On strategy.
On course.
Annual Report 2011
1
Paladin Energy Ltd
Pa l a d i n E n E r g y lT d » a n n u a l r E P o r T 2 011
Corporate Values and Key Achievements
Chairman’s letter
Insights from the Managing Director/CEO
Nuclear Power - Meeting the Challenge
Management Discussion and Analysis
Review of Operations
Health & Safety
Financial Review
Sustainable Development
Environment
Corporate Social Responsibility
Our People
Corporate Governance Statement
Directors’ Report
Remuneration Report
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Contents of the Financial Report
Consolidated Income Statement
89
Consolidated Statement of Comprehensive Income 90
91
Consolidated Statement of Financial Position
92
Consolidated Statement of Changes in Equity
94
Consolidated Statement of Cash Flows
95
Notes to the Consolidated Financial Statements
160
Directors’ Declaration
161
Independent Auditor’s Report
166
Additional Information
170
List of Abbreviations
171
Shareholder Reporting Timetable
172
Corporate Directory
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PaLadin EnErgy Ltd
ACN 061 681 098
The annual report covers the Group consisting of Paladin
Energy Ltd (referred throughout as the Company or Paladin)
and its controlled entities.
Paladin Energy Ltd is a company limited by shares,
incorporated and domiciled in Australia. Its registered office
and principal place of business is:
Paladin Energy Ltd
Level 4
502 Hay Street
SUBIACO WA 6008
Through the use of the internet, we have ensured that our
corporate reporting is timely, complete, and available globally
at minimum cost to the Company. All press releases, financial
statements and other information are available
on our website www.paladinenergy.com.au.
LangEr HEinricH MinE, naMibia.
LEading Our way.
in 1998, Paladin ouTlinEd a long-TErm Plan To build a major uranium mining housE.
Taking advanTagE of a downTurn in uranium markETs ThE ComPany aCquirEd a qualiTy
PorTfolio of uranium ProjECTs. Paladin ThEn suCCEssfully oPEnEd ThE world’s firsT
ConvEnTional uranium minE in 20 yEars, langEr hEinriCh, CurrEnTly in sTagE ThrEE
ExPansion. in 2009, ThE ComPany oPEnEd iTs sECond uranium minE, kayElEkEra, now
oPEraTing aT nEar CaPaCiTy, lifTing ToTal annual ProduCTion To a rECord 5.7mlb u3o8.
Today, Paladin is ThE world’s only indEPEndEnT, PurE Play uranium ProduCEr. wiTh
a ProvEn TraCk rECord, a major PiPElinE of ProjECTs and a foCusEd lEadErshiP TEam,
Paladin is on sTraTEgy and on CoursE.
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corporate
Values and Key
achievements
Corporate values
CrEaTE sharEholdEr wEalTh by dEvEloPing ThE ConsidErablE oPPorTuniTiEs Paladin has and
ConTinuEs To gEnEraTE.
bEComE a major PlayEr in ThE global uranium suPPly markET.
oPEraTE aT global bEsT PraCTiCE wiTh ParTiCular EmPhasis on safETy and ThE EnvironmEnT.
rEward EmPloyEE PErformanCE and ProvidE a fulfilling work EnvironmEnT.
ConTribuTE 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.
rEsPond 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.
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Pa l a d i n E n E r g y lT d » a n n u a l r E P o r T 2 011
550.3mlb
ToTal uranium invEnTory in ProjECT PiPElinE
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MANYINGEE
NIGER
OOBAGOOMA
DATABASE UTILISATION
ProjECT PiPElinE
Assets acquired and
projects developed
M&A
NEW PROJECT
ACQUISITIONS
MID-TERM GROWTH
Aurora
Valhalla
Angela
LANGER HEINRICH
STAGE 4 EXPANSION
New production with staged
organic growth to 2015
KAYELEKERA
STAGE 2 EXPANSION
LANGER HEINRICH
STAGE 3 EXPANSION
Pa l a d i n E n E r g y lT d » a n n u a l r E P o r T 2 011
,
ve set our
We
sights high
LAngeR HeinRicH Mine in nAMibiA At StAge 2 deSign of 3.7Mlb foR pASt two
yeARS. StAge 3 expAnSion to 5.2Mlb on tRAck foR eARLy 2012, witH pRoven
ModeRn uRAniuM extRAction tecHnoLogieS And conSiStent pRoduction
peRfoRMAnce.
kAyeLekeRA Mine in MALAwi RAMping up to 3.3Mlb And neAR nAMepLAte
pRoduction witH ongoing focuS on optiMiSAtion to incReASe cApAcity.
new pRoduction witH StAged oRgAnic gRowtH of exiSting MineS to 2015.
inventoRy of 550.3Mlb u3o8 in pRoject pipeLine.
pALAdin HAS unique expeRtiSe AcRoSS tHe wHoLe uRAniuM SpAce fRoM geoLogy
to ReSouRce expAnSion, deveLopMent, finAncing And MARketing.
pALAdin iS cuRRentLy tHe woRLd’S nintH LARgeSt uRAniuM pRoduceR by voLuMe,
SuppLying ARound 4% of tHe woRLd MARket.
key achievements for the year
2010
2011
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September
Launched takeover offer for NGM Resources Limited,
completed October 2010 establishing footprint in Niger.
January
Buy back of US$250M Convertible Bonds expiring December
2011 completed.
October
Significant mineral resource upgrade for Langer Heinrich Mine.
Ore reserve increased 104% to 134.1Mlb U3O8.
October
Successful raising of US$300M through the issue of senior
Convertible Bonds due November 2015.
December
Maiden resource of 10.3Mlb U3O8 at 0.06% issued for the Odin
deposit adding to the Mount Isa projects resource inventory.
February
Acquisition of the Aurora uranium assets in Eastern Canada
(at US$1.90 per resource pound) added a significant project to
Paladin pipeline.
June
Langer Heinrich Mine achieved all time monthly record
production of 355,513lbs.
Pa l a d i n E n E r g y lT d » a n n u a l r E P o r T 2 011
what we set out
to do in 2011
what we plan
to do in 2012
✗
Complete Stage 3 construction at Langer Heinrich Mine
with ramp-up commencing early CY2011.
Delayed due to engineering and equipment issues
✓ Progress Stage 4 Langer Heinrich Mine feasibility study.
Ongoing according to schedule
••• Optimise production at Kayelekera Mine.
Due to new resin-in-pulp technology, achieving
nameplate taking longer
✗
2011 production objective of 7Mlb.
Langer Heinrich Stage 3 delays and Kayelekera
ramp-up slower than anticipated
✓ Ongoing implementation of NOSA health and
safety system.
✓ Continue resource expansion at Mount Isa.
✓ Develop Paladin’s term contract sales to targeted levels.
✓ Ongoing commitment to global exploration.
✓ Continue to populate Paladin’s growth pipeline through
M&A and expand through organic growth.
Complete Stage 3 expansion at Langer Heinrich Mine
with commissioning September quarter 2011.
Ramp up production to design levels at
Kayelekera Mine.
Deliver Stage 4 Langer Heinrich Mine feasibility study
by end of CY2011.
2012 production guidance in the range of 7.4 to
7.9Mlb U3O8.
Resource update for Kayelekera Mine.
Continue to advance NOSA health and safety system
rating for Langer Heinrich and Kayelekera Mines.
Commence sustainability reporting.
Ongoing commitment to global exploration.
Expand production through organic growth.
Seek value increase in existing pipeline projects through
joint venture and M&A.
✓
Focus on talent management and career development
across the Group.
Optimise production and costs at Langer Heinrich and
Kayelekera Mines.
✗ Not achieved ••• Ongoing ✓ Achieved
kEy annual daTa
lTifr
78.57%
mlb sold
29%
revenue
32%
losT TimE injury frEquEnCy raTE
dECrEasEd from 5.6 To 1.2 from
fy2010 To fy2011
4.81mlb sold. uP from 3.73mlb,
a 29% inCrEasE
salEs rEvEnuE uP 32% from
us$202m To us$266.8m
Production
32%
Exploration spend
17%
recruitment
32%
ProduCTion uP 32% from
4.3mlb To 5.7mlb u3o8
ExPloraTion sPEnd inCrEasEd
from us$17.1m To us$20m
grouP EmPloyEEs inCrEasEd To
1,185 from 896
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cOnstructiOn wOrKErs –
LangEr HEinricH MinE
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1st
Paladin was ThE firsT ComPany in ThE lasT 20 yEars To
oPEn a ConvEnTional uranium minE, and ThE only ComPany
To suCCEssfully oPEn Two uranium minEs.
Pa l a d i n E n E r g y lT d » a n n u a l r E P o r T 2 011
consolidating
our position
The Company also made timely acquisitions, at appropriate
valuations, of quality uranium assets in Canada and Niger. These
uranium projects complement Paladin’s pipeline of uranium
resources in Australia, giving the Company a long-term strategic
stable of assets that cannot be replicated. This position, coupled
with Paladin’s production centres in Namibia and Malawi and
our team’s ability to build new operations, means that Paladin
occupies a unique space in the global uranium industry. I remind
shareholders to reflect on these particular characteristics of
your Company, notwithstanding perceived uncertainties in the
stock market and the uranium industry.
The Company’s strategies for organic and inorganic growth
are constantly under review and are considered in the context
of the current market dynamics and Paladin’s primary focus
on production and earnings per share growth. My Board is
conscious of the critical stage the Company is now in both
in terms of building investor confidence and entrenching its
position in the global uranium industry.
Once again, on behalf of my Board and fellow shareholders, I
thank John Borshoff and the Paladin team around the world for
their dedicated work during what has been a challenging period
for them. I also extend a sincere thank you to shareholders for
your support.
Yours faithfully
Rick Crabb
Chairman
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Dear Fellow Shareholders
It is fair to say that the 2010/11 financial year will be remembered
forever within the uranium industry. The tragic earthquake
and tsunami event in Japan in March stimulated considerable
misinformation and led many to what, I believe, is inaccurate
speculation about the future of nuclear power, much of which
has largely since been rectified.
Whilst we are convinced that there is a solid future for continued
growth in nuclear power and uranium demand, investors remain
cautious. Other global economic uncertainties, particularly
concerning the US and Europe, have depressed global stock
markets. Accordingly, the market for uranium shares has
suffered multiple blows. Tellingly the term price for uranium
oxide has remained relatively stable over this period, however
the spot price has retracted somewhat. I encourage you to
study the commentary in this Annual Report on Paladin’s view
of the current and future uranium market, to understand how
this shapes the Company’s strategic plans. Nevertheless, it has
been recognised by the Paladin Board and management that for
the time being we are operating in a different paradigm in terms
of how the investment market perceives the uranium industry.
On the other hand, both the emerging nuclear economies and
the existing nuclear power markets (except Germany) have
affirmed their commitment to nuclear power.
Paladin’s focus during 2010/11 has been on consolidating its
position as the new builder and operator of modern uranium
mines by increasing production. This goal was and remains
independent of events outside our control. I am pleased to say
that we are on track to achieve our goals and expect to make
further progress this year.
We are very pleased with the improved safety results, achieved
during a time of much activity at both mine sites and on our
exploration projects. Safety of our workforce and achievement
of the highest environmental practices remain top priorities of
the Board and management.
Due to various factors explained in the Company’s releases,
the annual production target was downgraded during the
year and the final result missed guidance by some 250,000
lbs. Understandably, this result drew criticism from market
analysts. However, year to year production increased by some
32% overall. The Company remains in a high growth phase
and has the philosophy of setting ambitious yet realistic targets
to encourage employees and contractors to work effectively
and efficiently to ensure this growth. This approach will not
change but our expectations are that our Langer Heinrich and
Kayelekera Mines will meet production guidance in the 2011/12
year. All efforts are being made at all levels of operations to
increase throughput and efficiency, whilst maintaining required
sustainability practices.
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I thought you may find it interesting to read the presentation I
gave to the Lowy Institute this year. The presentation looks at the
future of the nuclear industry following the earthquake in Japan.
John Borshoff
Managing Director/CEO
lowy insTiTuTE, sydnEy
john borshoff
20 aPril 2011
The Japanese operators are doing a remarkable job and in all
likelihood it appears that these units will be stabilised although
damage could well be sustained to the fuel rods. The plant in
question was one of the earliest built in Japan and even this
has, as far as is known, withstood forces way beyond design
specifications and containment of the main chamber appears to
have withheld and maintained its integrity.
I found it quite amazing that within
the first week of the earthquake [in
Japan], even though information
was scarce, politicians were jumping
to conclusions and backtracking
on nuclear, antagonists were
positioning and the frenzy fed by
misinformation and fear started to
roll out. The phobia that radioactivity, and generally all things
nuclear, generates and has always been irrational and during
this whole episode little attention was given to what could be
considered low level or even moderate level radioactive releases
of little danger to humans.
” it iS My beLief tHAt jApAn, AS foR ALL
As this all settles down the big issue that will confront Japan and
all other economies is to continue producing enough electricity
which is the foundation of economic wellbeing. The energy
strategists of Japan, many years ago, made the decision that
nuclear is essential and it will remain so when considered in terms
of environmental, technological, safety and economic grounds.
Renewables are out of the question when it comes to baseload
tHe nucLeAR induStRy, wiLL LeARn fRoM
tHiS, iMpRove And Move on. tHeRe ARe
LeSSonS to be LeARnt And tHiS wiLL
fuRtHeR iMpRove wHAt iS one of tHe
SAfeSt induStRieS in tHe woRLd.
It is incredible for me that this nuclear power plant event took so
much of the news traffic overshadowing the huge catastrophe
that had happened and I think, much to the shame of the
infotainment industries we call “news”, marginalising the death
and utter destruction this force of nature bought upon this region.
It is with this backdrop that we have watched the extraordinary high
profile developments being played out at the Fukushima nuclear
power plant where equally extraordinary efforts to stabilise these
units are ongoing, it appears with some success. A sideshow has
developed which, although understandable as this is the nature of
nuclear, nevertheless had a highly distractive impact. The media
frenzy and stakeholder positioning that has developed feeding on
hyperbole and imagination, with very little leadership or cool heads,
is apparent on a global scale and has not helped the situation. The
Japanese on the one hand are being embraced by the world in
dealing with the earthquake calamity and, on the other hand, are
being isolated with the ignorance and fear that is being exhibited
by many.
power and gas is already overloaded as the key offset to coal. It
is my belief that Japan, as for all the nuclear industry, will learn
from this, improve and move on. There are lessons to be learnt
and this will further improve what is one of the safest industries
in the world.
I must preface my remarks stating that I am not an expert in
reactor technology and so my comments here will be at a high
level. What I am able to say, however, is that the plant withstood
forces way beyond its design specifications and its main failure
was the inability to withstand massive water inundation, knocking
out the auxiliary power generation needed for cooling purposes.
Unlike 3 Mile Island and Chernobyl this was not operator error but
a consequence of a force of nature.
I come back to my airline industry analogy. With all the emotive
fear about flying (which has some parallel to the phobia some
have with nuclear) in the end, even if you have a serious airline
crash or even several crashes at once, this will not stop the
airline industry – it will learn, improve and move on – it will not go
back to sailing ships for transport or dream of hot air balloons
as being alternatives. The parallels in terms of managing risks
are all there for us to see.
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497PosT fukushima, ThE numbEr of nEw rEaCTors CurrEnTly ProPosEd and PlannEd aCross ThE world.
This is uP from 484 in 2010, and jusT 50 ThaT wErE ProPosEd/PlannEd in 2005. China, russia, india,
korEa and ThE middlE EasT arE driving dEmand as ThEy sEEk ClEanEr, lowEr CosT sourCEs of EnErgy.
This leads me to questions of the nuclear industry outlook.
I firmly believe that the outlook remains positive. The 440
reactors that exist today will continue to deliver electricity at
optimal levels, the 60 odd reactors under construction will be
built and those on schedule for construction starts, particularly
those in the emerging nuclear economies [such as China, India
and the UAE] along with Russia and Korea, will remain.
This time we have China, India, the Middle East, Korea and
Russia that will lead the charge with about 250 reactors planned
by 2030 in addition to the 62 they already operate between
them. You can bet, with this lot committed, the other countries
will follow en masse as they did in the 70’s and 80’s. There may
be a slight delay as these countries revisit and upgrade as a
result of lessons learnt.
The peripheral players in all this, particularly with regard to
new builds, are the US and Europe. The UK will posture a bit,
*Germany will posture but there is no alternative – nuclear is in
effect one of the safest industries in the world and will remain so
and it is much needed and essential to assist with the massive
amounts of new electricity growth that will be required. In
terms of environmental performance, technological capability
in delivering electricity, safety records and on economic and
strategic grounds it is a “must have” in the energy fuel mix
required and there is no getting away from this fact. Nuclear
has not got to the position that it has because it is loved, it has
got there because of its enormous capability to deliver massive
amounts of electricity in a carbon free and safe manner. There
is no credible replacement for this.
Demand will not appreciably change and the uranium supply
to fuel the current and new nuclear fleet becomes even more
interesting in my opinion. Those of you who have heard me
before know my position that uranium supply is in fundamental
shortage. That the US may delay its build programmes (and there
is clear evidence that some US utilities want to proceed and
build new units) and that the late arrived Germans may hold off a
little longer does not change this dynamic. China, Korea, Japan,
Middle East and Russia have reaffirmed their commitment to
nuclear. In a strange way the current events could well exacerbate
this shortage as skittish financial markets retreat which will likely
arise leaving a good many juniors unsupported.
In the 1960’s and 70’s nuclear development was spearheaded by
only 5 countries - the USA, USSR, France, Britain and Japan who
in the end built 250 reactors between them and were basically
the reason the nuclear boom started in the 70’s. Not all the 30
countries that would eventually have nuclear started together on
day one.
Pa l a d i n E n E r g y lT d » a n n u a l r E P o r T 2 011
In the 70’s when nuclear was regarded with great optimism,
the projections were to build 1,000 reactors by the turn of the
century. Supply from new mines increased rapidly in the 70’s and
utilities worldwide accumulated huge inventories in anticipation
to support this predicted growth. Then 3 Mile Island – 1979 and
Chernobyl – 1986 (in addition to economic factors) completely
derailed this growth expectation causing the collapse of the
uranium market. Suppliers went out of business, uranium miners
merged and rationalised where possible in a bid to survive, others
just abandoned their projects to welcome what was to become
a truly bleak period for nuclear. Uranium prices collapsed and
the outlook for the whole industry turned dismal leaving only a
handful of players and, for 25 years, a
hopelessness existed as the nuclear
industry stagnated.
It is my strong opinion that this
reaction will not be repeated as the
industry has matured and has an
excellent track record compared to
other industries. “in a nutsHELL
The 440 reacTors ThaT exIsT Today wILL
conTInue To deLIver eLecTrIcITy aT opTImaL
LeveLs, The 60 odd reacTors under
consTrucTIon wILL be buILT and Those
on scheduLe for consTrucTIon sTarTs,
parTIcuLarLy Those In The emergIng nucLear
economIes [such as chIna, IndIa and The uae ]
aLong wITh russIa and Korea, wILL remaIn.
* The German government subsequently implemented a revised phase out plan
shutting 8 reactors immediately and closing the remaining 9 plants by 2022.
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nuclear Power –
Meeting the
challenge
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afTEr ThE jaPanEsE Tsunami
In last year’s Annual Report we emphasised the resilience of the
nuclear electricity industry in the wake of the global financial crisis
and noted the strong growth of nuclear power worldwide. This
year we have to address the outlook for nuclear power after the
tsunami in Japan damaged the Fukushima plant which has raised
some questions about the safety of nuclear power and led to
a reappraisal of nuclear power programmes in some countries.
Now, more than five months after the tsunami, TEPCO, with the
assistance of nuclear companies worldwide, is making significant
progress towards achieving cold shutdown of units 1-3 by
January 2012 and maintaining adequate cooling of spent fuel
storage ponds. The evacuation area around the Fukushima plant
is still in force, causing major disruption to tens of thousands of
people, and radiation levels, while now low, are subject to strict
monitoring.
global imPaCT
The immediate impact was an outpouring of dramatic and
often hysterically exaggerated media coverage worldwide.
The unique circumstances of the accident and the fact that
“precautions” were often reported as “occurrences” led to
comparisons with Chernobyl which were entirely unjustified.
Data has subsequently shown that total radiation releases
(calculated as “iodine-131 equivalent”) were between 10-15%
of Chernobyl releases. Public anxiety was fuelled by a lack
of high quality information in the early days of the crisis and
a general ignorance of radiation risks and exposure concepts
amongst many in the media. In many countries anti-nuclear
advocates used the accident as an opportunity to make their
case against nuclear electricity without concerning themselves
with many of the details. In this potent mix of perceived “nuclear
disaster” there were immediate calls for the closure of nuclear
plants regardless of their design or location and in some
cases a demand for termination of national nuclear power
programmes. The German government immediately re-instated
its nuclear phase-out policy, shutting permanently 8 reactors
and mandating the closure of the remaining 9 plants by 2022.
The Japanese government has also announced a review of
the country’s long-term reliance on nuclear power. In other
countries a more pragmatic response is emerging.
whaT haPPEnEd as a rEsulT of
ThE Tsunami?
On 11 March 2011 the eastern coast of Japan’s Honshu Island
was devastated by a magnitude 9.0 earthquake centred about
130km offshore from the city of Sendai in Miyagi Prefecture.
The earthquake was very severe and caused Japan to move a
few metres eastward and the local coastline subsided by half
a metre. The subsequent tsunami, estimated to be 15 metres
at the coastline, inundated about 560 square kilometres and
caused the deaths of more than 20,000 people.
Eleven nuclear power reactors in the affected region were
operating at the time of the earthquake and all shut down
automatically at the time of the seismic shock. The reactors
operated by Tohoku Electric Power Company and Japan
Atomic Power Company were largely undamaged, but the four
units at Tokyo Electric Power Company’s (TEPCO) Fukushima
Daiichi plant were seriously compromised by the tsunami
floodwaters. Investigations have shown that units 1-3 escaped
major earthquake damage but lost external power supply
causing emergency generators in the basement of the turbine
buildings to start and provide power to the vital cooling circuits.
The primary tsunami wave hit the plants 41 minutes after the
earthquake and drowned the emergency generators and swept
away vital pumps and emergency systems. TEPCO engineers
faced an unprecedented challenge to avoid excessive core
temperatures causing possible ruptures to primary containment
structures and also to manage degradation of on-site spent
fuel storage ponds in an environment of destruction of vital
infrastructure caused by the tsunami. Graphic television images
of hydrogen explosions at three of the units flashed around
the world adding to the sense of disaster which threatened to
overshadow the human toll of the tsunami on local communities.
Pa l a d i n E n E r g y lT d » a n n u a l r E P o r T 2 011
E26ThE numbEr of rEaCTors undEr
ConsTruCTion in China, wiTh anoThEr
167 rEaCTors PlannEd or ProPosEd
To mEET ThE growing EnErgy nEEds
of ThE ChinEsE PEoPlE.
The Nuclear Fuel Cycle
ThE nuClEar fuEl CyClE
France, UK, Netherlands,
Germany, USA, Russia, China.
Enrichment
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–
i
Russia, France,
China, Canada, USA.
Conversion
r
a
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l
C
u
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Mixed Oxide
Fuel Recycle
440 plants consuming
180 Mlbs pa currently;
up to +490 new plants
under consideration
over the next 20 years.
Power Plant
11
11
Fuel Fabrication
14% of global electricity
production (2010)
Electricity
Mining
& Milling
140 Mlbs
produced
in 2010
Reprocessing
High-level
waste
Spent fuel
storage
Source: UMPNER Tasksforce, 2006; Paladin annotations.
Pa l a d i n E n E r g y lT d » a n n u a l r E P o r T 2 011
Pa l a d i n E n E r g y lT d » a n n u a l r E P o r T 2 011
nucLEar POwEr wOrLdwidE - POLicy cHangEs POst - JaPanEsE tsunaMi
Country
2010
%
Nuclear
Reactors
Operating
Reactors Under
Construction
Reactors
Planned
Reactors
Proposed
Comments - policy after Japanese tsunami
Belgium
52%
7
Canada
15%
18
0
2
0
3
0
3
China
2%
14
26
52
120
Czech
Republic
33%
Finland
28%
6
4
France
75%
58
Germany
26%
9
India
3%
20
Japan
29%
51
Korea
33%
21
0
1
1
0
5
2
5
2
0
1
0
18
10
6
1
2
1
0
40
5
0
Russia
17%
32
10
14
30
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l
C
u
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Will participate in EU stress tests.
Regulators ordered safety review and "lessons
learned" study.
Government temporary suspension of approvals
but maintains strong policy support
Nuclear a key climate change policy.
Government maintains plans for new build.
Radiation safety authority (STUK) to review
emergency preparedness.
Firm commitment to nuclear on
environment and cost grounds.
Highly dependent on nuclear and government has
reaffirmed pro- nuclear policy.
Will participate in EU stress tests.
Phase- out accelerated. 8 plants shut immediately,
remaining 9 shut by 2022.
Target 25% nuclear by 2050. Natural disaster
impact review. No change in policy.
Now under IAEA safeguards umbrella.
Major review of nuclear dependence "to decrease
use..but still utilize"
At least 20 plants off-line awaiting re- start
approvals. Staged stress tests ordered.
Safety review completed May 30; no change in
expansion plans.
Nuclear power and technology is a national
strategic priority
Progressive target to reach 70%- 80% nuclear
by 2100.
No change in government policy.
Will participate in EU stress tests. No change
in policy.
Phase- out abandoned and policy now permits
new plants to replace existing capacity.
Current government will not change policy.
Government will review safety, but no policy
changes announced.
Taiwan is planning a 20% power up- rate
and 20 year lifetime extension for existing
plants.
New government supports new reactors to
replace ageing fleet.
New build "emphasis on safety" but no
change to policy.
Spain
20%
8
12
Sweden
35%
10
Taiwan
20%
6
United
Kingdom
16%
18
USA
20%
104
Other
countries*
46
0
0
2
0
1
6
0
0
0
9
0
0
0
4
6
28
Current administration favourable to nuclear and
new builds highly likely.
"Lessons learned" review by NRC but no
change to policy.
38
104
11 additional countries planning nuclear programs
World
432
61
154
343
Potential to increase nuclear capacity by 2.5 times
* (Argentina, Armenia, Belarus, Brazil, Bulgaria, Egypt, Hungary, Indonesia, Iran, Israel, Italy, Jordan, Malaysia, Mexico, Netherlands, Pakistan, Poland, Romania, Slovakia, Slovenia, South Africa, Thailand, Turkey, Ukraine, UAE, Vietnam.)
Source: WNA, Paladin.
Pa l a d i n E n E r g y lT d » a n n u a l r E P o r T 2 011
nucLEar POwEr wOrLdwidE - POLicy cHangEs POst - JaPanEsE tsunaMi
Country
2010
%
Nuclear
Reactors
Operating
Reactors Under
Reactors
Construction
Planned
Reactors
Proposed
Comments - policy after Japanese tsunami
Belgium
52%
7
Will participate in EU stress tests.
Canada
15%
18
Regulators ordered safety review and "lessons
learned" study.
China
2%
14
26
52
120
Government temporary suspension of approvals
Czech
Republic
33%
Finland
28%
6
4
France
75%
58
Germany
26%
9
India
3%
20
Japan
29%
51
Korea
33%
21
Spain
20%
8
Sweden
35%
10
Taiwan
20%
6
United
Kingdom
16%
18
0
2
0
1
1
0
5
2
5
0
0
2
0
1
6
18
10
0
3
2
0
1
0
6
0
0
0
4
6
0
3
1
2
1
0
5
0
0
0
0
9
40
Target 25% nuclear by 2050. Natural disaster
impact review. No change in policy.
Now under IAEA safeguards umbrella.
but maintains strong policy support
Nuclear a key climate change policy.
Government maintains plans for new build.
Radiation safety authority (STUK) to review
emergency preparedness.
Firm commitment to nuclear on
environment and cost grounds.
Highly dependent on nuclear and government has
reaffirmed pro- nuclear policy.
Will participate in EU stress tests.
Phase- out accelerated. 8 plants shut immediately,
remaining 9 shut by 2022.
Major review of nuclear dependence "to decrease
use..but still utilize"
At least 20 plants off-line awaiting re- start
approvals. Staged stress tests ordered.
Safety review completed May 30; no change in
expansion plans.
strategic priority
Nuclear power and technology is a national
by 2100.
in policy.
No change in government policy.
Will participate in EU stress tests. No change
Phase- out abandoned and policy now permits
new plants to replace existing capacity.
Current government will not change policy.
Government will review safety, but no policy
changes announced.
Taiwan is planning a 20% power up- rate
and 20 year lifetime extension for existing
plants.
New government supports new reactors to
replace ageing fleet.
New build "emphasis on safety" but no
change to policy.
new builds highly likely.
"Lessons learned" review by NRC but no
change to policy.
Russia
17%
32
10
14
30
Progressive target to reach 70%- 80% nuclear
CurrEnT markET and long-TErm
uranium ouTlook
The growth in uranium production slowed in 2010 to 53,663
mtU/139,512,409lbs (up only 6% from 50,772 mtU/131,996,
423lbs in 2009) as the continued rise in Kazakhstan output
(17,803 mtU/46,284,021lbs in 2010, up 27% from 14,020
mtU/36,449,024lbs in 2009) and the increasing production from
the Company’s Kayelekera Mine Malawi (644 mtU/1,674,263lbs)
was substantially offset by a significant production shortfall in
Australia and smaller declines in Canada and Namibia.
We repeat our past assertions that pressures and constraints
on the supply side of the industry are real and still unresolved.
To the extent that investor appetite has been discouraged, we
believe uranium supply will continue to be tight over the medium
and longer term.
Uranium prices emerged from a depressed period during the
year when the spot price moved from US$41.75/lb U3O8 in July
to a peak of US$73.00/lb U3O8 in February 2011. The Japanese
situation in March 2011 saw prices weaken, reaching a low
of US$54.25/lb U3O8 in June 2011. The term uranium price
strengthened from US$60/lb U3O8 to reach US$73/lb U3O8
in February 2011 before easing off to US$68/lb U3O8 in May
2011. The Company continues to expect prices for both spot
and term supply to resume their upwards trend once the short-
term negative impact of the Fukushima accident has been fully
absorbed and understood by the market.
nuClEar PowEr Today
The public reaction has jolted the civil nuclear industry and
governments of nuclear electricity dependent countries into
recognising that more has to be done to explain the real risk
versus reward proposition of nuclear power. In particular, the
real off-site consequences of a major reactor accident have
to be better understood and explained. After a flurry of post-
accident announcements about reviewing reactor safety and
operations, most nuclear power countries have renewed their
support for their own civil power programmes. This is because
the case for nuclear power is still overwhelmingly compelling.
The world’s population is likely to exceed 9 billion people by
2050, entailing a tripling in demand for electricity. CO2 and
climate change policies will increasingly constrain the use of
high-carbon release fuels and, despite recent events, nuclear
power is and remains a safe and efficient source of large scale
electricity production.
sTaTus of nuClEar PowEr
ProgrammEs PosT ThE EvEnTs
in jaPan
We have updated the table we provided in last year’s Annual
Report to reflect the world, post the Japanese tsunami. This
year there are 432 nuclear power plants in operation worldwide
after Germany’s permanent closure of 8 plants (last year, 440)
providing 14% of the world’s electricity in 2010 (last year, 14%).
There are 61 new plants under construction (last year, 59), and
154 in the “planned” category (last year 149). The number of
plants in the “proposed” category has fallen by 1 to 343. These
numbers indicate that apart from the unique domestic issues
affecting Japan and Germany, nuclear power will maintain its
vital position as a major electricity source for today and well into
the future.
Operating
443
432
Proposed
343
322
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USA
20%
104
28
Current administration favourable to nuclear and
Other
countries*
46
38
104
11 additional countries planning nuclear programs
World
432
61
154
343
Potential to increase nuclear capacity by 2.5 times
* (Argentina, Armenia, Belarus, Brazil, Bulgaria, Egypt, Hungary, Indonesia, Iran, Israel, Italy, Jordan, Malaysia, Mexico, Netherlands, Pakistan, Poland, Romania, Slovakia, Slovenia, South Africa, Thailand, Turkey, Ukraine, UAE, Vietnam.)
nuMbEr Of rEactOrs
Pre-11 March 2011
Post-11 March 2011
Source: WNA Feb 2011
and July 2011
Planned
156
154
Under
construction
62
61
Pa l a d i n E n E r g y lT d » a n n u a l r E P o r T 2 011
Management
discussion and
analysis
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 2011. The effective date of this report is 31 august 2011.
The Financial Report has been prepared in accordance with
International Financial
Australian Accounting Standards,
Reporting Standards (IFRS), other authoritative pronouncements
of the Australian Accounting Standards 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 2011 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.
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Pa l a d i n E n E r g y lT d » a n n u a l r E P o r T 2 011
review of Operations
CANADA
AUSTRALIA
Aurora
Exploration
Resource 136Mlb
Postville
LABRADOR
Happy Valley - Goose Bay
Quebec
Oobagooma
Exploration
Exploration Target ~ 22Mlb
Manyingee
Advanced Exploration
Resource 24Mlb
Bigrlyi
Advanced Exploration
Resource 21Mlb
Darwin
NT
Alice Springs
Mount Isa Projects
Pre Development
Resource 129Mlb
Angela / Pamela
Angela / Pamela
Resource Definition
Resource 31Mlb
W A
QLD
SA
Brisbane
NEWFOUNDLAND
0
300
Kilometres
St. John’s
Perth
0
1000
Kilometres
NSW
Adelaide
Sydney
VIC
Melbourne
Paladin 100%
Paladin 41.71%
Paladin 50% JV Cameco
Mount Isa Projects
Resources and Reserves shown above
represent 100% of the resource or reserve -
not the participant’s share, and are depleted
for mining where appropriate
NIGER
NAMIBIA
MALAWI
Angola
Zambia
Tanzania
Langer Heinrich
Operating Mine plus Expansion
Reserves of 132Mlb
Resources of 174Mlb
Karonga
Zambia
Mzuzu
Kayelekera
Operating Mine
Reserves of 23Mlb
Resources of 42Mlb
Swakopmund
Walvis Bay
Windhoek
Botswana
N AM IBI A
Lake
Malawi
MALAWI
Lilongwe
Mozambique
Algeria
Libya
Arlit
Takardeit
Exploration
Resource 11Mlb
Agadez
NIGER
Chad
Mali
Niamey
Burkina
Faso
Benin
Nigeria
0
300
Kilometres
Atlantic
Ocean
Blantyre
South Africa
0
300
Kilometres
Zimbabwe
0
300
Kilometres
In addition to the resources illustrated above, the Company has a 19.98% interest in Deep Yellow Ltd (ASX: “DYL”) which has projects located near
Langer Heinrich in Namibia and Mount Isa in Australia.
Paladin’s total Mineral Resource inventory includes 163,786t
U3O8 (361.1Mlb of U3O8) at 0.070% U3O8 in the Indicated and
Measured categories (including ROM stockpiles), an 85%
increase from that reported in the previous year. Paladin also
holds 75,857t of U3O8 (167.2Mlb of U3O8) at 0.06% U3O8 in the
Inferred Resource category, a 12% 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 Mineral Resources from Bikini, Andersons and
Watta deriving from Paladin’s 82.08% ownership of Summit
Resources Ltd.
Pa l a d i n E n E r g y lT d » a n n u a l r E P o r T 2 011
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r E v i E w o f oP E r aTi o n s
uraniuM PrOductiOn
Project
Overview
* Langer Heinrich
Mine - 100%
(Namibia, Southern
Africa)
*Kayelekera
Mine – 100%
(Malawi, Southern
Africa)
The Company’s cornerstone asset
commenced production in 2007.
The Stage 3 expansion is essentially
complete with production expanding
to 5.2Mlb pa commencing ramp-up in
CY2011. To reach nameplate capacity
in first quarter of 2012. Studies are
underway for a further expansion to
10Mlb pa.
Paladin’s second operational uranium
mine announced commercial
production in July 2010. Ramp-up to
3.3Mlb pa is expected to be completed
end CY2011. Optimisation of the plant
is currently underway.
Mining
Method/
Deposit Type
Conventional
open pit;
calcrete
Outlook
Resources
Project life in
excess of 20
years
M&I (inc
stockpiles):
125.9Mt
@0.054%
(149.9Mlb U3O8)
Inferred:
18.6Mt @0.06%
(24.2Mlb U3O8)
Conventional
open pit;
sandstone
10 year project
life remaining
M&I (inc
stockpiles):
19.1Mt @ 0.08%
(34.2Mlb U3O8)
Inferred:
5.5Mt @ 0.06%
(7.6Mlb U3O8)
**Manyingee
Project – 100%
(Western Pilbara,
Western Australia)
Oobagooma
Project – 100%
(West Kimberley,
Western Australia)
*Valhalla & Skal
Deposits – 91.04%
(Queensland, Australia)
uraniuM dEVELOPMEnt
Project
Overview
*Aurora Project –
100%
(Labrador,
Canada)
Paladin’s first entry into Canada.
Resource definition and additional
exploration will be the next steps for
this project.
Mining
Method/
Deposit Type
Open pit -
underground;
metasomatic
Outlook
Resources
Development
dependent
on regulatory
policy
implementation
M&I:
Inferred:
40.2Mt @ 0.09%
(83.8Mlb U3O8)
29.1Mt @ 0.08%
(53.0Mlb U3O8)
7.9Mt @ 0.102%
(17.8Mlb U3O8)
Resource definition drilling is currently
planned and expected to commence
after access is achieved.
In-situ leach;
sandstone
3 year staged
feasibility study
required
M&I:
A key pipeline asset for Paladin.
In-situ leach;
sandstone
3 year reserve/
resource drilling
required
Exploration
target:
8.0Mt @ 0.12%-
0.14% U3O8
Inferred:
5.5Mt @ 0.05%
(6.2Mlb U3O8)
Paladin’s primary Australian asset
advancing towards future production.
A large effort is being made to
expand the current resource, continue
environmental studies and move
towards a Feasibility Study late 2012.
Open pit -
underground;
metasomatic
Development
dependent on
Queensland
Government U
Policy changes
*Bigrlyi Deposit –
41.71%
(Northern Territory,
Australia)
An expanded exploration budget for
the year will target increasing the
known resources and accessing
untested regional targets with JV
partner, Energy Metals.
Open pit -
underground;
sandstone
Prefeasibility
Study if
sufficient
resources
*Angela Deposit –
50%
(Northern Territory,
Australia)
In conjunction with JV partner
Cameco both resource definition and
preliminary economic analysis of the
asset is being advanced during 2011.
Open pit -
underground;
sandstone
Prefeasibility
Study to follow
resource
validation
M&I:
39.0Mt @ 0.08%
(68.8Mlb U3O8)
Inferred:
17.5Mt @ 0.06%
(21.9Mlb U3O8)
M&I:
4.7Mt @ 0.14%
(14.1Mlb U3O8)
Inferred:
Inferred:
2.8Mt @ 0.11%
(7.1Mlb U3O8)
10.7Mt @ 0.13%
(30.8Mlb U3O8)
Mineral Resources are quoted inclusive of any Ore Reserves that may be applicable.
Mineral Resources detailed above in all cases represent 100% of the resource – not the participant’s share.
*Complies with JORC(2004) guidelines & is NI 43-101 Compliant.
**Complies with JORC(1999) guidelines.
For Valhalla and Skal, Paladin’s interest is based on 50% deriving from the Isa Uranium Joint Venture and 41.04% via Paladin’s 82.08% 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.
Langer Heinrich and Kayelekera Mineral Resources have been depleted for mining to the end of June 2011.
M&I = Measured and Indicated.
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bLast HOLE driLLing, KayELEKEra MinE
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Pa l a d i n E n E r g y lT d » a n n u a l r E P o r T 2 011
r E v i E w o f oP E r aTi o n s
namibia
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langEr hEinriCh minE (lhm)
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 from the open pit mine with production
of 2.7Mlb of U3O8 achieved in 2008/2009. Soon afterwards, the
Stage 2 expansion increased production to 3.7Mlb pa in the 2010
financial year. Construction of the Stage 3 expansion is nearing
completion and is expected to further increase production to
5.2Mlb pa. Construction is expected to be completed in the
September quarter 2011 with ramp up to nameplate late 2011/
early 2012.
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 Detail 1 to 7 figure shows the location of the uranium
mineralisation along the length of the Langer Heinrich valley.
OPEratiOns
Production totalled 3.525Mlb, up 5% from 3.352Mlb the
previous year. The project operated successfully at near Stage
2 nameplate rates of 3.7Mlb pa for most of the year and fell
short only as a result of an unprecedented wet period between
January and April 2011.
Pa l a d i n E n E r g y lT d » a n n u a l r E P o r T 2 011
LangEr HEinricH MinE, naMibia
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The 174Mlb deposit allows for a minimum 20 year project
life based upon proposed Stage 3 production rates. During
the year 5,812,821t of ore was mined at an average grade of
773ppm. Additional low-grade material totalling 1,745,172t at
308ppm was mined and stockpiled for future down-blending
and potential heap-leach. The average strip ratio for the year
was 0.57:1 with an overall recovery of 80% achieved.
Construction and commissioning of the Stage 3 expansion is well
advanced which will bring the nameplate production design from
the current 3.7Mlb to 5.2Mlb pa. Delays have been experienced
in completing the expansion and conclusion of construction is
expected in October 2011. Staged commissioning is underway.
The second crushing system, with a much larger scrubbing
unit, was operational and contributing to production at the end
of the 2011 financial year with improved plant availability and
increased scrubbing efficiencies already apparent.
The Stage 4 expansion feasibility study is progressing well
in regards to process design and capability estimation. The
current target is to produce 8.7Mlb pa by conventional ore
processing and a further 1.3Mlb pa from the treatment of low
grade material. Efforts to date have focused largely on the
conventional ore treatment plant, plus optimisation of the mining
sequence. The study completion is expected by the December
quarter of 2011.
Following completion of drilling for the Stage 4 Mineral
Resource update, a new Ore Reserve using Stage 4 processing
parameters is expected during the second half of 2011.
The Mineral Resource is detailed below at a cut-off grade of
250ppm U3O8.
Pa l a d i n E n E r g y lT d » a n n u a l r E P o r T 2 011
r E v i E w o f oP E r aTi o n s
24000E
28000E
32000E
36000E
40000E
-88000N
To Gawib Flats
& Swakopmund
EPL 3500
-92000N
Legend
D7
D2
D1
D5
D3
D6
D4
Current
Reserve Base
-88000N
Old airstrip
ML 140
Plant
Ri ver
Airstrip
Camp
-92000N
To Tikos Flats
& Main Road
Surficial Cover
Ore Reserves >250ppm U3O8
Mineral Resource >250ppm U3O8
Crystalline rock
D7
Detail Grid
Area of 2010 Resource Drilling
Area of 2009 Infill Drilling
N
0
20
Kilometres
24000E
28000E
32000E
36000E
40000E
MinEraL rEsOurcE EstiMatE (dEPLEtEd
fOr Mining at End Of JunE 2011) fOr
dEtaiLs 1 tO 7:-
250ppm Cut-off
Mt Grade
t U3O8 Mlb U3O8
%
Measured Resources
34.1 0.055 18,337
40.42
Indicated Resources
76.2 0.055 42,208
93.05
Measured + Indicated 110.3 0.055 60,545
133.48
Stockpiles
15.6 0.050
7,445
16.41
Inferred Resources
18.6
0.06
10,990
24.2
(Figures may not add due to rounding and are quoted inclusive of any Ore
Reserves. Due to a software issue the previous resource was understated
by 2.7Mlb)
OrE rEsErVE
Economic analysis on this resource has indicated a break-even
cut-off grade of 250ppm.
OrE rEsErVE EstiMatE (250PPM u3O8
cut-Off)
250ppm Cut-off
Mt Grade
t U3O8 Mlb U3O8
%
Proved Ore Reserve
28.5 0.055 15,431
34.02
Probable Ore Reserve
65.0 0.055 36,842
81.22
Stockpiles
15.6 0.050
7,445
16.41
Total Ore Reserve
109.2 0.055 59,718
131.7
Ore Reserve has been depleted for mining to the end of June 2011
Compared to the previous ore reserve of 65.8Mlb announced
in 2008, the 2010 Ore Reserve estimate represented a 104%
increase in contained U3O8 when announced. The Ore Reserve
has been estimated from the Measured and Indicated Mineral
Resource of 139.3Mt at a grade of 0.055% U3O8. The Mineral
Resource estimate is based on Multi Indicator Kriging and
incorporates a specific adjustment based on expected mining
parameters. As a result additional dilution and mining recovery
are not included in the Ore Reserve estimation.
