)
1.1
1.5
39.9
7.7
32.2
39.9
-
8.3
8.3
(b)
Nature and timing of provisions
(i)
Rehabilitation
A provision for rehabilitation has been recorded in relation to LHM and KM. A provision is made for
rehabilitation work when the obligation arises and this is recognised as a cost of production or development
as appropriate.
(ii)
Mine closure
A provision for mine closure has been recorded in relation to LHM and KM 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.
(iii)
Employee benefits
Refer to Note 27.
(iv)
Demobilisation
A provision for demobilisation has been recorded in relation to LHM for the costs of demobilising the mining
contractor.
(v)
Social responsibility
A provision for social responsibility has been recorded in relation to KM for the costs of social responsibility
projects to be incurred under the Development Agreement (refer to Note 16(b)(iii)).
Paladin Energy Ltd
129
Notes to the consolidated Financial Statements
for the year ended 30 June 2009
Note 21. Contributed Equity And Reserves
(a)
Issued and paid up capital
Number of Shares
2008
2009
Consolidated/
Parent Entity
2009
US$M
2008
US$M
Ordinary Shares
Issued and fully paid
623,692,802
613,497,369
1,111.6
1,088.4
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$
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
Balance 30 June 2008
613,497,369
July 2008
July 2008
July 2008
Option conversions
Option conversions
Option conversions
September 2008
Option conversions
January 2009
Option conversions
February 2009
Fusion acquisition
Transfer from reserves
100,000
200,000
100,000
100,000
1,560,000
8,135,433
1.00
1.00
1.00
1.00
1.50
2.80
1.50
2.80
2.80
5.50
5.50
5.50
2.80
2.80
2.91
1.22122
1.08369
1.08369
1.12974
1.09343
1.09343
1.04671
1.04671
1.04671
1.04005
1.04005
1.04005
1.16633
1.55581
1.54760
0.2
0.1
3.0
6.2
0.1
0.3
0.1
0.5
-
2.6
1,088.4
0.5
1.1
0.5
0.2
2.8
15.3
2.8
Balance 30 June 2009
623,692,802
1,111.6
130
Annual Report 2009
Note 21. Contributed Equity And Reserves (continued)
(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
2008
2009
3,570,000
(3,570,000)
-
-
- -
Vest on positive outcome for LHM Bankable Feasibility Study together with completion of acceptable project
funding. Vesting conditions were met by 30 June 2006.
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
Balance at 30 June
Number of Options
2008
2009
7,000,000
(7,000,000)
-
-
- -
Vest on positive outcome for LHM Bankable Feasibility Study together with completion of acceptable project
funding. Vesting conditions were met by 30 June 2006.
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$1.50, on or before 15 July 2008
(granted 15 July 2005)
Balance at 1 July
Exercised during year
Balance at 30 June
Number of Options
2008
2009
190,000
(190,000)
-
-
- -
Vest on positive outcome for LHM Bankable Feasibility Study together with completion of acceptable project
funding. Vesting conditions were met by 30 June 2006.
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.
Paladin Energy Ltd
131
Notes to the consolidated Financial Statements
for the year ended 30 June 2009
Note 21. Contributed Equity And Reserves (continued)
(c)
Issued options (continued)
(iv)
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
Expired during year
Balance at 30 June
Number of Options
2008
2009
2,520,000
2,820,000
(1,660,000)
(860,000) -
(300,000)
-
2,520,000
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.
In September 2008, 100,000 options above were exercised raising A$280,000 (US$240,069) in contributed equity
and at the time of exercise the shares had a market value of A$545,000.
In January 2009, 1,560,000 options above were exercised raising A$4,368,000 (US$2,807,541) in contributed equity
and at the time of exercise the shares had a market value of A$4,633,200.
(v)
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
Expired during year
Balance at 30 June
(vi)
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
Exercised during year
Balance at 30 June
Number of Options
2008
2009
1,565,000
(1,565,000) -
1,565,000
-
1,565,000
1,400,000
(400,000) -
1,400,000
1,000,000
1,400,000
In July 2008 400,000 options above were exercised raising A$2,200,000 (US$2,115,283) in contributed equity and
at the time of exercise the shares had a market value of A$2,637,000.
(vii)
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
Forfeited during year
Balance at 30 June
132
Annual Report 2009
2,733,670
2,733,670
(35,700) -
2,697,970
2,733,670
Note 21. Contributed Equity And Reserves (continued)
(c)
Issued options (continued)
(vii)
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
Forfeited during year
Balance at 30 June
(ix)
Exercisable at A$4.50 on or before 29 Jan 2013
(granted 29 January 2008)
(8,541,620 vest 29 Jan 2011)
Balance at 1 July
Granted during year
Forfeited during year
Balance at 30 June
(x)
Exercisable at A$5.37 on or before 15 Feb 2011
(granted 15 February 2008)
(700,000 vest 15 Feb 2009)
Balance at 1 July
Granted during year
Balance at 30 June
(xi)
Exercisable at A$5.37 on or before 15 Feb 2013
(granted 15 February 2008)
(525,000 vest 15 Feb 2011)
Balance at 1 July
Granted during year
Forfeited during year
Balance at 30 June
(xii)
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
(xiii)
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
Forfeited during year
Granted during year
Balance at 30 June
Number of Options
2008
2009
400,000
(400,000)
-
-
- -
8,133,402 -
-
(578,917)
8,541,620
(408,212)
7,554,485
8,133,402
700,000 -
-
700,000
700,000
700,000
500,000 -
-
(50,000)
525,000
(25,000)
450,000
500,000
1,075,000 -
-
1,075,000
1,075,000
1,075,000
450,000 -
(450,000) -
-
-
450,000
450,000
Paladin Energy Ltd
133
Notes to the consolidated Financial Statements
for the year ended 30 June 2009
Note 21. Contributed Equity And Reserves (continued)
(c)
Issued options (continued)
(xiv)
Exercisable at A$2.54 on or before 14 October 2013
(granted 14 October 2008)
(750,000 vest 14 October 2011)
Balance at 1 July
Granted during year
Balance at 30 June
(xv) Exercisable at A$2.14 on or before 25 November 2013
(granted 25 November 2008)
(200,000 vest 25 November 2011)
Balance at 1 July
Granted during year
Forfeited during year
Balance at 30 June
(xvi)
Exercisable at A$2.07 on or before 25 November 2013