The cost parameters used in the reserve estimation are now
well established and as such their inclusion can reasonably be
justified. The revenue rate used in the estimate was US$60 per
lb and is regarded as appropriate when compared to the blend
of UxC spot price and existing term contracts.
These reserves form the basis of the detailed mine planning
for the Project. The revised mine model will allow a project life
in excess of 20 years, based on the expansion of processing
capability to 5.2Mlb pa.
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.
Following on from initial exploration drilling and a follow-up
airborne EM survey, a more extensive exploration and resource
definition drilling programme was completed by mid 2010. All
the data was validated and compiled into the Langer Heinrich
resource dataset and was used as input into the current Mineral
Resource estimation. Some areas close to the mining lease
remain open and a drilling programme to test these areas was
completed in August 2011.
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Pa l a d i n E n E r g y lT d » a n n u a l r E P o r T 2 011
3.525mlb
of u3o8 from ThE langEr hEinriCh minE
vErsus 3.352mlb u3o8 ThE PrEvious yEar
langEr hEinriCh ProCEss flow diagram
Alkaline Leach
(heat)
Barren Waste
Scrubbing
Crushing
Tailings Disposal
Run-of-mine Ore
Ion Exchange
Adsorption and
concentration
of uranium on
ion-exchange
resin from solution
Counter-Current
Decantation
Truck to
Walvis Bay
Ship to
Converter
Elution
Desorption of
uranium from
resin into
solution
Packaging
Precipitation
Precipitation
of uranium
from solution
Drying
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Pa l a d i n E n E r g y lT d » a n n u a l r E P o r T 2 011
r E v i E w o f oP E r aTi o n s
Malawi
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kayElEkEra minE (km)
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 primarily the arkose units and to a lesser extent
in the mudstone units. The lowest level of known mineralisation
currently is at a depth of approximately 160m below surface.
Kayelekera is owned 100% by Paladin (Africa) Limited (PAL)
a subsidiary of Paladin. 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, ML 152, 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 followed and construction started in June
2007 with completion in early 2009. The open pit mine continues
to ramp up to full scale production with nameplate production
expected early in the CY2012.
OPEratiOns
Operations at KM in FY2011 produced 2.169Mlbs, an increase
of 125% from the 963,000lbs produced in FY2010. While the
operation did not obtain steady nameplate during the financial
year, it made substantial positive steps toward the operation’s
design of 3.3Mlb pa. The project is expected to achieve this
capacity midway through the 2012 financial year as the
technical challenges and bottlenecks for production have now
been largely resolved.
Pa l a d i n E n E r g y lT d » a n n u a l r E P o r T 2 011
KayELEKEra MinE, MaLawi
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The main reasons for not obtaining nameplate production
within the specified period have centred around getting the first
modern Resin in Pulp (RIP) treatment plant operational, and
tackling plant availability and throughput restrictions. Heavy
rains and some shortages of diesel in Malawi during mid year
also contributed to the delay.
A key feature of the Kayelekera process plant is that it is the
first RIP facility in the Western world for uranium production.
While there have been challenges during the early days of the
application of this new technology, Paladin is now the front
runner on RIP application in the uranium recovery sector and
will benefit from this position.
Processing of the various ore types involves the use of sulphuric
acid, which is successfully produced at the site’s acid plant.
Sulphur, as well as other key reagents, is transported to site via
truck from various points of entry.
During the year, 946,410t of ore was mined at an average grade
of 1,448ppm. Additional low-grade material of 582,181t was
mined at an average grade of 514ppm. The average strip ratio
for the year was 1.6:1 with 1,022,843t of ore crushed.
Transport of uranium oxide operates successfully by convoy
through Zambia to Walvis Bay, Namibia where it is shipped to
converters in North America.
Electricity is produced by on-site diesel generation, which
has shown to be very effective. Further improvements
and cost savings are expected with the installation of a
steam turbine to be driven off the acid plant in the new financial
year. The steam turbine will deliver up to 2MW of electricity
while at the same time helping to reduce site dependence on
diesel fuel. Advancement of infrastructure, particularly roads
in the areas, hospitals and vendor suppliers, continues in
Northern Malawi.
Pa l a d i n E n E r g y lT d » a n n u a l r E P o r T 2 011
Kayelekera
Zambia
Karonga
Mzuzu
Tanzania
MALAWI
Lilongwe
Lake
Malawi
Mozambique
Blantyre
Zimbabwe
0
300
Kilometres
r E v i E w o f oP E r aTi o n s
33°40’
34°00’
Kayelekera
ML152
Mwankenja
Mpata
Juma
Mazongoni
Nthalire North
Nthalire South
Karonga
Mpata
EPL0170
Mlali
Chilumba
EPL0168
Chilongo
EPL0169
Chilumba
MALAWI
N
Chilumba
Livingstonia
10°00’
Minesite
Mapambo
EPL225/07
10°20’
Zambia
10°40’
0
20
Kilometres
Chiwerewere
Chimpamba
© Paladin Energy Ltd
resulting
relocation
Work has commenced on a combined programme of
equipment maintenance and
from
localised earth movement due to a land slip to the west of the
plant adjacent to the drying/packaging and acid plants. The
rectification programme includes movement of a portion of the
waste stockpile, continued instrument monitoring of affected
areas, the installation of a borehole pumping system to reduce
groundwater pressures, rehabilitation and where necessary,
relocation of plant equipment out of the affected area. A claim
for the cost has been lodged with the insurers.
MinEraL rEsOurcEs and OrE rEsErVEs EstiMatiOn
An updated Joint Ore Reserves Committee (JORC) and
Canadian National Instrument 43-101 (NI 43-101) Mineral
Resource and Ore Reserve is currently being estimated for the
Kayelekera ore body. The estimate will include all data from the
2010 and 2011 infill and extension drilling programme totalling
133 holes and 14,887m.
Details for the current Mineral Resource are as follows:
MinEraL rEsOurcE at 300PPM u3O8 cut-Off
250ppm Cut-off
Mt Grade
t U3O8 Mlb U3O8
%
Measured Resources
1.80
1,193
2,149
4.7
Indicated Resources
16.39
768
12,579
27.7
Total Measured &
Indicated
18.19
810
14,728
32.5
Stockpiles
0.94
822
770
Inferred Resources
5.5
625
3,447
1.7
7.6
(Figures may not add due to rounding and are quoted inclusive of any Ore
Reserves and are depleted for mining to end of June 2011)
Pa l a d i n E n E r g y lT d » a n n u a l r E P o r T 2 011
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2.169mlb
ProduCEd in oPEraTions from ThE kayElEkEra minE in fy2011, an
inCrEasE of 125% from ThE 963,000lbs ProduCEd in fy2010
kayElEkEra ProCEss flow diagram
Acid Leach
Extraction of uranium into
solution using acid liquor
Milling
Size reduction of crushed ore
Crushing
Tailings Disposal
Run-of-mine Ore
Elution
Desorption of
uranium from
resin into
solution
Precipitation
Precipitation
of uranium
from solution
Drying
Packaging
Resin-in-Pulp
Adsorption and concentration of
uranium on ion-exchange resin from slurry
Truck to
Walvis Bay
Ship to
Converter
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Pa l a d i n E n E r g y lT d » a n n u a l r E P o r T 2 011
Pa l a d i n E n E r g y lT d » a n n u a l r E P o r T 2 011
r E v i E w o f oP E r aTi o n s
The previously reported Mineral Resources (at 300ppm U3O8
cut-off) were 22.2Mt of Measured and Indicated Resources
grading 800ppm U3O8 (17,757t or 39.1Mlb of contained U3O8)
and 3.9Mt of Inferred Resources grading 552ppm (2,152t or
4.7Mlb of contained U3O8).
niger
west africa
OrE rEsErVEs
ProjECT agadEz
Project Agadez is located in northern Niger, north-west Africa,
30km west and north-west of the township of Agadez. It includes
3 exploration concessions, Tagait 4 (TAG4), Tolouk 1 (TOU1) and
Terzemazour 1 (TER1), totalling 1,480km2.
Paladin completed the takeover of NGM Resources Ltd (NGM),
the owner of the local company Indo Energy Ltd which holds
the concessions, in December 2010 and now owns 100% of
the project.
The tenements are located in the Tim Mersoi Basin and are
prospective for sandstone type uranium mineralisation in
Carboniferous, Permian and Jurassic sediments. The basin has
historically produced in excess of 280Mlb U3O8 from two Areva
mines (Somair and Cominak).
NGM had announced a low grade Inferred Mineral Resource of
11Mlb U3O8 at 210ppm at a cut-off grade of 120ppm U3O8 from
its drilling in shallow Jurassic sediments. Paladin has developed
an exploration programme to identify higher grade uranium
mineralisation in the lower carboniferous stratigraphies of
the area.
A drilling programme which started in March 2011 was completed
in early July with a total of 11,813m in 51 drill holes drilled.
Numerous downhole radiometric anomalies were encountered,
mainly in the prospective carboniferous strata. This initial drilling
programme was wide spaced with hole spacing of 400 to 800m
along profiles up to 8km apart. Although the anomalism was
generally narrow (less than 1m) counts were locally often high
(up to 19,700cps = approximately 0.77% eU3O8) and anomalous
strata could be correlated at distances of up to 8km resulting
in substantial follow-up targets for the next drilling programme.
The best intersection was encountered in hole TOCE18 at 230m
showing 1.4m at 0.25% eU3O8.
Due to the security situation caused by Al-Qaeda activities, no
experienced expatriate personnel from Paladin could visit the
project site. On-ground exploration was carried out by local staff,
with technical guidance from Perth head office.
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Economic analysis on this Resource has indicated a break-even
cut-off grade of 400ppm.
OrE rEsErVE at 400PPM u3O8 cut-Off
250ppm Cut-off
Mt Grade
t U3O8 Mlb U3O8
%
Proved Reserve
1.18
1,333
1,578
3.5
Probable Reserve
8.73
948
8,282
18.3
Stockpiles
0.94
822
770
1.7
Total Ore Reserve
10.85 979
10,630
23.4
(Figures may not add due to rounding and are depleted for mining to end of
June 2011)
The Ore Reserve is unchanged from the one announced in 2008
as there was no material change in the Measured and Indicated
category Mineral Resources. The 2011 drilling programme,
which is designed to infill a substantial portion of the Inferred
resources, is expected to result in an updated Ore Reserve.
The cost parameters used in the reserve estimation are now
well established and as such their inclusion can reasonably be
justified. The revenue rate used in the estimate was US$60 per
lb and is regarded as appropriate when compared to the blend
of UxC spot price and existing term contracts.
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 2010 drilling has also shown that the mineralisation is
not yet fully delineated, particularly at depth with additional
mineralisation identified below the current mine units. The 2011
drilling programme is continuing and is anticipated to be finalised
by the end of September 2011. The programme is expected to
better identify the mineralisation below the current pit design.
ExPLOratiOn
Work early in the year concentrated on drilling existing targets
on the exploration leases, particularly at Mpata, Juma and to
the immediate south of KM. Geological mapping, prospecting
and ground radiometric surveys were undertaken and this
work identified new targets at Mazongoni and Nthalire to the
south of the mine as well as targets at Mwankenja to the east.
Radiometric anomalies located at Chilumba, south of Karonga,
have also been planned for drill testing. Drilling continues on the
targets that have been identified.
Pa l a d i n E n E r g y lT d » a n n u a l r E P o r T 2 011
Formulation of the land use plan is progressing which, together
with environmental
legislation, will allow evaluation and
regulation of significant development projects. The Company
is awaiting the lifting of the three year moratorium on uranium
mining by the Nunatsiavut Government which is expected
towards the end of 2011.
Aurora consults regularly with the Nunatsiavut Government,
Inuit Community Governments, and community members on
the Company’s plans and activities in Labrador, as well as on
the progress and the process involved to develop the Michelin
Project. Community meetings have focused on uranium mining
and how it can be carried out safely; training, employment and
procurement opportunities; and environmental protection and
tailings management.
Activities are being maintained at the minimum level possible
and this status will not change until the moratorium is lifted.
Currently the Aurora technical data is being integrated into
the Paladin data system. Work has started on geological and
geophysical interpretation of the regional data set to identify
new prospective targets to guide future exploration and drilling.
Once the moratorium has been lifted an exploration programme
will be targeted at expanding the known resource centres as
well as new target development and testing.
canada
miChElin ProjECT
The Michelin Project is located 140km north of Goose Bay
and 40km southeast of the community of Postville, Labrador,
Canada.
On 1 February 2011 Paladin completed the acquisition of the
uranium assets of Aurora Energy Resources Inc. (Aurora) from
Fronteer Gold Inc. (TSX-FRG, AMEX-FRG). Paladin now holds
title to significant uranium assets within the highly prospective
Central Mineral Belt (CMB) of Eastern Canada.
The CMB is one of the few remaining, underexplored uranium
districts globally and this acquisition not only provides a
noteworthy mid-term development asset but also offers an
excellent opportunity for new discoveries and expansions of
the existing deposits. This highly strategic transaction fulfils
Paladin’s long held ambition to expand into Canada, a leading
country in uranium mining, both in terms of resources and
its stable political and business environment, providing the
Company with an important new platform from which to plan
its continued growth.
The resources are of a similar type to the Mount Isa deposits
and the expertise gained in the Mount Isa region will enable
Paladin to quickly develop targeting criteria and recognise new
prospective trends for drill testing.
The resources are reported at cut-off grades that contemplated
underground (0.05% U3O8 cut-off) and open pit (0.02% U3O8
cut-off) mining, based on preliminary economic assumptions,
and as such will be redefined utilising Paladin’s expertise.
Much of the Michelin Project area is within Labrador Inuit
Settlement Area (LISA) governed by the Inuit. In April 2008, the
Nunatsiavut Government imposed a three-year moratorium on
uranium mining on part of these lands, to be reviewed after
31 March 2011. The moratorium was put in place to give the
government time to develop environmental legislation and
finalise its land use plan.
ni 43-101 cOMPLiant u3O8 MinEraL rEsOurcEs
Deposit
Cut-off 0.05%
& 0.02% U3O8
Michelin
Jacques Lake
Rainbow
Inda
Nash
Gear
Total
Measured Mineral Resources
Indicated Mineral Resources
Inferred Mineral Resources
Mt Grade %
t U3O8
Mt Grade %
t U3O8
Mt Grade %
t U3O8
7.1
0.9
0.2
0.08
0.09
0.09
5,926
23.0
0.11
24,522
16.0
0.10
16,370
747
193
6.0
0.8
1.2
0.7
0.4
0.07
0.09
0.07
0.08
0.08
4,327
655
826
564
270
8.1
0.9
3.3
0.5
0.3
0.05
0.08
0.07
0.07
0.09
4,103
739
2,171
367
279
8.1
0.08
6,866
(15.1Mlb)
32.0
0.10
31,164
(68.7Mlb)
29.1
0.08
24,029
(53.0Mlb)
Pa l a d i n E n E r g y lT d » a n n u a l r E P o r T 2 011
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r E v i E w o f oP E r aTi o n s
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. Paladin has a 82.08% majority shareholding
in Summit. These areas cover approximately 1,459km2 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 457km2 of prospective
ground to the suite of Queensland uranium properties.
320000mE
340000mE
360000mE
Gunpowder
7820000mN
EPM12572
7800000mN
EPM12572
Honey Pot
Sunshine
EPM12572
Duke Batman
EPM16006
Project
Valhalla North -
Fusion
Isa North - Summit
Isa Uranium
Joint Venture
Uranium
Prospect
Mine
Station
Joker
EPM17513
EPM16006
EPM16006
EPM16006
EPM16921
7780000mN
Calton
Watta Hills
EPM16921
3
1
5
7
1
M
P
E
Warwai
EPM17513
7760000mN
EPM17519
EPM16921
Odin
Valhalla
7740000mN
EPM17514
Mirriooal
Rich John
Bikini
Skal
New May Downs
7720000mN
N
0
10
Kilometres
EPM17511
Andersons
Red Alpha
MOUNT ISA
© Paladin Energy Ltd
isa nOrtH and VaLHaLLa nOrtH
PrOJEct arEas
Mount Isa
Mount Isa
QLD
Brisbane
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 Pty 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 82.08% of the issued
capital in Summit, Paladin’s effective participating interest in the
IUJV is now 91.04%.
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 1,786km2 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 was
used as the 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. Exploration efforts are now focused on
increasing the mineable resource base, in close proximity to
Valhalla aiming to develop a robust mining model.
VaLHaLLa uraniuM dEPOsit
The Valhalla uranium deposit is located 40km north-west of
Mount Isa on Exploration Permit for Minerals (EPM) 17514.
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 Mineral 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 rocks 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.
In the September 2010 quarter a Mineral Resource estimate
conforming to both the JORC (2004) guidelines and the
requirements of NI 43-101 was completed for the Valhalla
uranium deposit following validation and compilation of data
from drilling undertaken earlier in the year. The estimate covers
the main Valhalla deposit as well as the south eastern extension,
Valhalla South.
The updated Mineral Resource estimate for the Valhalla uranium
deposit is quoted using a cut-off grade of 230ppm U3O8.
Measured and Indicated Mineral Resources increased by 5.6%
to 63.4Mlb U3O8 (28,778t U3O8). (see table at the end of this
section for more detail).
Odin uraniuM dEPOsit
The Odin uranium deposit is located 1km north of Valhalla at
EPL17514. A 99 hole resource definition drilling programme
totalling 16,044m was completed at Odin by September 2010
with a maiden Mineral Resource completed in December 2010.
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The Odin uranium deposit now has a strike length of 600m and
contains two mineralised lenses. The main lens trends north-
north-east and dips 50° – 60° to the east. The smaller southern
lens strikes north-south and dips steeply to the east. The Mineral
Resource is currently classified as Inferred, primarily due to drill
spacing and the number of bulk density determinations within
the dataset. Additional drilling is currently underway with an
updated Mineral Resource estimate expected late in 2011.
The initial Inferred Mineral Resource estimate for the Odin
uranium deposit is quoted using a cut-off grade of 250ppm
U3O8 (see table at the end of this section for more detail).
sKaL uraniuM dEPOsit
At Skal a resource development drilling programme of 28 holes
totalling 4,566m was halted in early December 2010 due to the
wet season. Encouraging results so far include:
SD0129
from 50m to 91m down hole, totalling
41m at 838ppm U3O8
SR0138
from 165m to 215m downhole totalling
50m at 1,394ppm U3O8
A resource upgrade for Skal is expected late in 2011 following
completion of the drilling programme.
mounT isa norTh uranium ProjECT
suMMit rEsOurcEs (aust) Pty Ltd 100% and OPEratOr
The project is located 10km 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.
biKini uraniuM dEPOsit
Following completion of drilling at the Bikini uranium deposit in
late 2010, an updated Mineral Resource estimate conforming to
the JORC (2004) and NI 43-101 guidelines has been finalised.
The resource dataset contains 180 drill holes for a total of
52,236m. Mineral Resources are quoted at a cut-off grade of
250ppm U3O8 and represent an 18% increase in contained
metal over the previous Mineral Resource (see table at the end
of this section for more detail).
VaLHaLLa nOrtH PrOJEct
The Valhalla North Project is located on two tenements totalling
457km2, 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.
Ground work and drilling of the Duke-Batman prospect in 2010
did not extend the mineralisation; however, it did confirm and
refine the geological model. After the compilation of all data a
new Mineral Resource estimate was identified (see table at the
end of this section for more detail).
rEsOurcE status MOunt isa rEgiOn - aLL PrOJEcts
The total JORC Resources under Summit and Paladin
management in the Mount Isa region are now 76.8Mlb U3O8
Measured and Indicated Resources and 52.7Mlb U3O8 Inferred
Resources. Of this 69.5Mlb U3O8 Measured and Indicated
Resources as well as 47.0Mlb U3O8 Inferred Resources (which
includes the Fusion Mineral Resources) are attributable to
Paladin. 59% of the Mineral Resources are located at Valhalla;
the rest are distributed over the Bikini, Skal, Andersons, Watta,
Duke-Batman and Honey Pot ore bodies. Details are as follows:-
Deposit
Measured Resources
Indicated Resources
Inferred Resources
Cut-off ppm
Mt
Grade
ppm
t U3O8
Mt
Grade
ppm
t U3O8
Mt
Grade
ppm
t U3O8
Valhalla*
230
16.0
819
13,116
18.6
4.3
840
575
15,662
9.1
2,458
8.4
8.2
5.77
497
2,868
6.7
643
491
573
493
5,824
4,130
4,685
3,324
2.0
4.2
1,050
2,100
410
1,720
0.5
1,370
728
0.3
1,100
325
Paladin
Attribution
91%
91%
91%
82.1%
82.1%
82.1%
100%
100%
Skal
Odin*
Bikini*
Andersons
Watta
250
250
250
230
230
Duke-Batman*
250
Honey Pot
250
Total
16.0
819
13,116
(28.9Mlb)
29.2
744
21,716
41.5
(47.9Mlb)
2.6
700
576
1,800
23,908
(52.7Mlb)
(Figures may not add due to rounding)
* Deposits estimated using Multiple Indicator Kriging within a wireframe envelope. All other resources are estimated using Ordinary Kriging with an appropriate
top cut. Data for all deposits is a combination of geochemical assay and downhole radiometric logging.
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r E v i E w o f oP E r aTi o n s
northern
territory
bigrlyi joinT vEnTurE
EnErgy MEtaLs LiMitEd 53.29% and ManagEr
nOrtHErn tErritOry uraniuM Pty Ltd 41.71%
sOutHErn crOss ExPLOratiOn nL 5%
The Bigrlyi Joint Venture (BJV) covers ten granted Exploration
Retention Licences located approximately 320km north-west
of Alice Springs in the Northern Territory. Participants in the
Joint Venture are Energy Metals Limited (53.29% and Manager),
Northern Territory Uranium Pty Ltd (a wholly owned subsidiary
of Paladin) (41.71%) and Southern Cross Exploration NL (5%).
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, as the Manager of the Bigrlyi Joint Venture,
announced in June 2011 the completion of a Pre-Feasibility
Study (PFS) for the Bigrlyi Project. The PFS showed that the
project is technically feasible, however, the key finding was that a
substantial increase in the resource base is required to improve
the project economics. Based on this result, the JV partners will
focus effort at increasing the resources of the project.
In late June 2011 Energy Metals Ltd released an updated
Mineral Resource estimate based on all drilling to date. The
revised geological model and estimation parameters based
on the close spaced drilling completed previously has resulted
in a slightly reduced total Mineral Resource than previously
announced. The breakdown of Mineral Resource category is
detailed below and is reported at a 500ppm U3O8 cut-off grade.
Mineral Resource
Classification
Tonnes
Mt
Grade
ppm
U3O8
Metal
t U3O8
Metal
Mlb U3O8
Indicated
Inferred
4.7
2.8
1,366
6,400
1,144
3,200
14.0
7.1
angEla joinT vEnTurE
caMEcO austraLia Pty Ltd 50% and ManagEr
PaLadin 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. Historical work indicates a potential
resource of between 26Mlb 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.
In 2009 and 2010 Cameco as the Project Manager conducted
drilling programmes including 172 holes and totalling 3,281m.
Extensive exploration work had been undertaken previously on
the Angela and Pamela Deposits by Uranerz Australia Pty Ltd
between 1972 and 1983.
A Mineral Resource estimate conforming to the JORC (2004) and
NI 43-101 guidelines has now been completed for the Angela-
Pamela uranium deposits. This follows extensive compilation
and validation of historic data and the drilling programme by the
Cameco-Paladin JV.
The Mineral Resource estimate is based on 794 holes totalling
180,468m and covers the Angela (1 to 5) and Pamela deposits.
The mineralisation plunges shallowly, approximately 9°, to the
west and the larger of the deposits, Angela 1, has been defined
up to 4.3km to the west at depths up to 600m and remains
open. The mineralisation is contained within nine individual
stratigraphic sequences with mineralised thicknesses of up to
10.4m.
The cut-off for the Mineral Resource is a combination of grade
greater than or equal to 300ppm U3O8 and thickness greater
than 0.5m. In addition, areas of low grade probability were
removed from the model.
Mineral Resource
Classification
Tonnes
Mt
Grade
ppm
U3O8
Metal
t U3O8
Metal
Mlb U3O8
Inferred Mineral
Resource
10.7
1,310
13,980
30.8
(Figures in the table above may not add due to rounding)
The Mineral Resource estimation was completed using a two
dimensional conditional simulation with the dataset being
derived predominantly from recent and historic downhole
radiometric
logging. The radiometric grades have been
extensively validated against laboratory assays.
This updated Mineral Resource estimate improves on the
historic resources previously announced providing a 10%
increase in both grade and tonnage U3O8.
As part of the licence conditions, baseline groundwater and
dust monitoring were completed prior to the commencement of
drilling activities. This programme is ongoing as part of a series
of environmental studies, including water, fauna and flora, dust,
radiation, meteorology and soils.
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western
australia
manyingEE uranium ProjECT
Manyingee 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
Manyingee in 1998 from Afmeco Mining and Exploration Pty Ltd
(AFMEX), a subsidiary company of Cogema of France.
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).
Manyingee contains JORC (1999) Code compliant Mineral
Resources as shown below at a cut off grade of 300ppm U3O8:
Category
Resource
Mt
Grade
% U3O8
U3O8
t
Indicated Resources
Inferred Resources
7.9
5.5
0.10
8,080
0.05
2,810
U3O8
Mlb
17.8
6.2
(Figures may not add due to rounding)
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 Manyingee
and is planning to start field exploration when an exploration
access agreement can be negotiated with the traditional owners
and land access and work approvals have been received from
the relevant authorities.
At Spinifex Well, where previous explorers identified uranium
mineralisation in the same strata which includes the Manyingee
ore body. Drilling has identified 4 redox fronts between 85m and
120m depth. Uranium mineralisation greater than 250ppm U3O8
or 0.5m was intersected in 10 holes with the best intersection
being 1.9m at 1,300ppm U3O8. The results are being evaluated
for further drilling in 2012.
oobagooma uranium ProjECT
Oobagooma 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 Oobagooma 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 exploration access can be granted. Negotiations with
the relevant Government bodies were initiated in the first half of
2010. Government and Defence representatives have indicated
their support for the Oobagooma Project and an access
agreement has been proposed to permit Paladin’s exploration
activities on the military training area.
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. Following detailed
examination of the work done by AFMEX, the Company
has formulated an exploration target for the prospect of
approximately 8Mt at a grade of between 0.12% and 0.14%
U3O8.
Previous tonnages, grades, assays and other technical data for
Oobagooma 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 any 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.
The information above relating to exploration, mineral resources and
ore reserves is, except where stated, based on information compiled
by Eduard Becker B.Sc, David Princep B.Sc and Andrew Reid B.Sc,
all of whom are members of the AusIMM. Messrs Becker, Princep and
Reid 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 Messrs Princep
and Reid as a Qualified Person as defined in NI 43-101. Messrs Becker,
Princep and Reid 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.
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Pa l a d i n E n E r g y lT d » a n n u a l r E P o r T 2 011
r E v i E w o f oP E r aTi o n s
australia’s uranium politics
uranium database
At the national level of Australian politics, both the Federal Labor
Party and the Federal Coalition parties support development of
the uranium industry, however, the granting of licences to mine
uranium is a decision made within the residual jurisdiction of
each state government.
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.
The state based Labor government of South Australia supports
existing mines and is receptive to new uranium projects.
The state based Labor government of the Northern territory also
supports existing mines and is receptive to new uranium projects,
although this is qualified by the government’s announcement
on 28 September 2010 that it would not support mining of
the Angela and Pamela deposits south of Alice Springs. The
opposition Country Liberal Party supports uranium mining.
The Liberal-National Party government of the state of Western
Australia supports uranium mining
in Western Australia
and several uranium mining projects have progressed to
environmental assessment since that government was elected
in late 2008. At its State Conference in June 2011, the opposition
Labor Party reaffirmed its stance against uranium mining. The
next Western Australian state election must be held no later
than April 2013.
At present, the state Labor Government of Queensland will
not grant a licence to mine uranium. To progress the currently
defined uranium resources in the Mount Isa region 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. The
opposition Liberal-National Party supports development of the
uranium industry. State elections in Queensland must be held
before June 2012.
Uniquely among Australian 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.
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 limiTEd (dyl)
PaLadin 19.98%
DYL is an ASX-listed, advanced stage uranium exploration
Company with a portfolio of advanced exploration projects in
the southern African nation of Namibia and in Australia. It also
has a listing on the Namibian Stock Exchange (NSX).
DYL’s primary focus is in Namibia where its wholly owned
subsidiary, Reptile Uranium Namibia
(Pty) Ltd, conducts
exploration on its four 100% owned Exclusive Prospecting
Licences (EPLs) covering 2,872km2 and three joint venture EPLs
covering 1,323km2, (in which it has earned 65% from Nova Energy
(Namibia) (Pty) Ltd). All seven tenements are situated in the Namib
Naukluft Desert Park inland from Walvis Bay and south and west
of Paladin’s LHM. Its flagship is the Omahola Project currently
under Pre-Feasibility Study with concurrent resource drill-outs
along the mineralised Ongolo Alaskite – INCA trend.
In Australia the Company is focused on resource delineation
of mid to high grade discoveries in the Mount Isa district in
Queensland and also owns the Napperby Uranium Project and
numerous exploration tenements in the Northern Territory.
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Health and
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OPEratOr, KayELEKEra MinE
Paladin is committed to achieving the highest performance
in Occupational Health and Safety and Radiation to create
and maintain a safe and healthy workplace. Our approach to
health and safety management is guided by our policy where
the safety, health and well being of employees, contractors
and the community are a core value to Paladin’s operations
with Paladin’s aim for zero injuries in the work place. Paladin
is fully committed to achieving minimum radiation exposure to
its workers, members of the public and the surrounding natural
environment. The Company is also committed to minimising
the potential long-term environmental impact of radiation by
the safe management of radioactive waste rock material at its
sites (exploration, construction, mining and processing). These
objectives will ensure that:
•
•
radiation doses to workers and the general public are
less than internationally accepted limits and are as low as
reasonably achievable; and
there are no adverse effects on the regional communities
or their environment.
During the year, Paladin undertook two external National
Occupational Safety Association (NOSA) grading audits of its
operations – Langer Heinrich Mine and Kayelekera Mine – and
a safety audit of the LHM Stage 3 contractors. In addition, the
Company used a local external health and safety auditor on its
Mount Isa exploration office. The Company is pleased to report
the following health and safety external audit results:
•
•
•
•
LHM: the site maintained its 4 Star NOSA Platinum rating;
KM: the site, undertaking its first grading audit, achieved
a 4 Star NOSA Green rating;
LHM Stage 3 contractors: all contractors were externally
(no grading audit
audited by a NOSA assessor
undertaken) and a satisfactory result was achieved; and
Mount Isa exploration: the office and its activities
were audited by Krause Health & Safety in relation to
compliance with AS/NZS4801 – 2001 and were found to
be in compliance.
Pa l a d i n E n E r g y lT d » a n n u a l r E P o r T 2 011
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Operational Area
Employees
Mine
Contractors
Contractors incl
construction
Employees
Mine
Contractors
Contractors incl
construction
Langer Heinrich Mine
Kayelekera Mine
Hours Worked
621,764
706,331
2,499,550
1,943,199
584,791
598,845
Lost Time Injuries
Fatalities
LTIFR
1
0
1.6
0
0
0
2
0
0.8
1
0
0.5
0
0
0
1
0
1.7
Langer Heinrich Mine Total LTIFR = 0.8
Duration rate = 20.0
Kayelekera Mine Total LTIFR = 0.6
Duration rate = 18.0
Operational Area
Perth
Corporate Office
Exploration
Employees
Contractors
Group
All Contractors
Paladin
Employees
Hours Worked
Lost Time Injuries
Fatalities
LTIFR
132,587
167,891
33,745
2,865,441
4,423,262
0
0
0
2
0
0
1
0
0
4
0
1.4
4
0
0.9
Perth and Exploration LTIFR = 9.0
Duration rate: 3.3
Paladin Group +
All Contractors LTIFR = 1.1
Lost Time Injury (LTI): Work injury that results in an absence from work for at least one full day or shift, any time after the day or shift on which the injury occurred.
Frequency Rate (FR): Number of lost time injuries per million hours worked.
Duration Rate:
Average number of workdays lost per injury.
78.57%
rEduCTion in losT TimE injury frEquEnCy raTE from fy2010 To fy2011
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34
kayElEkEra minE
Like LHM, KM put a concentrated effort into its SHER
management during the year via the implementation of the
NOSA safety system. The first NOSA grading audit was
conducted in June 2011 and the operation achieved a 4 Star
Green (health and safety) rating with a preliminary score of 88%.
involved
the site safety system
Implementation of
risk
management, the drafting of safety standards, recording of all
incidents and accidents, development of various key policies and
the training and development of employees and general training
of site contractors. A significant quantity of documentation was
uploaded into the Miracle database which is a depository for all
safety, health, radiation and environmental information.
The site reported two LTIs for 2010/11 – one to a consultant
(a broken ankle) and the other to a Kayelekera employee (a
fractured leg). No LTIs were reported for the mining contractor
Mota-Engil. The site annual LTIFR dramatically improved to 0.6
from 6.8.
A radiation specialist, seconded to KM, established a radiation
management system in a country with no previous uranium
mining or processing history. All high level documentation
has been completed including the development of Standard
radiation
Operating Procedures
monitoring equipment. Training of local employees on the new
radiation equipment was a major focus during the year. In terms
of occupational monitoring, no employee’s exposure exceeded
5 mSv (the annual regulatory limit is 20 mSv).
the newly acquired
for
ExPloraTion
Paladin’s exploration continued to be diverse during the year
with programmes undertaken across Queensland, Western
Australia, Northern Territory, Malawi and Niger. All exploration
programmes
involved drilling activities and work being
undertaken in remote locations. During the year, exploration
reported three LTIs – two to Paladin employees (both being
back strain) and one to a drilling contractor employee (slight
concussion from being hit by a loose hose). This necessitated
a greater emphasis to be placed on its health and safety
programme which was improved throughout the year in the
areas of documentation, safety awareness and training.
In February 2011, an external health and safety audit was
undertaken on the Mount Isa office and all activities by Krause
Health & Safety, a local consultant, to ensure compliance with
AS/NZS4801 – 2001 Occupational Health & Safety Management
Systems standards. In summary, they were found to be in
compliance with a comprehensive and documented health &
safety management system in place. Areas for improvement
identified, included incorporating the Queensland work health
& safety legislative requirements into the existing system, where
applicable, greater management and control of contractors and
improved hazardous substance and dangerous goods storage
management. These aspects are currently being addressed.
In addition, the Company’s Lost Time Injury Frequency Rate
(LTIFR) was reduced to 1.1 from 4.5 the previous year. This
compares favourably with West Australian metalliferous surface
mining LTIFR of 3.0.
langEr hEinriCh minE
LHM continues to focus on safety, health, environmental and
radiation (SHER) management. The second NOSA grading audit
was conducted in November, 2010. The operation maintained
its 4 Star Platinum (health, safety and environment) rating,
however it was able to improve its score significantly from 77%
to 90%. LHM is confident its grading will improve to a Platinum 5
Star rating during the next audit scheduled for November 2011.
The site reported three LTIs for 2010/11 – two LTIs for Stage 3
contractors (a twisted ankle and hairline skull fracture after being
hit by a loose pipe) and one for a Langer Heinrich employee (a
severed thumb). The site annual LTIFR improved to 0.8 from
1.5. No LTIs were reported for the mining contractor Karibib
Mining and Construction company (KMCC) which maintained
its NOSA 5 Star rating for its Langer Heinrich operations and
received the prestigious regional award for a 5 Star company
with the best Occupational Health and Safety system.
The main safety focus continues to be on improving the NOSA
rated safety system to further enhance the safety culture amongst
all employees. During the year, Stage 3 contractors were audited
to NOSA standards to identify areas of improvement in their
respective management systems. Safety management training,
ergonomics, planned job observations and internal auditing are
the areas of focus which will promote the continuous improved
performance.
In terms of occupational monitoring, the radiation programme
continues to focus on monitoring long-lived radioactive dust,
gamma, radon progeny and radon to ensure that all potential
pathways are considered when calculating the total effective dose
and also to ensure the principles of ALARA (as low as reasonably
achievable) are being maintained. The results obtained continue
to be very consistent and no employee’s exposure exceeded 5.5
mSv (the annual regulatory limit is 20 mSv).
Langer Heinrich continued its involvement with the Uranium
Institute in Namibia with the second module of the Radiation
Protection Officer’s course being com pleted. Two LHM
employees attended module II in this past year.
Further initiatives in progress include a finger swipe time card
and access control system, a newly designed final product
ablution and office facility, and a remote access control point to
ensure effective security measures for the increased mining and
processing activities.
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financial
review
suMMarisEd incOME statEMEnt
Revenue
Gross profit
Exploration and
evaluation expenses
Other expenses and income
Impairment of inventory
(Loss)/earnings before
interest and tax
Finance costs
Income tax benefit/(expense)
Loss after tax
Loss after tax attributable to:
Non-controlling interests
Members of the parent
Year Ended 30 June
2010
US$M
2011
US$M
268.9
204.3
46.7
51.0
(3.0)
(60.9)
(26.4)
(43.6)
(61.5)
16.6
(88.5)
(6.2)
(82.3)
(88.5)
(9.4)
(38.2)
-
3.4
(21.4)
(28.5)
(46.5)
(0.9)
(45.6)
(46.5)
Loss per share –
basic and diluted (US cents)
(11.1)
(6.5)
oPEraTional ovErviEw
LHM commenced production in 2007 with a capacity of 2.7Mlb
per annum. After operating at this level for a sustained period
of time, construction of the Stage 2 expansion to 3.7Mlb per
annum commenced in calendar year 2008. LHM reached the
Stage 2 design capacity in December 2009. The plant has
consistently operated at the 3.7Mlb per annum rate from the
beginning of calendar year 2010. Construction of the Stage 3
expansion to 5.2Mlb started at the beginning of calendar year
2010 and is well advanced. Conclusion of construction and
staged commissioning activities are expected to be completed
late in CY2011.
Construction of KM, with a 3.3Mlb design capacity, commenced
in 2007 and after a two year construction phase the mine
entered its production ramp-up phase in calendar year 2009.
KM continued to ramp-up its production volumes through to
July 2010. Commercial production was declared from 1 July
2010. KM made its first delivery of uranium to customers in
December 2009. The operation made substantial positive steps
toward the design of 3.3Mlb pa which the project is expected
to achieve early in the upcoming financial year after finalising
current plant upgrade to address bottlenecks.
References to 2011 and 2010 refer to the equivalent twelve
months ended 30 June 2011 and 2010 respectively.
analysis of inComE sTaTEmEnT
Revenue increased from US$204.3M to US$268.9M in 2011
as a result of increased sales of uranium of US$266.8M (2010:
US$202.0M). Total sales volume for the year was 4.812Mlb U3O8
(2010: 3.726Mlb). LHM sold 3.222Mlb U3O8, including 0.200Mlb
of LHM material sold through Paladin Nuclear Ltd, and KM sold
1.590Mlb U3O8. Total production for the year was 5.694Mlb U3O8
(2010: 4.316Mlb). LHM produced 3.525Mlb U3O8 (2010: 3.352Mlb)
and KM produced 2.169Mlb U3O8 (2010: 0.964Mlb). The average
realised uranium sales price in 2011 was US$55/lb U3O8 (2010:
US$54/lb). Delivery quantities under sales contracts are not evenly
distributed from month to month, which results in fluctuations
between production and sales between reporting periods.
Gross Profit in 2011 of US$46.7M is lower than in 2010
(US$51.0M) as a result of higher overall cost of sales offset by
increased sales volumes. The cost of sales (C1) for LHM in 2011
remained relatively stable at US$28/lb U3O8 (2010: US$26/lb).
The cost of sales (C1) for KM in 2011 was US$50/lb U3O8 (2010:
development phase). Overall cost of sales has been impacted
by higher unit costs associated with lower production volumes
during the ramp-up of production at KM. Inventory produced
during production ramp-up has been recognised at the lower of
cost and net realisable value. An explanation of how the higher
costs during production ramp-up at KM have affected the C1
cost of sales for the year ended 30 June 2011 is provided in
Segment Disclosure on page 39.
Exploration and Evaluation Expenditure of US$3.0M in 2011
were related to early stage work and project generation activities
in Australia and Malawi.
Other Expenses and Income has increased from US$38.2M to
US$60.9M due to other income in 2010 of US$9.5M relating
predominantly to an insurance recovery and in 2011 higher
corporate costs associated with expanded operations. The
non-cash component related to share rights benefits increased
from US$10.3M in 2010 to US$11.6M in 2011. A cost review
has commenced to reduce the level of both operational and
corporate costs.
Impairment of Inventory of $26.4M (2010:NIL) was required to
reduce the cost of KM inventory to its realisable value because
of the reduction in uranium spot prices and the higher cost of
KM production during the ramp up phase when volumes were
lower. A price of US$52.75/lb, the year end spot price, was
used as the net realisable value for finished goods inventory.
The spot price is the appropriate measure as sales are made
both into customer contracts and the spot market, with spot
prices currently lower than contract prices. The net realisable
value for stockpiles and work-in-progress is calculated at spot
price less budgeted costs to complete. Production volumes
have increased over the past year and are expected to increase
further once the current phase of plant upgrades to eliminate
bottlenecks is completed in the next few months.
Finance Costs have increased by US$40.1M to US$61.5M
despite average borrowings year on year remaining fairly
static due to a proportion of the interest payable in 2010 on
the convertible bonds and project finance being capitalised
as part of the construction of KM and in 2011 the loss on the
US$250M convertible bond buy back of US$4.6M and related
deferred borrowing costs amortisation of US$1.7M. Finance
costs related primarily to interest payable on the US$250.0M
convertible bonds issued 15 December 2006 and repaid at
the end of CY2010, the US$325.0M convertible bonds issued
11 March 2008, the US$300.0M convertible bonds issued 5
November 2010, US$127.9M project finance loan for KM and
US$24.8M project finance loan for LHM.
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druMMEd PrOductiOn frOM
LangEr HEinricH MinE
4.812mlb
ToTal salEs volumE for fy2011, vErsus
3.726mlb for ThE PrEvious yEar
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fi n a n C i a l r E v i E w
Income Tax Benefit of US$16.6M is lower than would be
expected from applying the tax rate to the loss before tax
largely due to tax losses for the Australian tax group not being
recognised, as at this point there is no certainty as to when
it will be recovered against income. This is partially offset by
the tax benefit arising in respect of the US$300M convertible
bonds. For 2010 a tax expense of US$28.5M arose largely due
to profits recorded in LHM and KM, a prior year adjustment and
tax losses for the Australian tax group not being recognised, as
at this point there is no certainty as to when it will be recovered
against income.
Non-controlling Interest in net losses of US$6.2M has been
recorded in 2011 attributable to the 18.0% interest in Summit
held by third parties and the 15% interest in Paladin (Africa) Ltd
held by the Government of Malawi.
The Loss after Tax attributable to the members of the parent
for 2011 of US$82.3M was higher than the loss after tax for
2010 of US$45.6M predominantly as a result of higher finance
costs in 2011 after cessation of capitalisation of KM, other
income in 2010 relating predominantly to an insurance recovery,
and the recognition of an impairment of inventory expense of
US$26.4M, which has partially been offset by the recognition in
2011 of an income tax benefit of US$16.6M, a turnaround from
the tax charge of US$28.5M in 2010.
The Loss per Share noted on the Income Statement reflects
the underlying result for the specific reported periods and the
additional shares issued in 2011 compared to 2010.
Total revenues for the quarters ended September 2010,
December 2010, March 2011 and June 2011, have increased
when compared to the equivalent comparative quarter as a
result of higher sales volumes of uranium. Total revenues for all
quarters ended December 2009 onwards include sales by KM.
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.
Loss after tax for the quarter ended June 2011 of US$47.7M
is higher than the comparative quarter loss predominantly
as a result of higher finance costs in 2011 after cessation of
capitalisation of KM and the recognition of an impairment of
inventory expense of US$23.4M, which has increased the loss
due to the recognition in 2011 of an income tax expense of
US$3.7M, a reduction from the tax charge of US$10.5M in 2010.
Loss after tax for the quarter ended March 2011 of US$13.5M
is higher than the comparative quarter loss predominantly
as a result of higher finance costs in 2011 after cessation of
capitalisation of KM.
suMMary Of QuartErLy financiaL rEsuLts
Total revenues
(Loss)/profit after tax
Basic and diluted loss per share (US cents)
Total revenues
(Loss)/profit after tax
Basic and diluted loss per share (US cents)
sEgMEnt grOss PrOfit
2011
Jun Qtr
US$M
60.2
(47.7)
(6.3)
2010
Jun Qtr
US$M
49.8
(25.2)
(3.5)
2011
Mar Qtr
US$M
92.9
(13.5)
(1.8)
2010
Mar Qtr
US$M
53.3
(5.7)
(0.8)
2010
Dec Qtr
US$M
66.7
(17.6)
(2.5)
2009
Dec Qtr
US$M
62.6
2.4
0.3
2010
Sep Qtr
US$M
49.1
(3.5)
(0.5)
2009
Sep Qtr
US$M
38.6
(17.1)
(2.5)
Year Ended 30 June 2011
Year Ended 30 June 2010
LHM
KM
TOTAL
LHM
KM
TOTAL
Volume Sold (lb)
3,222,135(1)
1,590,000
4,812,135
2,726,000
1,000,000
3,726,000
Average Sales Prices/lb
Revenue
US$55/lb
US$266.8M
US$54/lb
US$202.0M
Cost of Sales (C1)
US$91.1M
US$79.8M
US$170.9M
US$72.1M
US$59.5M
US$131.6M
Cost of Sales/lb (C1)
US$28/lb
US$50/lb
US$35/lb
US$26/lb
US$59/lb
US$35/lb
Profit after C1 costs
Other revenue and costs,
mainly depreciation
Gross Profit
US$95.9M
US$49.2M
US$46.7M
US$70.4M
US$19.4M
US$51.0M
(1) Includes 200,000lb of LHM produced U3O8 sold by Paladin Nuclear Ltd, Paladin Energy Ltd’s marketing company.
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Loss after tax for the quarter ended December 2010 of US$17.6M
is higher than the comparative quarter profit predominantly as a
result of higher finance costs in 2010 after cessation of capitalisation
of KM and other income in 2009 relating predominantly to
an insurance recovery, which has been partially offset by the
recognition in 2010 of an income tax benefit of US$6.4M.
Loss after tax for the quarter ended September 2010 of
US$3.5M was lower than the loss after tax for 2009 of US$17.1M
predominantly as a result of the recognition in 2010 of an income
tax benefit of US$15.1M compared to an income tax expense in
2009 of US$16.0M.
sEgMEnt discLOsurE (rEfEr tO nOtE 4)
The profit before tax and finance costs of US$44.9M in the
Namibian segment of the Company remained relatively stable
when compared to 2010 (US$40M). In the Malawian segment
the Company reflected a loss before tax and finance costs of
US$37.4M compared to a profit of US$7.9M in 2010 reflecting
loss on sale of inventory due to the higher cost of goods
produced during ramp-up of production and the recognition of
an impairment of inventory expense. An explanation of how the
higher costs during production ramp-up at KM have affected
the year ended 30 June 2011 C1 cost of sales is provided
below. Exploration activities have remained relatively consistent
from 2010 to 2011 however the amount expensed has fallen due
to the voluntary change in accounting policy (refer to Note 3). In
the Unallocated portion the Company reflected the remaining
Income Statement activities, which for 2011, comprises mainly
marketing, corporate, finance and administration costs.
Sales of 4,812,135lb U3O8 at an average of US$55/lb generated
revenue of US$266.8M in the year ended 30 June 2011. Paladin
Nuclear Ltd (PNL) sold part of its inventory holding previously
purchased from LHM. This compares with sales of 3,726,000lb
U3O8 at an average sales price of US$54/lb for the year ended
30 June 2010.
Cost of Sales (C1) for LHM in the year ended 30 June 2011
increased to US$28/lb U3O8 due to the 8% strengthening in the
Namibian dollar from 7.38 at 1 July 2010 to 6.79 at 30 June 2011
which impacted Cost of Sales (C1) reported in US$. Additionally
abnormal rainfall during the March quarter, ten times greater
than the annual average, impacted production due to restricted
access to higher-grade mining areas and increased difficulty in
treating wet ore.
C1 cost of sales for KM decreased from US$59.50/lb in 2010
to US$50/lb in 2011, which reflects a slower than anticipated
ramp-up. This is as a result of stock being valued at average
cost. The majority of KM’s sales were made from the stock
produced up to 31 December 2010. Consequently, the cost of
sales for the year predominantly reflects the cost of production
during the second half of CY2010 when costs were higher
due to lower volumes during the production ramp up phase.
Given the average cost approach, the timing of deliveries and
assuming that approximately four months of production is held
in stock from time to time, it is not unexpected for a delay of six
months to occur before current production costs are reflected in
the cost of sales. C1 cost of sales for the 350,000lb sold in the
June 2011 quarter was US$45/lb reflecting the higher volumes
produced during the first half of CY2011. With the present plant
upgrade being completed to remove bottlenecks, production
volumes are expected to rise further with a proportionate
reduction in costs.
Pa l a d i n E n E r g y lT d » a n n u a l r E P o r T 2 011
suMMarisEd statEMEnt Of
cOMPrEHEnsiVE incOME
Year Ended 30 June
2010
2011
US$M
US$M
Net loss after tax
(88.5)
(46.5)
Net gain/(loss) on available-
for-sale financial assets
Transfer of available-for-sale
reserve on acquisition
Foreign currency translation
Income tax on items of
other comprehensive
income
Total comprehensive
income/(loss) for the year
10.8
(37.0)
(3.2)
141.1
-
31.7
(3.7)
8.0
56.5
(43.8)
Net Loss after Tax is discussed under the Summarised Income
Statement section and is an increase from the loss in the
comparative period.
Net Gain on Available-for-Sale Financial Assets in 2011 of
US$10.8M primarily relates to the fair value increment in Deep
Yellow Limited (DYL) (net of tax) attributable to the increase in
the DYL share price.
Transfer of Available-for-Sale Reserve on Acquisition relates to
the transfer of US$3.2M for the NGM takeover to the cost of the
investment.
Foreign Currency Translation relates to the foreign currency
translation reserve movement as a result of the translation of
subsidiaries with Australian dollar functional currencies into the
Company presentation currency of US dollars on an ongoing
basis and for the comparative period.
Income Tax on Items of Other Comprehensive Income in 2011
relates to tax on movements in Available-for-Sale Financial
Assets.
suMMarisEd statEMEnt Of
financiaL POsitiOn
Total current assets
Total non current assets
Total assets
Total current liabilities
Total non current liabilities
Total liabilities
Net Assets
Year Ended 30 June
2010
2011
US$M
US$M
329.4
2,074.3
2,403.7
118.9
929.6
1,048.5
1,355.2
515.9
1,460.8
1,976.7
121.4
884.4
1,005.8
970.9
Current Assets have decreased to US$329.4M at 30 June 2011
due to a decrease in cash as well as trade and other receivables
which have been partially offset by an increase in inventories.
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fi n a n C i a l r E v i E w
Cash and cash equivalents have decreased to US$117.4M at 30
June 2011 as a result of expenditure on the Stage 3 expansion
at LHM, investment in working capital required as a result of
the increase in production levels at KM, principal repayments
for both the LHM and KM project finance facilities, exploration
and evaluation project expenditure, finance costs and corporate
costs for the year ended 30 June 2011.
the previous and new accounting policies of the Group. Given
the significance of the exploration programmes that are being
undertaken by the Company following the acquisition of Summit
Resources Limited, the recent acquisition of the uranium assets
of Aurora Energy Resources Inc. and the takeover of NGM
Resources Ltd, it was considered necessary to change the
accounting policy.
Inventories have increased from US$109.3M to US$177.7M at
30 June 2011 due to increased production volumes of 5.7Mlb
U3O8 being larger than sales volume for the year of 4.8Mlb U3O8,
reflecting the increase of stock in transit and converter stocks
associated with increased production levels.
Finished goods, at cost and net realisable value, as at 30 June
2011, have increased by US$51.6M to US$129.9M mainly due
to increased production at KM. The increase in finished goods
is also as a result of higher than average customer sales of in
excess of 1Mlbs that needed to be delivered in July 2011.
Non Current Assets have increased to US$2,074.3M at 30
June 2011 primarily as a result of the increase in the exploration
assets due to the foreign exchange movement on the Australian
dollar denominated exploration assets, the acquisition of NGM
and the Aurora uranium assets and the voluntary change in
accounting policy to capitalise and carry forward exploration
expenditure as an asset, (refer to Note 3). Exploration and
evaluation assets were assessed for impairment at the date of
the half year Financial Report and the Annual Financial Report.
The Company continues to conduct exploration and evaluation
activities on these projects and retains the right of tenure. In
determining the fair value for the Queensland capitalised
exploration and evaluation assets, management considered a
range of valuation indicators including market yardsticks such
as recent transactions and the share price of Summit Resources
Limited. Property, Plant and Equipment has increased due
to capital expenditure on the Stage 3 expansion at LHM and
there was an increase in the fair value of other financial assets
primarily attributable to the increase in the DYL share price.
ROM stockpiles have increased as planned ahead of the Stage
3 production expansion.
As noted above the financial report has been prepared on
the basis of a retrospective application of a voluntary change
in accounting policy relating to exploration and evaluation
expenditure. The new exploration and evaluation expenditure
accounting policy is to capitalise and carry forward exploration
and evaluation expenditure as an asset when rights to tenure
of the area of interest are current and costs are expected to be
recouped through successful development and exploitation of
the area of interest or alternatively by its sale. Refer to Note 2(s)
for the full detail of the new accounting policy. The previous
accounting policy was to charge exploration and evaluation
expenditure against profits as incurred; except for acquisition
costs and for expenditure incurred after a decision to proceed
to development was made, in which case the expenditure was
capitalised as an asset.
The new accounting policy was adopted on 31 March 2011 and
has been applied retrospectively. Management judges that
the change in policy will result in the financial report providing
more relevant and no less reliable information because it leads
to a more transparent treatment of exploration and evaluation
expenditure that meets the definition of an asset and is consistent
with the treatment of other assets controlled by the Group when
it is probable that future economic benefits will flow to the Group
and the asset has a cost that can be measured reliably. AASB 6
Exploration for and Evaluation of Mineral Resources allows both
The impact of the change in accounting policy on the
Consolidated Income Statement, Consolidated Statement of
Financial Position and Consolidated Statements of Cash Flows
is set out in Note 3.
from US$121.4M
Current Liabilities have decreased
to
US$118.9M at 30 June 2011 primarily as a result of a decrease
in interest bearing loans and borrowings as a result of principal
repayments for both the LHM and KM project finance facilities
and a decrease in provisions as a result of the settlement of the
Areva litigation. This has been partially offset by an increase in
trade and other payables.
Non Current Liabilities have increased from US$884.4M to
US$929.6M at 30 June 2011 primarily as a result of an increase
in deferred tax liabilities. The deferred tax liabilities have largely
increased due to the foreign exchange movement on deferred
tax liabilities recognised on the acquisition of the Summit Group
in Australia, an increase in the fair value of other financial assets
attributable to the increase in the DYL share price, initial recognition
of the US$300M convertible bond, capitalisation of exploration
expenditure and an unrealised foreign exchange gain in Namibia.
In the Statement of Financial Position as at 30 June 2011, the
Company reflected an increase in assets for the Namibian
segment in the period predominantly due to the Stage 3
expansion. For the Malawian segment, an increase in assets
occurred in the period predominantly as a result of an increase in
working capital due to increased production levels. Exploration
assets increased predominantly due to the increases in value
of Australian dollar denominated exploration assets, the
acquisition of NGM and the Aurora uranium assets and the
voluntary change in accounting policy to capitalise and carry
forward exploration expenditure as an asset, (refer to Note 3).
The reduction in the Unallocated assets reflects the reduction
in cash through investment in Stage 3 expansion, repayment of
LHM and KM project finance facilities and exploration activities.
suMMarisEd statEMEnt Of cHangEs in EQuity
Total equity at the
beginning of the
financial year
Total comprehensive
gain/(loss) for the year
Recognised value of
unlisted employee options
and performance share
rights
Movement in other reserves
Contributions of equity, net
of transaction costs
Total equity at the end of
the financial year
Year Ended 30 June
2010
2011
US$M
US$M
970.9
638.6
56.5
(43.8)
14.6
21.5
12.0
-
291.7
364.1
1,355.2
970.9
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Net Cash Outflow from Investing Activities was US$132.5M in 2011
as a result primarily of Stage 3 expansion at LHM and capitalised
exploration expenditure. The net cash outflow of US$179.6M in
2010 was as a result of mine construction at KM, Stage 2 and 3
expansions at LHM and capitalised exploration expenditure.
Net Cash Inflow from Financing Activities of US$1.3M in 2011 is
attributable to the US$300M convertible bond receipt partially
offset by the full repayment of the US$250M convertible bond,
drawdown of project financing for KM and repayment of
project financing for both LHM and KM. The net cash inflow
of US$495.3M in 2010 was attributable to the US$363.0M
net proceeds from the share placement and US$145.0M net
proceeds from the drawdown of KM project finance facilities
which was partly offset by repayment of project finance facilities
for LHM and KM project finance facility establishment costs.
Net Decrease in Cash and Cash Equivalents in 2011 was
US$233.2M, as compared to the net increase in cash over the
previous corresponding period in 2010 of US$281.2M. The change
is predominantly the result of the US$363.0M net proceeds from
the share placement and US$145.0M net proceeds from the
drawdown of KM project finance facilities in 2010 and lower cash
outflows from investing activities which has been partly offset by
higher cash outflows from operating activities.
Effect of Exchange Rate Changes on cash balances is a gain of
US$2.7M for 2011.
liquidiTy and CaPiTal rEsourCEs
The Group’s principal source of liquidity as at 30 June 2011 is
cash of US$117.4M (30 June 2010: US$347.9M). This includes
US$19.5M restricted for use in respect of the LHM and KM
project finance facilities. Of this US$93.5M is held in US dollars.
The Group’s principal sources of cash for the year ended 30 June
2011 were uranium sales receipts, proceeds from the issue of
convertible bonds and interest received from cash investments.
On 26 August 2011, the Company announced that the detailed
financing documentation required for the Stage 3 expansion had
been finalised and executed. The initial development funding
for the project has been via Paladin’s existing cash reserves.
Paladin and a syndicate of banks executed a US$141M Project
Financing Facility, consisting of a 6 year facility of US$135M with
a cost overrun facility of US$6M. The loan is being provided
without a parent company guarantee from Paladin with
drawdown subject to conditions precedent usual for this type of
facility. (Refer to Note 28)
The remaining amount outstanding on the LHM project finance
facilities was US$24.8M and the KM project finance facility was
US$127.9M.
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Total Comprehensive Income for the Year Ended 30 June 2011
is discussed under the Statement of Comprehensive Income
section.
Recognised Value of Unlisted Employee Options and
Performance Rights in 2011 totals US$14.6M. During the period,
960 employee options were exercised and 4,536,004 expired
or were forfeited with an exercise price ranging from A$2.07
to A$8.77 per share. During the year 1,300,580 performance
share rights vested and 4,292,117 performance share rights
were granted with vesting dates ranging from 1 January 2011 to
5 November 2014. Of these 750,000 were issued as fully paid
ordinary shares to be held in trust, vesting variously over time up
to 1 January 2012 subject to conditions.
Movement in Other Reserves in 2011 of US$21.5M relates to the
creation of the non-distributable reserve of US$28.1M from the
issue of US$300M of convertible bonds on 5 November 2010
and a US$6.6M transfer to the convertible bond reserve as a
result of the US$250M convertible bond buyback.
Contributions of Equity in 2011 of US$291.7M relates to the
issue of 7,155,938 shares to acquire NGM, the non-controlling
interest’s participation in Summit’s renounceable rights issue
and the issue of 52,097,937 shares to acquire the uranium
assets of Fronteer Gold Ltd. The number of fully paid ordinary
shares on issue at 30 June 2011 is 777,698,217, an increase
of 60,555,415 during the year. Share options of 8,231,791 and
performance rights of 6,947,337 remain outstanding at 30
June 2011 to the employees and consultants directly engaged
in corporate, mine construction, operations, exploration and
evaluation work.
suMMarisEd statEMEnt Of casH fLOws
Net cash outflow from
operating activities
Net cash outflow from
investing activities
Net cash inflow from
financing activities
Net (decrease)/increase in
cash and cash equivalents
Cash and cash equivalents
at the beginning of financial
year
Effects of exchange rate
changes on cash and cash
equivalents
Cash and cash equivalents
at the end of the financial
year
Year Ended 30 June
2010
2011
US$M
US$M
(102.0)
(34.5)
(132.5)
(179.6)
1.3
495.3
(233.2)
281.2
347.9
65.3
2.7
1.4
117.4
347.9
Net Cash Outflow from Operating Activities was US$102.0M in
2011 primarily due to the investment in working capital associated
with the increase in production levels. The LHM and KM operations
generated US$83.7M in cash in 2011 before investment in working
capital of US$108M mainly inventory to fill the stock pipeline to
the converter needed to support higher production and sales
levels. The remaining expenditure was for exploration, corporate,
administration, marketing and interest paid.
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fi n a n C i a l r E v i E w
The following is a summary of the Group’s outstanding
commitments as at 30 June 2011:
CriTiCal aCCounTing EsTimaTEs
Total Less than
1 yr
US$M
US$M
1 to 5yrs
US$M
5yrs+ or
unknown
US$M
Payments due
by period
Tenements
64.4
19.0
17.0
28.4
Mine
construction
Operating leases
Manyingee
acquisition costs
Total
commitments
18.8
6.9
18.8
1.5
0.8
-
-
5.3
-
-
0.1
0.8
90.9
39.3
22.3
29.3
In relation to the Manyingee Uranium Project, the acquisition
terms provide for a payment of A$0.75M (US$0.8M) 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$0.8M) and
are subject to the Western Australian Department of Minerals
& Energy granting tenements comprising two exploration
licence applications. The A$0.75M (US$0.8M) 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 31 August 2011 Paladin had 777,698,217 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, the Company
Employee Performance Share Rights Plan and in relation to the
Convertible Bonds:
As at 31 August 2011
Outstanding shares
Issuable under Executive Share
Option Plan
Issuable under Employee Performance
Share Rights Plan
Issuable in relation to the US$250M
Convertible Bonds
Issuable in relation to the US$325M
Convertible Bonds
Total
Number
777,698,217
8,131,187
6,781,267
49,317,147
52,956,752
894,884,570
The preparation of the Financial Report requires management
to make estimates and assumptions that affect the reported
amount of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements
and the reported amount of revenues and expenses during
the reporting period. Significant areas requiring the use of
management estimates relate to the determination of the
following: carrying value or impairment of inventories, financial
investments, property, plant and equipment,
intangibles,
mineral properties and deferred tax assets; carrying value of
rehabilitation, mine closure, sales contracts provisions and
deferred tax liabilities; and the calculation of share-based
payments expense and assessment of reserves. Actual results
could differ from these estimates.
finanCial insTrumEnTs
At 30 June 2011 the Group has exposure to interest rate
risk, which is the risk that the Group’s financial position will
be adversely affected by movements in interest rates that
will increase the cost of floating rate project finance debts 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 historically low US dollar interest rates of these
financial instruments.
The Group has no significant monetary foreign currency assets
and liabilities apart from Namibian dollar cash, receivables,
payables, deferred tax liabilities and provisions and Australian
dollar cash, payables and deferred tax liabilities and Canadian
payables.
The Group currently does not engage in any hedging or derivative
transactions to manage interest rate or foreign currency risks.
The Group’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 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 Group’s 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.
oThEr risks and unCErTainTiEs
risK factOrs
The Group is subject to other risks that are outlined in the
Annual Information Form 51-102F2 which is available on SEDAR
at sedar.com
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TransaCTions wiTh rElaTEd ParTiEs
uraniuM saLEs agrEEMEnt signEd
On 22 August 2011, the Company announced the signing of a
series of term uranium sales agreements for output from the
Langer Heinrich Stage 3 expansion. The agreements have
been signed with three new customers in the United States
and further strengthens Paladin’s already significant presence
within the U.S. nuclear market. Production commitments from
the new agreements total more than 2.8Mlb U3O8 with deliveries
beginning in 2012 and extending through to 2016. Contractual
pricing provisions incorporate both fixed and base (escalated)
mechanisms ranging from the low-to-mid-$60’s per pound U3O8.
LangEr HEinricH MinE, naMibia
ExEcutiOn Of us$141M PrOJEct financE faciLity
fOr stagE 3 ExPansiOn
On 26 August 2011, the Company announced that the financing
documentation required for the Stage 3 expansion had been
finalised and executed. The Stage 3 expansion of LHM in
Namibia will increase production to 5.2Mlb pa from its current
capacity of 3.7Mlb pa.
The initial development funding for the project has been via
Paladin’s existing cash reserves. The Langer Heinrich Stage
3 expansion is now fully financed and is on track to reach
nameplate capacity in the 1st quarter of 2012.
Paladin and a syndicate of banks executed a US$141M Project
Financing Facility, consisting of a 6 year Project Finance Facility
of US$135M with a Costs Overrun Facility of US$6M. The facility
is being provided without a parent company guarantee from
Paladin. The facilities are being provided by Société Générale
(as Agent), Nedbank Capital, Standard Bank Plc, Barclays
Capital (the investment banking division of Barclays Bank PLC)
and Rand Merchant Bank, a division of FirstRand Bank Limited
(RMB). Drawdown on the financing is subject to fulfilment of
conditions precedent usual for this type of facility.
During the year ended 30 June 2011 no payments were made
to Director related entities. Directors of the Company receive
compensation based on their personal contracts.
disClosurE ConTrols
The Company has applied its Disclosure Control Policy to the
preparation of the Consolidated Financial Report for the year
ended 30 June 2011, 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.
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 2011. An evaluation of the design
of ICFR has concluded that it is adequate to prevent a material
misstatement of the Company’s Consolidated Financial Report
as at 30 June 2011.
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 year, the Directors are not aware of any
other matter or circumstance not otherwise dealt with in this
report, 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 2011 Financial Report:
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32%inCrEasE in salEs rEvEnuE from
Pa l a d i n E n E r g y lT d » a n n u a l r E P o r T 2 011
us$202m To us$266.8m
sustainable
development
paladin is committed to the goal of sustainable development, commonly defined as “to meet
the needs of the present without compromising the ability of future generations to meet their
own needs.” In doing so paladin applies established and recognised principles of sustainable
development for all of its activities across the globe.
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Pa l a d i n E n E r g y lT d » a n n u a l r E P o r T 2 011
Paladin considers its employees, community and all other
stakeholders with the aim of achieving a balance between
the economic, environmental and social needs in all phases
of its projects. These components are intertwined in Paladin’s
sustainable development programme. The commitment to
sustainable development is also reflected in Paladin’s corporate
values.
The data collected will be assessed and used in Paladin’s future
public sustainability reporting. The commitment has been given
that a Sustainability Report to meet the GRI guidelines will be
published for the FY2012 reporting period. This allows time for
data collection, assessment and reporting for the financial year.
As this data becomes available it will be provided on Paladin’s
website throughout the year.
CorPoraTE susTainabiliTy
rEPorTing
Paladin is in the process of collecting data from LHM and KM for
the reporting period for input into future corporate sustainability
reporting. The basis for the data collected is meeting the
reporting guidelines of the Global Reporting Initiative (GRI)
Framework. The GRI indicator categories are the broad groups
of Economic, Environment and Social with the Social sub
categories of Human Rights, Labour Practices and Product
Responsibility. Each of these categories and sub–categories
have aspects and performance indicators on which to report.
LOcaL cHiLdrEn, KayELEKEra, MaLawi
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46
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 Environment 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, systems and plans to identify, assess
and manage environmental risk;
implementing and assigning accountabilities
standards, guidelines and procedures;
for
the
striving to achieve continuous improvement in environmental
performance;
communicating environmental responsibility to employees
and contractors;
effective consultation with stakeholders;
inspections and audits of environmental performance;
and
reporting on environmental performance.
In addition to Paladin’s Environment Policy, LHM and KM each
have their own Environment Policies applied at the sites which
includes consideration of the above points as a minimum.
Paladin has established Corporate Environmental Standards
for all of its operational subsidiaries. Operational compliance
with the Standards forms part of the Corporate Inspection and
Audit Programme.
EnvironmEnTal managEmEnT sysTEm
Within the Paladin Environmental Management System (EMS)
Standard each operating site is required to develop and
implement an EMS that is consistent with the requirements
of ISO14001:2004. LHM has implemented an EMS which was
certified to the ISO standard in 2009 with surveillance audits
undertaken in September 2010 and February 2011. KM is in
the process of continuing to develop an EMS for its operations.
Once completed, the KM EMS and its individual components
will be rolled out and implemented across the operation and
certification sought.
Operational Environmental Management Plans (EMP) for both
LHM and KM have been submitted to and reviewed by the
Namibian and Malawian Governments respectively and other
stakeholders and international financial lending institutions as
part of the project financing processes. The Operational EMP’s
are regularly updated and revised as part of the sites’ continual
improvement process.
The LHM EMP is in the process of being updated as part of
the Stage 4 Environmental Impact Assessment (EIA) process
and is expected to be completed and re-submitted together
with the Stage 4 EIA in third quarter of CY2011. In 2011, the
2008 KM Operational EMP was reviewed and revised to reflect
current operations. The updated EMP will be resubmitted to the
Government of Malawi Environmental Affairs Department once
the review is completed.
EnvironmEnTal imPaCT assEssmEnT
The EIA process for the LHM Stage 4 expansion and the
conversion of EPL3500 to a ML commenced in 2011 and
progressed through the remainder of the reporting period.
The EIA will be submitted to the Namibian Government and
other stakeholders for review and approval in the third quarter
of CY2011. Various environmental studies were conducted by
specialist consultants for the EIA and extensive stakeholder
consultation was undertaken to ensure that any issues and
concerns were addressed in the EIA process.
EnvironmEnT rEgulaTory rEPorTing
Both LHM and KM prepare various environmental reports for
the Namibian and Malawi Governments respectively. These
reports include monitoring data, specific topic reviews (such as
water) and general environmental reports that summarise the
environmental activities undertaken on the site, and provide
analyses of the monitoring data collected and assess trends for
the reporting period.
The frequency of regulatory environmental reporting for LHM
is bi-annual and annual for topics such as water. The LHM Bi-
Annual Report for the first six months of this reporting period
was submitted to the Namibian Government in April 2011,
and the second Bi-Annual Report for the period is currently in
preparation. The LHM Annual Water Report is at present collated
for the calendar year reporting period. The Annual Groundwater
Monitoring Status Report for 2009 was submitted in August 2010
and the 2010 Groundwater Report is currently in preparation.
Regulatory environmental reporting at KM
is conducted
quarterly and annually. Three quarterly reports were submitted
to the Government of Malawi during the reporting period that
provided information on the licence conditions and status of
compliance. In addition to the quarterly reports, environmental
monitoring data were also provided to the Government on a
quarterly basis. KM prepared and submitted its inaugural Annual
Environmental Report for the 2009-2010 reporting period to the
Government of Malawi. The Annual Environmental Report for
the current reporting period is in preparation.
insPECTion and audiT ProgrammE
A Paladin Environmental
Inspection and Audit Standard
is in place that requires sites to establish and implement
environmental inspection and audit programmes to ensure
that the environmental performance of Paladin’s operations is
reviewed, audited and reported to the Board. These programmes
include internal and external environmental audits to ensure
that there is not only compliance with regulatory and Paladin
requirements but also with the World Bank Equator Principles
and other industry standards, in particular those standards
specified for the uranium industry. Several inspections and
audits were undertaken at both the LHM and KM sites during
the reporting period with the findings documented, reported
and actions noted to rectify and manage the issues identified.
Pa l a d i n E n E r g y lT d » a n n u a l r E P o r T 2 011
biodivErsiTy
Biodiversity is defined by the International Union of Conservation
and Nature (IUCN) as “the variability among living organisms
from all sources including terrestrial, marine and other aquatic
ecosystems, and the ecological complexes of which they are
part; this includes diversity within species, between species,
and of ecosystems.” The definition alone shows the complex
nature of the term biodiversity and the different meaning it may
have to individuals.
Paladin’s objective is to conserve biodiversity by obtaining
knowledge of the ecosystems within the regions in which it
operates and to ensure that impacts on biodiversity are minimised
and managed. In biodiversity studies and management, the key
aspects considered for Paladin’s operations are water, air, flora,
fauna, land use and rehabilitation.
In particular, LHM is located in the Namib Naukluft National
Park so extensive biodiversity studies have been conducted
in the area to establish biodiversity composition, structure and
processes. From the results a biodiversity sensitivity analysis
was undertaken and management measures established to
avoid areas ranked as high sensitivity and to minimise impacts
on biodiversity in general.
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issue
is a major
Water resource
that requires careful
management at most mining operations. A Paladin Standard
for Water Use and Water Quality is enforced to ensure that
operations apply efficient, safe and sustainable use of water
and protect the water resources and ecosystems around its
sites. Paladin’s operations have water management strategies,
detailed water balances, flow models and have implemented
water management measures to achieve water management
objectives.
Dust generation during exploration activities and at the mine
sites is managed to enable a safe working environment and
to minimise impacts on the environment and surrounding
communities. Dust suppression units on drilling equipment, and
water sprays at key material transfer points and on roads are the
most common dust control methods together with progressive
rehabilitation of disturbed areas. Dust monitoring and dust
collection is undertaken at both LHM and KM with the dust
samples analysed and the results collated in the Environmental
Reports submitted to their respective Governments.
SOx emissions from LHM are currently very low and occur from
the diesel fuelled burners used for heating water for the heat
exchangers. During the reporting period, baseline air emission
and modelling studies for SOx were undertaken for the Stage 4
expansion EIA process. SOx emissions are generated at KM by
the burning of diesel fuel for power generation, and also from
the on-site acid plant. The emissions are monitored and the
results reported in the Annual Environmental Report submitted
to the Government of Malawi.
from Paladin’s
The principal greenhouse gas emissions
operations report from power generation, boilers for heating
and vehicle and equipment exhausts. Paladin is in the process
of collecting data for greenhouse gas emissions from its
operating sites calculated as Carbon Dioxide (CO2) emissions
as part of the sustainability reporting programme. Paladin’s
current Australian activities are confined to exploration and
the corporate Perth office, so initial estimations of diesel
consumption and purchased electricity indicate that Paladin will
not meet threshold levels to require registration and reporting in
Australia under the National Greenhouse Emissions Reporting
Act (NGER) 2007.
minEral wasTE
wastE rOcK
In recognition of the importance of water management to the
business, Paladin has employed an experienced hydrogeologist
to boost the in-house expertise in this important area. Paladin
also contracts hydrological specialists to provide ongoing
advice on the design, construction, operation and management
of water and water infrastructure at the production sites. The
design and water management strategies are subject to external
technical peer review to ensure that the water management
meets industry standards.
An Annual Water Report for the reporting period is currently
in preparation that will consolidate and summarise the key
water aspects across all Paladin’s operations and exploration
projects. This report for the 2010-2011 reporting period will be
the first Paladin Annual Water Report and the contents will be
used for internal and external sustainability reporting.
air Emissions
Large quantities of waste rock are required to be moved and
placed into dumps at both LHM and KM. The placement of
waste rock is important in terms of cost and environmental
considerations. The main objective is for the final landform of the
dumps to blend in with the surrounding landscape, be stable
and enable a self sustaining ecosystem to establish.
Studies have been conducted at both mine sites to determine
the best location for the waste rock dumps taking haulage costs
and environmental aspects into consideration. The design of
the dumps and the placement of waste rock must also take
into consideration other factors such as the physical and
geochemical properties of the waste rock and low grade ore
that may also be placed in dumps. Geochemical studies have
been undertaken on the waste rock and mineralised waste at
both LHM and KM, with the results applied in developing the
design for the dumps and the operating procedures for waste
rock management.
Paladin has an Air Quality Standard in place with the intent to
ensure that air pollutant emissions generated by any of Paladin’s
activities are identified, impacts assessed and management
measures established. The common air pollutants that are
generated by Paladin activities which have the potential to
impact on human health or the environment include; particulate
matter, sulphur oxides (SOX); carbon oxides (CO and CO2); and
nitrogen oxides (NOx).
taiLings
Tailings are the mineral waste fraction from the processing of
the uranium ore. Tailings management continues to be a high
priority at Paladin’s operational sites. Paladin applies measures
to ensure that its tailings storage facilities (TSF) are appropriately
designed, operated and managed according to acceptable
standards.
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E n v i r o n m En T
EnVirOnMEntaL MOnitOring –
LangEr HEinricH MinE
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Pa l a d i n E n E r g y lT d » a n n u a l r E P o r T 2 011
Specialist TSF engineers have designed the TSFs at LHM and
KM and defined the operational practice and management to
ensure that the tailings are managed in an acceptable manner,
and any potential environmental impacts from the tailings and
TSF are minimised. Internationally recognised independent
uranium tailings experts conduct peer 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.
non-minEral wasTE
Non-mineral waste comprises the waste streams generated
by the facilities and functions that support our mining and
processing operations. The wastes include typical general
wastes, sewage and also some that may be considered
hazardous. The volumes of non-mineral wastes are significantly
smaller than the mineralised wastes but still require appropriate
management. LHM and KM both have waste management
procedures that aim at applying the principles of reduce, reuse
and recycle. The waste that must be disposed in a landfill or
other designated location on site is managed according to the
procedures for that particular material and location. Sewerage
treatment plants are installed at both mine sites to treat sewage
which is then disposed into the TSF.
rEhabiliTaTion
The objective of rehabilitation is to return disturbed land to a
stable, self-sustaining landform that is compatible with the
surrounding environment and where possible has similar land
use and ecological values as existed prior to the commencement
of operations. Progressive rehabilitation of disturbed areas is
undertaken at all of Paladin’s mining operations and exploration
sites, where practicable. Rehabilitation plans are developed
and implemented at the sites to ensure disturbed areas are
rehabilitated appropriately and in a timely manner.
ClosurE
Mine closure planning is a key component of Paladin’s
commitment to sustainable development. A Closure Standard is
in place for all of Paladin’s operational and developing sites. The
intent of the Standard is to ensure that Paladin’s sites are left
in a safe and stable manner and that environmental and social
impacts are minimised so that tenements can be relinquished
without future liability to the Company, Government or the
community. LHM has a Draft Mine Closure Plan in place which
will be reviewed and updated on an ongoing basis. The closure
planning process at KM progressed with the commencement of
preparation of a Draft Mine Closure Plan.
CaPaCiTy building
Paladin is committed to offering support and assistance for
capacity building of its local employees, specific members of the
community and Government regulatory authorities. Capacity
building, particularly in the areas of regulatory environmental
and radiation management and monitoring, is an ongoing goal
for Paladin. Capacity building programmes continued through
the reporting period including the environmental monitoring
training programme conducted for Government of Malawi
regulatory officers. Officers from the Government of Malawi
Departments of Environmental Affairs, National Parks, Fisheries,
Water, Mines, Land Resources, Geology, Transport, Health
and Labour were trained in their relevant regulatory aspects of
environmental and radiation monitoring.
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
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
minerals.org.au.
Paladin is also a member of the Association of Mining and
Exploration Companies (AMEC) and the local Chamber of
Mines in Western Australia, Malawi and Namibia.
John Borshoff is on the Board of both the AUA and MCA. He
chairs the Code of Practice and Stewardship Group for the AUA
and is a member of its Executive Committee. James Eggins,
General Manager - Sales and Contract Administration, is a
member of the Non-Proliferation Working Group.
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Pa l a d i n E n E r g y lT d » a n n u a l r E P o r T 2 011
corporate social
responsibility
In addition to creating shareholder wealth, Paladin’s corporate
core values address contributing to the growth and prosperity
of host countries and responding positively to community needs
and expectations. The Paladin Group of Companies seeks to
meet its Corporate Social Responsibility (CSR) undertakings
through the following actions across its operations:
•
•
•
•
Stakeholder Consultation: Paladin understands the
linkages and interdependence between the Company
and its stakeholders and encourages communication with
stakeholders at local, national and international levels.
Ethical Business Behaviour: Internally and externally,
ethical behaviour is reinforced through a formal ethical
code and non-tolerance of corrupt and unethical
behaviour or practices.
the
Social Accountability: Paladin believes
Company is accountable to stakeholders for its social
impacts and to effectively monitor and report social
performance.
that
Community Development: Paladin actively supports
a range of community social development and local
business development initiatives in consultation with
local communities.
In framing its approach to managing Social Sustainability,
including the processes of community engagement, community
development, corporate social responsibility and cultural
awareness, Paladin has adopted as its policy in accordance
with our commitment to Enduring Value – the Australian
Minerals Industry Framework for Sustainable Development.
As a signatory to Enduring Value, Paladin is committed to
continually improve its social, environmental and economic
performance. This commitment is also aligned to the 10
Sustainable Development Principles of the International Council
on Mining and Metals (ICMM).
inTErnaTional iniTiaTivEs
MaLaria cOntrOL
Paladin has provided funding support to Eastland Medical
Systems Limited for Eastland’s development of ArTiMist™, a
sub-lingual (under the tongue) spray for the treatment of severe
and complicated malaria in children. After completion of a
successful clinical trial involving 30 children that confirmed the
effectiveness of the malaria treatment in young children,
Eastland has moved on to a 150-patient multi centre superiority
study in Africa. Trials have been progressing well with an initial
50 patients treated in Rwanda. The additional 100 patients are
being recruited for treatment in the Burkina Faso, Ghana and
Tanzanian arms of the trial.
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malawi
Paladin continues to fulfil its social development undertakings
under the terms of the Kayelekera Development Agreement. The
Company has developed a Social Sustainability Management
Plan (SSMP) to ensure that social and cultural environmental
aspects and impacts associated with the operation of KM are
identified and appropriately managed. Additional information on
the SSMP is available on the Company’s website.
Paladin’s social development initiatives in Malawi are based the
principles set forth in the SSMP. Projects undertaken during the
year included:
cOMMunity LiaisOn
Paladin engages formally with the Government of Malawi and
with local communities via committees established for that
purpose. These committees include:
•
•
Government of Malawi/Paladin Liaison Committee
(GLC), where Paladin reports to representatives of key
Government Ministries on its activities for the quarter and
provides an update on the operations of the KM; and
Uranium Liaison Committee
(ULICO) comprised of
local stakeholders such as community leadership, civic
societies, senior civil servants and Paladin representatives.
The Company also participates in the District Commissioner’s
quarterly stakeholder gatherings and meets formally with the
traditional leaders, headed by the region’s Paramount Chief.
Regular meetings take place with the Karonga Natural Resource
Development Association (KANREDA), which represents local
communities, and the Kayelekera Village Authority, to discuss
local matters such as medical care, education and road safety.
cOMMunity dEVELOPMEnt PrOgraMME
Paladin is renovating the former District Education Office in
Karonga which has been allocated by Government to provide
office accommodation for the Environmental Affairs Department
(EAD) Environmental Officer for Karonga District. This project
fulfils an Environmental
Impact Assessment undertaking
to renovate and equip an office for the EAD to facilitate its
environmental oversight of the KM.
The programme also saw the Company collaborating on
projects and events with Karonga Museum, Zodiac radio
network and a variety of community organisations.
LOcaL businEss dEVELOPMEnt PrOgraMME
local
to promote
A programme
involvement, economic
growth and capacity building in communities is in progress.
Opportunities are being explored for skills transference and
technical advising from Kayelekera’s experienced workforce
to area businesses and residents. Paladin is supporting the
UK-based MicroLoan Foundation by funding an expansion of
the Foundation’s activities in the Karonga region to provide
micro-loans to up to 300 local rural women for small scale co-
operative business ventures in the Karonga-Kayelekera region
which will boost farming family incomes.
Pa l a d i n E n E r g y lT d » a n n u a l r E P o r T 2 011
LOcaL girL, KayELEKEra, MaLawi
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$540,000
raisEd by friEnds and EmPloyEEs of Paladin for afriCan ChildrEn
(fEPaC) To daTE Through various iniTiaTivEs ThaT havE inCludEd
an annual golf day and quiz nighT. 100% of This goEs dirECTly To
ThE ProjECTs.
Pa l a d i n E n E r g y lT d » a n n u a l r E P o r T 2 011
C o r P o r aT E s o Ci a l r Es P o n s i b i l i T y
cOMMunity HEaLtH carE
Following completion of the Karonga Water Supply Project,
Karonga District Hospital (KDH) was identified as the local
public service institution most in need of support under
Paladin’s Infrastructure Development Programme. The 187-bed
hospital services a regional population of 250,775 and is the
main referral hospital in the District. Paladin’s funding support
saw the completion of the hospital’s unfinished maintenance
workshop, providing a base for further renovations at KDH.
A variety of renovations were also carried out, including
refurbishment of the hospital’s fire-damaged kitchen and repair
of its roof, ceilings, windows and plumbing fixtures.
Keeping an eye to health needs at the local level, Paladin also
supplied the Wiliro and Mpata regional health centres with
solar panel sets to provide lighting, enabling better patient
care during night hours. As well, the Company’s community
relations officers continued to deliver health-and-safety-themed
messages to school-aged children between Kayelekera and
Karonga. A series of school visits was carried out to students
on the topics ranging from road safety to HIV prevention.
agricuLturaL dEVELOPMEnt PrOgraMME
Collaboration between Paladin and the Ministry of Irrigation
and Water Development has yielded further improvement in
community agricultural practises in Kayelekera village and the
Karonga District this year. Further agricultural training was
provided in local villages and to widow’s groups in the region.
The Kayelekera and Nkungwe irrigation schemes were extended
and upgraded with provision of new piping, gate valves, a
dam and water channels. The village’s irrigated riverbank was
extended and a water pipeline installed to provide permanent,
year-round irrigation. Work is in progress to build a 100m lock-
controlled irritation channel and a reservoir is planned.
In cooperation with the Education Department, Paladin provided
several primary schools in the area with seedlings to plant fruit
orchards. Vegetable seed and propagation materials were
also supplied to community groups and farmers, respectively.
Training in proper use and care was provided along with these
materials. A study into the feasibility of a fish-breeding project in
Kayelekera is also underway.
watEr and sanitatiOn
In 2011, Paladin assisted communities in the Karonga District to
address water shortages, continuing to work with the Ministry
of Irrigation and Water Management to repair inoperable water
bores and to sink new ones. Training in borehole upkeep has
also been provided so that villages can maintain their water
sources. Surveys of locations for future boreholes and small
dams/catchments have been carried out.
Installation of rainwater tanks has also continued this year.
EducatiOnaL infrastructurE
Paladin has taken steps to improve the quality of education
available to children in Kayelekera and nearby villages through
infrastructure, materials, and teaching initiatives. The Company
has completed renovation of 12 dilapidated classrooms at the
Bwiwa Primary School in Karonga, the construction of two new
teachers’ houses for the school and provision of new desks for
the senior grades.
Two additional teachers’ houses at Chilambilo Primary School
near Karonga were also completed during the year.
The community centre donated by the mine’s construction
contractor Group 5 to Kayelekera Village was completed and is
being used to house junior classes of Kayuni Primary School. In
addition, a new bore was drilled adjacent to the school itself to
provide a water supply, as the building was not serviced by the
existing village water distribution system.
Over the course of the year, Paladin also sponsored nine
volunteer educators at Kayelekera and Juma primary schools.
These non-government teachers supplement the regular
teaching staff at schools in villages near Kayelekera Mine, where
student numbers have more than doubled since inception of the
Kayelekera Mine.
EMPLOyEE cHaritabLE fOundatiOn, suPPOrtEd by PaLadin
Friends and Employees of Paladin for African Children (FEPAC)
is a charitable foundation established in 2008 by Paladin
employees to fund smaller social projects in Malawi that are
outside the scope of the Company’s CSR programmes. To date
FEPAC has raised A$540,000 through various initiatives that
have included an annual golf day and quiz night. The charity
supports six projects that assist children with their everyday
educational needs. For example two of the projects provide
vocational training courses. During the year six of the courses
have been paid for which include brick laying, carpentry and
tailoring. Sixty teenagers have completed these courses and
are given the tools to continue their trades so they can earn
money to support their families.
FEPAC has also recently financed construction of
two
classrooms and an office at the School for Deaf Children in
Karonga and is currently constructing a dormitory for the
children to sleep in.
Paladin supports its employees’ initiatives by providing FEPAC
with administrative assistance, allowing time for employees
to organise and participate in fundraising activities and by
matching dollar-for-dollar all funds raised.