(granted 25 November 2008)
(300,000 vest 25 November 2011)
Balance at 1 July
Granted during year
Balance at 30 June
(xvii) Exercisable at A$4.48 on or before 24 June 2014
(granted 24 June 2009)
(700,000 vest 24 June 2012)
Balance at 1 July
Granted during year
Balance at 30 June
134
Annual Report 2009
Number of Options
2008
2009
-
750,000
750,000
-
200,000
(200,000)
-
-
300,000
300,000
-
700,000
700,000
-
-
-
-
-
-
-
-
-
-
-
-
-
Note 21. Contributed Equity And Reserves (continued)
(d)
Reserves
Consolidation Listed
option
reserve
application payments
reserve
US$M
reserve
US$M
US$M
Share- Available Foreign Convertible Acquisition Total
currency bond non-
based
translation distributable
for sale
reserve
reserve
US$M
reserve
US$M
reserve
US$M
US$M
US$M
-
0.1
9.7
31.7
30.3
26.5
14.9
113.2
Consolidated
At 1 July 2007
Net unrealised
movement on
available-for-sale
investments
Share-based payments
Foreign currency
translation
Convertible bonds
– equity component
Income tax
At 30 June 2008
At 1 July 2008
Net unrealised
movement on
available-for-sale
investments
Share-based payments
Foreign currency
translation
Transfer of impairment
loss to P&L
Allotment of 15% interest
in Paladin (Africa) Ltd to
Government of Malawi
Income tax
At 30 June 2009
-
-
-
-
-
-
-
-
-
-
-
(0.2)
-
(0.2)
-
-
-
-
-
0.1
0.1
-
-
-
-
-
-
-
8.1
(44.6)
-
-
-
7.0
124.6
-
-
-
-
13.4
-
-
17.8
(5.4)
-
-
-
-
-
-
-
-
(44.6)
8.1
131.6
17.8
8.0
17.8
7.5
154.9
38.9
14.9
234.1
17.8
7.5
154.9
38.9
14.9
234.1
-
8.1
41.4
-
-
-
-
-
-
-
(4.6)
(241.5)
0.5
-
-
(12.2)
-
6.3
-
-
-
-
-
-
-
-
-
-
-
-
41.4
8.1
(246.1)
0.5
(0.2)
(5.9)
0.1
25.9
32.6
(80.3)
38.9
14.9
31.9
Paladin Energy Ltd
135
Notes to the consolidated Financial Statements
for the year ended 30 June 2009
Note 21. Contributed Equity And Reserves (continued)
(d)
Reserves (continued)
Listed
option
Share-
based
application payments
reserve
US$M
reserve
US$M
Available
for sale
reserve
US$M
Convertible
bond non-
distributable
reserve
US$M
Total
Foreign
currency
translation
US$M
US$M
0.1
9.7
14.7
26.5
-
-
-
-
-
0.1
0.1
-
-
-
-
-
0.1
-
-
-
-
8.1
17.8
17.8
-
-
-
-
8.1
25.9
4.7
-
8.5
(28.4)
-
-
17.8
(5.4)
-
-
(0.5)
38.9
(0.5)
(1.0)
(10.3)
35.5
0.5
-
38.9
-
-
-
-
-
24.2
38.9
-
-
-
-
-
-
-
-
-
-
-
-
-
-
51.0
4.7
17.8
3.1
(28.4)
8.1
56.3
56.3
(1.0)
(10.3)
35.5
0.5
8.1
89.1
Parent
At 1 July 2007
Foreign currency translation
Convertible bonds – equity
component
Income tax
Net unrealised movement on
available-for-sale investments
Share-based payments
At 30 June 2008
At 1 July 2008
Foreign currency translation
Income tax
Net unrealised movement on
available-for-sale investments
Transfer of impairment loss
to P&L
Share-based payments
At 30 June 2009
Nature and purpose of reserves
Listed option application reserve
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 US dollars and have been translated into US 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.
136
Annual Report 2009
Note 21. Contributed Equity And Reserves (continued)
(d)
Reserves (continued)
Acquisition reserve
This reserve recognises the difference in value of investments in Summit, 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.
Consolidation reserve
This reserve recognises the difference between the fair value of the 15% interest in PAL allotted to the Government
of Malawi, at the net present value of the Kayelekera Project on the date the Development Agreement was signed
(22 February 2007), and the minority interest share of the net assets of PAL.
Note 22. Minority Interests
Minority interests comprise:
Share capital
Opening accumulated losses
Reserves
Current period loss
Total minority interests
Consolidated
Parent Entity
2009
US$M
2008
US$M
2009
US$M
2008
US$M
22.0
(12.1)
155.2
(96.2)
68.9
11.0
(6.9)
204.9
(1.2)
207.8
-
-
-
-
-
-
-
-
-
-
The minority interests recognised during the year relate to the 18.0% (2008: 18.1%) interest in Summit not acquired
from the takeover bid that closed on 1 June 2007 and the 15% (2008: Nil) interest in PAL held by the Government
of Malawi as at 26 June 2009.
Opening accumulated losses in 2009 include 15% interest of losses acquired by the Government of Malawi at the
time of the share issue as well as a share of current year losses to that time.
A share-based payment expense of US$5.7M has been recognised for the allotment of 15% interest in PAL to the
Government of Malawi, which has a corresponding increase in the minority interest reserve. In determining the fair
value for PAL, a discounted cash flow model (“DCF”) was adopted as the primary valuation methodology.
Note 23. Financial Instruments
(a)
Financial risk management objectives and 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 is regularly reported to the Board.
Paladin Energy Ltd
137
Notes to the consolidated Financial Statements
for the year ended 30 June 2009
Note 23. Financial Instruments (continued)
(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 functional currency of the relevant Group company.
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.
The financial instruments exposed to movements in the Australian dollar are as follows:
Consolidated
Parent Entity
2009
US$M
2008
US$M
2009
US$M
2008
US$M
Financial assets
Cash and cash equivalents
Trade and other receivables
Financial and other assets
Financial liabilities
Trade and other payables
The financial instruments exposed to movements
in the Namibian dollar are as follows:
Financial assets
Cash and cash equivalents
Trade and other receivables
Financial and other assets
Financial liabilities
Trade and other payables
3.1
0.7
47.3
51.1
4.6
4.6
0.4
12.0
-
12.4
18.4
18.4
1.5
0.3
26.1
27.9
3.2
3.2
3.2
6.2
-
9.4
8.5
8.5
3.1
1.0
47.3
51.4
4.6
4.6
-
-
-
-
-
-
1.5
0.1
26.1
27.7
3.2
3.2
-
-
-
-
-
-
138
Annual Report 2009
Note 23. Financial Instruments (continued)
(b)
Market risk (continued)
(i)
Foreign exchange risk (continued)
The following table summarises the sensitivity of financial instruments held at balance date to movements in
the exchange rate of the Australian dollar to the US dollar and the Namibian dollar to the US dollar, with all
other variables held constant. The 5% sensitivity is based on reasonably possible changes, over a financial
year, using the observed range of actual historical rates for the preceding five year period.
Impact on Profit
Impact on Equity
Parent Entity
Consolidated
2009
2009 2008
2008
US$M US$M US$M US$M US$M US$M US$M US$M
Parent Entity
2008
2009
Consolidated
2008
2009
Post-Tax Gain/Loss
AUD/USD +5% (2008: +5%)
AUD/USD -5% (2008: -5%)
-
-
-
(0.1)
NAD/USD +5% (2008: +5%)
NAD/USD -5% (2008: -5%)
0.2
(0.2)
-
-
-
-
-
-
0.1
(1.6)
(0.9)
(1.6)
(0.9)
(0.1)
1.7
1.0
1.7
1.0
-
-
-
-
-
-
-
-
-
-
(ii)
Interest rate risk
Interest rate risk is the risk that the Group’s financial position will be adversely affected by movements in
interest rates that will increase the cost of floating rate debt or opportunity losses that may arise on fixed
rate borrowings in a falling interest rate environment. Interest rate risk on cash and short-term deposits is not
considered to be a material risk due to the short-term nature of these financial instruments.
The Group’s main interest rate risk arises from long-term debt. Floating rate debt exposes the Group to cash
flow interest rate risk and fixed rate debt exposes the Group to fair value interest rate risk. All other financial
assets and liabilities in the form of receivables, investments in shares, payables and provisions, are non
interest bearing.
The Group currently does not engage in any hedging or derivative transactions to manage interest rate risk.
The floating rate financial instruments exposed to interest rates movements are as follows:
Financial assets
Cash and cash equivalents
Trade and other receivables
Financial liabilities
Interest-bearing liabilities
Consolidated
Parent Entity
2009
US$M
2008
US$M
2009
US$M
2008
US$M
66.2
-
66.2
54.1
54.1
337.5
-
337.5
66.3
66.3
16.8
411.2
428.0
-
-
317.4
106.1
423.5
-
-
Paladin Energy Ltd
139
Notes to the consolidated Financial Statements
for the year ended 30 June 2009
Note 23. Financial Instruments (continued)
(b)
Market risk (continued)
(ii)
Interest rate risk (continued)
The following table summarises the cash flow sensitivity of cash and cash equivalent financial instruments
held at balance sheet date following a movement to LIBOR, with all other variables held constant. The
sensitivity is based on reasonably possible changes over a financial year, using the observed range of
actual historical rates for the preceding five year period. The sensitivity analysis below excludes impact
on borrowing costs arising from interest bearing liabilities as these are capitalised as part of long-term
qualifying development projects.
Impact on Profit
Consolidated
Parent Entity
2009
US$M
2008
US$M
2009
US$M
2008
US$M
0.1
0.1
1.8
(1.8)
3.0
(0.9)
3.0
(3.0)
Post-Tax Gain/Loss
LIBOR +1% (2008: +1%)
LIBOR -0.3% (2008: -1%)
(iii)
Market price risk
Price risk is the risk that the Group’s financial position will be adversely affected by movements in the market
value of its available-for-sale financial assets.
The financial instruments exposed to movements in market value are as follows:
Financial assets
Other financial assets
Consolidated
Parent Entity
2009
US$M
2008
US$M
2009
US$M
2008
US$M
69.1
41.7
47.7
26.6
No impact on profit as movement in the market price is taken to the reserve.
The following table summarises the sensitivity of financial instruments held at balance date to movements
in the market price of available-for-sale financial instruments, with all other variables held constant the 10%
sensitivity is based on reasonable possible changes, over a financial year, using the observed range of
actual historical prices for 2009 and 2008.
Post-tax impact on reserve
Market price +25% (2008: +10%)
Market price -25% (2008: -10%)
Impact on Equity
Consolidated
Parent Entity
2009
US$M
2008
US$M
2009
US$M
2008
US$M
17.3
(17.3)
4.2
(4.2)
11.9
(11.9)
2.7
(2.7)
140
Annual Report 2009
Note 23. Financial Instruments (continued)
(c)
Liquidity risk
The liquidity position of the Group is managed to ensure sufficient liquid funds are available to meet the Group’s
financial commitments in a timely and cost effective manner.
The Group treasury function continually reviews the Group’s liquidity position including cash flow forecasts to
determine the forecast liquidity position and maintain appropriate liquidity levels. Sensitivity analysis is conducted
on a range of pricing and market assumptions to ensure the Group has the ability to meet repayment commitments.
This enables the Group to manage cash flows on a long term basis and provides the flexibility to pursue a range
of funding alternatives if necessary. Note 23 (e) details the repayment obligations in respect of the amount of the
facilities.
The ageing of payables at the reporting date was as follows:
2009
Consolidated
Trade and other payables
Loans and borrowings
Interest payable
Total payables
Parent Entity
Trade and other payables
Loans and borrowings
Interest payable
Total payables
2008
Consolidated
Trade and other payables
Loans and borrowings
Interest payable
Total payables
Parent Entity
Trade and other payables
Loans and borrowings
Interest payable
Total payables
Total
US$M
67.1
629.1
96.6
792.8
8.7
575.0
92.8
676.5
41.4
641.3
134.1
816.8
7.5
575.0
120.2
702.7
Payables ageing analysis
1-2 years
US$M
2-3 years
US$M
<1 year
US$M
67.1
14.2
28.9
110.2
8.7
-
27.4
36.1
41.4
12.2
32.4
86.0
7.5
-
27.4
34.9
-
15.2
28.7
43.9
-
-
27.4
27.4
-
14.2
31.4
45.6
-
-
27.4
27.4
-
266.2
22.6
288.8
-
250.0
21.8
271.8
-
15.2
30.3
45.5
-
-
27.4
27.4
>3 years
US$M
-
333.5
16.4
349.9
-
325.0
16.2
341.2
-
599.7
40.0
639.7
-
575.0
38.0
613.0
Paladin Energy Ltd
141
Notes to the consolidated Financial Statements
for the year ended 30 June 2009
Note 23. Financial Instruments (continued)
(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:
Consolidated
2009
US$M
2008
US$M
Parent Entity
2008
US$M
2009
US$M
Current
Cash and cash equivalents
Trade receivables
Other receivables – controlled entities
Other receivables – other entities
Non-Current
66.2
13.2
-
2.1
81.5
87.8
28.7
-
5.2
121.7
16.8
-
1.0
0.2
18.0
Other receivables – other entities
2.2
-
-
Total
83.7
121.7
18.0
The ageing of receivables at the reporting date was as follows:
67.7
-
-
9.0
76.7
-
76.7
>2 years
US$M
2009
Consolidated
Trade receivables
Other receivables
Total receivables
Parent Entity
Other receivables
Total receivables
Total
US$M
13.2
4.3
17.5
1.2
1.2
All receivables are not past due and are not impaired.
2008
Consolidated
Trade receivables
Other receivables
Total receivables
Parent Entity
Other receivables
Total receivables
142
Annual Report 2009
Total
US$M
28.7
5.2
33.9
9.0
9.0
Receivables ageing analysis
<1 year
US$M
1-2 years
US$M
Current
US$M
13.2
2.1
15.3
1.2
1.2
-
-
-
-
-
-
2.2
2.2
-
-
-
-
-
-
-
Receivables ageing analysis
<1 year
US$M
1-2 years
US$M
Current
US$M
28.7
5.2
33.9
9.0
9.0
-
-
-
-
-
-
-
-
-
-
>2 years
US$M
-
-
-
-
-
Note 23. Financial Instruments (continued)
(e)
Financing facilities
Unsecured convertible bonds
On 15 December 2006, the Company issued US$250M 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$325M 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).