HiV/aids awarEnEss caMPaign
Awareness programmes continued both on-site at KM and in
local communities, employing traditional arts and culture as
teaching tools wherever possible.
A series of 16 story booklets, written by one of Paladin’s Social
Development team, has been printed in three languages and
distributed to both KM employees and the community at
large. The books cover a variety of social topics including HIV/
AIDS prevention; malaria and chest infection management,
dealing with alcohol abuse; care of the new born; prevention
of diarrhoea; combating deforestation; theft and corruption and
wise use of wages. These booklets have proven hugely popular
due to the highly relevant subject matter and the novelty of
having reading material available in local languages. In the past
12 months, Paladin has distributed more than 38,000 copies to
employees, students and local communities.
The Company continues to use drama – a traditional art and
teaching form – to promote social messaging through its
sponsorship of the Nyange Nyange Drama Group, which
regularly perform HIV dramas at KM and in the community.
During the past year, Paladin sponsored Nyange Nyange to
perform for all 29 secondary school groups in the Karonga
District, reaching more than 9,500 students. The Company also
assisted Nyange Nyange by providing a video camera, enabling
the group to film their most popular performances, which are
now available on DVD, spreading the reach of the group’s social
messaging.
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The Company’s Social Development Team has established
cooperative relationships with locally-active NGOs that have
expertise in HIV/AIDS community engagement. Campaigns
related to awareness, testing, counselling and care were carried
out throughout the year in conjunction with Population Services
International, the Foundation for Community Support Services,
and the Malawi Aids Counseling and Resource Organisation.
In the interests of improving access to medical facilities in
Kayelekera Village, Paladin and the Department of Health
entered into discussions to expand upon the Paladin-supported
weekly outpatient clinic in the village. The outcome was a
commitment from the Department to establish a sub-clinic in
Kayelekera to provide access to the full range of government
programs. Paladin will facilitate establishing the clinic and
provide housing for two clinic staff in the village.
The National AIDS Council (NAC) had opportunity to assess
Paladin’s HIV/AIDS activities this year and provided positive
feedback on the Company’s commitment and level of activity in
relation to HIV/AIDS awareness education.
namibia
In line with the priorities expressed by Namibia’s government
and target communities that fall within LHM’s sphere of
influence, Paladin’s social development plan for that area has
continued to focus on development of education, site-specific
ecological improvement, and regional economic development.
The following provides a summary of key projects undertaken
in Namibia this year.
cOMMunity EngagEMEnt
Paladin puts a high priority on meaningful engagement with
local stakeholders. This means not only communicating with
officials at the government level, but also reaching out to local
and traditional authorities, as well as community members.
The Uranium Institute (UI), founded in 2007, continues to play an
important role in community outreach by the Namibian uranium
industry as a whole. The UI has set standards for safety, health,
radiation and environmental protection, by providing training
for member organisations and creating an information-sharing
platform. All operating mines and advanced uranium exploration
projects in Namibia have become members of UI and now
comply with the standards it prescribes. Paladin was a founding
member of UI and continues to collaborate with other members
on the institute’s activities. Most recently, UI worked with the
Namibian tourism industry to identify six projects where the
uranium industry could assist with the enhancement of tourist
attractions in the region.
MOndEsa yOutH OPPOrtunitiEs trust
2010-2011 marked Paladin’s inaugural year as principle sponsor
of the Mondesa Youth Opportunities Trust (MYO), although the
Company has a long history of involvement with the Trust.
MYO provides educational assistance to improve English,
mathematics, and computer skills for students selected from
primary schools in the impoverished Mondesa-DRC Townships
in Swakopmund. Improving life skills is also part of MYO’s
focus and children who participate receive a daily lunch,
music classes, sport training and access to a fully equipped
library. Paladin’s contributions this year enabled a number of
improvements to the programme, including raising the number
of enrolled students from 90 to 150, reinstating two class levels
(previously dropped due to funding constraints), and recruiting
two new staff teachers.
Pa l a d i n E n E r g y lT d » a n n u a l r E P o r T 2 011
a fOcus On MatHs and sciEncE EducatiOn
Paladin has placed special emphasis on mathematics and
sciences in its support of educational development. This
year, the LHM Bursary Scheme saw the award of six full-
time bursaries to post-secondary students, including the
continuation of two existing mining engineering bursaries. Of
the other four, two were granted to geological students and two
to students of metallurgy. Three bursary students on full time
study in 2010 successfully completed their course year, one a
Chemical Engineering student who is now employed full-time
with LHM.
For the third year in a row, Paladin was the principal sponsor
of the National Mathematics Congress. The event began six
years ago, with full support and cooperation of the Namibian
Ministry of Education, when the need for improved mathematics
teaching was identified. Over the course of three days,
mathematics experts train 250 – 300 local educators on the
latest developments in mathematics teaching. By providing this
professional development opportunity, it is expected that many
thousands of children actually benefit from this initiative. The
event has garnered national news coverage in Namibia.
for students
Additionally, the Company has sponsored a mathematics
enhancement programme
in Grades 10-12
attending schools in the Namibian Coastal Region. Local
educator Margaret Courtney-Clark - the founder of the National
Mathematics Congress - and the Ministry of Education have
worked closely with selected schools to develop a pilot project.
Funded by Paladin, the pilot project was approved for schools in
Swakopmund and commenced in March 2011. The initial results
are encouraging and later in the year a decision will be made
about the longer term future of the project.
Recognising that the educational needs of students cannot always
be met by efforts at the macro-level, Paladin has revived the School
Support Project, which sees the Company allocate small-scale
project funding to state schools on the Namibian Central Coast.
In discussions with the Ministry of Education, Paladin identified a
shortage of text books as a major contributor to poor scholastic
performance in schools in impoverished areas. Through the Project,
the Company bought 1,000 books and distributed them to specific
schools. The selection of text books ordered was determined
through direct interaction with the schools in question.
naMibian institutE fOr Mining and tEcHnOLOgy (niMt)
The Namibian Institute of Mining Technology is one of the
largest vocational training centres in Namibia servicing the
mining sector. Paladin’s support to NIMT is ongoing and
includes accommodating students for job attachments at LHM.
This year, 80 NIMT students received training at LHM, each
under the mentorship of a qualified Paladin tradesperson. The
Company also assisted NIMT by funding the cost of essential
repairs to facilities that will augment the students’ learning
experiences, including a computer training centre.
naMib-nauKLuft natiOnaL ParK dEVELOPMEnt
With funding from Paladin, the Ministry of Environment and
Tourism has commenced installation of eco-toilets in Namib-
Naukluft National Park (NNNP) and is advancing a waste
recycling and collection project involving 52 camp sites located
near LHM. The Company is progressively installing drums to
separately collect glass, steel and other domestic waste and
plans to assist in the first year of collection and recycling.
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C o r P o r aT E s o Ci a l r Es P o n s i b i l i T y
c28 HigHway, naMibia
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Paladin is also supporting two environmental projects in NNNP
which are being carried out by the Namib Ecological Restoration
and Monitoring Unit (NERMU) of the renowned Gobabeb Desert
Training and Research Foundation. This involves a pilot study
into the Hartmann’s mountain zebra, the dominant large grazing
animal of the Namib Desert. The study aims to establish the
population and movement of Hartmann’s mountain zebras in the
NNNP adjacent to LHM and to map seasonal water & grazing
resources. Local students are employed in fieldwork which is
being supervised by Gobabeb staff.
The second NERMU project is a study of water absorption and
retention by desert soils. The objective of the study is to develop
an understanding of the capacity of the desert ecology to
support local plant life. Understanding factors influencing water
infiltration into desert soils is essential to successful post-mining
rehabilitation.
c28 HigHway uPgradE PrOgraMME
Some 18km of the C28 leading to the LHM access road turn-
off remained unsealed after last year’s upgrades to this 55km
section of central Namibian highway in the Namib-Naukluft
National Park. Paladin’s ongoing participation in this project
has seen an agreement between the Company and other road
users, including exploration companies Deep Yellow, Extract,
Bannerman and local transport companies, to jointly fund the
sealing of an additional 9km. The Namibian National Roads
Authority has undertaken to improve the remaining 9km section
of the C28 by upgrading it to a salt road.
OtHEr cOMMunity initiatiVEs
Paladin continues to be an active corporate community
member by supporting a variety of youth-related initiatives, food
sharing programs, and industry and government events aimed
at serving the wider public.
Pa l a d i n E n E r g y lT d » a n n u a l r E P o r T 2 011
The Company continues its support of two feeding programmes
for impoverished children in Walvis Bay and Swakopmund. Two
local shelters supply meals to between 500 and 600 children
per day. The schemes focus on impoverished children and
ensures that they begin each school day with a healthy meal.
The need is enduring and Paladin’s commitment to this initiative
is on-going.
Support for the Blue Waters Sport Club also continued. Based
in the township of Kuisebmond (Walvis Bay), Blue Waters is
involved in youth development through sport participation.
austraLian initiatiVEs
Paladin makes significant contributions to regional and national
initiatives in Australia that positively impact the mining industry
and support its growth through technological advancement and
skills development.
This year, Paladin made a five-year financial commitment to
the Hammond-Nisbet Geoscience Fund administered by the
University of Western Australia (UWA). The fund supports the
creation of an endowed professorship within UWA’s Centre for
Exploration Targeting (CET). This research-intensive position
will focus on mentoring new generations of geoscientists in
interpretation of fieldwork and structural geophysics and in
applying this understanding to mineral systems and exploration
targeting.
In response to the urgent need to secure the future of the
Australian Prospectors and Miners Hall of Fame, the Company
refurbishment
the organisation’s capital
contributed
programme. The Hall of Fame showcases the history of mining
in Australia, as well as the future potential of mining in both
Western Australia and the country at large.
to
Paladin also continued its involvement with the ASX Thomson
Reuters Charity Foundation this year. Along with other
companies listed on the S&P ASX 200 Index, Paladin contributed
to the creation of a share portfolio which was auctioned off at a
major charity fundraiser organised by the Foundation. Proceeds
from the fundraiser go to a set of pre-determined charities, the
main focus being on medical research for children.
Our People
The Group’s focus has been on identifying talent and creating
programmes to enhance talent Group-wide. Going forward the
focus will be on retaining and enriching its human capital.
Across the Group, difficulties are still being experienced in filling
certain technical positions due to skills shortage. To retain
talent, the Group will continue to review retention strategies and
consider further strategies which take into account the unique
challenges that each of the Group’s sites face to retain and
motivate employees. This will include ensuring the Group’s sites
are meeting market benchmarks for remuneration. Efforts will
also focus on the ongoing localisation programmes at each site.
The Group continues
to offer employees competitive
remuneration by participating in annual salary surveys and
industry benchmark studies relevant to each site. In addition,
relationships are maintained with industry partners and other
mining companies to enable information sharing in regard to
market changes and mutual remuneration issues.
To enrich the Group’s human capital, training and development
initiatives will be a key plank of the strategy. On-the-job training,
utilising competency based training, as well as Group-wide skill-
transfer strategies will be employed. Skill transfer involves the
movement of personnel between sites on transfer arrangements
or short term assignments. This strategy enriches the experience
and development of employees, as well as facilitating cross
pollination of ideas and efficiencies. A flow-on effect of such
a strategy will be the reinforcement of consistency of human
resource processes and systems from site to site.
While retention of staff will be the key, in the past year, the aim
has been to bolster staff numbers. Staff numbers increased
throughout the Group with permanent employee numbers
increasing from 896 to 1185 at year end. This occurred
predominately at Kayelekera Mine, with the transfer of temporary
contractors to permanent staff members. Total number of
personnel (permanent and temporary staff) was 1256 at year
end. The acquisition of new businesses (e.g., Aurora Energy Ltd),
represents a smaller increase in overall staff numbers globally.
females represent about 14% of
Globally,
the Group’s
population. Voluntary turnover for the Group is approximately
9.9%, which is pleasing as it sits well below the average annual
rate for large companies of 12.6% as reported in the Australian
Institute of Management National Salary Survey 2011.
ausTralia (hEad offiCE & mounT isa)
This year, Australian based employees total 100 with females
representing 33%. The Australian voluntary turnover rate
was 13%, an increase from last year’s rate of 9%. This can
be explained by a number of employees leaving to pursue an
entirely different career choice, or moving industries. This reflects
the ongoing pressure on our staff retention strategies as the
booming economy presents many employment opportunities.
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o u r PE oPl E
An ongoing effort to increase efficiencies and effectiveness
at Head Office will be employed throughout this year. It is
critical that the Head Office has the necessary structures
and personnel to support the operational requirements of the
business, as well as maintain the talent bandwidth in order to
meet future strategic requirements of the business as and when
they present themselves.
Although still in their infancy, localisation programmes aimed
at identifying local employees with potential to take over some
positions currently held by expatriates after receiving necessary
training, coaching and mentoring gathered momentum in the
course of the year and are planned to proceed at a faster pace
in the course of next year.
Canada (aurora EnErgy lTd)
The acquisition of the Aurora assets in February 2011 provides
a talent pool of additional staff, capable of assisting the Group
wherever required where critical skills shortages exist. Of the
16 original employees at the time of acquisition, all but one
transferred to the Paladin Group. Females comprise 40% of the
employee base in Canada and turnover has been nil since the
acquisition.
malawi (kayElEkEra minE)
Employees at KM totalled 766 at year end. The number of
permanent, National employees increased from 529 the previous
year to 648 at year end. Temporary contractors and casual
employees reduced from 507 to 54 due to a large proportion
being given permanent contracts. A few were discharged due
to their contracts ending.
Expatriate employees numbered 118 at year end. The turnover
rate was just under 5% amongst National employees during the
year with the expatriate voluntary turnover rate around 25%.
Whilst this turnover rate seems high, expatriate employment
contracts are generally short and for a two year term. Also, fly-
in/fly-out arrangements inherently increase turnover rates when
compared to more sedentary work environments. Employees
who were hired in 2009 have come to the end of their contracts
in the first half of 2011, and thus have moved onto other
expatriate employment. Among National employees, females
represent close to 10% with females representing about 7% of
the expatriate population.
In the course of the year KM initiated various interrelated people
management projects aimed at enhancing the performance
levels of the workforce through skills development and
performance management processes. These projects will be
continued in the course of next year when they are expected to
start showing positive outcomes.
As part of a skills attraction and retention strategy, and in line
with its commitment to responsible corporate citizenship, KM
significantly increased the wages of its National employees in
pursuit of its objective to remunerate within the upper quartile of
the domestic labour market remuneration levels.
A peaceful and productive labour relations climate prevailed on
the mine throughout the year mainly as a result of successful
implementation of a labour relations management strategy
that includes monthly joint consultative meetings between
management and employee representatives to share information
on matters of mutual interest and discuss employee concerns
and grievances.
namibia (langEr hEinriCh minE)
The manpower requirements increased by 23% from 260 to 320
employees due to the impact of the Stage 3 expansion and the
majority of vacancies were successfully filled.
The number of permanent employees increased by 11.4% from
272 to 303 since the last reporting period. The increase in the
number of permanent employees was largely represented by
Namibians, with only 4% of the total permanent workforce being
non-Namibian. This confirms the Group’s commitment towards
recruitment and development of Namibians. Females represent
17% of the permanent workforce.
Voluntary labour turnover amounts to 6.3% against an overall
turnover of 8.6%. Overall turnover has increased in part due to
the transfer of individuals from Langer Heinrich to Kayelekera.
The Management Development Programme
the
University of Stellenbosch is continuing on an annual basis with
five employees registered for the period in question.
through
Business simulation training-sessions have been running since
2006 and the total number of trained employees has increased
from 170 to 255 in line with the objective of having all employees
participate in this programme. The training sessions assist
employees in understanding the fundamentals of business in a
practical context.
A fulltime bursary scheme was introduced in 2010 and 6
students are being sponsored to date in the fields of geology
and engineering. Fulltime employees who wish to improve their
educational qualifications continue to be assisted through the
part-time study assistance scheme.
Approximately 80 artisan learners (apprentices) were provided
with opportunities to gain practical experience during the year
through the collaboration of the Namibian Institute of Mining and
Technology. Promising apprentices are earmarked for future
employment opportunities. In collaboration with the Ministries of
Education, and Mines and Energy, Namibian students studying
at the Zimbabwe School of Mines are given the opportunity to
gain practical exposure which will enable them to complete their
studies.
The above endeavours will assist Namibians in obtaining the
necessary skills and knowledge in future and curb the shortage
of skills currently being experienced in Namibia.
LHM commits to the achievement of equal opportunity in
employment and continues to commit to its Affirmative Action
report and plan, formal training and development programmes
for Namibian understudies and giving preference to Namibian
citizens and previously disadvantaged groups when making
placements, with specific focus on women whenever possible.
As part of cost management, safety and employee productivity
improvements and in compliance with local labour legislation,
KM continued to review and improve work shift rosters with a
view to not only achieving lower overtime costs, but also to
giving employees optimal rest breaks and work hours.
The Langer Heinrich team continue to maintain a transparent
culture in which employees have trust to approach management
to discuss concerns. Management support and consultation
results in maintenance of a positive working atmosphere and
LHM is regarded by many as the Employer of Choice.
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Pa l a d i n E n E r g y lT d » a n n u a l r E P o r T 2 011
KayELEKEra MEss KitcHEn
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corporate
governance
statement
CorPoraTE govErnanCE framEwork
Information will be communicated to shareholders by:
The Board of Directors of Paladin Energy Ltd is responsible for
the corporate governance of the Group.
Paladin has adopted systems of control and accountability as
the basis for the administration of corporate governance.
This Corporate Governance Statement outlines
the key
principles and practices of the Company which, taken as a
whole, is the system of governance.
Shareholders are reminded that Paladin operates with a dual
listing in Australia on the ASX and in Canada on the Toronto
Stock Exchange
the governance
framework, the regulatory requirements in both Australia and
Canada have been taken into account.
formulating
(TSX).
In
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, a
Continuous Disclosure Communications Policy is in place.
This reinforces the Company’s commitment to its continuous
disclosure obligations imposed by law.
•
•
•
•
•
•
•
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, the
Managing Director/CEO and other senior executives at
the Annual General Meeting (AGM);
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;
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. Shareholders are able to directly lodge their
votes online via the Company’s website and the Computershare
voting platform.
Pa l a d i n E n E r g y lT d » a n n u a l r E P o r T 2 011
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 five Non-executive Directors, including
the Chairman and one Executive Director, being the Managing
Director/CEO. 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.
In 2010, Mr Ian Noble advised he would be retiring at the 2010
AGM. The decision was made to appoint two new Non-executive
independent directors, increasing the size of the Board by a
further director. Given the extent of the Group’s operations and
its activity base this was felt necessary, particularly to facilitate the
more effective use of Board committees across a broader group.
Skill sets represented at Board level include managerial,
technical,
legal and commercial.
Particularly, members have a broad range of experience and
expertise in the uranium business.
financial, corporate,
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 Principles and
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 face to face at least four times a year
(each over a three day period). Video conferencing facilities
have been installed to provide greater ease of communications
between face to face meetings and meetings are held at a
six week intervals between face to face meetings, via this
means. 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. This
provides an excellent opportunity for dialogue and networking,
with management from all operations present. 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 (as stated in their Letters of
Appointment) to attend the AGM of the Company and all
attended the 2010 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 annually 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. Mr Sean Llewelyn will seek
re-election at the 2011 AGM, following his retirement by rotation.
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 17 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. 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.
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60
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 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
includes provision of
comprehensive written material regarding the Company such as:
induction programme which
•
•
•
•
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
Access to previous Board papers 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
to
participate in continuous improvement programmes from time
to time, as considered appropriate.
times. Directors agree
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 and addresses the performance of each
director individually. Responses to the questionnaire were
collated and discussed by the Board in an open forum and
recommendations for improvement considered.
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
in the Directors’ Report.
Shareholders will be invited to consider and to approve the
Remuneration Report at the AGM in November 2011.
included
In relation to the Non-executive Directors there are no
termination or retirement benefits other than those contained in
statutory superannuation plans.
KnOwLEdgE, sKiLLs and ExPEriEncE
indEPEndEnt adVicE
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.
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.
Pa l a d i n E n E r g y lT d » a n n u a l r E P o r T 2 011
board CommiTTEEs
The Board has established Audit, Nomination, Remuneration
and Sustainability Committees which assist in the discharge
of the Board’s responsibilities. Each committee reviews its
performance and Charter on an annual basis.
The external auditors are Ernst & 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 auditors meet with the Audit Committee without
management present at each meeting.
Board approved charters set out the terms of reference and
rules governing these Committees.
nOMinatiOn cOMMittEE
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:
•
•
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•
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Monitor the integrity of the financial statements of the
reporting
reviewing significant financial
Company,
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
Non-executive, Independent Director
Sean Llewelyn
Non-executive, Independent Director
Peter Donkin
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 responsibilities of the Nomination Committee include:-
•
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•
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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.
The number of meetings of the Nomination 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
Nomination Committee’s effectiveness and performance within
his overall Board evaluation.
rEMunEratiOn cOMMittEE
role of
the Committee,
The
the
Remuneration Committee Charter, is to assist the Board with
respect to remuneration by reviewing and making appropriate
recommendations on:-
in accordance with
•
•
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 Audit Committee carries out periodic self evaluation of its
effectiveness and performance.
The remuneration paid to Directors and senior executives is
shown in the Directors’ Report.
The Chairman of the Board includes an evaluation of the Audit
Committee’s effectiveness and performance within his overall
Board evaluation.
The Remuneration Committee comprises three members,
all of whom are independent Directors. Sean Llewelyn is the
Chairman of the Remuneration Committee.
Pa l a d i n E n E r g y lT d » a n n u a l r E P o r T 2 011
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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.
sustainabiLity cOMMittEE
The role of the Sustainability Committee is to provide the Board
with an overview of Paladin’s performance in the areas of health,
safety, environment, social responsibility and sustainability and
to provide the Board with advice and recommendations where
relevant significant incidents occur.
The responsibilities of the Committee are to:-
•
•
•
•
•
•
•
•
•
Periodically review Paladin’s policies and guidelines in
the area of radiation, health, safety, environment, social
responsibility and sustainability to ensure they continue
to reflect the latest international standards;
Monitor Paladin’s performance and the effectiveness
of the implementation of the relevant guidelines and
policies;
Receive and consider reports on significant accidents,
environmental
incidents, community concerns and
breaches of Policy or system failure;
Receive and consider any major relevant internal or
consultant reports;
Receive and consider relevant internal audit reports;
Review relevant external audit reports and consider their
independence and effectiveness;
Obtain assurances that Paladin’s operations are in
compliance with all relevant legislation;
Refer matters of concern to the Board as appropriate;
and
Exercise such other powers and perform such other
duties and responsibilities as are incidental to the
purposes, duties and responsibilities of the Committee
pursuant to the Charter and as may be delegated by the
Board to the Committee from time to time.
The Sustainability Committee comprises three members,
the majority of whom are independent Non-executive Directors.
The current members of the Sustainability Committee are:-
•
•
•
Philip Baily – Committee Chairman
Non-executive, Independent Director
Rick Crabb
Non-executive, Independent Director, Board Chairman
John Borshoff
Managing Director/CEO
The Sustainability Committee meets at least twice a year,
with further meetings as required. At the discretion of the
Chairperson, having regard to the nature of the agenda, relevant
members of management and external consultants may be
invited to attend meetings.
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The number of meetings of the Sustainability 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
Sustainability Committee’s effectiveness and performance
within his overall Board evaluation.
finanCial rEPorTing
cEO and cfO sign-Offs
(Safeguard
In accordance with the Corporations Act 2001, ASX Corporate
Governance Principle 4
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 2011 Annual Report,
including financial statements.
Integrity
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.
covering
underlying
procedures
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 Continuous Disclosure and Communications
public
Policy with
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 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 ISO 31000:2009 -
“Risk Management” in managing the risk management process.
Pa l a d i n E n E r g y lT d » a n n u a l r E P o r T 2 011
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.
A report is provided annually to the Board of Directors detailing
the management process in relation to the Group’s material
business risks.
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 regular 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
for
The Company promotes a standard of excellence
environmental performance across
its operations. The
Company seeks to prevent, minimise, mitigate and remediate
any adverse impacts of its operations on the environment and
strives to achieve continuous improvement in environmental
performance. The Company has an Environmental Policy
that endorses compliance with all applicable environmental
legislation as a minimum, development and implementation
of Environmental Standards and all components of an
Environmental Management System,
assessment
and management of environmental risks, ensuring that its
employees and contractors are aware of their environmental
responsibilities, effective stakeholder consultation in relation
to the Company’s operations and proposed projects, and
undertaking regular audits and reviews and reporting on
environmental performance.
the
hEalTh and safETy
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.
During the year external health and safety audits were carried
out at LHM, KM and Mount Isa exploration.
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 in August 2010. This was due to the Company’s
largely expanded workforce and, rather than specific approvals
to trade required from all employees, the amended policy
restricts this requirement to a group of Restricted Employees.
This group consists of all Directors and officers and other
key personnel as nominated by the Chairman and Company
Secretary. Prescribed ‘blackout’ periods are included, during
which all Directors, officers and Restricted 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 Restricted
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
has been rolled-out to key employees 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 meet 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.
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PrivaCy PoliCy
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.
divErsiTy PoliCy
Following
the ASX Corporate Governance Council’s
amendments to the ASX Principles released on 30 June 2010
which take effect for the first financial year beginning on or after
January 2011 the Board has approved a Diversity Policy which
documents the Company’s commitment to workplace diversity
and recognises the benefits arising from the recruitment,
development and retention of a talented, diverse and motivated
workforce.
Diversity within the Company means all the things that make
individuals different to one another, including, but not limited to,
gender, ethnicity, religion, culture, language, disability and age.
It involves a commitment to equality and treating one another
with respect.
Responsibility for review of all matters contained within the
Diversity Policy rests with the Board as a whole and is reflected
accordingly in its Charter.
The Company will include in next year’s annual report the
measurable objectives for achieving gender diversity set by the
Board for the 2011/2012 financial year and the progress made
towards achieving them.
Further information on diversity within the Company can be
found in the Our People section of this annual report.
Any changes to the above Codes and Policies are considered
by the Board for approval.
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.
human righTs PoliCy
Paladin commits to uphold the human rights’ principles
outlined in the International Bill of Rights, which includes the
Universal Declaration of Human Rights, the International
Covenant on Economic, Social and Cultural Rights and the
International Covenant on Civil and Political Rights. Additionally,
Paladin respects the International Labor Organisation’s Core
Conventions.
Human rights are fundamental principles of personal dignity
and universal equality. Respect for human rights fosters
social progress, better standards of life and larger freedom for
individuals.
The aim of the Human Rights Policy is to provide the overarching
framework for the business in respecting human rights.
whisTlEblowEr PoliCy
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.
To assist in the understanding of this Policy by the local Malawian
workforce due to language and cultural differences, a storybook
has been written and translated into the local language dealing
with the issues of fraud and corruption and whistleblowing. This
has been distributed to all local employees. In addition, the local
acting troupe has been employed in presenting small plays to
the workforce on these subjects. Both mediums have been
extremely well received and effective in presenting the message.
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64
3 4 5
2
6
7
1
1 Mr JOHn bOrsHOff
2 Mr PEtEr dOnKin
3 Mr dOnaLd sHuMKa
4 Mr PHiLiP baiLy
5 Mr sEan LLEwELyn
6 Ms giLLian swaby
7 Mr ricK crabb
Pa l a d i n E n E r g y lT d » a n n u a l r E P o r T 2 011
directors'
report
The directors present their report on the group consisting of paladin energy Ltd and the entities
it controlled at the end of, or during, the year ended 30 June 2011.
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dirECTors
The following persons were Directors of Paladin Energy Ltd
(Company) and were in office for this entire period unless
otherwise indicated:
Mr Rick Wayne Crabb
B. Juris (Hons), LLB, MBA, FAICD
(Non-executive Chairman) Age 54
Mr Crabb holds degrees of Bachelor of Jurisprudence (Honours),
Bachelor of Laws and Master of Business Administration from
the University of Western Australia. He practised 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, of 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 also the non-executive chairman of
Golden Rim Resources Ltd (since 2001), Ashburton Minerals
Ltd (since 1999) and Otto Energy Ltd (since 2004). Mr Crabb is
a councillor on the Western Australian Division of the Australian
Institute of Company Directors.
Mr Crabb was appointed to the Paladin Board on 8 February
1994 and as 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
Special Responsibilities
Chairman of the Board
Member of Remuneration Committee from 1 June 2005
Member of Nomination Committee from 1 June 2005
Member of Sustainability Committee from 25 November 2010
Mr John Borshoff
B.Sc., F.AusIMM, FAICD
(Managing Director/Chief Executive Officer) Age 66
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.
Mr Borshoff has extensive knowledge of the uranium industry
in company management and strategic
and experience
planning. He serves on a number of industry organisations
including the Board of the Minerals Council of Australia and
the Board of the Australian Uranium Association of which he is
the chairman of its Code of Practice working committee and a
member of its Executive Committee.
Mr Borshoff founded Paladin and was appointed to the Paladin
Board on 24 September 1993.
Special Responsibilities
Managing Director/Chief Executive Officer
Member of Nomination Committee from 1 June 2005
Member of Sustainability Committee from 25 November 2010
Mr Sean Reveille Llewelyn
LL.B
(Non-executive Director) Age 63
Mr Llewelyn originally qualified, and practised, as a solicitor in
Australia and then re-qualified in England. He has subsequently
worked in the finance and merchant banking industries for
more than 20 years in Australia, the UK, the United States and
South Africa. His considerable finance experience has been
in derivatives (a founder, President and CEO of Capital Market
Technology Inc.), structured finance and early stage investment
relating to the metal markets. He has been involved with the
uranium industry for many years and has a comprehensive
understanding of the uranium market.
Mr Llewelyn was the instigator and driving a force in the formation
of Nufcor International Ltd, a major uranium marketing company,
jointly owned between Anglo Gold and First Rand International.
Mr Llewelyn was appointed to the Paladin 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 Donald Shumka
B.A., MBA
(Non-executive Director) Age 69
Mr Shumka has more than 40 years’ experience in financial roles.
From 2004 to 2011, he was President and Managing Director of
Walden Management, 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.
Mr Shumka was appointed to the Paladin 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 Peter Mark Donkin
B.Ec., LLB
(Non-executive Director) Age 54
Mr Donkin has over 30 years’ experience in finance, including
20 years arranging finance in the mining sector. He was the
Managing Director of the Mining Finance Division of Société
Générale in Australia, having worked for that bank for 21 years in
both their Sydney and London offices. Prior to that he was with
the corporate and international banking division of the Royal
Bank of Canada. His experience has involved structuring and
executing transactions for mining companies, both in Australia
and internationally in a wide variety of financial products,
including project finance, corporate finance, acquisition finance,
export finance and early stage investment capital. Mr Donkin
holds a Bachelor of Economics degree and a Bachelor of Law
degree from the University of Sydney. He was previously a
director of Sphere Minerals Ltd.
Mr Donkin was appointed to the Paladin Board on 1 July 2010.
Special Responsibilities
Member of Audit Committee from 25 November 2010
Pa l a d i n E n E r g y lT d » a n n u a l r E P o r T 2 011
Mr Philip Baily
B.Sc., MSc
(Non-executive Director) Age 67
Mr Baily is a metallurgist with more than 40 years’ experience
in the mining industry, including some 11 years in the uranium
sector. Throughout his career, he has been involved in the
design, construction, commissioning and operation of mineral
processing plants
including two uranium plants. Project
locations have varied from the deserts of Australia to the tropics
of Papua New Guinea and the high altitudes of Argentina. He
has extensive experience, at senior management level, in the
evaluation of projects from grass roots development to the
acquisition of advanced projects and operating companies.
These projects have been located throughout the world, many
in developing countries and environmentally sensitive areas.
Mr Baily holds a Bachelor of Science and a Master of Science
degree in Metallurgy from the University of NSW.
Mr Baily was appointed to the Paladin Board on 1 October 2010.
Special Responsibilities
Chairman of Sustainability Committee from 25 November 2010
Mr Ian Urquhart Noble
B.Sc. (Metallurgy), F.AusIMM, ARCST
(Non-executive Director) Age 70 – Retired from the Board 25
November 2010 at the Annual General Meeting
Mr Noble has over 40 years’ experience covering the mining,
chemical and nuclear industries with a strong emphasis in
the mining and mineral processing fields. He 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 was appointed to the Paladin Board on 29 June 2005
and retired from the Paladin Board with effect from the Annual
General Meeting held on 25 November 2010.
Special Responsibilities
Member of Audit Committee from 29 June 2005
Member of Nomination Committee from 29 June 2005
ComPany sECrETary
Ms Gillian Swaby
B.Bus., FCIS, FAICD
Age 51
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.
board and CommiTTEE 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:
Board of
Directors
Audit
Committee
Remuneration
Committee
Nomination
Committee
Sustainability
Committee
Number
attended
Number
eligible
to attend
Number
attended
Number
eligible
to attend
Number
attended
Number
eligible
to attend
Number
attended
Number
eligible
to attend
Number
attended
Number
eligible
to attend
18
17
18
17
9
16
13
18
18
18
18
10
18
13
-
-
4
4
2
1
-
-
-
4
4
2
2
-
3
-
3
3
-
-
-
3
-
3
3
-
-
-
1
1
1
1
-
1
1
1
1
1
1
-
1
1
1
1
-
-
-
-
1
1
1
-
-
-
-
1
Name
Mr Rick Crabb
Mr John Borshoff
Mr Sean Llewelyn
Mr Donald Shumka
Mr Ian Noble
Mr Peter Donkin
Mr Philip Baily
Of the above Board meetings, only 4 were face to face with the remainder held via electronic means. The total number of meetings reflects additional activity
with the takeover of NGM Resources Ltd, the issue and buy-back of convertible bonds and the acquisition of the Aurora assets.
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inTErEsTs in ThE sECuriTiEs of
ThE ComPany
signifiCanT ChangEs in ThE sTaTE
of affairs
As at the date of this report, the interests of the Directors in the
securities of Paladin Energy Ltd were:
There were no significant changes in the state of affairs of the
Group during the financial year not otherwise dealt with in this
report.
Director
Paladin
Shares
Options
(issued
under the
Paladin
EXSOP)
Share
Rights
(issued
under the
Paladin
Employee
Plan)
**300,000
Mr John Borshoff
21,877,394 *1,250,000
***500,000
Mr Rick Crabb
4,881,528
Mr Sean Llewelyn
100,000
Mr Donald Shumka
100,000
Mr Peter Donkin
Mr Philip Baily
15,000
12,000
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
exercisable at A$4.50 on or before 29 January 2013
*
** due to vest on 26 March 2013 subject to performance conditions
*** due to vest on 5 November 2013 subject to performance conditions
rEsignaTion, ElECTion and
ConTinuaTion in offiCE of dirECTors
In accordance with the Constitution of the Company, Mr Ian
Noble retired by rotation at the Annual General Meeting on
25 November 2010 and did not seek re-election. Mr Peter
Donkin and Mr Philip Baily were appointed as Non-executive
Directors by the Board effective 1 July 2010 and 1 October 2010
respectively and were then elected by shareholders at the 2010
Annual General Meeting. Mr Sean Llewelyn will seek re-election
at the 2011 Annual General Meeting, following his retirement by
rotation.
PrinCiPal aCTiviTy
The principal activity of the Group was the development and
operation of uranium mines in Africa, together with global
exploration and evaluation activities in Africa, Australia, Canada
and Niger.
rEviEw and rEsulTs of oPEraTions
A detailed operational and financial review of the Group is set
out on pages 14 to 43 of this report under the section entitled
Management Discussion and Analysis.
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loss after tax
is US$82.3M
The Groups’
(2010:US$45.6M) representing an increase of 80% from the
previous year.
for the year
dividEnds
No dividend has been paid during the financial year and no
dividend is recommended for the current year.
signifiCanT EvEnTs afTEr ThE
balanCE shEET daTE
Since the end of the year, the Directors are not aware of any
other matter or circumstance not otherwise dealt with in this
report, 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 2011 Financial Report:
uraniuM saLEs agrEEMEnt signEd
On 22 August 2011, the Company announced the signing of a
series of term uranium sales agreements for output from the
Langer Heinrich Stage 3 expansion. The agreements have
been signed with three new customers in the United States
and further strengthens Paladin’s already significant presence
within the U.S. nuclear market. Production commitments from
the new agreements total more than 2.8Mlb U3O8 with deliveries
beginning in 2012 and extending through to 2016. Contractual
pricing provisions incorporate both fixed and base (escalated)
mechanisms ranging from the low-to-mid-$60’s per pound U3O8.
LangEr HEinricH MinE, naMibia
ExEcutiOn Of us$141M PrOJEct financE faciLity fOr
stagE 3 ExPansiOn
On 26 August 2011, the Company announced that the financing
documentation required for the Stage 3 expansion had been
finalised and executed. The Stage 3 expansion of LHM in
Namibia will increase production to 5.2Mlb pa from its current
capacity of 3.7Mlb pa.
The initial development funding for the project has been via
Paladin’s existing cash reserves. The Langer Heinrich Stage
3 expansion is now fully financed and is on track to reach
nameplate capacity in the 1st quarter of 2012.
Paladin and a syndicate of banks executed a US$141M Project
Financing Facility, consisting of a 6 year Project Finance Facility
of US$135M with a Costs Overrun Facility of US$6M. The facility
is being provided without a parent company guarantee from
Paladin. The facilities are being provided by Société Générale
(as Agent), Nedbank Capital, Standard Bank Plc, Barclays
Capital (the investment banking division of Barclays Bank PLC)
and Rand Merchant Bank, a division of FirstRand Bank Limited
(RMB). Drawdown on the financing is subject to fulfilment of
conditions precedent usual for this type of facility.
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.
Pa l a d i n E n E r g y lT d » a n n u a l r E P o r T 2 011
Non-executive Directors’ remuneration remained at the
same level as for the past three years. It is expected
that an increase will be presented for consideration at
the 2011 AGM, particularly given the additional Non-
executive Director appointed in October 2010.
ExECuTivE rEmunEraTion
Details of the remuneration received by the Managing Director/
CEO and Key Management Personnel prepared in accordance
with statutory requirements and accounting standards are
detailed further in the Remuneration Report.
The tables below set out the cash value of earnings realised by
the Managing Director/CEO and Key Management Personnel for
2010 and 2011 and the intrinsic value of share based payments
that vested to the executives during the period. The intrinsic
value of share based payments represents the difference
between the exercise price of the award and the Company’s
share price at vesting date, and does not reflect the accounting
value determined in accordance with the Company’s accounting
policies.
The cash value of earnings realised include cash salary and
fees, superannuation, cash bonuses and other benefits
received in cash during the year and the intrinsic value of long-
term incentives vesting during the 2011 year. The tables do not
include the accounting value for share rights or options granted
in the current and prior years, as this value may or may not be
realised as they are dependent on the achievement of certain
performance hurdles. The accounting value of other long-term
benefits which were not received in cash during the year have
also been excluded.
All cash remuneration is paid in Australian dollars to those parties
listed below (with the exception of D Garrow who is paid in US$)
therefore the tables are presented in both A$ and US$ being the
functional and presentation currency. The detailed schedules
of remuneration presented later in this report are presented in
US$. The table below details only Key Management Personnel
and not other executives.
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EnvironmEnTal rEgulaTions
•
The Group is subject to significant environmental regulation
in respect to its exploration, evaluation, development and
operational activities for uranium projects under the laws of
the countries in which its activities are conducted. The Group
currently has mining and processing operations in Namibia and
Malawi, and exploration projects in Africa, Australia, Niger and
Labrador. 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.
rEmunEraTion for ThE yEar aT
a glanCE
As with last year, disclosure has taken a more holistic approach
to give a greater insight into the remuneration landscape
across the entire organisation and not simply focus on the
Key Management Personnel. Each and every employee is
important and to maintain a successful organisation, policies
for the attraction, motivation and retention of all staff throughout
the Group must be visible and consistent. This is particularly
relevant given the industry in which Paladin operates which
suffers globally from a lack of expertise.
•
•
•
•
•
•
Managing Director/CEO received a 5% increase in fixed
remuneration together with a short-term incentive cash
bonus representing 12% of fixed remuneration.
Salary increases across the Group were broadly based on
Consumer Price Index (CPI) increases (3% for Australia,
rounded up from 2.84%). Certain adjustments for parity
were made to ensure individual market competitiveness
was maintained. This philosophy extended throughout
the Group worldwide, with CPI adjustments relative to
the country of operations.
The bonus pool available for distribution decreased this
year as a result of poor uranium prices and delayed
ramp-up of Kayelekera Mine.
Short-term incentive cash bonuses were paid to non-
site personnel and senior executives at an average of
6-10% of fixed remuneration. Superior performance and
contribution was rewarded at a higher rate. Site based
employees continued to operate on a quarterly cash
bonus system linked to mine performance criteria.
A further annual grant of share rights was made under the
long-term incentive plan totalling 2,617,100 share rights
(0.34% of issued capital).
Employees saw the first tangible benefits of the change in
long-term incentive plan from options to share rights with
the vesting of the first tranche of time based share rights
on 1 September 2010. This totalled 495,580 shares.
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casH VaLuE Of Earnings rEaLisEd
2011 (a$’000) / (us$’000)
Name
Base Salary &
Superannuation
Cash Bonus
Other
Total Cash
LTIP 2008(1)
LTIP 2010(2)
Total
A$
US$
A$
US$
A$
US$
A$
US$
A$
US$
A$
US$
A$
US$
Mr John Borshoff
2,032 2,002
234
231
Mr Dustin Garrow
661
651
Ms Gillian Swaby
-
-
Mr Garry Korte
Mr Wyatt Buck
460
448
453
442
Mr Mark Chalmers
88(5)
87(5)
72
50
55
-
-
71
49
54
-
-
-
-
- 2,266 2,233
256
252
-
- 2,522 2,485
-
733
520(3)
512(3)
-
-
570
515
51(4)
50(4)
499
-
-
88
722
561
507
492
87
55
53
54
52
-
-
41
40
76
68
34
61
75
67
33
59
864
691
549
601
-
-
-
-
88
851
680
540
591
87
Total
3,689 3,635
411
405
571
562 4,671 4,602
405
398
239
234 5,315 5,234
(1) Value of long-term incentive options granted on 29 January 2008 and vesting on 29 January 2011 at an exercise price of A$4.50 vs market price at vesting
of A$4.89.
(2) Value of share rights granted on 26 March 2010 and vesting on 1 September 2010 at a market price of A$3.80.
(3) Fees for Company Secretarial services paid to a company of which Ms Gillian Swaby is a director and shareholder.
(4) School fees and accrued leave paid on resignation being 6 May 2011.
(5) Employment commenced 27 April 2011.
(6) Exchange rate used is average for year US$1 = A$1.01512.
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casH VaLuE Of Earnings rEaLisEd
2010 (a$’000) / (us$’000)
Name
Base Salary &
Superannuation
Cash Bonus
Other
Total Cash
A$
US$
A$
US$
A$
US$
A$
US$
Mr John Borshoff
1,910 1,681
-
-
Mr Dustin Garrow
Ms Gillian Swaby
690
432
607
380
Mr Garry Korte
275(1)
242(1)
Mr Wyatt Buck
549
483
66
44
-
-
58
39
-
-
Total
3,856 3,393
110
97
-
-
-
-
6
6
- 1,910 1,681
-
-
-
5
756
476
275
555
665
419
242
488
5 3,972 3,495
(1) Employment commenced 2 November 2009.
(2) Exchange rate used is average for year US$1 = 1.13652.
There were no benefits received from vesting of any LTIP incentives during this year.
Pa l a d i n E n E r g y lT d » a n n u a l r E P o r T 2 011
kEy ElEmEnTs of kEy managEmEnT
PErsonnEl/ExECuTivE rEmunEraTion
sTraTEgy
The overall focus of Paladin’s remuneration strategy is to:
•
•
•
•
•
•
attract and retain talented, qualified and effective
Executives;
motivate short and long-term performance and reward
past performance;
provide competitive and fair reward;
be flexible and responsive in line with market expectations;
align Executive interests with those of the Company’s
shareholders; and
comply with applicable legal requirements and appropriate
standards of governance.
This strategy applies group wide for all employees.
The overall level of compensation takes into account the
Company’s earnings and growth in shareholder wealth of the
Company together with the achievement of strategic goals.
Consideration of the Company’s earnings will be more relevant as
the Company matures from its development and consolidation
phase to profitability. 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 Board is cognisant of general shareholder concern that
long-term equity-based remuneration be linked to Company
performance and growth in shareholder value. The recent
Share Rights plan addresses this with performance conditions
including reference
(EPS), Total
Shareholder Return (TSR) and Market Price conditions. These
are considered in more detail further in this report.
to Earnings per Share
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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 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.
the purposes of
For
‘Executive’
the managing director, senior executives,
encompasses
managers and company secretary of the Parent and the Group.
report,
term
this
the
rEmunEraTion aPProval ProCEss
The Remuneration Committee is charged with assisting the
Board by reviewing and making appropriate recommendations
on remuneration packages for the Managing Director/CEO,
Non-executive Directors and senior executives. In addition,
it makes recommendations on long-term incentive plans and
associated performance hurdles together with the quantum of
grants made, taking into account both the individual’s and the
Company’s performance.
The Remuneration Committee, chaired by Mr Sean Llewelyn,
held three meetings during the year. Messrs Crabb and
Shumka are also Committee Members. The Managing Director/
CEO is invited to attend those meetings which consider the
remuneration strategy of the Group and recommendations in
relation to senior executives.
Having regard to the recommendations made by the Managing
Director/CEO, the Committee approves the quantum of the
short-term incentive bonus pool and the total number of the
long-term incentive grants to be made and recommends the
same for approval by the Board. Individual awards are then
determined by the Managing Director/CEO in conjunction with
senior management, as appropriate.
Pa l a d i n E n E r g y lT d » a n n u a l r E P o r T 2 011
r Em u n Er a T i o n r E P o r T ( a u d i T Ed )
Paladin Energy Limited
S&P/ASX 200 Index
250
) 200
0
0
1
=
e
s
a
B
(
x
e
d
n
I
150
100
50
0
June 06
June 07
June 08
June 09
June 10
June 11
30 June 2007
30 June 2008
30 June 2009
30 June 2010
30 June 2011
The Company
S&P/ASX 200 Index
A$201
A$124
A$156
A$103
A$120
A$78
A$87
A$85
A$61
A$91
EPS*
US$(0.07)
US$(0.06)
US$(0.78)
US$(0.08)
US$(0.11)
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* Restated as a result of the voluntary change in accounting policy (refer to Note 3).
The following graph provides further clarity in respect of the
Company’s performance and, in particular, its peer group in the
uranium sector against the S&P/TSX Composite Index, the second
graph illustrates the performance of Paladin and its peer group
against a base pre the Japanese tsunami through to year end.
S&P/TSX Composite Index
Paladin Energy Limited
Uranium One Inc
Cameco Corp
ERA
Uranium Participation Corp
Denison Mines Corp
x
e
d
n
I
e
t
i
s
o
p
m
o
C
X
S
T
/
P
&
S
250
200
150
100
50
0
June 06
June 07
June 08
June 09
June 10
June 11
Note: ERA's ASX share price converted to equivalent value in $C to compare to S&P/TSX Composite
Pa l a d i n E n E r g y lT d » a n n u a l r E P o r T 2 011
UXC spot price
Uranium One Inc
Cameco Corp
ERA
Paladin Energy Limited
Uranium Participation Corp
Denison Mines Corp
10.0%
0.0%
-10.0%
-20.0%
-30.0%
-40.0%
-50.0%
-60.0%
-70.0%
Japanese Tsunami
The remuneration structure for the Key Management Personnel/
Executives has three elements:
•
•
•
fixed remuneration;
short-term variable remuneration; and
long-term incentives.
These are detailed as follows:
$80.00
$70.00
$60.00
$50.00
$40.00
$30.00
$20.00
$10.00
$0.00
Remuneration Component
Elements
Details
Fixed Remuneration
Annual base salary determined
as at 1 January each year
The ‘not at risk’ cash component which may include
certain salary sacrifice packaging.
Statutory superannuation
contributions
Expatriate benefits
Foreign assignment allowance
Variable Performance Linked
Remuneration
(“at risk” remuneration)
Short-term incentive, paid as a
cash bonus
Long-term incentive, granted
under the Rights Plan
Statutory % of base salary.
Executives who fulfill their roles as an expatriate may
receive benefits including relocation costs, health
insurance, housing and car allowances, educational fees
and tax advisory services.
An additional % of base salary is payable in relation to
foreign assignments being 15% for Malawi and 10% for
Namibia.
Rewards Executives for performance over a short
period, being the year ending 31 December. Bonuses
are awarded at the same time as the salary reviews.
Assessment is based on the individual’s performance and
contribution to team and Company performance.
Award determined in the September quarter of each
year, based on individual performance and contribution
to team and Company performance. Vesting dependent
on creation of shareholder value over a three year period,
together with a retention element.
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Pa l a d i n E n E r g y lT d » a n n u a l r E P o r T 2 011
r Em u n Er a T i o n r E P o r T ( a u d i T Ed )
fixEd rEmunEraTion
variablE rEmunEraTion
This is reviewed annually with consideration given to both the
Company and the individual’s performance and effectiveness.
As competition in the global uranium mining industry continues to
grow, a key to maintaining talent is to create relevant and globally
competitive remuneration packages. Market data focused on
the mining industry is analysed with a focus on maintaining
parity or above with companies of similar complexity and size
operating in the resources sector and becoming an employer of
choice. The Company subscribes to a number of remuneration
including Boardroom Remuneration
surveys and reports
Review (Connect 4), Resources Sector Remuneration Report
(Godfrey Remuneration Group Pty Ltd), The Top 500 Report
(CRA Plan Managers Pty Ltd) and the AIM National Salary
Survey (Australian Institute of Management). The Company
also takes into consideration the annual Executive and Board
Remuneration Report produced by Ernst & Young.
During the past year, salaries, as a general rule, were increased
in accordance with the movements of the CPI only, other than in
cases where there was a role change or an anomalous situation
relevant to labour market conditions. For Australian employees
this amounted to 3%. For foreign operations, the CPI adjustment
was relative to that country.
By way of comparison, salaries in the mining industry in Australia
increased on average 4.34%. Whilst the level of increase was
below the average, Paladin’s long-term incentive scheme which
operates through all levels provides a generous component of
remuneration. Taking into account performance and industry
parity, senior executives received an average increase of 6.7%.
Mr John Borshoff is referred to as both Managing Director/
CEO to clarify the understanding of his position in both North
America and Australia, given Paladin’s stock exchange listings
in each jurisdiction.
Managing dirEctOr/cEO
Fixed remuneration (inclusive of superannuation) increased
by 5% from A$1,946,880 (US$1,713,019) to A$2,044,224
(US$2,013,776), effective from 1 January 2011. This level of
remuneration reflects the extensive knowledge and experience
Mr John Borshoff has in the uranium sector gained over the
past 40 years, as a recognised global authority. Expertise at
this level is in extremely limited supply, particularly given the
period of over 20 years of non activity in the uranium sector
and the very small number of uranium producers worldwide.
His knowledge and expertise of the sector has been key to the
growth and acquisition strategy of the Company and integral to
its development from a junior explorer to a uranium producer
with two operating mines. In addition, his contract provides
for 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 reflects approximately 18 years of
service to the Company by John Borshoff, being the founder
in 1993. As a comparison to retirement benefits generally seen
in the North American markets (in which the Company is listed
and a market from which executive staff are sourced), this
benefit is not considered excessive by the Board. This benefit
was approved by shareholders on 9 November 2005 at a time
when retirement benefits generally were set at a much higher
threshold.
sHOrt-tErM incEntiVEs
The Company provides short-term incentives comprising
a cash bonus to Executives of up to 30% of base salary.
The bonus is entirely discretionary with the goal of focusing
attention on short-term strategic and financial objectives. The
amount is dependent on the Company’s performance in its
stated objectives and the individual’s performance, together
with the individual’s position and level of responsibility. As for
2010, bonuses in 2011 were paid to modest levels averaging
6% across the group (2010: 10%) having regard to poor uranium
prices and delays in the ramp-up of Kayelekera Mine. Senior
executive bonuses averaged between 7% and 10%. All cash
bonuses granted have been paid during the year.
This component is an “at risk” component of overall remuneration
designed to encourage exceptional performance whilst adhering
to the Company values. Specific targets for individuals have not
been set due to the philosophy of achieving a common goal for
the Company, however, the following measures are taken into
account where these are applicable to the Key Management
Personnel and individual Executives and have been selected to
align their interests to those of shareholders:
(a)
(b)
(c)
(d)
(e)
(f)
(g)
health, safety and environmental performance;
production performance;
project development performance;
additional uranium resources delineated;
performance of the Company in meeting its various
other objectives;
financial performance of the Company; and
such other matters determined by the Remuneration
Committee in its discretion.
Managing dirEctOr/cEO
A bonus of up to 100% of base salary can be achieved,
having consideration to outcomes achieved during the year,
to be determined by the Remuneration Committee. For the
calendar year 2010 a 12% bonus was awarded. Matters to be
considered as key outcomes for the calendar year 2011 when
considering payment of a bonus to J Borshoff fall within the
following parameters which the Board considers best capture
the essential elements for increasing shareholder returns:
Factor
Indicative
Weighting
1
2
Production and financial performance
meeting or exceeding expectations.
Sustainability matters achieving
expectations.
3 Organic and inorganic growth
progressing in accordance with strategy.
4 Organisational factors meeting
expectations.
5 Other factors at the discretion of the
Remuneration Committee
45%
20%
15%
10%
10%
LOng-tErM incEntiVEs
The Company believes that encouraging its employees to
become shareholders is the best way of aligning their interests
with those of its shareholders.
Pa l a d i n E n E r g y lT d » a n n u a l r E P o r T 2 011
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In 2009, the Directors determined that a share rights plan
was the most appropriate form of long-term incentive plan for
the Group and at the 2009 AGM, shareholders approved the
adoption of the Employee Performance Share Rights Plan (the
Rights Plan).
Approval was also given to implement a share rights plan to
reward a small number of key individual contractors who provide
similar services to employees, the Contractor Performance
Share Rights Plan (the Contractor Rights Plan). These plans are
referred to jointly as the Rights Plans.
As a consequence of adopting the Rights Plans, no further
grants will be made under the previous Executive Share Option
Plan with the last option grant made on 24 June 2009. It was
determined that this plan had a number of limitations and did
not provide an appropriate incentive.
The Rights Plans are long-term incentive plans aimed at
advancing the interests of the Company by creating a stronger
link between employee performance and reward and increasing
shareholder value by enabling participants to have a greater
involvement with, and share in the future growth and profitability
of, the Company. They are an important tool to assist in
attracting and retaining talented people.
Share Rights are granted under the plan for no consideration.
Share Rights are rights to receive fully paid ordinary shares
in the capital of the Company (Shares) in the future if certain
individual and/or corporate performance metrics (Performance
Conditions) are met in the measurement period.
The number of Share Rights able to be issued under the Plans is
limited to 5% of the issued capital. The 5% limit includes incentive
grants under all plans made in the previous 5 years (with certain
exclusions under the Australian corporate legislation).
The Board is cognisant of general shareholder concern
that long-term equity based rewards should be linked to the
achievement by the Company of a performance condition.
Share Rights granted under the Rights Plan are subject to
certain vesting and performance conditions as determined by
the Board from time to time. The Company does not offer any
loan facilities to assist in the purchase of shares by employees.
VEsting and PErfOrMancE cOnditiOns
Managing dirEctOr/cEO
The Share Rights issued to the Managing Director/CEO have
different vesting hurdles to reflect the “at risk” nature of 100%
of this component of his remuneration and provide a direct
link between Managing Director/CEO reward and shareholder
return, and provide a clear line of sight between Managing
Director/CEO performance and Company performance.
In November 2010, 500,000 Share Rights were granted to
Mr J Borshoff, as approved by shareholders at the 2009 AGM.
The performance conditions are:
Proportion of
Share Rights
to which
performance
hurdle applies
50%
50%
Performance measure
Total Shareholder Return (TSR) relative
to mining companies in ASX S&P 200
Index*
Earnings Per Share (EPS) Measuring the
increase in earnings over the period
*The initial measurement date of the Share Rights subject to the
relative TSR condition is at the end of year three, calculated from
the date of grant. At the end of year three, Mr John Borshoff
can either:
•
•
accept the vesting outcome achieved; or
elect to have his Share Rights retested at the end of year
four (in which case the same vesting schedule applies but
the retest period covers the entire four year period from
the date the Share Rights were granted).
He is not permitted to “double dip”, so by electing to have his
Share Rights retested at the end of year four he forfeits any
entitlement to Share Rights which otherwise would have vested
at the end of year three. All Share Rights subject to the relative
TSR condition will expire at the end of year four.
The Remuneration Committee allows one retest to reflect the
volatile nature of the industry. The way in which the retest is
applied maintains alignment with shareholder interests.
The Share Rights issued in November 2010 are subject to a
range of vesting and performance conditions:
wHy wErE tHEsE targEts sELEctEd?
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The Board considered the measures reflected an appropriate
balance in terms of alignment between comparative shareholder
return and individual reward, a market based performance
measure and the encouragement of long-term retention.
Performance measure
Proportion of
Share Rights
to which
performance
hurdle applies
10%
15%
25%
20%
30%
Time based – must remain in employ
for 1 year from date of grant
Time based – must remain in employ
for 2 years from date of grant
Time based – must remain in employ
for 3 years from date of grant
Total Shareholder Return (TSR)
relative to mining companies in ASX
S&P 200 Index
Market Price Performance (MPP)
measuring the increase in share price
over the period
Pa l a d i n E n E r g y lT d » a n n u a l r E P o r T 2 011
r Em u n Er a T i o n r E P o r T ( a u d i T Ed )
Details of the various performance conditions follow:
Time-based Vesting
50% of the Share Rights will vest based on the participant continuing to be employed with the Group. These are staggered over
time and this condition is designed to assist in long-term retention of staff. Such benefits also assist in recruitment of suitably
qualified personnel in a market place where both mining, and more particularly uranium experience, are in particularly short
supply. Paladin competes in the global recruitment market and must offer competitive benefits to be successful and attract quality
candidates. The available talent pool with uranium expertise is both small and internationally focussed. Costs for replacement
of personnel and the hidden costs of disruption to the business can be substantial. This vesting criteria does not apply to the
Managing Director/CEO.
TSR
20% of the Share Rights will vest based on the Company’s TSR relative to the TSRs of a peer group of companies. This measure
represents the change in the Company’s share price over the measurement period, plus dividends (if any) notionally reinvested in
the Company’s shares, expressed as a percentage of the opening value. The peer group will comprise of mining companies in
the S&P/ASX 200 Index as at the date of the offer, excluding steel companies and any companies that pay a dividend during any
year of the performance period.
The limited number of uranium development and production companies globally presents difficulties in determining a suitable peer
group. It was therefore decided that, as the primary listing is on ASX and the majority of share trading takes place in that market,
the peer group set out above is the most appropriate. This also reflects the Group’s competitors for capital and talent.
Relative TSR is independent of market conditions and is considered a more relevant measure of management performance in
terms of value delivered to shareholders over the medium to long-term.
50% of the Share Rights granted to the Managing Director/CEO will vest based on the Company’s Relative TSR.
Mining companies are companies under the Global Industry Classification Standard (GICS) sub-industries: Oil & Gas – Coal &
Consumable Fuels (10102050), Metals & Mining – Aluminium (15104010), Metals & Mining – Diversified Metals & Mining (15104020),
Metals & Mining – Gold (15104030), Metals & Mining – Precious Metals & Minerals (15104040) and Metals & Mining – Steel
(15104050).
The base and stretch targets for the TSR performance condition are as follows:
Relative TSR percentile ranking
Less than 50th percentile
at 50th percentile
Percentage of Share Rights that may vest if the relative TSR
performance condition is met
0% of the Share Rights subject to the TSR condition
50% of the Share Rights subject to the TSR condition
Greater than the 50th percentile but less than the
75th percentile
Pro-rated vesting between 51% and 99% of the Share Rights
subject to the TSR condition
At 75th percentile or greater
100% of the Share Rights subject to the TSR condition
MPP
30% of the Share Rights are subject to MPP vesting condition which measures the increase in share price of the Company. Share
Rights will vest if, at the end of the measurement period, the share price of the Company is 25% above the market price at the
date of the offer. As part of the mix of performance conditions this provides a market based performance measure. The base
price for each grant is detailed in the table on the following page.
This does not apply to the Managing Director/CEO.
EPS
Basic Earnings Per Share (“EPS”) is determined by dividing the operating profit or loss attributable to members of Paladin Group
by the weighted average number of ordinary shares outstanding during the financial year. In the event that EPS is negative
(representing a loss per share) a reduction of the loss per share is, for this purpose, treated as a growth in EPS. Growth in EPS
will be measured by comparing the EPS in the base year (being the full financial year ending prior to the date of grant) and the
measurement year. EPS has been chosen as a performance condition because it provides a clear line of sight between Managing
Director/CEO performance and Company performance. It is also a generally recognised and understood measure of performance.
50% of the Share Rights granted to the Managing Director/CEO will vest based on the Company’s EPS.
The base and stretch targets for the Share Rights subject to the EPS conditions are as follows:
Average compound growth EPS over the performance period
Less than 10% pa
At 10% pa
More than 10% pa but less than 20% pa
Percentage of performance rights that may vest if the EPS
hurdle is met
0% of the Performance Rights subject to the EPS condition
50% of the Performance Rights subject to the EPS condition
Pro rated vesting between 51% and 99% of the Performance
Rights subject to the EPS condition
At 20% pa or greater
100% of the Performance Rights subject to the EPS condition
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sHarEs acQuirEd undEr tHE rigHts PLan
ExEcutiVE sHarE OPtiOn PLan (ExsOP)
Shares to be allocated to participants on vesting are currently
issued from equity. No consideration is paid on the vesting of
the Share Rights and resultant shares carry full dividend and
voting rights.
cHangE Of cOntrOL
All Share Rights will vest on a change of control event. The
Remuneration Committee considers that this is appropriate
given that shareholders (or a majority thereof) would have
collectively elected to accept a change of control event.
Moreover the number of Performance Rights relative to total
issued shares is not significant and thus are not considered a
disincentive to a potential bidder.
cEssatiOn Of EMPLOyMEnt
Under the Rights Plan, employees’ Share Rights will be cancelled
on cessation of employment, unless special circumstances
exist such as retirement, total and permanent disability,
redundancy or death. Contractors will have their Share Rights
cancelled, other than on death at which point the contractor’s
legal representative will be entitled to receive them.
The outstanding balance of Share Rights at 30 June 2011 is
represented by:
Prior to the implementation of the Share Rights Plan, the
EXSOP was the basis for the long-term incentive remuneration,
approved by shareholders in November 2006.
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
is measured by comparing the Company’s TSR (share price
appreciation plus dividends reinvested) with a group of peer
companies. The Company has chosen relative TSR, or how a
company performs relative to its peers, as it believes that this
is the most effective measure of the Company’s performance
and long-term shareholder value creation. 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 to allow for the effect of market factors beyond
the individual’s control.
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 mining
companies in the S&P/ASX200 Index at the date of grant. This
peer group reflects the Group’s competitors for capital and talent.
Date rights granted
Vesting date
Vesting performance conditions
26 March 2010
26 March 2010
26 March 2010
26 March 2010
26 March 2010
26 March 2010
5 November 2010
5 November 2010
5 November 2010
5 November 2010
5 November 2010
5 November 2010
5 November 2010
26 March 2013
26 March 2013
1 September 2011
1 September 2012
TSR
EPS
Time based
Time based
1 September 2012
TSR
1 September 2012
Market Price (base price A$3.82)
5 November 2013
5 November 2013
1 September 2011
1 September 2012
1 September 2013
TSR
EPS
Time based
Time based
Time based
1 September 2013
TSR
1 September 2013
Market price (base price A$3.62)
15 February 2011
15 February 2012
15 February 2011
15 February 2011
Total
* Managing Director/CEO grant
15 February 2013
15 February 2014
Time based
Time based
Time based
Number
*150,000
*150,000
594,270
990,450
792,360
1,188,540
*250,000
*250,000
202,170
303,255
505,425
404,340
606,510
155,336
178,838
225,843
6,947,337
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r Em u n Er a T i o n r E P o r T ( a u d i T Ed )
The Group’s performance against the hurdle is determined
according to Paladin’s ranking against the peer group TSR
growth over the performance period:
In addition, from time to time, the Board will make specific
grants of share rights subject only to time vesting as part of the
Company’s retention strategy for key individuals.
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%;
kEy ElEmEnTs of non-ExECuTivE
dirECTor rEmunEraTion sTraTEgy
The focus of the remuneration strategy is to:
when Paladin is ranked at the 50th percentile, 50% of the
share options will vest; and
•
•
when Paladin is ranked below the 50th percentile the
share options will not vest.
•
•
•
•
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When a participant ceases employment prior to the vesting of their
share options, the share options are cancelled 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.
HEdging Of incEntiVE grants PrOHibitEd
The Company’s policy prohibits hedging of equity
compensation grants. 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 such remuneration and inconsistent with
shareholder objectives.
MEtHOd Of VaLuatiOn Of LOng-tErM incEntiVEs
Refer to Note 25(g) and 25(k) of the financial statements to see
the key inputs used for valuation of the long-term incentives.
A summary of the options remaining on issue under the EXSOP
at 30 June 2011 is represented by:
Number of
Options
Exercise
Price A$
Expiry Date
Vesting Date
6,706,791
300,000
475,000
750,000
4.50
5.37
4.59
2.54
29/01/2013
29/01/2011*
15/02/2013
15/02/2011**
18/04/2013
18/04/2011***
14/10/2013
14/10/2011
* Subject to retesting on 29 January 2012
** Subject to retesting on 15 February 2012
*** Subject to retesting on 18 October 2011
rEtEntiOn PrOgraMME
As a component of the strategy for retention of key personnel,
certain executives and staff participate in a retention bonus
programme. Participation extends to a limited number of
selected individuals that have been identified as possessing the
requisite skills, expertise and experience in the uranium sector
and those with specialist corporate and commercial skills that
the Company requires to achieve its aggressive goals over
coming years. This initiative is driven by a desire to retain the
intellectual properly pool considered necessary to ensure the
continued success of the Company. The programme entitles
the participants to receive a cash award at the end of the
three year retention period ending on 1 July 2013. In the event
employment is terminated for any of retirement, disablement,
redundancy or death, after 1 July 2011 one third will be payable
and after 1 July 2012, two thirds will be payable. The cash award
varies between 50 and 100% of the average annual salary over
the 3 year period.
Attract and retain talented and dedicated directors.
Remunerate appropriately to reflect the:
– size of the Company;
–
–
–
the nature of its operations;
the time commitment required; and
the responsibility the Directors carry.
ComPonEnTs of non-ExECuTivE
dirECTor rEmunEraTion
In accordance with corporate governance principles, Non-
executive Directors are remunerated solely by way of fees and
statutory superannuation. The aggregate annual remuneration
permitted to be paid to Non-executive Directors is A$1.2M
(US$1.2M) as approved by shareholders at the 2008 AGM.
A number of independent surveys looking at companies both
from a market capitalisation, (A$1bn - $3bn) and ASX Top 51-
100 perspective give a range of Non-executive Director’s fees
from A$110,000 (50th percentile) to A$223,000 (90th percentile).
In relation to Non-executive Chairman, the analysis ranges from
A$248,000 (50th percentile) to A$480,000 (75th percentile). The
fee level currently set is mid-range of these.
Remuneration
Component
Elements
Base Fee
Must be contained
within aggregate limit
Details
(per annum)
Chairman
A$325,000
(US$320,159)
Non-executive
Director
A$160,000
(US$157,617)
Committee
Fees*
Paid to the Chairman of
the Audit Committee
A$20,000
(US$19,702)
Superannuation Statutory contributions
are included in the fees
set out above
Statutory % of
fees
*This is the only fee paid to any committee member. All other duties are
remunerated as part of the base fee.
Pa l a d i n E n E r g y lT d » a n n u a l r E P o r T 2 011
The following graph is provided to give a clearer understanding
of the Non-executive Directors’ remuneration.
rEmunEraTion aCross ThE grouP
The strategies outlined for Executive remuneration apply across
the Group. This extends to the provision of relevant short-term
and long-term incentives. Site bonuses at Langer Heinrich are
determined on a quarterly basis with reference to production,
safety, environmental performance and attendance. The full
bonus was only paid out in one quarter. At Kayelekera, the
bonus scheme will not be fully established until consistent
nameplate production is achieved, however, in recognition of a
significant LTI free period of 180 days, a small bonus was paid
in March 2011. Employees, regardless of their level or position in
the organisation, are paid the same bonus amount. This assists
in aligning Paladin values with its employees on the remote
operating sites.
In addition, permanent employees at the Langer Heinrich Mine
participated in the allocation of Share Rights during the year.
The vesting of 10% of this allocation on 1 September 2010 was
extremely well received and further cements the concept of
broad employee share ownership, assisted by the Company’s
listing on the Namibian Stock Exchange. This is seen by
employees as an extremely valuable benefit, particularly by
the local national employees, and enables them to build up a
shareholding in the Company over time. Whilst the workforce
had previously participated in the EXSOP, the issues associated
with the granting of options were exacerbated at the local level
and were not perceived as a tangible benefit.
At the Kayelekera Mine in Malawi, the allocation of Share Rights
was limited to a small number of employees because of delays
in ramp-up. Due to difficulties associated with local share
ownership of Paladin shares, an alternative reward system will
be established for local nationals in that country once the mine
reaches consistent design production levels. Senior employees
will participate in the Rights Plan to a greater extent as mine
production progresses.
As discussed earlier, CPI increases were implemented at all
Paladin operations and head office, the percentage varying
based on the individual country index.
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nOn-ExEcutiVE dirEctOr
rEMunEratiOn
P Baily **
P Donkin
S Llewelyn
D Shumka
I Noble**
Chairman
Maximum Fee Cap A$1.2M
160
180
160
160
180
160
325
325
120
160
160
180
65
325
0
0
0
,
$
A
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p
1200
1000
800
600
400
200
0
2009
2010
2011
Includes A$20K in relation to Audit Committee Chair fees
*
** Part year
OtHEr fEEs/bEnEfits
In addition, the Company’s Constitution provides for additional
compensation to be paid if any of the Directors are called upon
to perform extra services or make any special exertions on
behalf of the Company or the business of the Company. The
Company may compensate such Director in accordance with
such services or exertions, and such compensation may be
either in addition to or in substitution for the Directors’ fees
referred to above. No additional fees were paid during the year,
other than the Directors’ fees disclosed.
Non-executive Directors are also entitled to be reimbursed for
reasonable expenses incurred whilst engaged on Company
business. There
to compensation on
termination of non-executive directorships. Non-executive
Directors do not earn retirement benefits (other than the
statutory superannuation) and are not entitled to any form of
performance linked remuneration.
is no entitlement
bOard cHangEs
Mr Peter Donkin and Mr Phil Baily were appointed Non-
executive Directors on 1 July and 1 October 2010 respectively.
Both Director appointments were approved by shareholders on
25 November 2010 at the Annual General Meeting. Mr Ian Noble
retired from the Board on 25 November 2010 at the Annual
General Meeting.
Mr Sean Llewelyn will retire by rotation and seek re-election on
24 November 2011 at the Annual General Meeting.
Pa l a d i n E n E r g y lT d » a n n u a l r E P o r T 2 011
r Em u n Er a T i o n r E P o r T ( a u d i T Ed )
cOMPEnsatiOn Of KEy ManagEMEnt PErsOnnEL and tHE fiVE HigHEst Paid ExEcutiVEs fOr
tHE yEar EndEd 30 JunE 2011 Of tHE grOuP
Short-Term Benefits
Post Employment
Long-Term Benefits
Share Based
Payment*
Total(2)
Total
Total
Performance
Related
Total
Performance
Related
Salary &
fees
Cash
bonus
Other
Company
Benefits
Other
Super-
annuation
Retirement
Benefits
Long-
Term
Incentive
Plan
Long
Service
Leave
Options
Share
Rights
US$’000 US$’000 US$’000 US$’000 US$’000
US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 A$’000
US$’000
%
Directors
Mr Rick Crabb
305
-
Mr John Borshoff
1,987
231
Mr Sean Llewelyn
Mr Ian Noble(3)
Mr Donald Shumka
Mr Philip Baily(4)
Mr Peter Donkin(5)
145
59
177
108
145
-
-
-
-
-
Subtotal
2,926
231
Executives
Ms Gillian Swaby
-
Mr Garry Korte
Mr Wyatt Buck(6)
Mr Dustin Garrow
Mr Mark Chalmers(7)
Mr Mark Barnaba(9)
Mr Simon Solomons(9)
Mr Jim Morgan(9)
Subtotal
Total
438
427
651
83
478
455
566
3,098
6,024
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
512(1)
-
-
-
-
-
-
-
49
54
71
-
-
30
39
243
474
-
50
-
-
296(8)
-
-
346
346
512
512
15
15
13
5
-
10
13
71
-
15
15
-
4
15
15
15
79
-
584(10)
-
-
-
-
-
584
-
-
-
-
-
-
-
-
-
150
584
-
-
-
-
-
-
-
-
114
95
-
146
-
-
-
109
464
464
-
-
-
320
325
-
99
688
655
4,259 4,324
1,574
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
158
160
64
177
118
158
65
180
120
160
-
-
-
-
-
99
688
655
5,254 5,334
1,574
-
-
-
-
-
-
-
-
-
131
718
1,524 1,547
-
186
102
(35)(11)
788
559
799
567
134
376
1,378 1,399
-
-
87
88
- 1,955
2,744 2,784
303
119
204
1,007 1,022
284
1,132
1,150
289
115
80
330
-
-
402
254
789
3,688
9,219 9,356
1,470
99 1,477 4,343 14,473 14,690
3,044
-
37.0
-
-
-
-
-
18.9
14.6
14.3
23.9
-
-
39.9
22.4
Notes to the Compensation Table
Presentation Currency
The compensation table has been presented in US$, the Company’s functional and presentation currency. The A$ value has also been shown as this is considered
to be the most relevant comparator between years, given that in 2011 more than 90% of KMP’s contracts for services were denominated in A$ and this eliminates the
effects of fluctuations in the US$ and A$ exchange rate.
(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 is average for year US$ 1 = A$1.01512
(3) Mr Ian Noble – retired 25 November 2010.
(4) Mr Philip Baily – appointed 1 October 2010.
(5) Mr Peter Donkin – appointed 1 July 2010.
(6) Mr Wyatt Buck – resigned 6 May 2011.
(7) Mr Mark Chalmers - appointed 27 April 2011.
(8) Commencement fee and deferred remuneration.
(9) Mr Simon Solomons, Mr Jim Morgan and Mr Mark Barnaba are included as they are among the five highest paid executives, but are not determined to be
Key Management Personnel.
(10) This is the present value of the amount required to be accrued in 2011 for the payment at a future date (as yet undetermined) of a retirement benefit to Mr
Borshoff under the terms of his Services Contract.
(11) Includes a credit of US$58,000 relating to Share Rights lapsing upon resignation.
* A reconciliation of this figure in A$ follows to enable a clearer understanding of how this number is calculated.
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rEcOnciLiatiOn Of sHarE basEd PayMEnt cOMPEnsatiOn Of KEy ManagEMEnt PErsOnnEL
and tHE fiVE HigHEst Paid ExEcutiVEs fOr tHE yEar EndEd 30 JunE 2011 (cOnsOLidatEd
and cOMPany).
A$4.50 Options
(expiring
29/1/2013)
Share Rights
granted
26 March 2010
(vesting 2010
to 2013)
Share Rights
granted
8 July 2010
(vested August
2010)
Share Rights
granted
5 November 2010
(vesting 2011
to 2013)
Share Rights
granted
15 February 2011
(vesting 2012
to 2014)
Total Share Based
Payment
% of Total
Remuneration
Consisting of
Options
A$’000 US$’000 A$’000 US$’000 A$’000 US$’000 A$’000 US$’000 A$’000 US$’000 A$’000 US$’000
Directors
Mr John Borshoff
Subtotal
Executives
698
698
688
688
Ms Gillian Swaby
133
131
292
292
257
128
287
287
253
126
Mr Garry Korte
Mr Wyatt Buck
Mr Dustin Garrow
-
-
103
136
102
134
(35)(3)
(35)(3)
285
281
-
-
-
-
-
-
-
-
-
-
-
-
Mr Mark Barnaba
-
-
-
- 1,984(2)
1955(2)
Mr Simon Solomons
Mr Jim Morgan
Subtotal
Total
307
121
800
303
119
171
229
168
226
-
-
-
-
789
1,035
1,019
1,984
1,955
1,498
1,477
1,327
1,306
1,984
1,955
374
374
368
368
-
-
-
-
1,364
1,343
1,364
1,343
72
60
-
96
-
36
60
71
59
-
95
-
36
59
400(1)
394(1)
-
-
-
-
-
-
-
-
-
-
-
-
862
188
68
517
849
185
67
510
1,984
1,955
514
410
507
404
324
698
320
688
400
400
394
4,543
4,477
394
5,907
5,820
16.2
16.2
8.6
0
17.0
9.8
0
30.1
10.5
When a long-term incentive is granted to an employee, it is valued at the grant date and that value is allocated as an expense over the financial years up to the
date of vesting. The A$4.50 options were expensed up to 29/1/2011 and therefore no expense will be recognised for these in future years. All of the A$8.77
options lapsed during the year as the vesting conditions were not met. At the date of lapse these options had an intrinsic value of A$nil.
It should be noted that performance vesting conditions attach to all of the Options and Share Rights referred to above. These are detailed elsewhere in this
report, however for Options, 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. If performance conditions are still not met then the Options will lapse.
(1) Issued pursuant to retention programme, vesting time based only.
(2) Grant of 625,000 rights which vested into shares on 1 August 2010. Resulting shares then held in trust vesting January 2011 to January 2012. Once vested,
the shares are then subject to a disposal restriction which expires on 1 January 2014. The services from M Barnaba are of a high level strategic nature and
alleviates payment for such services from an investment bank or other advisor. The shares are both a sign-on bonus and part pre-payment for 3 years
service.
(3) Includes a credit of A$59,000 relating to Share Rights lapsing upon resignation.
(4) Exchange rate used as the average for year US$1 = A$1.01512
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m
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r
81
r Em u n Er a T i o n r E P o r T ( a u d i T Ed )
cOMPEnsatiOn Of KEy ManagEMEnt PErsOnnEL and tHE fiVE HigHEst Paid ExEcutiVEs fOr
tHE yEar EndEd 30 JunE 2010 Of tHE grOuP
Short-Term Benefits
Post Employment
Long-Term
Benefits
Share Based
Payment*
Total(2)
Total
Total
Performance
Related
Total
Performance
Related
Salary &
fees
Cash
bonus
Other
Company
Benefits
Other
Super-
annuation
Retirement
Benefits
Long
Service
Leave
Options
Share
Rights
US$’000
US$’000
US$’000
US$’000
US$’000
US$’000
US$’000
US$’000
US$’000
US$’000
A$’000
US$’000
%
Directors
Mr Rick Crabb
275
Mr John Borshoff
1,669
Mr Sean Llewelyn
Mr Ian Noble
Mr Donald Shumka
129
129
158
Subtotal
2,360
Executives
-
-
-
-
-
-
Ms Gillian Swaby
-
39
Mr Garry Korte(7)
Mr Wyatt Buck
Mr Dustin Garrow
Mr Simon Solomons
Mr Justin Reid(6)
Mr Jim Morgan(6)
Mr Mark Bolton(3)
Subtotal
Total
232
445
607
392
388
459
132
2,655
5,015
-
-
58
-
20
115(4)
-
22
139
139
-
-
120
120
-
-
-
-
-
-
-
-
5
-
-
-
-
-
-
-
-
380 (1)
-
-
-
-
-
-
-
380
380
12
12
12
12
-
-
-
-
-
287
326
-
510 (5)
476
2,416
74
5,157
5,861
2,490
-
-
-
-
-
-
-
-
-
-
-
-
141
141
158
160
160
180
-
-
-
48
510
476
2,416
74
5,884
6,687
2,490
-
10
38
-
12
12
12
6
90
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
270
-
276
270
468
353
303
99
49
88
788
291
852
896
331
968
110
1,045
1,188
66
44
88
938
932
862
160
1,066
1,059
980
182
333
12
298
355
484
384
325
22
-
-
1,940
544
5,868
6,670
2,213
138
510
476
4,356
618
11,752
13,357
4,703
-
48.3
-
-
-
42.3
4.2
34.9
34.0
51.6
41.2
37.7
13.8
Notes to the Compensation Table
(1) Other represents fees paid for company secretarial services to a company of which Ms Gillian Swaby is a director and shareholder.
(2) Exchange rate used is average for year US$ 1 = A$ 1.13652.
(3) Acting Chief Financial Officer – resigned 13 November 2009.
(4) Relocation expenses.
(5) This is the present value of the amount required to be accrued in 2010 for the payment at a future date (as yet undetermined) of a retirement benefit to Mr
Borshoff under the terms of his Services Contract.
(6) Mr Justin Reid and Mr Jim Morgan are included as they are among the five highest paid executives, but are not determined to be Key Management
Personnel.
(7) Mr Garry Korte – appointed 2 November 2009.
* A reconciliation of this figure in A$ follows to enable a clearer understanding of how this number is calculated.
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rEcOnciLiatiOn Of sHarE-basEd PayMEnt cOMPEnsatiOn Of KEy ManagEMEnt PErsOnnEL
and tHE fiVE HigHEst Paid ExEcutiVEs fOr tHE yEar EndEd 30 JunE 2010 (cOnsOLidatEd
and cOMPany)
A$8.77 Options
(expiring 1/12/2012)
A$4.50 Options
(expiring 29/1/2013)
A$4.48 Options
(expiring 24/6/2014)
Share Rights
(vesting 2010/2011/
2012/2013)
Total Share
Based Payment
% of Total
Remuneration
Consisting of
Options
A$’000
US$’000
A$’000
US$’000
A$’000
US$’000
A$’000
US$’000
A$’000
US$’000
Directors
Mr John Borshoff
Subtotal
Executives
Ms Gillian Swaby
Mr Garry Korte
Mr Wyatt Buck
Mr Dustin Garrow
Mr Simon Solomons
Mr Justin Reid
Subtotal
Total
1,537
1,537
1,352
1,352
1,208
1,208
1,063
1,063
229
201
-
-
179
236
532
157
208
468
77
-
136
71
-
-
68
-
120
62
-
-
120
420
-
-
-
-
-
-
-
-
-
-
-
-
-
-
84
84
112
56
100
125
75
50
100
353
702
74
74
99
49
88
110
66
44
88
618
618
2,829
2,829
2,489
2,489
368
49
365
380
534
397
392
418
56
415
432
607
451
445
544
48.6
34.2
-
32.4
25.8
49.9
37.9
35.1
2,824
2,485
Mr Jim Morgan
136
184
-
-
-
-
401
353
209
370
1,385
1,218
401
353
1,957
1,722
2,593
2,281
401
5,653
4,974
When a long-term incentive is granted to an employee, it is valued at the grant date and that value is allocated as an expense over the financial years up to the
date of vesting. The A$8.77 options were expensed up to 1/2/2010 and therefore no expense will be recognised for these in future years.
It should be noted that performance vesting conditions attach to all of the Options and Share Rights referred to above. These are detailed elsewhere in this
report, however for Options, 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. If performance conditions are still not met then the Options will lapse.
(1) Exchange rate used is the average for year US$1 = A$1.13652
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ConTraCTs for sErviCEs
Ms Gillian Swaby
Company Secretary
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 or rights that have vested, or that will
vest during the notice period, will be released. Options or rights
that have not yet vested will be forfeited.
Mr John Borshoff,
Managing Director/CEO
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.
Consultancy agreement with no fixed term.
Annual fee A$540,000.
Notice period 3 months.
No termination benefit is specified in the agreement.
83
Retention bonus – 100%.
Mr Dustin Garrow
Executive General Manager - Marketing
Term of agreement – 4 years commencing 27 November 2009.
Term of agreement – no fixed term.
Base salary, inclusive of superannuation, A$1,946,880 increased
to A$2,044,244 effective 1 January 2011. 3 months long service
leave after 5 years continual service.
Base salary, of US$632,500 increased to US$664,125 effective
1 January 2011.
No termination benefit is specified in the agreement.
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.
Notice period 6 months.
Retention bonus – 100%.
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r Em u n Er a T i o n r E P o r T ( a u d i T Ed )
Mr Simon Solomons
Executive General Manager - Operations Development
Term of agreement – no fixed term.
Base salary, inclusive of superannuation of A$470,000,
increased to A$484,100 effective 1 January 2011.
No termination benefit is specified in the agreement.
Notice period 6 months.
Mr Garry Korte
Chief Financial Officer
Term of agreement – no fixed term.
Base salary, inclusive of superannuation of A$416,000,
increased to A$503,500 effective 1 January 2011.
No termination benefit is specified in the agreement.
Notice period 3 months.
Retention bonus – 100%.
Mr Mark Barnaba
Strategic Advisor
(Commenced 1 July 2010)
Term of Agreement – 3 years.
Base salary, inclusive of superannuation A$500,000.
Notice period – 3 months.
Mr Jim Morgan
Executive General Manager
Term of Agreement – no fixed term.
Base salary, inclusive of superannuation of A$480,000,
increased to A$504,000 effective 1 January 2011.
20% foreign assignment allowance.
No termination benefit is specified in the agreement.
Notice period 2 months.
Retention bonus – 100%
Mr Mark Chalmers
Executive General Manager – Production
(Commenced 27 April 2011)
Term of Agreement – no fixed term.
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Base salary, inclusive of superannuation of A$490,000,
together with relocation expenses to Perth from South
Australia.
Notice period 3 months
No termination benefit is specified.
Mr Wyatt Buck
Executive General Manager – Production
(Resigned 6 May 2011)
Term of agreement – no fixed term.
Base salary, inclusive of superannuation A$525,000.
No termination benefit is specified in the agreement.
Notice period 6 months.
Retention bonus – 100%.
Remuneration for all parties referred to above includes provision
of an annual discretionary bonus and initial and ongoing
discretionary participation in the Company’s long-term incentive
plans.
granTs and vEsTing of long-TErm
inCEnTivEs
During the financial years ended 30 June 2011 and 2010, no
options were granted as equity compensation benefits under
the long-term incentive plan to Key Management Personnel.
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.
OPtiOns VEstEd during tHE yEar EndEd
30 JunE 2011:
Options @ A$4.50 expiring
29 January 2013
Vested
Unvested
657,000
136,018
593,000
122,767
105,926*
95,607**
139,915
123,672
315,360
126,284
111,624
284,640
Name
John Borshoff
Gillian Swaby
Wyatt Buck
Dustin Garrow
Jim Morgan
Simon Solomons
*
**
forfeited on 6 June 2011.
forfeited on 6 May 2011.
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Share Rights awarded to Key Management Personnel and the five highest paid executives during the year ended 30 June 2011
(Consolidated and Company) are set out below:
30 June 2011
Grant
Number
Grant date
Fair value per share right
at award date
Vesting date
(A$)
(US$)
Directors
Mr John Borshoff
500,000
5 November 2010
3.82
3.85
5 November 2013
Executive
Ms Gillian Swaby
60,000
5 November 2010
Ms Gillian Swaby
325,000
15 February 2011
Mr Garry Korte
Mr Wyatt Buck
Mr Dustin Garrow
50,000
50,000
80,000
5 November 2010
5 November 2010
5 November 2010
Mr Mark Barnaba
625,000
8 July 2010
Mr Jim Morgan
Mr Simon Solomons
Total
50,000
30,000
1,770,000
5 November 2010
5 November 2010
3.73
5.41
3.73
3.73
3.73
3.56
3.73
3.73
3.76
5.43
3.76
3.76
3.76
3.04
3.76
3.76
1 Sept 2011 to 1 Sept 2013
15 Feb 2012 to 15 Feb 3014
1 Sept 2011 to 1 Sept 2013
1 Sept 2011 to 1 Sept 2013
1 Sept 2011 to 1 Sept 2013
1 Jan 2011 to 1 Jan 2012
1 Sept 2011 to 1 Sept 2013
1 Sept 2011 to 1 Sept 2013
Shares Rights vested to Key Management Personnel and the five highest paid executives during the year ended 30 June 2011
(Consolidated and Company) are set out below:
30 June 2011
Grant
Number
Grant date
Fair value per share
right at award date
Vesting date
Vested
(A$)
(US$)
No.