Secured bank loans
During the year ended 30 June 2006 the Consolidated Entity completed project finance facilities amounting to
US$71M for construction of LHM. The financing has been provided by Société Générale Australia Branch (as lead
arranger), Nedbank Capital and Standard Bank Limited and consists of a seven year Project Finance Facility of
US$65M and a Standby Cost Overrun Facility of US$6M. 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
LHUPL and its immediate holding companies. Paladin has provided a project completion guarantee as part of the
facilities.
At 30 June 2009 US$54.1M (2008: US$66.3M) had been drawn of the project finance facilities, following principal
repayments of US$12.2m, leaving available facilities of US$Nil (2008: US$Nil).
On 31 July 2009, the Company announced the completion of all conditions precedent to enable drawdown under
the US$167M KM project finance. The project finance consists of a six year Project Finance Facility of US$145M,
a Standby Cost Overrun Facility of US$12M and a Performance Bond Facility of US$10M. The facilities are being
provided by Société Générale Corporate and Investment Banking (as inter-creditor agent and commercial lender),
Nedbank Capital a division of Nedbank Limited (ECIC lender) and Standard Bank Limited (as ECIC facility agent
and lender). On 17 August 2009, the company announced the first drawdown of US$84.5M under this facility (refer
to Note 32). The Company has drawdown an additional US$47.5M since the year end.
Financing facilities available
At reporting date, the following financing facilities
had been negotiated and were available:
Consolidated
Parent Entity
2009
US$M
2008
US$M
2009
US$M
2008
US$M
Total facilities:
Unsecured convertible bonds
Secured bank loans
Facilities used at reporting date:
Unsecured convertible bonds
Secured bank loans
Total facilities:
575.0
54.1
629.1
575.0
54.1
629.1
575.0
66.3
641.3
575.0
66.3
641.3
575.0
-
575.0
575.0
-
575.0
575.0
-
575.0
575.0
-
575.0
Facilities used at reporting date
629.1
641.3
575.0
575.0
There were no unused facilities at reporting date.
Paladin Energy Ltd
143
Notes to the consolidated Financial Statements
for the year ended 30 June 2009
Note 23. Financial Instruments (continued)
(f)
Capital management
The Group treasury function is responsible for the Group’s capital management, including management of the
long term debt and cash as part of the capital structure. This involves the use of corporate forecasting models
which enable analysis of the Group’s financial position including cash flow forecasts to determine the future capital
management requirements. To ensure sufficient funding for operational expenditure and growth activities, a range of
assumptions are modelled so as to provide the flexibility in determining the Group’s optimal future capital structure.
Group treasury monitors gearing and compliances with various contractual financial covenants. The gearing
ratio as at balance date is 32% (2008:19%). 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.
(g)
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
2009
US$M
2008
US$M
Carrying
amount
Fair
value
Carrying
amount
Fair
value
Convertible bonds
543.2
510.3
532.1
637.9
(h)
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 8.2Mlb for delivery over the period 2009 to 2013.
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 Ltd, is valued at US$28.1M at the lower of cost and net
realisable value in accordance with our accounting policy for inventories.
144
Annual Report 2009
Note 24. Key Management Personnel
(a)
Details of Key Management Personnel
(i)
Directors
Mr Rick Crabb
Chairman (Non-executive)
Mr John Borshoff
Managing Director/CEO
Mr Sean Llewelyn
Director (Non-executive)
Mr Ian Noble
Director (Non-executive)
Mr Donald Shumka
Director (Non-executive)
(ii)
Executives
Ms Gillian Swaby
Company Secretary
Mr Mark Bolton
Acting Chief Financial Officer (Appointed 1 November 2008)
Mr Ross Glossop
Chief Financial Officer (Appointed 18 July 2008; Resigned 27 October 2008)
Mr Ron Chamberlain Chief Financial Officer (Resigned 18 July 2008)
Mr Wyatt Buck
General Manager – Production & Langer Heinrich Operations
Mr Dustin Garrow
Executive General Manager – Marketing
Mr Simon Solomons
Executive General Manager – Operations Development
(b)
Compensation of Key Management Personnel: compensation by category
Short-term
Post employment
Share-based payment
Consolidated
Parent Entity
2009
US$M
4,154
107
3,951
8,212
2008
US$M
2009
US$M
4,270
97
4,366
8,733
3,000
61
3,351
6,412
2008
US$M
3,910
61
3,832
7,803
Decrease in compensation of Key Management Personnel due to foreign exchange rate movements between
United States and Australian dollar. Average exchange rate used for year to 30 June 2009, US$1 = AU$1.36035.
(Average exchange rate used for year to 30 June 2008, US$1 = AU$1.11832).
Paladin Energy Ltd
145
Notes to the consolidated Financial Statements
for the year ended 30 June 2009
Note 24. Key Management Personnel (continued)
(c)
Option Holdings of Key Management Personnel (Consolidated and Parent Entity)
Granted as
01 Jul 08 Remuneration Exercised
Options Net Change
Other
Vested/
30 Jun 09 Exercisable Exercisable
Not vested/
Not
30 June 2009
Directors
Mr John Borshoff
2,750,000
Executives
Ms Gillian Swaby
333,785
Mr Ron Chamberlain
136,245
Mr Wyatt Buck
1,351,533
Mr Dustin Garrow
944,769
Mr Simon Solomons
600,000
Mr Ross Glossop
450,000
Total
6,566,332
# Forfeited on resignation of employee
-
-
-
-
-
-
-
-
-
-
-
-
2,750,000
- 2,750,000
-
333,785
(136,245)#
-
(310,000)
(690,000)
351,533
(600,000)
-
-
-
-
344,769
600,000
(450,000)#
-
-
-
-
-
-
-
333,785
-
351,533
344,769
600,000
-
(910,000) (1,276,245)
4,380,087
- 4,380,087
No other Key Management Personnel held options during the year ended 30 June 2009.
Granted as
01 Jul 07 Remuneration Exercised
Options Net Change
Other
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 Dustin Garrow
678,570
266,199
Mr Simon Solomons
Mr Ross Glossop
-
-
600,000
450,000
-
-
-
Total
12,239,270
2,925,529
(9,950,000)
-
-
-
-
-
-
-
-
-
2,750,000
-
-
- 2,750,000
333,785
136,245
-
-
333,785
136,245
944,769
344,769
600,000
600,000
450,000
-
-
600,000
450,000
5,214,799
344,769 4,870,030
No other Key Management Personnel held options during the year ended 30 June 2008.