%
Directors
Mr John Borshoff
300,000
26 March 2010
3.32
3.02
26 March 2013
-
-
Executives
Ms Gillian Swaby
180,000
26 March 2010
Mr Garry Korte
90,000
26 March 2010
Mr Wyatt Buck
160,000
26 March 2010
Mr Dustin Garrow
200,000
26 March 2010
Mr Simon Solomons
120,000
26 March 2010
Mr Justin Reid
80,000
26 March 2010
Mr Jim Morgan
160,000
26 March 2010
3.16
3.16
3.16
3.16
3.16
3.16
3.16
2.88
1 Sept 2010 to 1 Sept 2012
18,000
2.88
1 Sept 2010 to 1 Sept 2012
9,000
2.88
1 Sept 2010 to 1 Sept 2012
16,000
2.88
1 Sept 2010 to 1 Sept 2012
20,000
2.88
1 Sept 2010 to 1 Sept 2012
12,000
2.88
1 Sept 2010 to 1 Sept 2012
8,000
2.88
1 Sept 2010 to 1 Sept 2012
16,000
10%
10%
10%
10%
10%
10%
10%
Mr Mark Barnaba(1)
625,000
8 July 2010
3.56
3.04
1 Jan 2011 to 1 Jan 2012
625,000
100%
Total
1,915,000
724,000
38%
(1) Grant of 625,000 rights which vested into shares on 1 August 2010. Resulting shares then held in trust vesting January 2011 to January 2012. Once vested,
the shares are then subject to a disposal restriction which expires on 1 January 2014. 375,000 rights have vested to employee as at 30 June 2011.
End of audiTEd rEmunEraTion rEPorT
960 shares were issued on the exercise of options. The fair value at exercise date was A$518 and the amount paid was A$4,320.
1,300,580 shares were issued on the vesting of Share Rights during the year ended 30 June 2011. 2,694,270 options at an exercise
price of A$8.77 lapsed. At the date of lapse, these options had zero value.
Pa l a d i n E n E r g y lT d » a n n u a l r E P o r T 2 011
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sharEs undEr oPTion
Unissued ordinary shares of the Company under option at the
date of this report are as follows:
Date options granted
Date of Performance
Condition Test
Expiry date
Exercise price of
options(A$)
Number under option
29 January 2008
29 January 2011
29 January 2013
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
4.50
5.37
4.59
2.54
Total
6,606,187
300,000
475,000
750,000
8,131,187
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Since the end of the financial year, 95,444 options were forfeited
due to the cessation of employment.
No option holder has any right under the options to participate
in any other share issue of the Company or of any other entity.
The outstanding balance of Performance Share Rights at the
date of this report are as follows:
Date rights granted
Vesting date
Vesting performance conditions
26 March 2010
26 March 2010
26 March 2010
26 March 2010
26 March 2010
26 March 2010
26 March 2013
26 March 2013
1 September 2011
1 September 2012
TSR
EPS
Time based
Time based
1 September 2012
TSR
1 September 2012
Market Price (base price A$3.82)
5 November 2010
5 November 2013
5 November 2010
5 November 2013
5 November 2010
1 September 2011
5 November 2010
1 September 2012
5 November 2010
1 September 2013
TSR
EPS
Time based
Time based
Time based
5 November 2010
1 September 2013
TSR
5 November 2010
1 September 2013
Market price (base price A$3.62)
15 February 2011
15 February 2012
15 February 2011
15 February 2013
15 February 2011
15 February 2014
Time based
Time based
Time based
Total
* Managing Director/CEO grant
Number
*150,000
*150,000
575,025
958,375
766,700
1,150,050
*250,000
*250,000
197,110
295,665
492,775
394,220
591,330
155,336
178,838
225,843
6,781,267
Pa l a d i n E n E r g y lT d » a n n u a l r E P o r T 2 011
Ernst & Young received or are due to receive the following
amounts for the provision of non-audit services:
Tax compliance services
International tax consulting
Tax advice on mergers and acquisitions
Other tax advice
Total
US$’000
101
165
232
51
549
Signed in accordance with a resolution of the Directors.
Mr John Borshoff
Managing Director/CEO
Perth, Western Australia
31 August 2011
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dirECTors’ indEmniTiEs
During the year the Company has incurred premiums to insure
the Directors and/or officers for liabilities incurred as costs and
expenses that may be incurred in defending civil or criminal
proceedings that may be brought against the officers in their
capacity as officers of the Company and or its controlled entities.
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.
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.
audiTor’s indEPEndEnCE
dEClaraTion To ThE dirECTors
of Paladin EnErgy lTd
In relation to our review of the financial report of Paladin
Energy Ltd for the year ended 30 June 2011, 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
31 August 2011
Pa l a d i n E n E r g y lT d » a n n u a l r E P o r T 2 011
contents of the
financial report
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ConsolidaTEd inComE sTaTEmEnT
ConsolidaTEd sTaTEmEnT of ComPrEhEnsivE inComE
ConsolidaTEd sTaTEmEnT of finanCial PosiTion
ConsolidaTEd sTaTEmEnT of ChangEs in EquiTy
ConsolidaTEd sTaTEmEnT of Cash flows
noTE 1.
noTE 2.
noTE 3.
noTE 4.
noTE 5.
noTE 6.
noTE 7.
noTE 8.
noTE 9.
CorPoraTE informaTion
summary of signifiCanT aCCounTing PoliCiEs
volunTary ChangE in aCCounTing PoliCy
sEgmEnT informaTion
rEvEnuEs and ExPEnsEs
inComE Tax
Cash and Cash EquivalEnTs
TradE and oThEr rECEivablEs
invEnToriEs
noTE 10.
oThEr finanCial assETs
noTE 11 (a). ProPErTy, PlanT and EquiPmEnT
noTE 11 (b). non CurrEnT assET hEld for salE
noTE 12.
minE dEvEloPmEnT
noTE 13.
ExPloraTion and EvaluaTion ExPEndiTurE
noTE 14.
inTangiblE assETs
noTE 15.
TradE and oThEr PayablEs
88
88
noTE 17.
Provisions
noTE 16.
inTErEsT bEaring loans and borrowings
noTE 18.
ConTribuTEd EquiTy and rEsErvEs
noTE 19.
finanCial insTrumEnTs
noTE 20.
kEy managEmEnT PErsonnEl
noTE 21.
audiTors’ rEmunEraTion
noTE 22.
CommiTmEnTs and ConTingEnCiEs
noTE 23.
EmPloyEE bEnEfiTs
noTE 24.
rElaTEd ParTiEs
noTE 25.
sharE-basEd PaymEnT Plans
noTE 26.
inTErEsTs in joinTly ConTrollEd assETs
noTE 27.
assET aCquisiTion
noTE 28.
EvEnTs afTEr ThE balanCE shEET daTE
noTE 29.
non-Cash finanCing and invEsTmEnT aCTiviTiEs
noTE 30.
Earnings PEr sharE
noTE 31.
ParEnT EnTiTy informaTion
89
90
91
92
94
95
95
110
111
114
115
117
118
119
119
120
121
121
122
128
129
129
131
133
135
143
146
147
149
150
150
155
156
157
157
158
158
Pa l a d i n E n E r g y lT d » a n n u a l r E P o r T 2 011
Consolidated inCome statement
For ThE yEar EndEd 30 JunE 2011
Revenue
Revenue
Cost of sales
Depreciation and amortisation
Product distribution costs
Royalties
Gross profit
Other income
Exploration and evaluation expenses
Administration, marketing and non-production costs
Other expenses
(Loss)/earnings before interest and tax
Finance costs
Net loss before income tax
Income tax benefit/(expense)
Net loss after tax
Attributable to:
Non-controlling interests
Members of the parent
Notes
CONSOLIDATED
2011
US$M
2010
US$M
5(a)
268.9
(170.9)
204.3
(131.6)
5(b)
13
5(c)
5(d)
5(e)
6(a)
98.0
(36.1)
(9.2)
(6.0)
46.7
1.9
(3.0)
(54.0)
(35.2)
(43.6)
(61.5)
(105.1)
16.6
(88.5)
(6.2)
(82.3)
72.7
(14.3)
(3.4)
(4.0)
51.0
9.5
(9.4)
(38.6)
(9.1)
3.4
(21.4)
(18.0)
(28.5)
(46.5)
(0.9)
(45.6)
Loss per share (US cents)
Loss after tax from operations attributable to ordinary equity holders of the
Company
– basic and diluted (US cents)
30
(11.1)
(6.5)
The above Consolidated Income Statement should be read in conjunction with the accompanying notes.
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Consolidated statement of Comprehensive inCome
For ThE yEar EndEd 30 JunE 2011
Net loss after tax from operations
Other comprehensive income
Net gain/(loss) on available-for-sale financial assets
Transfer of available-for-sale reserve on acquisition of entity
Foreign currency translation
Income tax on items of other comprehensive income
Other comprehensive income for the year, net of tax
Total comprehensive income/(loss) for the year
Total comprehensive income/(loss) attributable to:
Non-controlling interests
Members of the parent
CONSOLIDATED
2011
US$M
2010
US$M
(88.5)
(46.5)
10.8
(3.2)
141.1
(3.7)
145.0
56.5
9.2
47.3
56.5
(37.0)
-
31.7
8.0
2.7
(43.8)
3.1
(46.9)
(43.8)
The above Consolidated Statement of Comprehensive Income should be read in conjunction with the accompanying
notes.
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Consolidated statement of finanCial position
as aT 30 JunE 2011
CONSOLIDATED
Notes
2011
US$M
2010
US$M
2009
US$M
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Prepayments
Inventories
Financial assets held for trading
Non current assets held for sale
TOTAL CURRENT ASSETS
Non current assets
Trade and other receivables
Inventories
Other financial assets
Deferred borrowing costs
Property, plant and equipment
Mine development
Exploration and evaluation expenditure
Deferred tax asset
Intangible assets
TOTAL NON CURRENT ASSETS
TOTAL ASSETS
LIABILITIES
Current liabilities
Trade and other payables
Unearned revenue
Interest bearing loans and borrowings
Provisions
TOTAL CURRENT LIABILITIES
Non current liabilities
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
Non-controlling interests
TOTAL EQUITY
7
8
9
11(b)
8
9
10
11(a)
12
13
6(d)
14
15
16
17
16
6(d)
17
18(a)
18(c)
117.4
20.5
13.8
177.7
-
-
329.4
1.5
73.6
41.8
-
630.1
106.6
1,177.9
19.7
23.1
2,074.3
2,403.7
69.7
-
43.9
5.3
-
675.8
217.5
36.3
929.6
1,048.5
1,355.2
1,768.1
205.2
(701.8)
1,271.5
83.7
1,355.2
347.9
33.2
13.5
109.3
-
12.0
515.9
0.3
40.8
35.7
-
541.1
119.2
695.1
4.0
24.6
66.1
26.4
2.7
85.8
1.0
-
182.0
2.2
24.9
69.2
8.2
457.8
54.2
642.9
10.8
25.6
1,460.8
1,295.8
1,976.7
1,477.8
63.4
-
47.9
10.1
-
682.2
168.7
33.5
884.4
1,005.8
970.9
1,474.6
42.6
(619.5)
897.7
73.2
67.1
0.2
14.2
9.8
91.3
0.2
572.0
143.4
32.3
747.9
839.2
638.6
1,111.6
32.0
(573.9)
569.7
68.9
970.9
638.6
118.9
121.4
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
The comparative statement for the year ended 30 June 2009 has been restated to show the effect of the voluntary
change in accounting policy (refer to page 110).
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Consolidated statement of Changes in equity
For ThE yEar EndEd 30 JunE 2011
Notes
Contributed
Equity
US$M
Available
-for-Sale
Reserve
US$M
Share-
Based
Payments
Reserve
US$M
Convertible
Bond Non-
Distributable
Reserve
US$M
Foreign
Currency
Premium on
Option
Revaluation
Acquisition
Application
Consolidated
Accumulated
Reserve
US$M
Reserve
US$M
Reserve
US$M
Reserve
US$M
Losses
US$M
Attributable
to Owners
of the
Parent
US$M
Non-
Controlling
Interests
US$M
CONSOLIDATED
Balance at 1 July 2009 as
previously stated
1,111.6
Effect of accounting policy change
3
-
Balance at 1 July 2009 – restated
Total comprehensive income/(loss) for the
year net tax
Share-based payment
Contributions of equity, net of transactions
costs
Balance at 30 June 2010
Balance at 1 July 2010 as
previously stated
1,111.6
-
-
363.0
1,474.6
1,474.6
Effect of accounting policy change
3
-
Balance at 1 July 2010 – restated
Total comprehensive income/(loss) for the
year net tax
Share-based payment
Vesting performance rights
Contributions of equity, net of
transaction costs
Convertible bonds – equity component,
net of tax and transaction costs
Convertible bonds – buyback
1,474.6
-
-
3.1
290.4
-
-
32.5
-
32.5
(24.8)
-
-
7.7
7.7
-
7.7
4.0
-
-
-
-
-
26.0
-
26.0
-
12.0
-
38.0
38.0
-
38.0
-
14.6
(3.1)
-
-
-
Balance at 30 June 2011
1,768.1
11.7
49.5
38.9
-
38.9
-
-
-
38.9
38.9
-
38.9
-
-
-
-
28.1
(6.6)
60.4
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
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(80.3)
14.9
0.1
(0.2)
(581.2)
562.3
7.3
7.3
(80.3)
14.9
0.1
(0.2)
(573.9)
569.6
23.5
(45.6)
(56.8)
14.9
(0.2)
(619.5)
(56.8)
14.9
(0.2)
(634.0)
(56.8)
14.9
0.1
(0.2)
(619.5)
897.7
-
-
-
-
-
-
-
-
-
125.6
-
-
-
-
-
-
-
-
-
-
-
0.1
0.1
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
14.5
(82.3)
(46.9)
12.0
363.0
897.7
883.2
14.5
47.3
14.6
-
28.1
(6.6)
68.9
0.1
69.0
3.1
-
1.1
73.2
73.2
73.2
9.2
-
-
-
-
-
290.4
1.3
291.7
68.8
14.9
0.1
(0.2)
(701.8)
1,271.5
83.7
1,355.2
Total
US$M
631.2
7.4
638.6
(43.8)
12.0
364.1
970.9
956.4
14.5
970.9
56.5
14.6
-
28.1
(6.6)
Consolidated statement of Changes in equity
For ThE yEar EndEd 30 JunE 2011
Notes
Contributed
Equity
US$M
Available
-for-Sale
Reserve
US$M
Share-
Based
Convertible
Bond Non-
Payments
Distributable
Reserve
US$M
Reserve
US$M
Foreign
Currency
Revaluation
Reserve
US$M
Premium on
Acquisition
Reserve
US$M
Option
Application
Reserve
US$M
Consolidated
Reserve
US$M
Accumulated
Losses
US$M
Attributable
to Owners
of the
Parent
US$M
Non-
Controlling
Interests
US$M
(80.3)
-
(80.3)
23.5
-
-
14.9
-
14.9
-
-
-
(56.8)
14.9
(56.8)
-
(56.8)
125.6
-
-
-
-
-
14.9
-
14.9
-
-
-
-
-
-
0.1
-
0.1
-
-
-
0.1
0.1
-
0.1
-
-
-
-
-
-
(0.2)
(581.2)
562.3
-
7.3
7.3
(0.2)
(573.9)
569.6
-
-
-
(45.6)
-
-
(0.2)
(619.5)
(0.2)
(634.0)
-
14.5
(46.9)
12.0
363.0
897.7
883.2
14.5
(0.2)
(619.5)
897.7
-
-
-
-
-
-
(82.3)
-
-
-
-
-
47.3
14.6
-
290.4
28.1
(6.6)
68.9
0.1
69.0
3.1
-
1.1
73.2
73.2
-
73.2
9.2
-
-
1.3
-
-
Total
US$M
631.2
7.4
638.6
(43.8)
12.0
364.1
970.9
956.4
14.5
970.9
56.5
14.6
-
291.7
28.1
(6.6)
Balance at 30 June 2011
1,768.1
11.7
49.5
68.8
14.9
0.1
(0.2)
(701.8)
1,271.5
83.7
1,355.2
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
CONSOLIDATED
Balance at 1 July 2009 as
previously stated
Effect of accounting policy change
3
Balance at 1 July 2009 – restated
Total comprehensive income/(loss) for the
year net tax
Share-based payment
Contributions of equity, net of transactions
costs
Balance at 30 June 2010
Balance at 1 July 2010 as
previously stated
Balance at 1 July 2010 – restated
Total comprehensive income/(loss) for the
year net tax
Share-based payment
Vesting performance rights
Contributions of equity, net of
transaction costs
Convertible bonds – equity component,
net of tax and transaction costs
Convertible bonds – buyback
1,111.6
32.5
26.0
38.9
1,111.6
26.0
38.9
-
-
-
-
-
-
-
-
363.0
1,474.6
1,474.6
3.1
290.4
32.5
(24.8)
-
-
-
-
-
-
-
-
-
7.7
7.7
7.7
4.0
12.0
38.0
38.0
14.6
(3.1)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
38.9
38.9
28.1
(6.6)
60.4
Effect of accounting policy change
3
1,474.6
38.0
38.9
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Consolidated statement of Cash flows
For ThE yEar EndEd 30 JunE 2011
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers
Payments to suppliers and employees
Interest received
Interest paid
Exploration and evaluation expenditure
Other income
Notes
CONSOLIDATED
2011
US$M
2010
US$M
281.0
(348.6)
1.6
(33.2)
(3.0)
0.2
201.0
(202.8)
1.8
(33.0)
(9.2)
7.7
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NET CASH OUTFLOW FROM OPERATING ACTIVITIES
7(a)
(102.0)
(34.5)
CASH FLOWS FROM INVESTING ACTIVITIES
Capitalised exploration expenditure
Payments for property, plant and equipment
Payments for available-for-sale financial assets
Payments for controlled entities net of cash acquired
Proceeds from sale of property, plant & equipment
Proceeds from sale of tenements
Proceeds from sale of investments
27
(17.6)
(129.4)
-
(3.5)
11.7
3.0
3.3
(7.4)
(170.4)
(1.8)
-
-
-
-
NET CASH OUTFLOW FROM INVESTING ACTIVITIES
(132.5)
(179.6)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from convertible bonds
Repayment of convertible bonds
Share placement
Rights issue
Equity fundraising costs
Project finance facility establishment costs
Repayment of borrowings
Proceeds from borrowings
NET CASH 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
300.0
(253.3)
-
1.3
(6.9)
-
(51.8)
12.0
1.3
(233.2)
347.9
2.7
-
-
374.2
1.1
(11.2)
(7.2)
(6.6)
145.0
495.3
281.2
65.3
1.4
CASH AND CASH EQUIVALENTS AT THE END OF THE FINANCIAL YEAR
7
117.4
347.9
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
Pa l a d i n E n E r g y lT d » a n n u a l r E P o r T 2 011
notes to the Consolidated finanCial statements
For ThE yEar EndEd 30 JunE 2011
NOTE 1. CORPORATE INFORMATION
The Financial Report of Paladin for the year ended 30 June 2011 was authorised for issue in accordance
with a resolution of the Directors on 30 August 2011.
Paladin is a company limited by shares incorporated and domiciled in Australia whose shares are publicly
traded on the ASX with additional listings on the Toronto Stock Exchange in Canada as well as 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 the Management
Discussion and Analysis on pages 14 to 43.
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 has been prepared in accordance with
the requirements of the Corporations Act 2001, 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 2011 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 US 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.
Apart from changes in accounting policies noted below, the accounting policies adopted are consistent with
those disclosed in the Financial Report for the year ended 30 June 2010. Certain comparative information
has been reclassified to be presented on a consistent basis with the current year’s presentation.
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(b)
New accounting Standards and Interpretations
(i) Changes in accounting policy and disclosures
During the year the Group adopted a voluntary change in accounting policy (refer to Note 3).
The Group has adopted the following new and amended Australian Accounting Standards and AASB
interpretations effective from 1 July 1010 as follows:
Reference
Title
AASB
2009-5
Further Amendments to Australian Accounting Standards arising from the Annual
Improvements Project – The subject of amendments to the standards are set out below:
95
• AASB 5 – Disclosures in relation to non-current assets (or disposal groups) classified as
held for sale or discontinued operations.
• AASB 8 – Disclosure of information about segment assets.
• AASB 101 – Current/non-current classification of convertible instruments.
• AASB 117 – Classification of leases of land.
• AASB 118 – Determining whether an entity is acting as a principle or an agent.
• AASB 136 – Clarifying the unit of account for goodwill impairment test is not larger than
an operating segment before aggregation.
• AASB 139 – Treating loan prepayment penalties as closely related embedded
derivatives, and revising the scope exemption for forward contracts to enter into a
business combination contract.
Pa l a d i n E n E r g y lT d » a n n u a l r E P o r T 2 011
notes to the Consolidated finanCial statements
For ThE yEar EndEd 30 JunE 2011
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(b)
New accounting Standards and Interpretations (continued)
(i) Changes in accounting policy and disclosures (continued)
Reference
Title
AASB
2009-8
AASB
2009-10
AASB
2010-3
Interpretation
19
Amendments to Australian Accounting Standards – Group Cash-settled Share-based
Payment Transactions [AASB 2].
Amendments to Australian Accounting Standards – Classification of Rights Issues [AASB
132].
Amendments to Australian Accounting Standards arising from the Annual Improvements
Project [AASB 3, AASB 7, AASB 121, AASB 128, AASB 131, AASB 132 & AASB 139].
Interpretation 19 Extinguishing Financial Liabilities with Equity Instruments.
The new and amended Standards and Interpretations had no impact on the financial position or
performance of the Group.
(ii) Accounting Standards and Interpretations issued but not yet effective
The following Australian Accounting Standards that have recently been issued or amended but are not yet
effective and have not been applied by the Group for the annual reporting period ending 30 June 2011,
outlined in the table below:
Application
Date of
Standard*
Application
Date for
Group*
1 January
2013
1 July 2013
1 January
2013
1 July 2013
1 January
2011
1 July 2011
Reference
Title
Summary
AASB 9
Financial Instruments
AASB
2009-11
Amendments to
Australian Accounting
Standards Arising
from AASB 9 [AASB
1, 3, 4, 5, 7, 101,
102, 108, 112,
118, 121, 127, 128,
131, 132, 136, 139,
1023 & 1038 and
Interpretations 10 &
12].
AASB 124
(Revised)
Related Party
Disclosures
(December 2009)
AASB 9 includes requirements for the
classification and measurement of
financial assets resulting from the first
part of Phase 1 of the IASB’s project to
replace IAS 39 Financial Instruments:
Recognition and Measurement (AASB
139 Financial Instruments: Recognition
and Measurement).
These amendments arise from
the issuance of AASB 9 Financial
Instruments that sets out requirements
for the classification and measurement
of financial assets.
This Standard shall be applied when
AASB 9 is applied.
The revised AASB 124 simplifies the
definition of a related party, clarifying
its intended meaning and eliminating
inconsistencies from the definition.
A partial exemption is also provided
from the disclosure requirements
for government-related entities.
Changes to the revised standard apply
retrospectively.
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notes to the Consolidated finanCial statements
For ThE yEar EndEd 30 JunE 2011
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(b)
New accounting Standards and Interpretations (continued)
(ii) Accounting Standards and Interpretations issued but not yet effective (continued)
Reference
Title
Summary
Application
Date of
Standard*
Application
Date for
Group*
1 January
2011
1 July 2011
1 July 2011 1 July 2011
1 January
2011
1 July 2011
This amendment makes numerous
editorial changes made by the
IASB and AASB to a range of
Australian Accounting Standards and
Interpretations.
This standard is as a consequence
of phase 1 of the joint Trans-Tasman
Convergence project of the AASB
and FRSB, and relocates all Australian
specific disclosures from other
standards to one place and revises
certain other disclosures.
This standard makes amendments to
several Australian Accounting Standards
and Interpretations. These amendments
are a consequence of the Annual
Improvements Project.
This Standard makes numerous
editorial amendments to a range of
Australian Accounting Standards and
Interpretations, including amendments
to reflect changes made to the text of
IFRS by the IASB.
1 January
2011
1 July 2011
The amendments increase the
disclosure requirements for transactions
involving transfers of financial assets.
1 July 2011 1 July 2011
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AASB
2009-12
Amendments to
Australian Accounting
Standards [AASBs
5, 8, 108, 110, 112,
119, 133, 137, 139,
1023 & 1031 and
Interpretations 2, 4,
16, 1039 & 1052]
AASB
1054
Australian Additional
Disclosures
AASB
2010-4
AASB
2010-5
AASB
2010-6
Further Amendments
to Australian
Accounting Standards
arising from the
Annual Improvements
Project [AASB 1,
AASB 7, AASB
101, AASB 134 and
Interpretation 13].
Amendments to
Australian Accounting
Standards [AASB
1, 3, 4, 5, 101,
107, 112, 118,
119, 121, 132, 133,
134, 137, 139, 140,
1023 & 1038 and
Interpretations 112,
115, 127, 132 &
1042].
Amendments to
Australian Standards
– Disclosures on
Transfers of Financial
Assets [AASB 1 &
AASB 7]
Pa l a d i n E n E r g y lT d » a n n u a l r E P o r T 2 011
notes to the Consolidated finanCial statements
For ThE yEar EndEd 30 JunE 2011
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(b)
New accounting Standards and Interpretations (continued)
(ii) Accounting Standards and Interpretations issued but not yet effective (continued)
Reference
Title
Summary
Application
Date of
Standard*
Application
Date for
Group*
1 January
2013
1 July 2013
This standard makes amendments to
several Australian Accounting Standards
and Interpretations. These amendments
arise from the issuance of AASB 9
Financial Instruments as issued in
December 2009.
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AASB
2010-7
AASB
2011-1
**
**
**
Amendments to
Australian Accounting
Standards arising
from AASB 9
(December 2010)
[AASB 1, 3, 4, 5,
7, 101, 102, 108,
112, 118, 120, 121,
127, 128, 131,
132, 136, 137, 139,
1023, & 1038 and
interpretations 2, 5,
10, 12, 19 & 127]
Amendments to
Australian Accounting
Standards Arising
from the Trans-
Tasman Convergence
project [AASB 1,
AASB 5, AASB 101,
AASB 107, AASB
108, AASB 121,
AASB 128, AASB
132, AASB 134,
Interpretation 2,
Interpretation 112,
Interpretation 113]
Consolidated
Financial Statements
Joint Arrangements
Disclosure of Interests
In Other Entities.
This Standard amends many Australian
Accounting Standards, removing the
disclosures which have been relocated
to AASB 1054.
1 July 2011 1 July 2011
1 January
2013
1 July 2013
1 January
2013
1 July 2013
1 January
2013
1 July 2013
IFRS 10 establishes a new control
model that applies to all entities. It
replaces parts of IAS 27 Consolidated
and Separate Financial Statements
dealing with the accounting for
consolidated financial statements.
IFRS 11 replaces IAS 31 Interests in
Joint Ventures and SIC-13 Jointly-
controlled Entities – Non-monetary
Contributions by Ventures. IFRS 11
uses the principle of control in IFRS 10
to define joint control, and therefore the
determination of whether joint control
exists may change.
New disclosures have been
introduced about the judgements
made by management to determine
whether control exists, and to require
summarised information about
joint arrangements, associates and
structured entities and subsidiaries with
non-controlling interests.
Pa l a d i n E n E r g y lT d » a n n u a l r E P o r T 2 011
notes to the Consolidated finanCial statements
For ThE yEar EndEd 30 JunE 2011
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(b)
New accounting Standards and Interpretations (continued)
(ii) Accounting Standards and Interpretations issued but not yet effective (continued)
Application
Date of
Standard*
Application
Date for
Group*
1 January
2013
1 July 2013
Reference
Title
Summary
**
Fair Value
Measurement
IFRS 13 provides guidance on how to
determine fair value under IFRS when
fair value is required or permitted by
IFRS. Application of this definition
may result in different fair values being
determined for the relevant assets.
IFRS 13 also expands the disclosure
requirements for all assets or liabilities
carried at fair value.
* Designates the beginning of the applicable annual reporting period unless otherwise stated.
** The AASB has not issued this standard, which was finalised by the IASB in May 2011.
The potential effect of these Standards is yet to be fully determined. However, it is not expected that the
new Standards will significantly affect the Group’s financial position.
(c)
Basis of Consolidation
The consolidated financial statements comprise the financial statements of Paladin Energy Ltd and its
subsidiaries as at and for the period ended 30 June each year (the Group). Interests in associates are equity
accounted and are not part of the consolidated Group.
Subsidiaries are all those entities over which the Group has the power to govern the financial and operating
policies so as to obtain benefits from their activities. The existence and effect of potential voting rights that
are currently exercisable or convertible are considered when assessing whether a group controls another
entity.
The financial statements of the subsidiaries are prepared for the same reporting period as the parent
company, using consistent accounting policies. In preparing the consolidated financial statements, all
intercompany balances and transactions, income and expenses and profit and losses resulting from intra-
group transactions have been eliminated in full.
Subsidiaries are fully consolidated from the date on which control is obtained by the Group and cease to be
consolidated from the date on which control is transferred out of the Group.
The acquisition of subsidiaries is accounted for using the acquisition method of accounting. The acquisition
method of accounting involves recognising at acquisition date, separately from goodwill, the identifiable
assets acquired, the liabilities assumed and any non-controlling interest in the acquiree. The identifiable
assets acquired and the liabilities assumed are measured at their acquisition date fair values (refer to Note
2(j)).
The difference between the above items and the fair value of the consideration (including the fair value of
any pre-existing investment in the acquiree) is goodwill or a discount on acquisition.
A change in the ownership interest of a subsidiary that does not result in a loss of control, is accounted for
as an equity transaction.
Non-controlling interests are allocated their share of net profit after tax in the statement of comprehensive
income and are presented within equity in the consolidated statement of financial position, separately from
the equity of the owners of the parent.
Losses are attributed to the non-controlling interest even if that results in a deficit balance.
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notes to the Consolidated finanCial statements
For ThE yEar EndEd 30 JunE 2011
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(c)
Basis of Consolidation (continued)
If the Group loses control over a subsidiary, it:
• Derecognises the assets (including goodwill) and liabilities of the subsidiary;
• Derecognises the carrying amount of any non-controlling interest;
• Derecognises the cumulative translation differences, recorded in equity;
• Recognises the fair value of the consideration received;
• Recognises the fair value of any investment retained;
• Recognises any surplus or deficit in profit or loss; and
• Reclassifies the parent’s share of components previously recognised in other comprehensive income to
profit or loss.
(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 whenever
events or changes in circumstances indicate that the carrying value may not be recoverable.
The Group conducts an annual internal review of asset values, which is used as a source of information
to assess for any indicators of impairment. Factors, such as changes in uranium prices, production
performance and mining and processing costs are monitored to assess for indicators of impairment. If any
indication of impairment exists, an estimate of the asset’s recoverable amount is calculated.
An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its
recoverable amount. Recoverable amount is the higher of an asset’s fair value less costs to sell and value
in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there
are separately identifiable cash inflows that are largely independent of the cash inflows from other assets or
groups of assets (cash-generating units).
(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 the Black-Scholes 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.
The carrying amount of deferred income tax assets is reviewed at each reporting date and reduced to the
extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the
deferred income tax asset to be utilised.
Unrecognised deferred income tax assets are reassessed at each reporting date and are recognised to
the extent that it has become probable that future taxable profit will allow the deferred tax asset to be
recovered.
Pa l a d i n E n E r g y lT d » a n n u a l r E P o r T 2 011
notes to the Consolidated finanCial statements
For ThE yEar EndEd 30 JunE 2011
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(d)
Significant Accounting Judgements, Estimates and Assumptions (continued)
(vi) Rehabilitation Provision
The value of this provision represents the discounted value of the present obligation to rehabilitate the mine
and 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 (estimated cash flows, discount rates or
inflation rates), used to determine the provision could have a material impact to the carrying value of the
provision.
(vii) Share-Based Payment Transactions
The Group measures the cost of equity-settled transactions with employees by reference to the fair value
of the equity instruments at the date at which they are granted. The fair value is determined by an external
valuer using either the Black-Scholes model, Monte-Carlo simulation model or Asset or Nothing Digital
Option valuation model as appropriate, using assumptions detailed in Note 25.
(viii) Proved and Probable Reserves
The Group uses the concept of a life of mine as an accounting value to determine such things as
depreciation rates and the appropriate period to discount mine closure provisions. In determining life of mine
the proved and probable reserves measured in accordance with the 2004 edition of the JORC Code specific
to a mine are taken into account which by their very nature require judgements, estimates and assumptions.
(ix) Production Start Date
The Group assesses the stage of each mine under construction to determine when a mine moves into the
production stage. The criteria used to assess the start date are determined based on the unique nature of
each mine construction project, such as the complexity of a plant and its location. The Group considers
various relevant criteria to assess when the mine and the processing plant is substantially complete, ready
for its intended use. At this time, any costs capitalised to ‘construction work in progress’ are reclassified
to ‘mine development’ and ‘property, plant and equipment’. Some of the criteria will include, but are not
limited, to the following:
•
•
•
•
availability of the plant
completion of a reasonable period of testing of the mine plant and equipment
ability to produce metal in saleable form (within specifications)
ability to sustain ongoing production of metal at commercial rates of production
When a mine construction project moves into the production stage, the capitalisation of certain mine
construction costs ceases and costs are either regarded as inventory or expensed, except for costs that
qualify for capitalisation relating to mine asset additions or improvements, mine development or mineable
reserve development. It is also at this point that depreciation/amortisation commences.
(e)
Segment Reporting
An operating segment is a component of an entity that engages in business activities from which it may
earn revenue and incur expenses (including revenues and expenses relating to transactions with other
components of the same entity), whose operating results are regularly reviewed by the Group’s executive
management team (the chief operating decision makers) to make decisions about resources to be allocated
to the segment and assess its performance and for which discrete financial information is available. This
includes start-up operations which are yet to earn revenues. Management will also consider other factors
in determining operating segments such as the existence of a line manager and the level of segment
information presented to the executive management team.
Operating segments have been identified based on the information provided to the chief operating decision
makers, being the executive management team.
Operating segments that meet the quantitative criteria as prescribed by AASB 8 are reported separately.
However, an operating segment that does not meet the quantitative criteria is still reported separately where
information about the segment would be useful to users of the financial statements.
The Company has identified its operating segments to be Exploration, Namibia and Malawi on the basis of
the nature of activity and geographical location and different regulatory environments.
Pa l a d i n E n E r g y lT d » a n n u a l r E P o r T 2 011
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notes to the Consolidated finanCial statements
For ThE yEar EndEd 30 JunE 2011
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(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.
(ii) Transactions and Balances
Foreign currency transactions are converted 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.
(iii) Group Companies
Some Group entities have a functional currency of US dollars which is consistent with the Group’s
presentational currency. 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.
Foreign currency translation reserves upon the sale of a subsidiary is recycled to the Income Statement.
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
•
Indo Energy Ltd
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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
102
The following material operating subsidiaries have a Canadian dollar functional currency:
• Aurora Energy Ltd
• Michelin Uranium Ltd
• Paladin Canada Holdings (NL) Ltd
• Paladin Canada Investments (NL) 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 risk and reward of ownership pass which is when title of
the product passes from the Group 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
Group.
Pa l a d i n E n E r g y lT d » a n n u a l r E P o r T 2 011
notes to the Consolidated finanCial statements
For ThE yEar EndEd 30 JunE 2011
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(g)
Revenue Recognition (continued)
(ii)
Interest Revenue
Interest revenue from investments in cash 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.
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.
(i)
Leases
The determination of whether an arrangement is or contains a lease is based on the substance of the
arrangement and requires an assessment of whether the fulfilment of the arrangement is dependent on the
use of a specific asset or assets and the arrangement conveys a right to use the asset.
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)
Business Combinations
Business combinations are accounted for using the acquisition method. Prior to 1 July 2009 the purchase
method of accounting was used to account for business combinations. The consideration transferred
in a business combination shall be measured at fair value, which shall be calculated as the sum of the
acquisition-date fair values of the assets transferred by the acquirer, the liabilities incurred by the acquirer to
former owners of the acquiree and the equity issued by the acquirer, and the amount of any non-controlling
interest in the acquiree. For each business combination, the acquirer measures the non-controlling interest
in the acquiree either at fair value or at the proportionate share of the acquiree’s identifiable net assets.
Acquisition-related costs are expensed as incurred.
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notes to the Consolidated finanCial statements
For ThE yEar EndEd 30 JunE 2011
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(j)
Business Combinations (continued)
When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate
classification and designation in accordance with the contractual terms, economic conditions, the Group’s
operating or accounting policies and other pertinent conditions as at the acquisition date. This includes the
separation of embedded derivatives in host contracts by the acquiree.
If the business combination is achieved in stages, the acquisition date fair value of the acquirer’s previously
held equity interest in the acquiree is remeasured at fair value as at the acquisition date through profit or
loss.
Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the
acquisition date. Subsequent changes to the fair value of the contingent consideration which is deemed to
be an asset or liability will be recognised in accordance with AASB 139 either in profit or loss or in other
comprehensive income. If the contingent consideration is classified as equity, it shall not be remeasured.
(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.
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(n)
Inventories
Consumable stores inventory are valued at the lower of cost and net realisable value using the weighted
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 weighted 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 stockpiles containing ore at less than the cut-off
grade.
Any inventory produced during the development phase is initially recognised at its deemed cost, being net
realisable value and deducted from capitalised development costs.
The costs of production include labour costs, materials and contractor expenses which are directly
attributable to the extraction and processing of ore (including any recognised expense of stripping costs);
the depreciation of property, plant and equipment used in the extraction and processing of ore; and
production overheads.
Inventory held for trading by Paladin Nuclear Ltd, the Group’s marketing entity, is valued at the lower of
actual cost and net realisable value, using a blend of spot and long-term prices.
Pa l a d i n E n E r g y lT d » a n n u a l r E P o r T 2 011
notes to the Consolidated finanCial statements
For ThE yEar EndEd 30 JunE 2011
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(o)
Investments and Other Financial Assets
The Group classifies its investments and other financial assets 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.
Classification
(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.
(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 losses which
arise from changes in the fair value of non monetary securities classified as available-for-sale are recognised
in other comprehensive income. 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
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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.
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(v) Fair Value of Financial Instruments
The fair values of quoted investments are based on current bid prices. If the market for a financial asset
or liability 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.
The nominal value less estimated adjustments of trade receivables and payables are assumed to
approximate their fair values.
(vi)
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. Any subsequent increase in value is recognised in equity.
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notes to the Consolidated finanCial statements
For ThE yEar EndEd 30 JunE 2011
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(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.
(q)
Property, Plant and Equipment
All property, plant and equipment are stated at historical cost less accumulated depreciation and impairment
losses. Historical cost includes expenditure that is directly attributable to the acquisition of the items.
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 either the unit of production basis
or 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
2-6 years
•
Leasehold improvements
7 years
• Mine plant and equipment
lesser of life of asset and unit of production basis
During the year the depreciation basis for mine plant and equipment was changed from straight-line to
a unit of production basis as management believe this better reflects the consumption of the economic
benefits. The amount of the effect in future periods is not disclosed because estimating it is impracticable.
The amount relating to the year ended 30 June 2011 is a reduction in depreciation expense of US$1.1M.
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.
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(r)
Mine Development
Pre-production costs are deferred as development costs until such time as the asset is capable of being
operated in a manner intended by management. Post-production costs are recognised as a cost of
production.
Overburden cost is capitalised and depreciated on a units of production basis. Stripping costs are
recognised as a production cost as incurred.
(s)
Exploration and Evaluation Expenditure
The Company has made a voluntary change to its accounting policy for exploration and evaluation
expenditure. Refer to Note 3 for disclosure regarding the change.
Exploration and evaluation expenditure related to areas of interest is capitalised and carried forward to the
extent that:
(i)
rights to tenure of the area of interest are current; and
(ii) costs are expected to be recouped through successful development and exploitation of the area of
interest or alternatively by its sale.
Exploration and evaluation expenditure is allocated separately to specific areas of interest. Such expenditure
comprises net direct costs and an appropriate portion of related overhead expenditure directly related to
activities in the area of interest.
Pa l a d i n E n E r g y lT d » a n n u a l r E P o r T 2 011
notes to the Consolidated finanCial statements
For ThE yEar EndEd 30 JunE 2011
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(s)
Exploration and Evaluation Expenditure (continued)
Costs related to the acquisition of properties that contain Mineral Resources are allocated separately to
specific areas of interest.
If costs are not expected to be recouped through successful development and exploitation of the area of
interest or alternatively by sale, costs are expensed in the period in which they are incurred.
Exploration and evaluation expenditure that is capitalised is included as part of cash flows from investing
activities whereas exploration and evaluation expenditure that is expensed is included as part of cash flows
from operating activities.
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 to its recoverable amount if the area of
interest’s carrying amount is greater than its estimated recoverable amount.
(t)
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
Life of mine
Amortisation method used
Amortised over the life of the mine on a unit of production basis
Impairment testing
Annually and more frequently when an indication of impairment exists.
The amortisation method is reviewed at each financial year-end.
The rights to use water and power supply have been granted for a minimum of 17 years from April 2007 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.
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notes to the Consolidated finanCial statements
For ThE yEar EndEd 30 JunE 2011
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(u)
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.
(v)
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 debt is recognised as a liability in the
Statement of Financial Position, 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 the equity component and is recognised in shareholders’ equity. The carrying
amount of the equity component 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.
(w)
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.
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.
(x)
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
due 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.
(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) Long-Term Incentive Plan
The liability for the retention programme is recognised in the provision for employee benefits as the present
value of expected future payments to be made in respect of the retention bonus programme. Consideration
is given to expected future salary levels and experience of employee departures. Expected future payments
are discounted using market yields at the reporting date on national government bonds with terms of
maturity and currency that match, as closely as possible, the estimated future cash outflows. Projected unit
credit method has been used to calculate the provision.
(iv) Share-Based Payments
Share-based compensation benefits were provided to employees via the Paladin Executive Share Option
Plan (EXSOP). Following the implementation of the Employee Performance Share Rights Plan and the
Contractor Performance Share Rights Plan (Rights Plans) detailed in Note 25, no further options will be
granted pursuant to the EXSOP.
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notes to the Consolidated finanCial statements
For ThE yEar EndEd 30 JunE 2011
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(x)
Employee Benefits (continued)
(iv) Share-Based Payments (continued)
The fair value of options granted under both the EXSOP and rights under the Rights Plans 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 or rights.
The fair value of options at grant date is independently determined using the Black-Scholes pricing model
that takes into account the exercise price, the term of the option or right, the vesting and performance
criteria, the impact of dilution, the non-tradeable nature of the option or right, 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 model is used to model the future value of the Company’s
shares and the movement of the comparator companies’ Total Shareholder Return (TSR) on the various
vesting dates associated with vesting requirements of the options.
The rights with a non-market based performance condition (time based and EPS) were valued using a
Black-Scholes model. The rights that contained relative TSR performance condition are modelled using a
Monte-Carlo simulation model. The rights subject to the market price condition were valued using an Asset
or Nothing Digital Option valuation model.
Non-market vesting conditions are included in assumptions about the number of options or rights that are
expected to become exercisable or granted. At each balance sheet date, the entity revises its estimate of
the number of options and rights 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 or the grant of rights, 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.
(y)
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.
(z)
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.
(aa)
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.
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notes to the Consolidated finanCial statements
For ThE yEar EndEd 30 JunE 2011
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(ab)
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 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.
NOTE 3. VOLUNTARY CHANGE IN ACCOUNTING POLICY
The financial report has been prepared on the basis of a retrospective application of a voluntary change in
accounting policy relating to exploration and evaluation expenditure.
The new exploration and evaluation expenditure accounting policy is to capitalise and carry forward
exploration and evaluation expenditure as an asset when rights to tenure of the area of interest are current
and costs are expected to be recouped through successful development and exploitation of the area of
interest or alternatively by its sale. Refer to Note 2(s) for the full detail of the new accounting policy.
The previous accounting policy was to charge exploration and evaluation expenditure against profit and
loss as incurred; except for acquisition costs and for expenditure incurred after a decision to proceed to
development was made, in which case the expenditure was capitalised as an asset.
The new accounting policy was adopted on 31 March 2011 and has been applied retrospectively.
Management judges that the change in policy will result in the financial report providing more relevant and
no less reliable information because it leads to a more transparent treatment of exploration and evaluation
expenditure that meets the definition of an asset and is consistent with the treatment of other assets
controlled by the Group when it is probable that future economic benefits will flow to the Group and the
asset has a cost that can be measured reliably. AASB 6 Exploration for and Evaluation of Mineral Resources
allows both the previous and new accounting policies of the Group.