146
Annual Report 2009
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 2009
Directors
Mr Rick Crabb
Mr John Borshoff
Mr Ian Noble
Mr Sean Llewelyn
Mr Donald Shumka
Executives
Ms Gillian Swaby
Mr Ron Chamberlain
Mr Wyatt Buck
Mr Simon Solomons
Mr Dustin Garrow
Total
Balance
01 Jul 08
On Exercise Net Change Balance
30 June 09
of Options
Other
(1,000,000)
4,581,528
-
-
100,000
50,000
21,591,394
21,000
100,000
50,000
5,581,528
21,591,394
21,000
-
-
5,091,140
600,000
16,350
1,000
-
-
-
-
-
-
-
310,000
(54,485)
(600,000)# -
(230,000)
5,036,655
96,350
3,000
-
-
2,000
-
600,000
(600,000)
32,902,412
910,000
(2,332,485)
31,479,927
# No longer employed by Paladin so not required to disclose share holdings.
No other Key Management Personnel held shares during the year ended 30 June 2009.
30 June 2008
Directors
Mr Rick Crabb
Mr John Borshoff
Mr Ian Noble
Executives
Ms Gillian Swaby
Mr Ron Chamberlain
Mr Wyatt Buck
Mr Simon Solomons
Total
Balance
01 Jul 07
On Exercise Net Change Balance
30 June 08
of Options
Other
8,964,746
3,250,000
18,091,394
3,750,000
(6,633,218)#
(250,000)
5,581,528
21,591,394
16,000
-
5,000
21,000
10,216,140
2,750,000
(7,875,000)#
5,091,140
400,000
200,000
-
600,000
-
-
-
-
16,350
1,000
16,350
1,000
37,688,280
9,950,000 (14,735,868)
32,902,412
# 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
7,038,345 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.
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
147
Notes to the consolidated Financial Statements
for the year ended 30 June 2009
Note 24. Key Management Personnel (continued)
(e)
Other Transactions and Balances with Key Management Personnel
Fees paid in the normal course of business in 2009 for company secretarial services totalling US$426,572 (2008:
US$380,034) were paid/payable (balance outstanding at 30 June 2009 and included in trade creditors US$Nil
(2008: US$Nil)) to a company of which Ms Gillian Swaby is a director and shareholder. All amounts are excluding
GST.
Note 25. Auditors’ Remuneration
The auditor of the Paladin Energy Ltd Group is Ernst & Young.
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 (1)
• Other assurance services
• 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
• Taxation services:
Tax compliance services
Consolidated
Parent Entity
2009
US$000
2008
US$000
2009
US$000
2008
US$000
326
38
388
189
103
53
1,097
55
-
55
1,207
389
14
99
27
171
10
710
23
5
18
756
269
35
374
171
96
53
998
-
-
-
314
14
99
27
171
10
635
-
-
-
998
635
(1) Decrease in audit fees due to foreign currency exchange rate movements between the US and Australian dollar.
148
Annual Report 2009
Note 26. Commitments And Contingencies
There were no outstanding commitments or contingencies, which are not disclosed in the Financial Report of the Consolidated
Entity and the Company as at 30 June 2009 other than:
(a)
Tenements
Consolidated
Parent Entity
2009
US$M
2008
US$M
2009
US$M
2008
US$M
Commitments for tenements
contracted for at the reporting date but not
recognised as liabilities, payable:
Within one year
Later than one year but not later than 5 years
More than 5 years
Total tenements commitment
7.1
8.0
-
15.1
2.6
-
-
2.6
-
-
-
-
-
-
-
-
These include commitments relating to tenement lease rentals and, the minimum expenditure requirements of the
Namibian, Malawian, Western Australian, South Australian, Northern Territorian and Queensland Mines Departments
attaching to the tenements and are subject to re-negotiation upon expiry of the exploration leases or when
application for a mining licence is made.
These are necessary in order to maintain the tenements in which the Consolidated Entity and other parties are
involved. All parties are committed to meet the conditions under which the tenements were granted in accordance
with the relevant mining legislation in Namibia, Malawi and Australia.
(b)
Mine construction commitments
Consolidated
Parent Entity
2009
US$M
2008
US$M
2009
US$M
2008
US$M
Commitments for mine construction
contracted for at the reporting date but not
recognised as liabilities, payable:
Within one year
Later than one year but not later than 5 years
More than 5 years
Total mine construction
4.4
-
-
4.4
61.0
-
-
61.0
-
-
-
-
-
-
-
-
These commitments in 2009 relate to construction of KM and Stage II at LHM (2008: construction of the KM and
Stage II at LHM).
(c)
Operating lease commitments
The Group has entered into various property leases relating to rental of offices and residential accommodation.
These non-cancellable leases have remaining terms of between 1 month and 12 years. All leases include a clause
to enable upward revision of rental charge on an annual basis according to prevailing market conditions.
Future minimum rentals payable under non-cancellable operating leases as at 30 June are as follows:
Within one year
Later than one year but not later than 5 years
More than 5 years
Total operating lease commitment
Consolidated
Parent Entity
2009
US$M
2008
US$M
2009
US$M
2008
US$M
0.8
2.7
1.6
5.1
0.4
3.3
2.7
6.4
0.6
2.6
1.6
4.8
0.2
3.2
2.7
6.1
Paladin Energy Ltd
149
Notes to the consolidated Financial Statements
for the year ended 30 June 2009
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$0.75M (US$0.6M) (2008:A$0.75M (US$0.7M)) and are subject to the Department of
Minerals & Energy granting tenements comprising two exploration licence applications. The A$0.75M (US$0.6M)
(2008:A$0.75M (US$0.7M)) 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 three 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$0.75M
(US$0.6M) (2008:A$0.75M (US$0.7M)) by the Consolidated Entity to the vendors when all project development
approvals are further obtained.
(e)
Bank guarantees
As at 30 June 2009 the Group and Parent have outstanding US$87,051 (A$108,201) (2008:US$61,401 / A$63,926)
as a current guarantee provided by a bank for the corporate office lease.
(f)
Legal actions
(i)
Mount Isa Uranium Joint Venture
On 3 August 200,7 the Company’s wholly owned subsidiary, MIU entered into a settlement agreement with
respect to proceedings which had been commenced by SRA (which had, by the time of the settlement,
become ultimately 82.0% 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 in the Summit Proceedings, SRA would
have been 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 SRA
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 trial of the Areva intervention proceedings was heard over
the period from 18 May 2009 to 3 June 2009 and the Court reserved its decision. It is currently expected that
judgment will be handed down in September 2009.
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, the 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 82% interest in SRA. As a consequence, a change in the
ownership of the 50% interest in the Mount Isa Uranium joint venture from MIU to SRA would not be of
significance to the Company.
150
Annual Report 2009
Note 27. Employee Benefits
Consolidated
Parent Entity
2009
US$M
2008
US$M
2009
US$M
2008
US$M
Provision for annual leave and long service leave
aggregate employment benefit liabilities
2.2
1.6
Employee benefits expense
Wages and salaries
Defined contribution superannuation
Share-based payments
Other employee benefits
Total employee benefits expense
Employee numbers
Average number of employees during the financial year
Superannuation
18.5
1.9
10.9
0.7
32.0
14.6
1.5
10.6
0.6
27.3
1.3
3.1
0.3
7.7
0.6
1.1
4.4
0.4
8.9
0.5
11.7
14.2
Number
Number
107
47
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 2009 and 2008 consisted of:
(i)
(ii)
(iii)
(iv)
sundry debtors receivable by the Company (Note 7(c));
loans advanced by the Company (Note 7(d));
loans advanced to the Company (Note 17); and
the payment of interest on the loans advanced by the Company (Note 4(a)).