Given the significance of the exploration programmes that are being undertaken by the Company following
the acquisition of Summit Resources Limited, the recent acquisition of the uranium assets of Aurora Energy
Resources Inc. and the takeover of NGM Resources Ltd, it was considered appropriate to change the
accounting policy.
The impact of the change in accounting policy on the Consolidated Income Statement, Consolidated
Statement of Financial Position and Consolidated Statements of Cash Flows is set out below:
Consolidated Income Statement
Exploration and evaluation expenditure related to qualifying areas of interest has been capitalised in
accordance with the accounting policy subject to an impairment review. This has resulted in a decrease
in exploration and evaluation expenditure of US$17.1M and a net decrease in non-controlling interests of
US$1.1M (2010: Nil) for the year to 30 June 2011.
Net loss before and after tax before non-controlling interests has decreased by US$17.1M for the year to 30
June 2011 (2010:US$7.3M).
Basic and diluted loss per share has also been restated. This has resulted in a reduction of 2.3 US cents in
the loss per share for the year ended 30 June 2011 (2010: reduction of 1.1 US cents per share).
Consolidated Statement of Financial Position
The carried forward exploration and evaluation asset at 30 June 2011 has increased by US$35.5M. This
adjustment represents a decrease in accumulated losses of US$32.5M, an increase in the Functional
Currency Translation Reserve of US$4.0M and a decrease in non-controlling interests of US$1.0M.
The carried forward exploration and evaluation asset at 30 June 2010 has increased by US$15.1M. This
adjustment represents a decrease in accumulated losses of US$14.5M and a net movement in deferred tax
assets and liabilities of US$0.6M.
Cumulative capitalised exploration and evaluation expenditure at 1 July 2009 has increased by US$7.4M.
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For ThE yEar EndEd 30 JunE 2011
NOTE 3. VOLUNTARY CHANGE IN ACCOUNTING POLICY (continued)
Consolidated Statement of Cash Flows
Exploration and evaluation expenditure that is capitalised is included as part of cash flows from investing
activities whereas exploration and evaluation expenditure that is expensed is included as part of cash flows
from operating activities. This has resulted in additional cash outflows from investing activities being reflected
for capitalised exploration expenditure of US$17.6M for the year to 30 June 2011 (2010:US$7.4M). This has
also resulted in a corresponding reduction being reflected in the net cash outflow from operating activities
for the equivalent periods.
NOTE 4. SEGMENT INFORMATION
Identification of Reportable Segments
The Company has identified its operating segments to be Exploration, Namibia and Malawi, on the basis
of the nature of the activity and geographical location and different regulatory environments. The main
segment activity in Namibia and Malawi is the production and sale of uranium from the mines located in
these geographic regions. The Exploration segment is focused on developing exploration and evaluation
projects in Australia, Niger and Canada. Previously exploration was disclosed within the Australia segment.
Unallocated portion covers the Company’s sales and marketing, treasury, corporate and administration. The
prior year comparatives have been restated due to the change in operating segments.
Discrete financial information about each of these operating segments is reported to the Group’s executive
management team (chief operating decision makers) on at least a monthly basis.
The accounting policies used by the Group in reporting segments internally are the same as those contained
in Note 2 to the accounts and in the prior period.
Inter-entity sales are priced with reference to the spot rate.
Corporate charges comprise non-segmental expenses such as corporate office expenses. A proportion of
the corporate charges are allocated to Namibia and Malawi on the basis of timesheet allocations with the
balance remaining in Unallocated.
The following items are not allocated to segments as they are not considered part of the core operations of
any segment:
•
Interest revenue
• Non project finance interest and borrowing expense
• Unallocated corporate and labour costs
The Group’s customers are major utilities and other entities located mainly in USA, Australia, China,
Taiwan and UK. These revenues are attributed to the geographic location of the mines being the reporting
segments Namibia and Malawi.
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notes to the Consolidated finanCial statements
For ThE yEar EndEd 30 JunE 2011
NOTE 4. SEGMENT INFORMATION (continued)
The following tables present revenue, expenditure and asset information regarding operating segments for
the years ended 30 June 2011 and 30 June 2010.
Exploration
US$M
Namibia
US$M
Malawi
US$M
Unallocated Consolidated
US$M
US$M
Year ended 30 June 2011
Sales to external customers
Other revenue
Inter segment sales
Total segment revenue
Elimination of inter segment
sales
Total consolidated revenue
Segment (loss)/profit before
income tax and finance costs
Finance costs
Loss before income tax
-
-
-
-
-
-
166.5
-
26.9
193.4
100.3
-
-
100.3
(26.9)
-
166.5
100.3
-
2.1
-
2.1
-
2.1
(1.4)
-
44.9
(3.6)
(37.4)
(8.8)
(49.7)
(49.1)
266.8
2.1
26.9
295.8
(26.9)
268.9
(43.6)
(61.5)
(105.1)
16.6
(88.5)
Income tax benefit/(expense)
0.5
(15.7)
22.3
9.5
Loss after income tax
Segment assets/total assets
1,184.0
498.4
576.7
144.6
2,403.7
Australia
US$M
Canada
US$M
Malawi
US$M
Namibia
US$M
Other
US$M
Consol-
idated
US$M
Non current assets
by country*
891.4
270.2
427.9
385.7
36.1
2,011.3
In 2011, the three most significant customers equated on a proportionate basis to 14% (US$37.4M Namibia
and Malawi), 14% (US$36.5M Malawi) and 9% of the Group’s total sales revenue.
*
Excluding deferred tax assets and financial instruments.
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For ThE yEar EndEd 30 JunE 2011
NOTE 4. SEGMENT INFORMATION (continued)
Year ended 30 June 2010
Sales to external customers
Other revenue
Inter segment sales
Total segment revenue
Elimination of inter segment
sales
Total consolidated revenue
Segment (loss)/profit before
income tax and finance costs
Finance costs
Loss before income tax
Exploration
US$M
Namibia
US$M
Malawi
US$M
Unallocated Consolidated
US$M
US$M
-
-
-
-
-
-
(8.3)
-
133.5
-
7.9
141.4
(7.9)
133.5
40.0
(4.4)
68.5
-
-
68.5
-
68.5
7.9
-
-
2.3
-
2.3
-
2.3
(36.2)
(17.0)
202.0
2.3
7.9
212.2
(7.9)
204.3
3.4
(21.4)
(18.0)
(28.5)
(46.5)
Income tax benefit/(expense)
2.5
(24.0)
(2.6)
(4.4)
Loss after income tax
Segment assets/total assets
698.0
367.4
528.3
383.1
1,976.8
Australia
Canada
Malawi
Namibia
US$M
US$M
US$M
US$M
Other
US$M
Consol-
idated
US$M
Non current assets
by country*
713.5
-
451.0
268.3
-
1,432.8
In 2010, the three most significant customers equated on a proportionate basis to 38% (US$76.8M Namibia
and Malawi), 13% (US$26.7M Namibia) and 12% (US$23.4M Namibia) of the Group’s total sales revenue.
*
Excluding deferred tax assets and financial instruments.
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notes to the Consolidated finanCial statements
For ThE yEar EndEd 30 JunE 2011
NOTE 5. REVENUES AND EXPENSES
(a)
Revenue
Sale of uranium
Interest income from non-related parties
Database licence revenue
Other revenue
Total revenue
(b)
Other Income
Gain on disposal of investment
Insurance recovery relating to heat exchangers
Gain on disposal of available for sale investments
Gain on re-estimation of cash flows attributable to a financial liability
Total other income
(c)
Administration, Marketing and Non-Production Costs
Corporate and marketing
LHM and KM
Canada
Non-cash - share-based payments
Non-cash - depreciation
Royalties
LHM Stage 4 expansion project
Total administration and marketing
(d)
Other Expenses
Loss on disposal of property, plant and equipment
Impairment of inventory
Foreign exchange loss (net)
Loss on disposal of financial assets held for trading
Movement in financial assets held for trading
Impairment of asset
Slope remediation
Total other expenses
(e)
Finance Costs
Interest expense
Accretion relating to convertible bonds (non-cash)
Loss on convertible bond buyback
Mine closure provision discount interest expense
Facility costs
Total finance costs
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CONSOLIDATED
2011
US$M
2010
US$M
266.8
1.4
0.2
0.5
268.9
0.8
-
1.1
-
1.9
(26.5)
(9.3)
(1.3)
(11.6)
(1.0)
(2.2)
(2.1)
(54.0)
(0.9)
(26.4)
(6.0)
-
-
-
(1.9)
(35.2)
(36.4)
(11.9)
(4.6)
(2.0)
(6.6)
(61.5)
202.0
2.0
0.2
0.1
204.3
-
7.7
-
1.8
9.5
(23.5)
(3.9)
-
(10.3)
(0.9)
-
-
(38.6)
-
-
(5.2)
(0.8)
(0.2)
(2.9)
-
(9.1)
(4.0)
(11.1)
-
(2.3)
(4.0)
(21.4)
Total depreciation and amortisation expense for the year included in the Consolidated Income Statement is
US$37.1M (2010: US$15.2M).
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notes to the Consolidated finanCial statements
For ThE yEar EndEd 30 JunE 2011
NOTE 6.
INCOME TAX
(a)
Income Tax Benefit
Current income tax
Current income tax expense/(credit)
Deferred income tax
Related to the origination and reversal of temporary differences
Tax benefits not brought to account as future income tax benefits
Tax benefits previously not recognised, now recognised
Adjustments relating to prior period
Income tax (benefit)/expense reported in the Income Statement
(b)
Amounts Charged or Credited Directly to Equity
Deferred income tax related to items charged or credited directly to equity:
Unrealised gain on available-for-sale investments
Convertible bonds
Changes in foreign currency rates
Other
Income tax expense reported in equity
(c)
Numerical Reconciliation of Income Tax Benefit to Prima Facie
Tax Payable
Loss before income tax expense
Tax at the Australian tax rate of 30% (2010 – 30%)
Tax effect of amounts which are not deductible/
(taxable) in calculating taxable income:
Share-based payments
Convertible bonds
Permanent foreign exchange differences
Other expenditure not allowable
Difference in overseas tax rates
Prior year adjustment
Losses not recognised
Temporary foreign exchange differences
Other
Income tax (benefit)/expense reported in the Income Statement
CONSOLIDATED
2011
US$M
2010
US$M
0.1
(33.9)
20.3
-
(37.0)
-
(16.6)
2.8
10.7
35.3
1.1
49.9
32.6
22.6
-
7.2
28.5
6.0
-
16.6
(3.1)
19.5
(105.1)
(31.5)
(18.0)
(5.4)
3.5
(1.0)
4.6
1.1
(23.3)
3.8
-
14.4
(5.2)
(6.3)
(16.6)
3.1
-
-
0.2
(2.1)
2.1
7.2
22.6
(1.7)
0.4
28.5
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notes to the Consolidated finanCial statements
For ThE yEar EndEd 30 JunE 2011
NOTE 6.
INCOME TAX (continued)
(d)
Deferred Income Tax
Deferred tax liabilities
Accelerated prepayment deduction for tax purposes
Accelerated depreciation for tax purposes
Exploration expenditure
Recognition of acquired exploration expenditure
Foreign currency balances
Capitalised interest
Recognition of convertible bond for accounting purposes
Gross deferred tax liabilities
Set off of deferred tax assets
Net deferred tax liabilities
Deferred tax assets
Revenue losses available for offset against future
taxable income
Equity raising costs
Provisions for employee benefits
Inventory
Available for sale securities
Accruals
Foreign currency balances
Interest bearing liabilities
Other
Gross deferred tax assets
Set off against deferred tax liabilities
Net deferred tax assets recognised
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CONSOLIDATED
2011
US$M
2010
US$M
(0.4)
(155.1)
(21.2)
(180.8)
(17.5)
(10.8)
(12.6)
(398.4)
180.9
(1.2)
(141.3)
(12.5)
(145.5)
1.8
(11.7)
(12.2)
(322.6)
153.9
(217.5)
(168.7)
167.1
2.7
0.8
10.1
1.4
4.3
8.2
5.7
0.3
200.6
(180.9)
19.7
151.0
3.5
0.5
(5.1)
4.4
1.9
-
(0.6)
2.3
157.9
(153.9)
4.0
116
The net deferred tax assets recognised are in respect of revenue losses expected to be offset against future
taxable income.
(e)
Tax Losses
Australian unused tax losses for which no deferred tax asset has been
recognised
Other unused tax losses for which no deferred tax asset has been
recognised
Total unused tax losses for which no deferred tax asset has been recognised
Potential tax benefit at the Australian tax rate of 30%
This benefit for tax losses will only be obtained if:
206.5
124.7
4.6
211.1
63.3
-
124.7
37.4
(i)
(ii)
the Consolidated Entities derive future assessable income of a nature and of an amount sufficient to
enable the benefit from the deductions for the losses to be realised;
the Consolidated Entities continue to comply with the conditions for deductibility imposed by tax
legislation; and
(iii) no changes in tax legislation adversely affect the Consolidated Entities in realising the benefit from the
deductions for the losses.
Pa l a d i n E n E r g y lT d » a n n u a l r E P o r T 2 011
notes to the Consolidated finanCial statements
For ThE yEar EndEd 30 JunE 2011
NOTE 7. CASH AND CASH EQUIVALENTS
Cash at bank and in hand
Short-term bank deposits
Total cash and cash equivalents
CONSOLIDATED
2011
US$M
27.6
89.8
117.4
2010
US$M
13.5
334.4
347.9
Total cash and cash equivalents includes US$19.5M restricted for use in respect of the LHM and KM
project finance facilities (refer to Note 16).
Cash at bank earns interest at floating rates based on daily bank deposit rates. Short-term deposits are
made for varying periods depending on the immediate cash requirements of the Group, and earn interest at
the respective short-term deposit rates.
(a)
Reconciliation of Net Loss After Tax to Net Cash Flows Used in
Operating Activities
Net loss
(88.5)
(46.5)
Adjustments for
Depreciation and amortisation
Loss recognised on re-measurement to fair value
(Gain)/Loss on disposal of investments
Database licence revenue
Net exchange differences
Share-based payments
Non-cash financing costs
Inventory impairment
Asset impairment
Interest capitalised as property, plant and equipment
Loss on disposal of property, plant and equipment
Changes in assets and liabilities
Decrease/(increase) in prepayments
Decrease/(increase) in trade and other receivables
Decrease in trade and other payables
Increase in provisions
Increase in inventories
Increase in deferred tax liabilities
Increase in deferred tax assets
Net cash flows used in operating activities
(b)
Disclosure of Financing Facilities - Refer to Note 16.
37.1
4.6
(1.8)
(0.2)
6.0
11.6
20.2
26.4
-
-
0.9
0.2
9.5
(11.3)
0.5
(106.9)
5.3
(15.6)
(102.0)
20.9
0.2
0.8
(0.2)
5.2
10.3
15.7
-
2.9
(29.4)
-
(2.0)
(4.0)
(32.7)
3.4
(11.4)
32.5
(0.2)
(34.5)
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notes to the Consolidated finanCial statements
For ThE yEar EndEd 30 JunE 2011
NOTE 8. TRADE AND OTHER RECEIVABLES
Current
Trade receivables
Less provision for doubtful debts
Net trade receivables
Interest receivable
GST and VAT
Sundry debtors
Total current receivables
Note
(a)
(b)
CONSOLIDATED
2011
US$M
2010
US$M
-
-
-
-
11.9
8.6
20.5
14.2
-
14.2
0.2
11.1
7.7
33.2
(a) Trade receivables are non-interest bearing and are generally on 30 day terms. Carrying value
approximates fair value due to the short-term nature of the receivables. An allowance for doubtful
debts is made when there is objective evidence that a trade receivable is impaired. No expense has
been recognised for the current year or the previous year.
(b) GST and VAT debtor relates to Australia, Namibia, Malawi and Canada.
Non Current
Sundry debtors
Total non current receivables
1.5
1.5
0.3
0.3
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notes to the Consolidated finanCial statements
For ThE yEar EndEd 30 JunE 2011
NOTE 9.
INVENTORIES
Current
Stores and spares (at cost)
Stockpiles (at cost)
Stockpiles (at net realisable value)
Work-in-progress (at cost)
Work-in-progress (at net realisable value)
Finished goods (at cost)
Finished goods (at net realisable value)
CONSOLIDATED
2011
US$M
2010
US$M
30.3
2.5
7.3
3.1
4.6
78.5
51.4
17.9
8.4
-
4.7
-
58.4
19.9*
Total current inventories at the lower of cost and net realisable value
177.7
109.3
*
Inventory transferred out of mine development at net realisable value
(a)
Inventory Expense
Inventories sold recognised as an expense for the year ended 30 June 2011 totalled US$222.2M (2010:
US$153.3M) for the Group as part of cost of goods sold.
(b)
Impairment of Inventory Expense
During 2011 inventory held at the Kayelekera Mine was reduced to net realisable value resulting in an
impairment loss of US$26.4M for the year, recognised in other expenses (refer to Note 5(d)).
Non Current
Stockpiles (at cost)
Stockpiles (at net realisable value)
Total non current inventories at the lower of cost and net realisable value
71.2
2.4
73.6
40.8
-
40.8
Stockpiles at LHM and KM that are unlikely to be processed within 12 months of the balance date.
NOTE 10. OTHER FINANCIAL ASSETS
Non Current
Available-for-sale financial assets
Total non current other financial assets
Available-for-Sale Financial Assets
CONSOLIDATED
2011
US$M
41.8
41.8
2010
US$M
35.7
35.7
The Group has an investment in DYL and at 30 June 2011 held 224,934,461 (2010: 220,258,461) fully paid
ordinary shares.
The holding of these fully paid ordinary shares represents a 19.9% interest at 30 June 2011 (2010: 19.56%)
of the ordinary shares of DYL, a uranium explorer listed on ASX. The market value of the shares in DYL
at 30 June 2011 is A$33.7M (US$35.7M) (2010: A$28.6M / US$24.5M) based on a share price of 15.0
Australian cents per share (2010: 13.0 Australian cents).
The Group had an investment in NGM at 30 June 2010 of 40,373,574 fully paid ordinary shares. The
takeover was completed on 10 December 2010 with the acquisition of 100% of the issued share capital
(refer to Note 27).
The Group also holds minor investments in other companies.
Pa l a d i n E n E r g y lT d » a n n u a l r E P o r T 2 011
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notes to the Consolidated finanCial statements
For ThE yEar EndEd 30 JunE 2011
NOTE 11(a). PROPERTY, PLANT AND EQUIPMENT
Plant and equipment – at cost
Less accumulated depreciation
Total plant and equipment
Land and buildings - at cost
Less accumulated depreciation
Total land and buildings
Construction work in progress – at cost
Total property, plant and equipment
CONSOLIDATED
2011
US$M
566.6
(80.6)
486.0
11.4
(1.5)
9.9
134.2
630.1
2010
US$M
535.4
(39.6)
495.8
9.7
(1.0)
8.7
36.6
541.1
Property, plant and equipment pledged as security for liabilities
Refer to Note 16 for information on property, plant and equipment pledged as security.
Reconciliations
Reconciliations of the carrying amounts of each class of property, plant and equipment at the beginning
and end of the year are set out below:
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Carrying amount at start of year
Additions
Depreciation and amortisation expense
Reclassification of assets
Reclassification to mine development
Foreign currency translation
120
Carrying amount at end of year
Consolidated – 2010
Carrying amount at start of year
Additions (1)
Transfers to assets held for sale
Depreciation and amortisation expense
Impairment of assets (2)
Reclassification of assets
Reclassification to mine development
Foreign currency translation
Carrying amount at end of year
Plant and
Equipment
Land and
Buildings
Construction
Work in
Progress
US$M
US$M
US$M
495.8
25.0
(43.9)
9.0
-
0.1
486.0
147.0
47.1
(12.0)
(18.8)
(2.9)
335.3
-
0.1
495.8
8.7
-
(0.5)
0.8
-
0.9
9.9
5.8
0.2
-
(0.4)
-
2.9
-
0.2
8.7
36.6
107.6
-
(9.8)
(0.2)
-
134.2
305.0
137.2
-
-
-
(338.2)
(67.4)
-
36.6
Total
US$M
541.1
132.6
(44.4)
-
(0.2)
1.0
630.1
457.8
184.5
(12.0)
(19.2)
(2.9)
-
(67.4)
0.3
541.1
(1)
Includes US$29.4M of capitalised interest (effective weighted interest rate 8.52% for general
borrowings and LIBOR + 3.5% for specific borrowings).
(2)
Impairment of assets. Refer to Note 11(b).
Pa l a d i n E n E r g y lT d » a n n u a l r E P o r T 2 011
notes to the Consolidated finanCial statements
For ThE yEar EndEd 30 JunE 2011
NOTE 11(b). NON CURRENT ASSET HELD FOR SALE
Current
At net realisable value
Plant and equipment
CONSOLIDATED
2011
US$M
2010
US$M
-
12.0
Plant and equipment no longer suitable which will be sold within the next twelve months and replaced.
NOTE 12. MINE DEVELOPMENT
Mine development
Less accumulated depreciation
Total mine development
Carrying amount at start of year
Additions
Depreciation and amortisation expense
Effects of changes in discount rates
Reclassification from exploration
Reclassification from property, plant and equipment
Carrying amount at end of year
CONSOLIDATED
2011
US$M
122.4
(15.8)
106.6
119.2
1.4
(10.2)
(5.5)
1.5
0.2
106.6
2010
US$M
124.8
(5.6)
119.2
54.2
-
(2.4)
-
-
67.4
119.2
Canadian securities law requires the following description of the Group’s interests in mineral property
tenements:
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 Mount
Gibson Iron Limited) 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 2 plant upgrade and a further
Stage 3 upgrade is nearing completion with construction expected to be completed in the September
2011 quarter with ramp-up to nameplate late 2011/early 2012. Planning for the Stage 4 upgrade is in
progress and an updated mineral resource estimation prior to ore reserve estimation for Stage 4 has been
completed. It is expected that the update to the ore reserve will be undertaken once all cost and recovery
parameter have been finalised for Stage 4.
LHUPL also holds an exclusive prospecting licence, EPL 3500, covering 30km² to the west of the mining
licence.
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Pa l a d i n E n E r g y lT d » a n n u a l r E P o r T 2 011
notes to the Consolidated finanCial statements
For ThE yEar EndEd 30 JunE 2011
NOTE 12. MINE DEVELOPMENT (continued)
Kayelekera Mine (Malawi) - Paladin 85%
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
Group 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 Group
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
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. The processing facility achieved commercial production at the end
of June 2010. Additional resource definition drilling has been carried out to the west of the current pit design
to confirm the final pit limits with an updated mineral resource and ore reserve expected during the second
half of 2011.
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 13. EXPLORATION AND EVALUATION EXPENDITURE
Canadian securities law requires the following description of the Group’s interests in mineral property
tenements:
Labrador Project (Canada) - Paladin 100%
On 1 February 2011 the Company completed the acquisition of the uranium assets of Aurora Energy
Resources Inc. (Aurora) from Fronteer Gold Inc. The project covers approximately 81,200ha. Included in the
total are 28 map staked licences and 6 quarry licences. An additional 4 map staked licences were staked
along a proposed infrastructure corridor from the settlement of North West River. All licences are held in the
name of Aurora. All licences are in good standing.
The Labrador Inuit Land Claims agreement was ratified by the Inuit in May 2004 leading to the formation of
the Inuit Government on 1 December 2005. The agreement created two categories of land: the Labrador
Inuit Settlement Area (LISA) and Labrador Inuit Lands (LIL). A significant portion of the project area is
covered by LISA lands. During 2008 the Nunatsiavut government imposed a 3 year moratorium on mining
uranium on properties located within the LISA, effective initially until the 31st March 2011. The Nunatisiavut
government is currently working towards a mechanism to address the moratorium.
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The project area has a 2% net sales royalty from uranium production and a 2% net smelter return (NSR) on
base and precious metals payable to Altius Resources Inc.
Exploration commenced in the project area in the mid 1950’s. By 1980, British Newfoundland Exploration
Limited (Brinex) had completed geological mapping, 290 core holes at the Michelin deposit, a decline of
approximately 580m in length and a mineral resource estimation. Brinex ceded its exploration concession in
1980 but held mining leases over a number of deposits in the area until 1994. Work undertaken in 2003-
2005 by the Fronteer – Altius Alliance commenced with a re-evaluation of the area for Cu-Au-U targets. The
Alliance subsequently acquired a number of mineral licences. The uranium interests in the licences were
transferred to Aurora in 2005. Fronteer completed a number of exploration programmes between 2005 and
2008 which culminated with mineral resource estimations in 2007 with an update in 2008.
Niger Project (Niger) - Paladin 100%
Following the completion of the takeover of NGM Resources Ltd (NGM) in December 2010 the Company
took possession of the wholly owned British Virgin Islands company, Indo Energy Ltd. Indo Energy Ltd holds
3 exploration concessions in the Tim Mersoi basin, Tagait 4 (TAG4), Tolouk 1 (TOU1) and Terzemazour 1
(TER1), covering an area of 1,480km². The concessions are located approximately 30km to the north and
north west of the township of Agadez in northern Niger. Prior to acquisition, NGM had completed a mineral
resource estimation conforming to the JORC (2004) guidelines for the Takardeit deposit in the central portion
of concession TER1. The concessions were originally granted on the 21st May 2007 for a period of 3
years, however in view of the political and security situation then prevailing in the country, in June 2010 the
concessions were given a 27 month extension of the permits until December 2012.
Pa l a d i n E n E r g y lT d » a n n u a l r E P o r T 2 011
notes to the Consolidated finanCial statements
For ThE yEar EndEd 30 JunE 2011
NOTE 13. EXPLORATION AND EVALUATION EXPENDITURE (continued)
Niger Project (Niger) - Paladin 100% (continued)
The concessions are located in the Tim Mersoi Basin and are prospective for sandstone type uranium
mineralisation in Carboniferous, Permian and Jurassic sediments. The basin has historically produced in
excess of 280Mlb U3O8 from two Areva mines (Somair and Cominak) and a third mine Imouraren is under
construction.
Due to the security situation caused by Al-Qaeda activities, especially in the northern desert region where
the project is located, no experienced expatriate personnel from the company are able to visit the project
site or directly supervise the exploration effort. On-ground exploration was carried out during 2011, with
guidance from Perth head office, by local personnel.
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 Group 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
18 May 1989 for a 21-year term to 17 May 2010. The leases have now been renewed for a further 21-year
term to 17 May 2031. 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 undertaking a
drilling programme. Ground access difficulties have so far precluded the commencement of drilling and it is
hoped this issue will be dealt with in the near future.
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 28 December 1983 and 04/776 and 04/777 lodged on 28 November
1991 which largely overlie the earlier applications. The Group 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 are being actively pursued with both the
Federal and State governments.
Valhalla North Uranium Project (Australia) - Paladin 100%
The Valhalla North Uranium Project consists of two granted exploration permits – Exploration Permit for
Minerals 12572 (EPM 12572) and EPM 16006 - covering 457km² to the north of Mount Isa in north-western
Queensland. The Group acquired the Valhalla North Uranium Project following the successful takeover of
Fusion in February 2009. EPM 12572 was granted on 11 January 2006 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 renewal of EPM 12572 for a further period of five years has been lodged and is awaiting grant. 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. Drilling at the Duke Batman deposit
did not extend the mineralisation but identified a high grade core to the mineralisation and significantly
added to the geological understanding of the deposit.
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notes to the Consolidated finanCial statements
For ThE yEar EndEd 30 JunE 2011
NOTE 13. EXPLORATION AND EVALUATION EXPENDITURE (continued)
Bigrlyi Uranium Project (Australia) - Paladin 41.71%
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 53.29%, Southern Cross Exploration NL
5.00% and Northern Territory Uranium Pty Ltd 41.71% (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. The deposit was subject to extensive
drilling between 1974 and 1982 with Ore Reserve studies carried out during the 1980’s and 1990’s. 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. Resource updates were
released in April and July 2009 with additional drilling completed in late 2009 and 2010. In June 2011 an
increased Indicated and Inferred Mineral Resource totalling 21.1Mlb U3O8 at a cut-off grade of 500ppm was
announced.
Isa Uranium Joint Venture (Australia) - Paladin 91.04%
The IUJV in Northern Queensland is a 50:50 joint venture between Summit Resources (Aust) Pty Ltd (SRA)
(Paladin 82.08% effective ownership) and Mt Isa Uranium Pty Ltd (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
90.95% following the acquisition of 81.9% of Summit in 2007.
Valhalla Uranium Deposit (Australia) - Paladin 91.04%
The Valhalla Uranium Deposit is situated on EPM 17514 granted in January 2010 for a five year term to
5 January 2015. The Valhalla Uranium Deposit is located approximately 40km north of Mount Isa and
straddles the Barkly Highway. The ground was previously 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, with EPM 9221 being granted in 1993. 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 with the updating of the Mineral Resource
being announced in October 2010. Geotechnical and metallurgical studies are ongoing.
Skal Uranium Deposit (Australia) - Paladin 91.04%
The Skal Uranium Deposit is situated on EPM 17519, granted in January 2010 for a five year term to 5
January 2015. The Skal Uranium Deposit is located approximately 8km south-east of the Valhalla Uranium
Deposit and 32km north of Mount Isa. The ground was previously held by SRA as EPM 14048 granted
in 2005. 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
EPM 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 was undertaken in 2009 and followed up with a resource update in October 2009. Resource
definition and metallurgical drilling commenced in 2010 and delayed due to the extended wet season has
been planned for completion in late 2011.
Summit Resources Ltd (Australia) - Paladin 82.08%
Paladin acquired an 81.9% interest in Summit as a result of a takeover bid which closed on 1 June 2007.
SRA, which is a wholly owned subsidiary of 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 Mineral 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. Additional drilling was undertaken at Bikini in late 2010
with the Mineral Resource being updated in April 2011.
Pa l a d i n E n E r g y lT d » a n n u a l r E P o r T 2 011
notes to the Consolidated finanCial statements
For ThE yEar EndEd 30 JunE 2011
NOTE 13. EXPLORATION AND EVALUATION EXPENDITURE (continued)
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 Australia Pty Ltd 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. Exploration and
resource definition drilling was planned. Drilling programmes were completed in 2009 and 2010 and these
are being evaluated to determine the future direction of the project. A successful mud rotary drilling trial was
undertaken in early 2011 which is now expected to reduce overall drilling costs and improve drilling rates.
An initial Mineral Resource estimate has now been completed and reported.
Other Mineral Property Interests
The Group 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 Group’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 Group 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.
.
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notes to the Consolidated finanCial statements
For ThE yEar EndEd 30 JunE 2011
NOTE 13. 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 2011:
Areas of interest
Balance 30 June 2010 as previously stated
Effect of accounting policy change (Note 3)
Balance 30 June 2010 - restated
Acquisition property payments
Project exploration and evaluation
expenditure
Labour
Outside services
Other expenses
Total expenditure
Expenditure expensed
Expenditure capitalised
Foreign exchange differences
Transferred to Mine Development
Balance 30 June 2011
Valhalla/
Skal (1)
US$M
Isa North
US$M
Fusion
US$M
Angela/
Pamela
US$M
529.1
-
529.1
-
0.9
2.5
2.0
5.4
-
5.4
128.6
-
663.1
126.0
-
126.0
-
1.2
1.7
0.8
3.7
-
3.7
26.8
-
156.5
8.5
1.0
9.5
-
0.2
0.2
0.2
0.6
(0.1)
0.5
2.3
-
12.3
-
4.5
4.5
-
0.2
0.7
0.4
1.3
-
1.3
1.1
-
6.9
(1) Summit has a 50% interest in the Valhalla/Skal Projects with the other 50% interest held by the Paladin
Group. As a consequence of the takeover of the Summit Group, the above table now reflects 100% of
the Valhalla/Skal Projects with the non-controlling interest reflected on the face of the Balance Sheet.
The following table details the expenditures on interests in mineral properties by area of interest for the
year ended 30 June 2010:
Isa North
US$M
Fusion
US$M
Angela/
Pamela
US$M
Bigrlyi
US$M
KM
US$M
Other Uranium
Projects
US$M
LHM
US$M
Total
US$M
Areas of interest
Balance 30 June 2009 as previously stated
Effect of accounting policy change (Note 3)
Balance 30 June 2009 - restated
Acquisition property payments
Project exploration and evaluation
expenditure
Labour
Outside services
Other expenses
Total expenditure
Expenditure expensed
Expenditure capitalised
Foreign exchange differences
Valhalla/
Skal (1)
US$M
494.4
-
494.4
2.9
1.1
1.0
1.6
3.7
(3.7)
-
31.8
117.7
-
117.7
0.7
1.0
2.0
0.8
3.8
(3.8)
-
7.6
8.0
-
8.0
-
0.3
0.6
0.2
1.1
(0.1)
1.0
0.5
9.5
-
1.1
1.1
-
0.8
1.9
0.7
3.4
-
3.4
-
4.5
Balance 30 June 2010
529.1
126.0
(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 non-controlling interest reflected on the face of the Balance Sheet.
Pa l a d i n E n E r g y lT d » a n n u a l r E P o r T 2 011
29.4
36.0
269.1
1,177.9
Total
US$M
680.0
15.1
695.1
295.8
5.5
8.7
5.9
20.1
(3.0)
17.1
171.6
(1.7)
1.2
1.8
3.0
-
1.7
0.3
0.7
2.7
(2.0)
0.7
0.9
-
4.6
KM
US$M
LHM
US$M
Canada
US$M
Other Uranium
Projects
US$M
Bigrlyi
US$M
15.2
6.3
21.5
-
0.4
1.4
0.7
2.5
-
-
2.5
5.4
14.3
5.2
19.5
-
0.2
0.4
0.5
1.1
-
1.1
0.9
21.5
Niger
US$M
-
-
-
34.0
0.2
1.4
0.4
2.0
2.0
-
-
-
-
-
-
-
-
-
-
0.2
0.6
0.3
1.1
(1.1)
-
-
-
-
-
-
-
-
0.2
0.3
0.4
0.9
(0.9)
-
0.2
0.2
-
-
-
-
-
1.3
1.3
1.3
1.5
-
1.5
1.5
-
-
-
-
-
-
0.2
0.2
0.2
(1.7)
1.1
0.9
2.0
-
0.7
0.3
0.6
1.6
(0.7)
0.9
0.1
3.0
261.8
-
-
-
-
-
-
0.5
0.3
0.8
0.8
6.5
635.5
7.4
642.9
3.6
4.3
8.1
4.7
17.1
(9.4)
7.7
40.9
695.1
NOTE 13. EXPLORATION AND EVALUATION EXPENDITURE (continued)
The following table details the expenditures on interests in mineral properties by area of interest
for the year ended 30 June 2011:
Areas of interest
Valhalla/
Skal (1)
US$M
Isa North
US$M
Fusion
US$M
Angela/
Pamela
US$M
Balance 30 June 2010 as previously stated
529.1
126.0
Effect of accounting policy change (Note 3)
Balance 30 June 2010 - restated
529.1
126.0
Acquisition property payments
Project exploration and evaluation
expenditure
Labour
Outside services
Other expenses
Total expenditure
Expenditure expensed
Expenditure capitalised
Foreign exchange differences
Transferred to Mine Development
year ended 30 June 2010:
Areas of interest
Balance 30 June 2009 as previously stated
Effect of accounting policy change (Note 3)
Balance 30 June 2009 - restated
Acquisition property payments
Project exploration and evaluation
expenditure
Labour
Outside services
Other expenses
Total expenditure
Expenditure expensed
Expenditure capitalised
Foreign exchange differences
-
-
-
-
0.9
2.5
2.0
5.4
5.4
128.6
Valhalla/
Skal (1)
US$M
494.4
-
494.4
2.9
1.1
1.0
1.6
3.7
(3.7)
-
31.8
-
-
-
-
1.2
1.7
0.8
3.7
3.7
26.8
117.7
-
117.7
0.7
1.0
2.0
0.8
3.8
(3.8)
-
7.6
8.5
1.0
9.5
-
0.2
0.2
0.2
0.6
(0.1)
0.5
2.3
-
8.0
8.0
-
-
0.3
0.6
0.2
1.1
(0.1)
1.0
0.5
9.5
-
4.5
4.5
-
0.2
0.7
0.4
1.3
-
-
1.3
1.1
6.9
-
1.1
1.1
-
0.8
1.9
0.7
3.4
-
-
3.4
4.5
Balance 30 June 2010
529.1
126.0
(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 non-controlling interest reflected on the face of the Balance Sheet.
notes to the Consolidated finanCial statements
For ThE yEar EndEd 30 JunE 2011
Bigrlyi
US$M
15.2
6.3
21.5
-
0.4
1.4
0.7
2.5
-
2.5
5.4
-
Niger
US$M
-
-
-
34.0
0.2
1.4
0.4
2.0
-
2.0
-
-
Balance 30 June 2011
663.1
156.5
12.3
29.4
36.0
(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 non-controlling interest reflected on the face of the Balance Sheet.
The following table details the expenditures on interests in mineral properties by area of interest for the
KM
US$M
LHM
US$M
Canada
US$M
Other Uranium
Projects
US$M
-
-
-
-
0.2
0.3
0.4
0.9
(0.9)
-
-
-
-
-
1.5
1.5
-
-
0.2
-
0.2
-
0.2
-
(1.7)
-
-
-
-
261.8
0.5
-
0.3
0.8
-
0.8
6.5
-
269.1
1.2
1.8
3.0
-
1.7
0.3
0.7
2.7
(2.0)
0.7
0.9
-
4.6
Total
US$M
680.0
15.1
695.1
295.8
5.5
8.7
5.9
20.1
(3.0)
17.1
171.6
(1.7)
1,177.9
Isa North
US$M
Fusion
US$M
Angela/
Pamela
US$M
Bigrlyi
US$M
KM
US$M
Other Uranium
Projects
US$M
LHM
US$M
Total
US$M
14.3
5.2
19.5
-
0.2
0.4
0.5
1.1
-
1.1
0.9
21.5
-
-
-
-
0.2
0.6
0.3
1.1
(1.1)
-
-
-
-
0.2
0.2
-
-
1.3
-
1.3
-
1.3
-
1.5
1.1
0.9
2.0
-
0.7
0.3
0.6
1.6
(0.7)
0.9
0.1
3.0
635.5
7.4
642.9
3.6
4.3
8.1
4.7
17.1
(9.4)
7.7
40.9
695.1
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notes to the Consolidated finanCial statements
For ThE yEar EndEd 30 JunE 2011
NOTE 14.
INTANGIBLE ASSETS
CONSOLIDATED
2011
US$M
2010
US$M
(a)
Reconciliation of Carrying Amount at the Beginning and End
of the Period
Beginning of year - Net of accumulated amortisation
Amortisation
End of year - Net of accumulated amortisation
At 30 June
Cost
Accumulated amortisation
Net carrying amount of non current intangible assets
24.6
(1.5)
23.1
27.8
(4.7)
23.1
Amortisation of US$1.5M (2010: US$1.0M) is included in costs of sales in the Income Statement.
(b)
Movements in Intangible Assets
Movements in each group of intangible asset during the financial year are set out below:
Consolidated – 2011
Carrying amount at 1 July 2010
Amortisation expense
Carrying amount at 30 June 2011
Consolidated - 2010
Carrying amount at 1 July 2009
Amortisation expense
Carrying amount at 30 June 2010
Right to
Supply of
Power
Right to
Supply of
Water
Kayelekera
Mining
Lease
US$M
US$M
US$M
4.3
(0.2)
4.1
4.5
(0.2)
4.3
10.3
(0.5)
9.8
11.1
(0.8)
10.3
10.0
(0.8)
9.2
10.0
-
10.0
25.6
(1.0)
24.6
27.8
(3.2)
24.6
Total
US$M
24.6
(1.5)
23.1
25.6
(1.0)
24.6
(c)
Description of the Group’s Intangible Assets
(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 on a unit of production 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 on a unit of production basis.
(iii) Kayelekera Mining Lease
In exchange for the 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. In terms of the Development Agreement PAL has
spent US$10M on agreed community infrastructure projects. This amount has been recognised as an
intangible asset and is being amortised over the life of the mine estimated to be 9 years on a straight-line
basis (refer to Note 17(b)(iv)).
Pa l a d i n E n E r g y lT d » a n n u a l r E P o r T 2 011
notes to the Consolidated finanCial statements
For ThE yEar EndEd 30 JunE 2011
NOTE 15. TRADE AND OTHER PAYABLES
Current
Trade and other payables
Total current payables
Trade payables are non-interest bearing and are normally settled on 30 day terms.
NOTE 16. INTEREST BEARING LOANS AND BORROWINGS
CONSOLIDATED
2011
US$M
69.7
69.7
2010
US$M
63.4
63.4
Current
Secured bank loans
Non Current
Unsecured convertible bonds(1)
Unsecured convertible bonds(2)
Unsecured convertible bonds(3)
Secured bank loan
Secured bank loan
Total non current interest bearing loans and borrowings
CONSOLIDATED
2011
US$M
2010
US$M
Maturity
2011
2013
2015
2012
2015
43.9
47.9
-
315.6
258.6
8.1
93.5
675.8
236.7
310.1
-
24.0
111.4
682.2
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Accounting Standards.
Fair value disclosures
Details of the fair value of the Group’s interest bearing liabilities are set out in Note 19(g).
Unsecured convertible bonds
(1) On the 17 December 2010, the Company announced that pursuant to its tender offer for the
repurchase of the US$250M December 2011 unsecured convertible bonds it had repurchased and
cancelled US$229.6M bonds. The remaining US$20.4M bonds were redeemed on 18 January 2011.
129
(2) On 11 March 2008, the Company issued US$325M in convertible bonds with an underlying coupon
rate of 5.0% (underlying effective interest rate of 7.13%), maturity 11 March 2013 and a conversion
price of US$6.59 for Company shares.
(3) On the 5 November 2010, the Company issued US$300M in convertible bonds with an underlying
coupon rate of 3.625%, (underlying effective interest rate of 7.47%) maturing on 5 November 2015
with a conversion price of US$5.67, 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
consist of both a liability (underlying debt) and equity component (conversion rights into Company shares).
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For ThE yEar EndEd 30 JunE 2011
NOTE 16. INTEREST BEARING LOANS AND BORROWINGS (continued)
Secured bank loans
On 26th May 2006 the Company entered into a project financing facility amounting to US$71M for the
construction of the Langer Heinrich Mine. The financing is 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 a margin over the London Interbank Offered Rate (LIBOR) and is repayable on a six monthly basis
over the term of the loan. 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 had provided a project completion guarantee as part of the facilities.
The guarantee has since been released when the project satisfied the Completion Tests mid 2009.
At 30 June 2011 US$24.8M (2010: US$47.5M) was outstanding under the LHM project finance facilities.
On 30th March 2009, the Company entered into a project financing facility amounting to US$167M for the
construction of the Kayelekera Mine. 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). The facilities are secured over the assets of PAL. The Project
Finance Facility bears interest at a margin over the London Interbank Offered Rate (LIBOR) and is repayable
on a four monthly basis over the term of the loan. Paladin has provided a project completion guarantee as
part of the facilities.
At 30 June 2011 US$127.9M (2010: US$145M) was outstanding under the KM project finance facilities.
Deferred Borrowing costs relating to the establishment of the facilities have been included as part of interest
bearing loans and borrowings.
Financing facilities available
At reporting date, the following financing facilities had been negotiated and were available:
CONSOLIDATED
Total facilities:
Unsecured convertible bonds
Secured bank loans
Facilities used at reporting date:
Unsecured convertible bonds
Secured bank loans
Facilities unused at reporting date:
Unsecured convertible bonds
Secured bank loans
2011
US$M
625.0
152.7
777.7
625.0
152.7
777.7
-
-
-
2010
US$M
575.0
204.5
779.5
575.0
192.5
767.5
-
12.0
12.0
Pa l a d i n E n E r g y lT d » a n n u a l r E P o r T 2 011
notes to the Consolidated finanCial statements
For ThE yEar EndEd 30 JunE 2011
NOTE 16. INTEREST BEARING LOANS AND BORROWINGS (continued)
Assets pledged as security
The carrying amounts of assets pledged as security for current and non current interest bearing liabilities
(secured bank loans) are:
Current
Floating charge
Cash and cash equivalents
Trade and other receivables
Inventories
Total current assets pledged as security
Non Current
Inventories
Property, plant and equipment
Mine development
Deferred tax asset
Intangible assets
Total non current assets pledged as security
Total assets pledged as security
Assets pledged include both LHM and KM.