Paladin Energy Ltd
151
Notes to the consolidated Financial Statements
for the year ended 30 June 2009
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 2009 and 2008.
(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.
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’s ranking against the peer group
TSR growth over the performance period.
•
•
•
•
when Paladin 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 is ranked at the 50th percentile, 50% of the share options will vest;
when Paladin 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 other than for misconduct 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.
(b)
Types of share-based payment plans
Expense recognised in the Income Statement in respect to share-based payments is disclosed in Note 4.
152
Annual Report 2009
Note 29. Share-Based Payment Plan (continued)
(c)
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
2009
No.
19,077,072
1,950,000
(1,314,617)
(2,060,000)
1
(2,425,000)
15,227,455
1,700,000
2009
WAEP
A$
5.12
3.12
4.55
3.32
4.54
5.25
5.45
2008
No.
19,678,670
11,291,620
(833,218)
(11,060,000)
-
19,077,072
4,002,500
2008
WAEP
A$
3.18
4.63
6.58
2 1.06
-
5.12
3.80
1.
The weighted average share price at the date of exercise is A$3.79
2. The weighted average share price at the date of exercise is A$6.31
The outstanding balance as at 30 June 2009 is represented by:
Date options granted
Exercisable
Expiry date
Exercise price
of options
Number under
option
5 July 2006
5 July 2006
20 July 2006
20 July 2006
5 January 2008
5 January 2009
5 January 2008
5 January 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 April 2011
18 April 2013
14 October 2008
14 October 2011
14 October 2013
11 December 2011
11 December 2011
11 December 2013
24 June 2009
24 June 2012
24 June 2014
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$2.54
A$2.07
A$4.48
Total
100,000
500,000
200,000
200,000
2,697,970
7,554,485
700,000
450,000
1,075,000
750,000
300,000
700,000
15,227,455
Please refer to Outstanding Share Information table in the Management Discussion & Analysis for movements since
the year end.
(d)
Weighted average remaining contractual life
The weighted average remaining contractual life for the share options outstanding as at 30 June 2009 is between Nil
and 3 years (2008: Nil and 3 years).
(e)
Range of exercise price
The range of exercise prices for options outstanding at the end of the year was A$2.07 – A$8.77 (2008: A$2.80 –
A$8.77).
Paladin Energy Ltd
153
Notes to the consolidated Financial Statements
for the year ended 30 June 2009
Note 29. Share-Based Payment Plan (continued)
(f)
Weighted average fair value
The weighted average fair value of options granted during the year was A$1.79 (2008: A$2.73).
(g)
Option pricing model: ESOP and EXSOP
The fair value of the equity-settled share options granted under the option plan is estimated as at the date of grant
using a binominal model taking into account the terms and conditions upon which the options were granted.
The following table lists the inputs to the model used for the years ended 30 June 2009 and 30 June 2008:
Dividend yield (%)
Expected volatility (%)
Risk-free interest rate (%)
Expected life of option (years)
Option exercise price ($)
Closing share price at grant date ($)
2009
Nil%
2008
Nil%
70% - 72%
66% - 77%
3.69% - 4.93%
6.22% - 6.87%
3.75 years
1.75 - 5 years
A$2.07 - A$4.48
A$4.50 - A$5.37
A$2.45 - A$4.41
A$4.64 - A$5.95
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.
Note 30. Interests In Jointly Controlled Assets
(a)
Joint venture details
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) with Energy Metals
Ltd as manager and operator of the joint venture.
Angela Joint Venture
The Angela joint venture is involved in the identification of and exploration for uranium resources on tenements to
the south of Alice Springs in the Northern Territory, Australia. The joint venture is between Cameco Australia Pty Ltd
(Cameco) 50% and Paladin NT Pty Ltd (PNT) 50% (PNT is 100% owned by Paladin) with Cameco 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.
154
Annual Report 2009
Note 30. Interests In Jointly Controlled Assets (continued)
(b)
Assets utilised in the Bigrlyi Uranium and Angela Joint Ventures
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
Consolidated
Parent Entity
2009
US$M
2008
US$M
2009
US$M
2008
US$M
14.3
14.3
17.1
17.1
-
-
-
-
The interest of NTU in the Bigrlyi uranium joint venture was acquired on 7 September 2006 and includes the
allocation of the acquisition value.
The interest of PNT in the Angela joint venture was acquired on 20 February 2008.
(c)
Commitments relating to the joint venture
Consolidated
Parent Entity
2009
US$M
2008
US$M
2009
US$M
2008
US$M
Share of tenement commitments (Note 26)
-
-
-
-
(d)
Impairment
No assets employed in the jointly controlled assets were impaired during the year (2008: US$Nil).
Note 31. Asset Acquisition
Acquisition of Fusion Resources Limited
Paladin acquired a controlling interest on 5 February 2009 of the voting shares of Fusion (formerly listed on ASX –
“FSN”), a public company based in Australia involved in the exploration for uranium resources. The takeover was
completed on 1 April 2009 with the acquisition of 100% of the issued share capital for the issue of 8,135,433 Paladin
shares plus US$0.4M in transaction costs for a total cost of US$15.7M.
The acquisition was treated as an acquisition of an asset as the transaction involved the acquisition of exploration
licences only and no employees were retained and the Fusion office was closed.
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 2009 Financial Report:
Langer Heinrich Mine, Namibia Project Finance – Completion Test Satisfied
On 1 July 2009, the Company announced in accordance with the LHM project finance loan the Completion Test has
been satisfied.
On 30 June 2009, Société Générale advised on behalf of the Bankers’ Syndicate, which also includes Nedbank
Capital and Standard Bank Limited, that LHM had successfully met all conditions required by the Project Lenders
including the entire host of Completion Tests. Additionally, the previously outstanding construction related condition
of leach tank lining remediation had been satisfied enabling the declaration of Construction Practical Completion.
As a result of achieving Completion the interest margin on the outstanding LHM project finance debt will reduce by
1% per annum and the loan becomes non-recourse to Paladin.
Paladin Energy Ltd
155
Notes to the consolidated Financial Statements
for the year ended 30 June 2009
Note 32. Events After The Balance Sheet Date (continued)
Issue of Employee Options
On 2 July 2009, the Company announced the granting of 700,000 unlisted incentive options, exercisable at A$4.48
vesting after three years, subject to performance conditions as outlined in the EXSOP, with a five year expiry.
Kayelekera Mine, Malawi US$167M Project Finance Completed – First Drawdown
On 17 August 2009, the Company announced the first drawdown of US$84.5M under the KM Financing Loan
(Facility). The Company has drawdown an additional US$47.5M since the year end.
KM is currently in its production ramp-up phase. The first drawdown will be reimbursed to Paladin for funds
spent on completing the project, with the remainder of the facility to be applied to the project and working capital
expenditure.
The facility is provided by a syndicate of banks made up of Société Générale, Standard Bank Limited and Nedbank
Capital and is the same syndicate of banks that provided project finance for LHM Stage I.
The US$167M project finance package consists of:-
•
•
•
US$145M Project Financing Facility – currently drawn to US$84.5M
US$12M Cost overrun Facility – currently funded with US$8M cash
US$10M Performance Bond Facility
Increased holding in NGM Resources Limited
On 20 August 2009 it was announced that the Company had increased its shareholding from 16.7% to 19.9%
following an additional investment of US$2.0M.
Institutional Placement of Shares
On 9 September 2009, the Company announced that it had agreed to undertake an institutional private placement
of 93.45M ordinary shares (representing 15% of Paladin’s issued capital) to raise approximately A$419M
(approximately C$391M) net of fees payable to the placing agents.
The placement was priced at A$4.60 (approximately C$4.30) per share which represents a 6.1% discount to
Paladin’s last closing price on ASX and a 0.5% discount to Paladin’s 5 day volume weighted average price on
ASX. The new shares will rank equally with existing shares. The placement was made pursuant to exemptions from
registration and prospectus requirements under applicable securities laws and is subject to receipt of all applicable
regulatory approvals, including approval of the Toronto Stock Exchange. The transaction was completed and shares
were issued on 15 September 2009. No adjustment was required to the terms of either of Paladin’s convertible bond
series.
Azure Capital acted as Corporate Adviser to Paladin. RBC Capital Markets and UBS AG, Australia Branch acted as
Global Joint Lead Placing Agents and Cormark Securities Inc., Dundee Securities Corporation and GMP Securities
L.P. were Co-Managers to the placement.
Paladin intends to use the funds raised to:
•
•
•
•
provide Paladin with the financial capacity to advance M&A and inorganic growth opportunities;
progress the Langer Heinrich Stage III project (recently approved by the Board);
expand exploration and pre-development programmes in Australia; and
enhance Paladin’s balance sheet flexibility to ensure Paladin remains well placed to take advantage of other
international nuclear industry opportunities as they arise.
156
Annual Report 2009
Note 33. Non-Cash Financing And Investment Activities
Consolidated
Parent Entity
2009
US$M
2008
US$M
2009
US$M
2008
US$M
Non-Cash Financing and Investment Activities
Issue of shares to acquire 100% of Fusion
Allotment of 15% interest in PAL to
Government of Malawi (1)
15.3
5.7
-
-
15.3
-
-
-
(1) A share-based payment expense has been recognised for the allotment of a 15% interest in PAL to the Government of Malawi. In
determining the Fair Value for PAL, a DCF was adopted as the primary valuation methodology.
Note 34. Earnings Per Share
(i)
Basic earnings per share
Basic earnings per share are calculated by dividing the profit attributable to equity holders of the Company
by the weighted average number of ordinary shares outstanding during the period.
(ii)
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to
take into account the after income tax effect of interest and other financing costs associated with dilutive
potential ordinary shares and the weighted average number of shares assumed to have been issued for no
consideration in relation to dilutive potential ordinary shares. Diluted earnings per share is the same as basic
earnings per share in 2009 and 2008 as the Consolidated Entity is in a loss position.
The following reflects the income and share data used in the basic and diluted earnings per share
computations:
Net loss attributable to ordinary equity holders
of the Parent from continuing operations
Weighted average number of ordinary shares
for basic and diluted earnings per share
Weighted average number of options issuable
under the Company’s option plans
that could be potentially dilutive
Consolidated
2009
US$M
2008
US$M
(480.2)
(36.0)
2009
Number
of Shares
2008
Number
of Shares
617,953,844 608,341,416
3,311,233
14,746,269
Paladin Energy Ltd
157
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 2009 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 2009.
On behalf of the Board
Mr John Borshoff
Managing Director/CEO
Perth, Western Australia
24 September 2009
158
Annual Report 2009
independent audit Report
to the members of Paladin energy ltd
Report on the Financial Report
We have audited the accompanying financial report of Paladin Energy Ltd (“the Company”), which comprises the balance
sheet as at 30 June 2009, 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 1, 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. 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 1, 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.
Paladin Energy Ltd
159
independent audit Report
to the members of Paladin energy ltd
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 2009 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 Regulation 2001.
2.
the financial report also complies with International Financial Reporting Standards as issued by the International
Accounting Standards Board.
Report on the Remuneration Report
We have audited the Remuneration Report included in pages 68 to 76 of the Directors’ Report for the year ended 30 June
2009. 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 and its controlled entities for the year ended 30 June 2009,
complies with section 300A of the Corporations Act 2001.
Ernst & Young
G H Meyerowitz
Partner
Perth
24 September 2009
160
Annual Report 2009
additional information
Pursuant to the Listing Requirements of Australian Securities Exchange Limited as at 21 September 2009:
(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
1,337 shareholders hold less than a marketable parcel of shares issued.
(b)
The twenty largest shareholders hold 77.01% of the total shares issued.
Holder
CDS & Co
HSBC Custody Nominees (Australia) Limited
National Nominees Limited
JP Morgan Nominees Australia Limited
Cede & Co
ANZ Nominees Limited
Citicorp Nominees Pty Limited
Aylworth Holdings Pty Ltd
UBS Wealth Management Australia Nominees Pty Ltd
HSBC Custody Nominees (Australia) Limited-GSCO ECA
UBS Nominees Pty Ltd
Credit Suisse Securities (Europe) Ltd
Merrill Lynch (Australia) Nominees Pty Limited
AMP Life Limited
Ms Gillian Swaby
Queensland Investment Corporation
Cogent Nominees Pty Limited
Citicorp Nominees Pty Limited
HSBC Custody Nominees (Australia) Limited – A/C 3
Brispot Nominees Pty Ltd
No. of Shares
137,445,770
122,305,233
64,603,700
47,135,479
36,413,718
31,785,848
24,825,211
19,486,222
15,802,780
8,164,527
6,542,802
6,540,000
4,791,216
4,738,573
4,000,000
3,970,580
3,820,762
3,470,063
3,336,612
3,109,097
Total Holders
11,986
11,288
2,494
1,838
178
27,784
%
19.17
17.05
9.01
6.57
5.08
4.43
3.46
2.72
2.20
1.14
0.91
0.91
0.67
0.66
0.56
0.55
0.53
0.48
0.47
0.43
(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.
552,288,193
77.01
Paladin Energy Ltd
161
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%
100.00%
100.00%
100.00%
100.00%
100.00%
-
-
-
-
-
-
-
QUEENSLAND (See Note 2)
Isa North
11 EPMs
81.90%
(see Note 3)
Valhalla North
Mary Kathleen S.
5 EPMs
3 MDLs
3 EPMs
1 EPM
(A)
(A)
81.90%
-
81.90%
(see Note 3)
100.00%
100.00%
-
-
LHU
LHU
PAL
PAL
PAL
PAL
PAL
SRA
SRA
SRA
FSN
FSN
1
1
1
1
1
3
3
NORTHERN TERRITORY
Angela and Pamela
Bigrlyi
Walbiri
Malawi
Minerva
1 EL
1 EL
10 ERLs
20 MCs
2 MLs
1 ERL
1 ERL
50.00%
Cameco Australia Pty Ltd
(A)
50.00%
Cameco Australia Pty Ltd
42.06%
) Energy Metals Limited
(A)
(A)
(A)
(A)
42.06%
)- Southern Cross Exploration NL
42.06%
)
58.13%
Energy Metals Limited
47.96%
Energy Metals Limited
12 ERLs
(A) 100.00%
Cameco
Cameco
EME
EME
EME
EME
EME
NTU
Beatrice South
Mount Gilruth
1 EL
1 EL
(A)
(A)
33.33%
Afmeco Mining and Exploration Pty Ltd
Afmeco
33.33%
Afmeco Mining and Exploration Pty Ltd
Afmeco
WESTERN AUSTRALIA
Manyingee
Spinifex Well
Oobagooma
3 MLs
1 EL
100.00%
100.00%
4 ELs
(A) 100.00%
-
-
-
SOUTH AUSTRALIA
Petermorra
Mt Yerila
1 EL
1 EL
20.00%
Quasar Resources Pty Ltd
15.00%
Quasar Resources Pty Ltd
J E Risinger
PEM
PEM
PEM
Quasar
Quasar
162
Annual Report 2009
(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
81.90%
MM Mining Pty Ltd
4 EPMs
(A)
81.90%
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
81.90%
MM Mining Pty Ltd
81.90%
MM Mining Pty Ltd
81.90%
MM Mining Pty Ltd
Other Queensland Joint Ventures
Tate River
3 EPMs
100.00%
Sovereign Metals Ltd
1 EPM
(A) 100.00%
Sovereign Metals Ltd
Tributary Creek
Perisher
1 EPM
2 EPMs
30.00%
BHP Billiton Minerals Pty Ltd
100.00%
Cloncurry Metals Ltd
SOUTH AUSTRALIA
Reaphook JV
1 EL
7.50%
Perilya Limited
Signature Resources NL
4
4
4
4
4
4
5
5
6
7
MMM
MMM
MMM
MMM
MMM
MMM
SOV
SOV
BHP
CML
Perilya
Operators
BHP
CML
EME
FSN
LHU
MIU
BHP Billiton Minerals Pty Ltd
Cloncurry Metals Limited
Energy Metals Limited
Fusion Resources Pty Ltd
Langer Heinrich Uranium (Pty) Limited
Mount Isa Uranium Pty Ltd
MMM
MM Mining Pty Ltd
NTU
PAC
PAL
PEM
SOV
SRA
Northern Territory Uranium Pty Ltd
Pacific Mines Limited
Paladin (Africa) Ltd
Paladin Energy Minerals NL
Sovereign Metals Limited
Summit Resources (Aust) Pty Ltd
Paladin Equity
(direct and indirect)
Note
0%
0%
0%
100%
100%
100%
31.25%
100%
100%
85%
100%
0%
81.9%
4
1
2
Paladin Energy Ltd
163
additional information
Notes
1. Paladin holds 85% equity in PAL with 15% equity having been issued to the Government of Malawi pursuant to the terms of the
Development Agreement for KM between the Government of Malawi, PAL and Paladin Energy Minerals NL.
2. Paladin’s interest in these tenements is held by virtue of Paladin’s 81.9% equity holding in Summit which in turn holds 100% equity
interest in SRA 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 IUJV between SRA (50% and Operator) and MIU (50%).
4. The Western Isa Joint Venture tenements are held by SRA/Pacific Mines Limited. MM Mining can earn 80% equity in the Western Isa
Joint Venture tenements through expenditure of A$8M within two years of commencement (10 December 2007). Summit holds 20M
fully paid shares or 31.25% of the issued capital in MMM, the UK registered parent of MM Mining .
5. The Tate River Joint Venture tenements are held by Fusion. Sovereign Metals Limited has earned 50% equity and can earn up to 75%
through further staged expenditure of A$1.5M.
6. The Tributary Creek Joint Venture tenement is held by Fusion. BHP Billiton has earned 70% equity and will earn further equity if
Fusion elects to dilute by not contributing to ongoing exploration expenditure.
7. The Perisher Joint Venture tenements are held by Fusion. Cloncurry Metals Limited is earning 51% equity through expenditure of
A$500,000 and can earn a further 10% equity through expenditure of A$300,000. Cloncurry Metals Limited can earn up to 100%
equity if Fusion elects to dilute by not contributing to ongoing exploration expenditure during subsequent stages of the Joint Venture.
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
164
Annual Report 2009
CORPORATE DIRECTORY
EC
Directors
Non-executive Chairman
Mr Rick Crabb
Managing Director/CEO
Mr John Borshoff
Non-executive Directors
Mr Sean Llewelyn
Mr Ian Noble
Mr Donald Shumka
Registered Offi ce
Grand Central, 1st Floor, 26 Railway Road
Subiaco Western Australia 6008
Telephone: (+61 8) 9381 4366
Facsimile: (+61 8) 9381 4978
Email: paladin@paladinenergy.com.au
Web: www.paladinenergy.com.au
Share Registries
Australia
Computershare Investor Services Pty Ltd
Level 2, 45 St Georges Terrace
Perth Western Australia 6000
Telephone: (+61 8) 9323 2000
Facsimile:
(+61 8) 9323 2033
Canada
Computershare Investor Services Pty Ltd
100 University Avenue, 11th Floor
Toronto Ontario M5J 2Y1
Telephone: (+1) 416 263 9200
Facsimile: (+1) 416 263 9261
Investor Relations
Australia – Corporate Offi ce
Ms Gillian Swaby
Grand Central, 1st Floor, 26 Railway Road
Subiaco Western Australia 6008
(PO Box 201, Subiaco, 6904)
Telephone: (+61 8) 9381 4366
Facsimile: (+61 8) 9381 4978
Email: gillian.swaby@paladinenergy.com.au
North America
Mr Greg Taylor
Ontario Canada
Business/Cell: (+1) 416 605 5120
Facsimile:
(+1) 905 844 6532
Email: 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 is a company limited by shares, incorporated
and domiciled in Australia. Its registered offi ce 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, fi nancial statements and
other information are available
on our website www.paladinenergy.com.au.
Please note the Registered Offi ce/Head Offi ce
will be relocated as of November 2009 to:
Level 4,
502 Hay Street,
Subiaco, WA 6008
(All other contact details
remain the same)
Jaime McDowall
Corporate Receptionist
Head Offi ce
www.paladinenergy.com.au