NOTE 17. PROVISIONS
Current
Social responsibility
Other provision
Employee benefits
Total current provisions
Non Current
Social responsibility
Employee benefits
Rehabilitation provision
Demobilisation provision
Total non current provisions
CONSOLIDATED
2011
US$M
2010
US$M
65.3
31.4
149.8
246.5
73.6
573.5
106.6
19.7
23.1
796.5
1,043.0
47.3
41.5
102.5
191.3
40.8
533.2
119.2
-
24.6
717.8
909.1
CONSOLIDATED
2011
US$M
2010
US$M
-
-
5.3
5.3
-
3.3
30.6
2.4
36.3
1.3
5.9
2.9
10.1
0.2
0.1
31.3
1.9
33.5
Note
23
23
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For a description of the nature and timing of cash flows associated with the above provisions, refer to
section (b) of this note.
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notes to the Consolidated finanCial statements
For ThE yEar EndEd 30 JunE 2011
NOTE 17. PROVISIONS
(a)
Movements in Provisions
Movements in each class of provision during the financial year, excluding provisions relating to employee
benefits, are set out below:
Consolidated
At 1 July 2010
Arising during the year
Utilised
Effects of changes in discount rates
Foreign currency movements
At 30 June 2011
2011
Current
Non current
2010
Current
Non current
Demob-
ilisation
Social
Respons-
ibility
US$M
US$M
Rehab-
ilitation
US$M
Other
US$M
5.9
-
(6.9)
-
1.0
-
-
-
-
5.9
-
5.9
1.9
0.5
-
-
-
2.4
-
2.4
2.4
-
1.9
1.9
1.5
-
(1.5)
-
-
-
-
-
-
1.3
0.2
1.5
31.3
1.7
-
(5.5)
3.1
30.6
-
30.6
30.6
-
31.3
31.3
Total
US$M
40.6
2.2
(8.4)
(5.5)
4.1
33.0
-
33.0
33.0
7.2
33.4
40.6
(b)
Nature and Timing of Provisions
(i) Rehabilitation
A provision for rehabilitation and mine closure 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. Additionally the provision includes 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. The provision is estimated using the
assumption that remediation will not take place until 10 to 20 years’ time.
(ii) Employee benefits
Refer to Note 23.
(iii) Demobilisation
A provision for demobilisation has been recorded in relation to LHM for the costs of demobilising the mining
contractor.
(iv) Social responsibility
In 2010 a provision for social responsibility was recorded in relation to KM for the costs of social
responsibility projects to be incurred under the Development Agreement (refer to Note 14(c)(iii)). During 2011
the whole of this provision was utilised.
(v) Other
In 2010 a provision for an expected litigation settlement amount was recorded (refer to Note 22(f)). During
2011 the whole of this provision was settled.
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notes to the Consolidated finanCial statements
For ThE yEar EndEd 30 JunE 2011
NOTE 18. CONTRIBUTED EQUITY AND RESERVES
(a)
Issued and Paid Up Capital
Ordinary shares
Number of Shares
CONSOLIDATED
2011
2010
2011
US$M
2010
US$M
Issued and fully paid
777,698,217 717,142,802
1,768.1
1,474.6
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
Exchange
Rate
A$
US$ : A$
Balance 30 June 2009
623,692,802
September 2009
Share placement
Transaction costs
93,450,000
4.60
1.14890
Balance 30 June 2010
717,142,802
August 2010
Rights vested
September 2010 Rights vested
November 2010
January 2011
February 2011
February 2011
NGM acquisition
Option conversions
Aurora acquisition
Rights vested
Transfer from reserves
Transaction costs
750,000(1)
530,580
7,155,938
960
52,097,937
20,000
-
-
4.28
4.50
5.04
-
-
-
1.01557
1.00415
1.00670
-
Balance 30 June 2011
777,698,217
Shares held in trust
375,000(1)
Adjusted Balance
30 June 2011
777,323,217
Total
US$M
1,111.6
374.2
(11.2)
1,474.6
-
-
30.1
-
260.6
-
3.1
(0.3)
1,768.1
-
1,768.1
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(1)
250,000 shares held in trust, vesting variously over time up to 1 January 2012 subject to conditions;
125,000 shares held by Paladin Employee Plan Pty Ltd.
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notes to the Consolidated finanCial statements
For ThE yEar EndEd 30 JunE 2011
NOTE 18. CONTRIBUTED EQUITY AND RESERVES (continued)
(c)
Reserves
Consol-
idation
reserve
Listed
option
application
reserve
Share-
based
payments
reserve
Available-
for-sale
reserve
Foreign
currency
translation
reserve
Convertible
bond non-
distributable
reserve
Premium
on
acquisition
reserve
Total
US$M
US$M
US$M
US$M
US$M
US$M
US$M
US$M
CONSOLIDATED
At 1 July 2009
(0.2)
0.1
26.0
32.5
(80.3)
38.9
14.9
31.9
Net unrealised
movement on
available-for-sale
investments
Share-based
payments
Foreign currency
translation
Income tax
At 30 June 2010
At 1 July 2010
Net unrealised
movement on
available-for-sale
investments
Share-based
payments
Foreign currency
translation
Income tax
Transfer to statement
of financial position
Convertible bonds,
equity component net
of tax and transaction
costs
Convertible bonds,
buy back
-
-
-
-
-
-
-
-
(0.2)
(0.2)
0.1
0.1
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(37.0)
12.0
-
-
-
38.0
38.0
4.2
8.0
7.7
7.7
-
10.9
11.5
-
-
-
-
-
-
-
(3.7)
(3.2)
-
-
-
-
23.5
-
(56.8)
(56.8)
-
-
125.6
-
-
-
-
-
-
-
-
-
-
-
-
(37.0)
12.0
27.7
8.0
38.9
38.9
14.9
42.6
14.9
42.6
-
-
-
-
-
28.1
(6.6)
-
-
-
-
-
-
-
10.9
11.5
125.6
(3.7)
(3.2)
28.1
(6.6)
At 30 June 2011
(0.2)
0.1
49.5
11.7
68.8
60.4
14.9
205.2
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Pa l a d i n E n E r g y lT d » a n n u a l r E P o r T 2 011
notes to the Consolidated finanCial statements
For ThE yEar EndEd 30 JunE 2011
NOTE 18. CONTRIBUTED EQUITY AND RESERVES (continued)
(c)
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 25 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.
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 16.
Acquisition reserve
This reserve represents the premium paid on the acquisition of a non-controlling interest in Summit.
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 non-controlling interest share of the net assets of PAL.
NOTE 19. 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, cash and short-term deposits and available for sale financial assets. 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.
(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.
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notes to the Consolidated finanCial statements
For ThE yEar EndEd 30 JunE 2011
NOTE 19. FINANCIAL INSTRUMENTS (continued)
(b)
Market Risk (continued)
(i) Foreign Exchange Risk (continued)
The financial instruments exposed to movements in the Australian dollar are as follows:
CONSOLIDATED
2011
US$M
2010
US$M
Financial assets
Cash and cash equivalents
Trade and other receivables
Available-for-sale financial assets
Financial liabilities
Trade and other payables
Net exposure
The financial instruments exposed to movements in the Namibian dollar are as follows:
3.8
3.2
26.0
33.0
(9.3)
23.7
0.6
2.0
20.7
23.3
(9.0)
14.3
CONSOLIDATED
Financial assets
Cash and cash equivalents
Trade and other receivables
Financial liabilities
Trade and other payables
Net exposure
2011
US$M
6.1
17.2
23.3
(31.8)
(8.5)
2010
US$M
6.2
13.2
19.4
(27.9)
(8.5)
The following table summarises the sensitivity of financial instruments held at balance date to movements in
the exchange rate of the Australian dollar to the US dollar and the Namibian dollar to the US dollar, with all
other variables held constant. The 5% sensitivity is based on reasonably possible changes, over a financial
year, using the observed range of actual historical rates for the preceding five year period.
IMPACT ON PROFIT/LOSS
CONSOLIDATED
IMPACT ON EQUITY
CONSOLIDATED
2011
US$M
2010
US$M
2011
US$M
(0.1)
0.1
(0.3)
0.3
(0.2)
0.2
(0.3)
0.3
0.9
(1.0)
-
-
2010
US$M
0.7
(0.8)
-
-
Post-Tax Gain/(Loss)
AUD/USD +5% (2010: +5%)
AUD/USD -5% (2010: -5%)
NAD/USD +5% (2010: +5%)
NAD/USD -5% (2010: -5%)
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Pa l a d i n E n E r g y lT d » a n n u a l r E P o r T 2 011
notes to the Consolidated finanCial statements
For ThE yEar EndEd 30 JunE 2011
NOTE 19. FINANCIAL INSTRUMENTS (continued)
(b)
Market Risk (continued)
(ii)
Interest Rate Risk
Interest rate risk is the risk that the Group’s financial position will be adversely affected by movements in
interest rates that will increase the cost of floating rate debt or opportunity losses that may arise on fixed
rate borrowings in a falling interest rate environment. Interest rate risk on cash and short-term deposits is
not considered to be a material risk due to the short-term nature of these financial instruments.
The Group’s main interest rate risk arises from long-term debt. Floating rate debt exposes the Group to
cash flow interest rate risk and fixed rate debt exposes the Group to fair value interest rate risk. All other
financial assets and liabilities in the form of receivables, investments in shares, payables and provisions, are
non interest bearing.
The Group currently does not engage in any hedging or derivative transactions to manage interest rate risk.
The floating rate financial instruments exposed to interest rates movements are as follows:
Financial assets
Cash and cash equivalents
Financial liabilities
Interest-bearing liabilities
Net exposure
CONSOLIDATED
2011
US$M
117.4
117.4
2010
US$M
347.9
347.9
(152.7)
(192.5)
(35.3)
155.4
The following table summarises the cash flow sensitivity of cash and cash equivalent financial instruments
held at balance sheet date following a movement in LIBOR, with all other variables held constant. The
sensitivity is based on reasonably possible changes over a financial year, using the observed range of
actual historical rates for the preceding five year period. The sensitivity analysis below excludes impact on
borrowing costs arising from interest bearing liabilities as these are capitalised as part of long-term qualifying
development projects.
Post-Tax Gain/(Loss)
LIBOR +1% (2010: +1%)
LIBOR -0.1% (2010: -0.3%)
IMPACT ON PROFIT/LOSS
CONSOLIDATED
2011
US$M
(0.2)
-
2010
US$M
1.0
(0.3)
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notes to the Consolidated finanCial statements
For ThE yEar EndEd 30 JunE 2011
NOTE 19. FINANCIAL INSTRUMENTS (continued)
(b)
Market Risk (continued)
(iii) Market Price Risk
Price risk is the risk that the Group’s financial position will be adversely affected by movements in the market
value of its available-for-sale financial assets.
The financial instruments exposed to movements in market value are as follows:
Financial assets
Other financial assets
CONSOLIDATED
2011
US$M
2010
US$M
41.8
35.7
The following table summarises the sensitivity of financial instruments held at balance date to movements in
the market price of available-for-sale financial instruments, with all other variables held constant. The 25%
sensitivity is based on reasonable possible changes, over a financial year, using the observed range of actual
historical prices for 2011 and 2010.
Post-tax impact on reserve
Market price +25% (2010: +25%)
Market price -25% (2010: -25%)
(c)
Liquidity Risk
IMPACT ON EQUITY
CONSOLIDATED
2011
US$M
7.3
(7.3)
2010
US$M
6.2
(6.2)
The liquidity position of the Group is managed to ensure sufficient liquid funds are available to meet the
Group’s financial commitments in a timely and cost effective manner.
The Group treasury function continually reviews the Group’s liquidity position including cash flow forecasts
to determine the forecast liquidity position and maintain appropriate liquidity levels. Sensitivity analysis is
conducted on a range of pricing and market assumptions to ensure the Group has the ability to meet
repayment commitments. This enables the Group to manage cash flows on a long-term basis and provides
the flexibility to pursue a range of funding alternatives if necessary. Note 16 details the repayment obligations
in respect of the amount of the facilities.
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notes to the Consolidated finanCial statements
For ThE yEar EndEd 30 JunE 2011
NOTE 19. FINANCIAL INSTRUMENTS (continued)
(c)
Liquidity Risk (continued)
The maturity analysis of payables at the reporting date was as follows:
2011
Consolidated
Trade and other payables
Loans and borrowings
Interest payable
Total payables
2010
Consolidated
Trade and other payables
Loans and borrowings
Interest payable
Total payables
Payables maturity analysis
<1 year
1-2 years
2-3 years
>3 years
US$M
US$M
US$M
US$M
69.7
46.1
31.4
147.2
63.4
15.2
34.9
113.5
-
363.5
25.5
389.0
-
320.9
26.9
347.8
-
29.9
12.9
42.8
-
360.9
19.6
380.5
-
338.2
15.7
353.9
-
62.9
3.2
66.1
Total
US$M
69.7
777.7
85.5
932.9
63.4
759.9
84.6
907.9
(d)
Credit Risk
Credit risk is the risk that a contracting entity will not complete its obligation under a financial instrument that
will result in a financial loss to the Group. The carrying amount of financial assets represents the maximum
credit exposure. The Group trades only with recognised, credit worthy third parties. In addition, receivable
balances are monitored on an ongoing basis with the result that the Group’s exposure to bad debts is not
significant.
The maximum exposure to credit risk at the reporting date was as follows:
Current
Cash and cash equivalents*
Trade receivables
Other receivables – other entities
Non Current
Other receivables – other entities
Total
CONSOLIDATED
2011
US$M
117.4
-
20.5
137.9
2010
US$M
347.9
14.2
19.0
381.1
1.5
0.3
139.4
381.4
*
The Group’s maximum deposit with a single financial institution represents 25% of cash and cash
equivalents.
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notes to the Consolidated finanCial statements
For ThE yEar EndEd 30 JunE 2011
NOTE 19. FINANCIAL INSTRUMENTS (continued)
(d)
Credit Risk (continued)
The ageing of receivables at the reporting date was as follows:
2011
Consolidated
Trade receivables
Other receivables
Total receivables
2010
Consolidated
Trade receivables
Other receivables
Total receivables
Receivables ageing analysis
Current
<1 year
1-2 years
>2 years
US$M
US$M
US$M
US$M
-
20.5
20.5
14.2
19.0
33.2
-
1.5
1.5
-
0.3
0.3
-
-
-
-
-
-
-
-
-
-
-
-
Total
US$M
-
22.0
22.0
14.2
19.3
33.5
No receivables are past due or impaired.
(e)
Financial Instruments Measured at Fair Value
The Group uses various methods in estimating the fair value of a financial instrument. The methods
comprise:
Level 1 – the fair value is calculated using quoted prices in active markets.
Level 2 – the fair value is estimated using inputs other than quoted prices included in Level 1 that are
observable for the asset or liability, either directly (as prices) or indirectly (derived from prices).
Level 3 – the fair value is estimated using inputs for the asset or liability that are not based on observable
market data.
The fair value of the financial instruments as well as the methods used to estimate the fair value are
summarised in the table below:
Year ended 30 June 2011
Year ended 30 June 2010
Valuation
technique-
market
observable
inputs
(Level 2)
Valuation
technique-
non market
observable
inputs
(Level 3)
Quoted
market
price
(Level 1)
Valuation
technique-
market
observable
inputs
(Level 2)
Valuation
technique-
non market
observable
inputs
(Level 3)
Quoted
market
price
(Level 1)
Total
Total
US$M
US$M
US$M
US$M
US$M
US$M
US$M
US$M
Consolidated
Financial assets
Available-for-sale
investments
Listed investments
Unlisted
investments
40.8
-
40.8
-
-
-
-
40.8
32.2
1.0
1.0
1.0
-
41.8
32.2
-
-
-
-
32.2
3.5
3.5
3.5
35.7
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notes to the Consolidated finanCial statements
For ThE yEar EndEd 30 JunE 2011
NOTE 19. FINANCIAL INSTRUMENTS (continued)
(e)
Fair Value of Financial Instruments Measured at Fair Value (continued)
Quoted market price represents the fair value determined based on quoted prices on active markets as at
the reporting date without any deduction for transaction costs. The fair value of the listed equity investments
are based on quoted market prices.
For financial instruments not quoted in active markets, the Group uses valuation techniques such as
present value techniques, comparison to similar instruments for which market observable prices exist and
other relevant models used by market participants. These valuation techniques use both observable and
unobservable market inputs.
The fair value of unlisted debt and equity securities, as well as other investments that do not have an active
market, are based on latest private share placement price before 30 June 2011.
Reconciliation for Level 3 Fair Value Movements
Opening balance
Other comprehensive income
Additions
Disposals
Closing balance
Total gain or loss stated in the table above for assets held at the end
of the period
(f)
Capital Management
CONSOLIDATED
2011
US$M
2010
US$M
3.5
-
0.5
(3.0)
1.0
-
3.9
0.4
-
(0.8)
3.5
-
When managing capital, management’s objective is to ensure adequate cash resources to meet the
Company’s commitments are maintained, as well as to maintain optimal returns to shareholders through
ensuring the lowest cost of capital available to the entity.
The Company utilises a combination of debt, equity and convertible bonds to provide the cash resources
required. Management review the capital structure from time to time as appropriate.
The Group treasury function is responsible for the Group’s capital management, including management of
the long-term debt and cash as part of the capital structure. This involves the use of corporate forecasting
models which enable analysis of the Group’s financial position including cash flow forecasts to determine the
future capital management requirements. To ensure sufficient funding for operational expenditure and growth
activities, a range of assumptions are modelled so as to provide the flexibility in determining the Group’s
optimal future capital structure.
Group treasury monitors gearing and compliances with various contractual financial covenants. The
Company’s project finance facility is subject to various financial undertakings including a negative pledge,
debt service coverage ratio, loan life coverage ratio and project life coverage ratio. At the time of reporting,
the Company was in compliance with all of the facility’s financial undertakings.
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notes to the Consolidated finanCial statements
For ThE yEar EndEd 30 JunE 2011
NOTE 19. FINANCIAL INSTRUMENTS (continued)
(f)
Capital Management (continued)
Total borrowings
Less cash and cash equivalents
Net debt
Total equity
Total capital
Gearing Ratio
CONSOLIDATED
2011
US$M
719.7
(117.4)
2010
US$M
730.1
(347.9)
602.3
382.2
1,768.1
1,474.6
2,370.4
1,856.8
25%
21%
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(g)
Fair Value of Financial Assets and Financial Liabilities Carried at Amortised Cost
The fair value representing the mark to market of a financial asset or a financial liability is the amount at
which the asset could be exchanged or liability settled in a current transaction between willing parties after
allowing for transaction costs.
The fair values of cash and cash equivalents, trade and other receivables and trade and other payables
approximate to their carrying values, as a result of their short maturity or because they carry floating rates of
interest.
The fair value of the debt component of the convertible bonds has been determined using a valuation
technique based on the quoted market price of the convertible bonds.
All financial assets and liabilities where the fair value does not approximate to the carrying value are as
follows:
CONSOLIDATED
2011
US$M
2010
US$M
Carrying
amount
Fair value
Carrying
amount
Fair value
Convertible bonds – debt component
583.1
566.1
554.3
538.7
(h)
Commodity Price Risk
Uranium is not traded in any significant volume on global commodity exchanges. The Group has customer
sales contracts in place for delivery over the period 2011 to 2020.
The contracted selling price is determined by a formula which references common industry published prices
for spot and term contracts and is subject to an escalating floor price and also escalating ceiling prices.
Pa l a d i n E n E r g y lT d » a n n u a l r E P o r T 2 011
notes to the Consolidated finanCial statements
For ThE yEar EndEd 30 JunE 2011
NOTE 20. KEY MANAGEMENT PERSONNEL
(a)
Details of Key Management Personnel
(i) Directors
Mr Rick Crabb
Mr John Borshoff
Mr Sean Llewelyn
Chairman (Non-executive)
Managing Director/CEO
Director (Non-executive)
Mr Donald Shumka
Director (Non-executive)
Mr Peter Donkin
Director (Non-executive) (appointed 1 July 2010)
Mr Philip Baily
Mr Ian Noble
(ii) Executives
Director (Non-executive) (appointed 1 October 2010)
Director (Non-executive) (retired 25 November 2010)
Ms Gillian Swaby
Company Secretary
Mr Garry Korte
Mr Wyatt Buck
Mr Dustin Garrow
Mr Mark Chalmers
Chief Financial Officer
Executive General Manager – Production (resigned 6 May 2011)
Executive General Manager – Marketing
Executive General manager – Production (appointed 28 April 2011)
(b)
Compensation of Key Management Personnel: Compensation by Category
Short-term employee benefits
Post employment benefits
Long-term benefits
Share-based payment
CONSOLIDATED
2011
US$’000
2010
US$’000
5,492
689
454
2,955
9,590
4,672
624
476
4,186
9,958
Average exchange rate used for year to 30 June 2011, US$1 = A$1.01512 (2010 US$1 = A$1.13652).
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notes to the Consolidated finanCial statements
For ThE yEar EndEd 30 JunE 2011
NOTE 20. KEY MANAGEMENT PERSONNEL (continued)
(c)
Option Holdings of Key Management Personnel (Consolidated and Parent Entity)
30 June 2011
01 Jul 10
Directors
Mr John Borshoff
Executives
Ms Gillian Swaby
Mr Wyatt Buck
Mr Dustin Garrow
2,750,000
333,785
351,533
344,769
Total
3,780,087
Granted as
remune-
ration
Options
exercised
Net change
other
30 Jun 11
Vested/
exercisable
Not
vested/ not
exercisable
-
-
-
-
-
- (1,500,000)(2) 1,250,000
657,000
593,000
-
-
-
(75,000)(2)
(351,533)(1)
(78,570)(2)
258,785
-
266,199
136,018
-
139,915
122,767
-
126,284
- (2,005,103)
1,774,984
932,933
842,051
No other Key Management Personnel held options during the year ended 30 June 2011.
(1) Mr Wyatt Buck resigned on 6 May 2011. 105,926 options lapsed on 6 June 2011 and 95,607 were
forfeited on 6 May 2011. 150,000 lapsed during the year as the vesting conditions were not met.
(2) Lapsed during the year as the vesting conditions were not met.
30 June 2010
01 Jul 09
Directors
Mr John Borshoff
2,750,000
Executives
Ms Gillian Swaby
Mr Wyatt Buck
Mr Dustin Garrow
Mr Simon Solomons
333,785
351,533
344,769
600,000
Total
4,380,087
Granted as
remune-
ration
Options
exercised
Net change
other
30 Jun 10
Vested/
exercisable
Not
vested/ not
exercisable
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,750,000
333,785
351,533
344,769
600,000
4,380,087
-
-
-
-
-
-
2,750,000
333,785
351,533
344,769
600,000
4,380,087
No other Key Management Personnel held options during the year ended 30 June 2010.
(d)
Share Rights Holdings of Key Management Personnel (Consolidated and Parent Entity)
30 June 2011
Directors
Mr John Borshoff
Executives
Ms Gillian Swaby
Mr Garry Korte
Mr Dustin Garrow
Mr Wyatt Buck
01 Jul 10
Granted as
remuneration
Vested as
shares
Forfeited
30 Jun 11
300,000
500,000
-
180,000
90,000
200,000
160,000
385,000
50,000
80,000
50,000
(18,000)
(9,000)
(20,000)
(16,000)
-
-
-
-
(194,000)(1)
800,000
547,000
131,000
260,000
-
Total
930,000
1,065,000
(63,000)
(194,000)
1,738,000
No other Key Management Personnel held share rights during the year ended 30 June 2011.
(1) Mr Wyatt Buck resigned on 6 May 2011 and his outstanding share rights were forfeited.
Pa l a d i n E n E r g y lT d » a n n u a l r E P o r T 2 011
notes to the Consolidated finanCial statements
For ThE yEar EndEd 30 JunE 2011
NOTE 20. KEY MANAGEMENT PERSONNEL (continued)
(d)
Share Rights Holdings of Key Management Personnel (Consolidated and Parent Entity) (continued)
30 June 2010
Directors
Mr John Borshoff
Executives
Ms Gillian Swaby
Mr Garry Korte
Mr Dustin Garrow
Mr Wyatt Buck
Mr Simon Solomons
Total
01 Jul 10
Granted as
remuneration
Vested as
shares
Forfeited
30 Jun 11
-
-
-
-
-
-
-
300,000
180,000
90,000
200,000
160,000
120,000
1,050,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
300,000
180,000
90,000
200,000
160,000
120,000
1,050,000
No other Key Management Personnel held share rights during the year ended 30 June 2010.
(e)
Shareholdings of Key Management Personnel (Consolidated and Parent Entity)
Shares held in Paladin Energy Ltd (number)
30 June 2011
Directors
Mr Rick Crabb
Mr John Borshoff
Mr Ian Noble(1)
Mr Sean Llewelyn
Mr Donald Shumka
Mr Peter Donkin
Mr Philip Baily
Executives
Ms Gillian Swaby
Mr Wyatt Buck(2)
Mr Garry Korte
Mr Dustin Garrow
Mr Mark Chalmers
Total
Balance
01 Jul 10
On Exercise
of Options
On Vesting
of Rights
Net Change
Other
Balance
30 June 11
4,881,528
21,877,394
21,000
100,000
50,000
-
-
5,036,655
110,000
-
-
-
32,076,577
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(21,000)
-
50,000
15,000
12,000
4,881,528
21,877,394
-
100,000
100,000
15,000
12,000
18,000
16,000
9,000
20,000
-
(1,468,000)
(126,000)
-
(20,000)
-
3,586,655
-
9,000
-
-
63,000
(1,558,000)
30,581,577
No other Key Management Personnel held shares during the year ended 30 June 2011.
(1) Mr Ian Noble retired on 25 November 2010. No longer required to disclose shareholdings.
(2) Mr Wyatt Buck resigned on 6 May 2011. No longer required to disclosure shareholdings.
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notes to the Consolidated finanCial statements
For ThE yEar EndEd 30 JunE 2011
NOTE 20. KEY MANAGEMENT PERSONNEL (continued)
(e)
Shareholdings of Key Management Personnel (Consolidated and Parent Entity) (continued)
30 June 2010
Directors
Mr Rick Crabb
Mr John Borshoff
Mr Ian Noble
Mr Sean Llewelyn
Mr Donald Shumka
Executives
Ms Gillian Swaby
Mr Wyatt Buck
Mr Simon Solomons
Total
Balance
01 Jul 09
On Exercise
of Options
Net Change
Other
Balance
30 June 10
4,581,528
21,591,394
21,000
100,000
50,000
5,036,655
96,350
3,000
31,479,927
-
-
-
-
-
-
-
-
-
300,000
286,000
-
-
-
4,881,528
21,877,394
21,000
100,000
50,000
-
13,650
-
5,036,655
110,000
3,000
599,650
32,079,577
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
Group would have adopted if dealing at arm’s length.
(f)
Other Transactions and Balances with Key Management Personnel
Fees paid in the normal course of business in 2011 for company secretarial services totalling US$561,000
(2010: US$419,000) were paid/payable (balance outstanding at 30 June 2011 and included in trade
creditors US$Nil (2010: US$Nil)) to a company of which Ms Gillian Swaby is a director and shareholder. All
amounts are excluding GST.
NOTE 21. AUDITORS’ REMUNERATION
The auditor of the Paladin Energy Ltd Group is Ernst & Young.
CONSOLIDATED
2011
US$’000
2010
US$’000
Amounts received or due and receivable by Ernst & Young (Australia) for:
• Audit or review of the financial report of the consolidated Group and
audit related services
1,068(1)
776
•
Taxation services:
Tax compliance services
International tax consulting
Tax advice on mergers and acquisitions
Other tax advice
Sub-total
Amounts received or due and receivable by related practices of Ernst &
Young (Australia) for:
• Audit or review of the financial report of subsidiaries
• Other assurance services:
Malawi Development Agreement
•
Taxation services:
Tax compliance services
Sub-total
97
165
232
51
97
205
2
58
1,613
1,138
389
-
4
393
209
58
5
272
(1)
$97,794 relates to services performed in relation to the issue of Convertible Bonds.
Pa l a d i n E n E r g y lT d » a n n u a l r E P o r T 2 011
notes to the Consolidated finanCial statements
For ThE yEar EndEd 30 JunE 2011
NOTE 21. AUDITORS’ REMUNERATION (continued)
The level of non-audit related fees that the Company paid to its independent auditor, Ernst & Young relative
to the audit/audit related fees reduced from 2010 to 2011, with non-audit fees reasonably lower than the
audit/audited related fees.
The level of non-audit related fees was driven by the tax compliance requirements of multiple jurisdictions,
establishing new operations and by the specialist advice requirements of potential acquisitions.
Whilst always striving to meet the highest corporate governance standards, Paladin is also cognisant of the
need to retain the value of the best available specialist advice. The establishment of the Kayelekera mining
operation in Malawi necessitated setting up robust internal controls and processes and systems. After a
thorough search Paladin engaged Ernst & Young because of their specialised experience in both Africa and
the mining sector and Ernst & Young’s detailed understanding of the Paladin Group. These costs included
under other assurance services in 2010 are considered to be set up costs and are not anticipated to be
incurred in future periods.
In terms of the Company’s Corporate Governance Policy all non-audit services are reviewed and approved
by the audit committee prior to commencement to ensure that they do not adversely affect the integrity and
objectivity of the auditor and that the nature of the services provided does not compromise the Code of
Ethics for Professional Accountants APES 110 issued by the Accounting Professional and Ethical Standards
Board.
All non-audit services provided by Ernst & Young were allowable services that received the sign off of the
audit partner confirming that, in his professional opinion, they do not in any way impair the independence of
the firm. Where any service might be perceived to be subjective, Ernst & Young policy requires approval by
the Oceania Independence and Conflicts Leader.
NOTE 22. COMMITMENTS AND CONTINGENCIES
There were no outstanding commitments or contingencies, which are not disclosed in the Financial Report
of the Group as at 30 June 2011 other than:
(a)
Tenements
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
CONSOLIDATED
2011
US$M
2010
US$M
19.0
17.0
28.4
64.4
2.1
20.4
0.1
22.6
These include commitments relating to tenement lease rentals and the minimum expenditure requirements of
the Namibian, Malawian, Nigerian, Canadian, Western Australian, South Australian, Northern Territorian and
Queensland Mines Departments attaching to the tenements and are subject to re-negotiation upon expiry of
the exploration leases or when application for a mining licence is made.
These are necessary in order to maintain the tenements in which the Group and other parties are involved.
All parties are committed to meet the conditions under which the tenements were granted in accordance
with the relevant mining legislation in Namibia, Malawi, Australia, Canada and Niger.
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notes to the Consolidated finanCial statements
For ThE yEar EndEd 30 JunE 2011
NOTE 22. COMMITMENTS AND CONTINGENCIES (continued)
(b)
Mine Construction Commitments
Commitments for mine construction contracted for at the reporting date but
not recognised as liabilities, payable:
Within one year
Later than one year but not later than 5 years
More than 5 years
Total mine construction
CONSOLIDATED
2011
US$M
2010
US$M
18.8
-
-
18.8
35.7
-
-
35.7
These commitments in 2011 relate to construction of Stage 3 at LHM (2010: construction of Stage 3 at
LHM).
(c)
Operating Lease Commitments
The Group has entered into various property leases relating to rental of offices and residential
accommodation.
These non-cancellable leases have remaining terms of between 1 month and 10 years. All leases include
a clause to enable upward revision of rental charge on an annual basis according to prevailing market
conditions.
Future minimum rentals payable under non-cancellable operating leases as at 30 June are as follows:
Within one year
Later than one year but not later than 5 years
More than 5 years
Total operating lease commitment
(d)
Acquisition Costs
CONSOLIDATED
2011
US$M
1.5
5.3
0.1
6.9
2010
US$M
1.3
4.5
0.9
6.7
The Group acquired a call option on 19 June 1998 in relation to the purchase of the Oobagooma Uranium
Project and, in turn, granted a put option to the original holder of the project. Both the call and put
options have an exercise price of A$0.75M (US$0.8M) (2010:A$0.75M (US$0.6M)) and are subject to the
Department of Minerals & Energy granting tenements comprising two exploration licence applications. The
A$0.75M is payable by the Group within 10 business days of the later of the grant of the tenements or the
exercise of either the call or put option. The options will expire 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$0.8M) (2010:A$0.75M (US$0.6M)) by the Group to the vendors when all project development
approvals are obtained.
(e)
Bank Guarantees
As at 30 June 2011 the Group has outstanding US$911,837 (A$860,619) (2010: US$731,144 / A$853,801)
as a current guarantee provided by a bank for the corporate office lease and a US$289,700 (A$273,428)
(2010: US$30,828 / A$36,000) guarantee for tenements.
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notes to the Consolidated finanCial statements
For ThE yEar EndEd 30 JunE 2011
NOTE 22. COMMITMENTS AND CONTINGENCIES (continued)
(f)
Legal Actions
Isa Uranium Joint Venture
On 3 August 2007, the Company’s wholly owned subsidiary, Mt Isa Uranium Pty Ltd (MIU) entered into a
settlement agreement with respect to proceedings which had been commenced by Summit Resources
(Aust) Pty Ltd (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 (Areva intervention proceedings). 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.
Early in 2011 the Company finalised the settlement of the Areva intervention proceedings. Although the
effect of the settlement is that the Summit Proceedings remain on foot, as previously announced, the
Company is confident that, if pursued, those proceedings will be able to be successfully defended and,
in any event, the Company has the benefit of an indemnity from Resolute. Further, the Company has an
ultimate 82.1% interest in SRA. As a consequence, a change in the ownership of the 50% interest in the
Isa Uranium joint venture from MIU to SRA would not be of significance to the Company.
SRA has now made application to the Supreme Court of Western Australia for orders which would allow it
to settle the Summit Proceedings, essentially on the terms contemplated by the 2007 settlement agreement.
That application is ongoing.
NOTE 23. EMPLOYEE BENEFITS
Provision for annual leave and long service leave aggregate employment
benefit liabilities
8.6
3.0
CONSOLIDATED
2011
US$M
2010
US$M
Employee Benefits Expense
Wages and salaries
Defined contribution superannuation
Share-based payments
Other employee benefits
Total employee benefits expense
Superannuation
62.7
3.9
14.3
5.1
86.0
25.5
2.6
11.3
1.9
41.3
The Company contributes to employees’ superannuation plans in accordance with the requirements of
Occupational Superannuation Legislation. Contributions by the Company represent a defined percentage of
each employee’s salary. Employee contributions are voluntary.
Employee Share Incentive Option Plan
Details of the Employee Share Incentive Option Plan for the Company are disclosed in Note 25.
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notes to the Consolidated finanCial statements
For ThE yEar EndEd 30 JunE 2011
NOTE 24. RELATED PARTIES
Key Management Personnel
Details relating to Key Management Personnel can be found at Note 20.
NOTE 25. SHARE-BASED PAYMENT PLANS
Share based payment expense
The share-based payment plans are described below.
(a)
Types of Share-Based Payment Plans
Executive Share Option Plan (EXSOP)
CONSOLIDATED
2011
US$M
11.9
2010
US$M
10.4
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%;
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• when Paladin is ranked at the 50th percentile, 50% of the share options will vest; and
• 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.
Following the adoption of the Rights Plan referred to below, no further grants will be made under the
EXSOP. The last grant under this Plan was made on 24 June 2009.
Pa l a d i n E n E r g y lT d » a n n u a l r E P o r T 2 011
notes to the Consolidated finanCial statements
For ThE yEar EndEd 30 JunE 2011
NOTE 25. SHARE-BASED PAYMENT PLANS (continued)
(a)
Types of Share-Based Payment Plans (continued)
Employee Performance Share Rights Plan
The Employee Performance Share Rights Plan (Rights Plan) was approved by shareholders on 25 November
2009. The Rights Plan replaces the EXSOP and no further options will be granted under the EXSOP.
The Rights Plan is a long-term incentive plan aimed at advancing the interests of the Company by creating
a stronger link between employee performance and reward and increasing shareholder value by enabling
participants to have a greater involvement with, and share in the future growth and profitability of the
Company. It is an important tool to assist in attracting and retaining talented people.
Share Rights are granted under the plan for no consideration. Share Rights are rights to receive fully paid
ordinary shares in the capital of the Company (Shares) in the future if certain individual and/or corporate
performance metrics (Performance Conditions) are met in the measurement period.
The Board is cognisant of general shareholder concern that long-term equity based reward for staff should
be linked to the achievement by the Company of a performance condition. Share Rights granted under the
Rights Plan are subject to performance conditions as determined by the Board from time to time.
The Share Rights issued are subject to a combination of Performance Conditions:-
•
•
Time-based Performance conditions which prescribe a period of time that the employee must stay
employed by the Company prior to automatic vesting.
The Total Shareholder Return (TSR) measure which represents the change in the Company’s Share
price over the relevant period, plus dividends (if any) notionally reinvested in the Company’s Shares,
expressed as a percentage of the opening value.
The TSR of the Company from the date of the offer to the measurement date will be compared with
the TSR of all mining companies in the ASX S&P 200 Index for the same period excluding, for such
time as Paladin does not pay a dividend, all companies that paid a dividend during any year of the
measurement period.
The number of Share Rights that vest depends on the TSR percentile ranking of the Company, as set
out below:
Relative TSR Percentile Ranking
Percentage of share rights that may vest if the relative
TSR performance condition is met
Less than 50th percentile
0% of the Share Rights subject to the TSR condition
at 50th percentile
50% of the Share Rights subject to the TSR condition
Greater than the 50th percentile but less
than the 75th percentile
Pro-rated vesting between 51% and 99% of the Share
Rights subject to the TSR condition
At 75th percentile or greater
100% of the Share Rights subject to the TSR condition
The Market Price Performance condition measures the increase in share price of the Company. Share
Rights subject to the Market Price Performance Condition will vest if, at the end of the measurement period,
the Share price of the Company is 25% above the market price as at the date of the offer.
The Earnings Per Share (EPS) Performance condition, which is determined by dividing the operating
profit attributable to members of the Paladin Group by the weighted average number of Ordinary Shares
outstanding during the financial year. Growth in EPS will be measured by comparing the EPS in the base
year and the measurement year.
Vesting will only occur if the Company achieves average compound growth in EPS of at least 10% per
annum over the three year performance period, calculated from the date of the grant of the Share Rights.
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notes to the Consolidated finanCial statements
For ThE yEar EndEd 30 JunE 2011
NOTE 25. SHARE-BASED PAYMENT PLANS (continued)
(a)
Types of Share-Based Payment Plans (continued)
Employee Performance Share Rights Plan (continued)
The vesting schedule of the Share Rights subject to the EPS conditions is as follows:
Average compound growth EPS
over the performance period
Percentage of share rights that may vest if the EPS
condition is met
Less than 10% pa
0% of the Share Rights subject to the EPS condition
At 10% pa
50% of the Share Rights subject to the EPS condition
More than 10% pa but less than 20% pa
Pro-rated vesting between 51% and 99% of the Share
Rights subject to the EPS condition
At 20% pa or greater
100% of the Share Rights subject to the EPS condition
When a participant ceases employment prior to the vesting of their Share Rights, the Share Rights lapse
unless cessation of employment is due to retirement, total and permanent disablement, redundancy or
death. In the event of a change of control all the Share Rights will vest.
Contractor Performance Share Rights Plan
The Company has also implemented a plan to reward a small number of key individual contractors, who
provide similar services to employees. This plan and the Rights Plan applicable to employees, as detailed
above, differ only in respect of the class of individuals who are eligible for participation. This Plan was
approved by shareholders on 25 November 2009.
(b)
Summaries of Options Granted Under EXSOP
The following table illustrates the number (No.) and weighted average exercise prices (WAEP) of and
movements in share options issued during the year:
2011
Number
2011 WAEP
A$
2010
Number
2010 WAEP
A$
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Granted during the year
Forfeited during the year
Exercised during the year(1)
Expired during the year
12,768,755
-
(1,841,734)
(960)
(2,694,270)
5.26
-
4.13
4.50
8.77
15,227,455
-
(1,458,700)
-
(1,000,000)
Outstanding at the end of the year
8,231,791
4.36
12,768,755
152
Exercisable at the end of the year
4,032,078
4.55
-
(1)
The weighted average share price at the date of exercise is A$5.35 (2010: N/A).
5.25
-
5.02
-
5.50
5.26
-
The outstanding balance as at 30 June 2011 is represented by:
Date options granted
Exercisable
Expiry date
Exercise price
of options
Number under
option
29 January 2008
15 February 2008
18 April 2008
14 October 2008
29 January 2011
15 February 2011
18 April 2011
14 October 2011
29 January 2013
15 February 2013
18 April 2013
14 October 2013
Total
4.50
5.37
4.59
2.54
6,706,791
300,000
475,000
750,000
8,231,791
Please refer to Outstanding Share Information table in the Management Discussion & Analysis for
movements since the year end.
Pa l a d i n E n E r g y lT d » a n n u a l r E P o r T 2 011
notes to the Consolidated finanCial statements
For ThE yEar EndEd 30 JunE 2011
NOTE 25. SHARE-BASED PAYMENT PLANS (continued)
(c)
Weighted Average Remaining Contractual Life
The weighted average remaining contractual life for the share options outstanding as at 30 June 2011 is 1.7
years (2010: 2.5 years).
(d)
Range of Exercise Price
The range of exercise prices for options outstanding at the end of the year was A$2.54 – A$5.37 (2010:
A$2.07 – A$8.77).
(e)
(f)
Weighted Average Fair Value
There were no options granted during 2010 or 2011.
Option Pricing Model: EXSOP
The fair value of the equity-settled share options granted under the option plan is estimated as at the date
of grant using a Black-Scholes model taking into account the terms and conditions upon which the options
were granted. There were no options granted during 2010 or 2011.
(g)
Summaries of Performance Share Rights Granted Under the Rights Plans
The following table illustrates the number (No.) of and movements in share rights issued during the year:
Outstanding at the beginning of the year
Granted during the year *
Forfeited during the year
Vested during the year(1)
Outstanding at the end of the year
CONSOLIDATED
2011
US$M
2010
US$M
5,014,500
4,292,117
(1,058,700)
(1,300,580)
-
5,026,900
(12,400)
-
6,947,337
5,014,500
*
Includes 490,000 rights granted under the Contractor Performance Share Rights Plan (2010:
520,000).
(1)
The weighted average share price at the vesting date is A$3.80 (2010: N/A).
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notes to the Consolidated finanCial statements
For ThE yEar EndEd 30 JunE 2011
NOTE 25. SHARE-BASED PAYMENT PLANS (continued)
(h)
Summaries of Performance Share Rights Granted Under the Rights Plans (continued)
The outstanding balance as at 30 June 2011 is represented by:
Date
rights
granted
26 March 2010
26 March 2010
26 March 2010
26 March 2010
26 March 2010
26 March 2010
5 November 2010
5 November 2010
5 November 2010
5 November 2010
5 November 2010
5 November 2010
5 November 2010
15 February 2011
15 February 2011
15 February 2011
Total
Vesting date
Vesting Performance Conditions
Number
26 March 2013
26 March 2013
1 September 2011
1 September 2012
1 September 2012
1 September 2012
5 November 2013
5 November 2013
1 September 2011
1 September 2012
1 September 2013
1 September 2013
1 September 2013
15 February 2012
15 February 2013
15 February 2014
Relative total shareholder return
Earnings per share
Time based
Time based
Relative total shareholder return
Market price
Earnings per share
Relative total shareholder return
Time based
Time based
Time based
Relative total shareholder return
Market price
Time based
Time based
Time based
150,000
150,000
594,270
990,450
792,360
1,188,540
250,000
250,000
202,170
303,255
505,425
404,340
606,510
155,336
178,838
225,843
6,947,337
Please refer to Outstanding Share Information table in the Management Discussion & Analysis for
movements since the year end.
(i)
Weighted Average Remaining Contractual Life
(j)
(k)
The weighted average remaining contractual life for the share rights outstanding as at 30 June 2011 is 1.5
years (2010: 1.9 years).
Weighted Average Fair Value
The weighted average fair value of share rights granted during the year was A$3.86 (2010: A$3.17).
Rights Pricing Model
The fair value of the equity-settled share rights granted under the plan is estimated as at the date of grant
using either the Black-Scholes model for rights with non-market based performance conditions (time based
and EPS), the Monte-Carlo simulation model for rights that contained a relative TSR performance condition
or an Asset or Nothing Digital Option valuation model for rights subject to the market price condition.
The following table lists the inputs to the model used for the years ended 30 June 2011 and 30 June 2010.
2011
2010
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Dividend yield (%)
Expected volatility (%)
Risk-free interest rate (%)
Expected life of right (years)
Closing share price at grant date (A$)
Nil
39%
Nil
49%
4.77% - 5.03% 4.55% - 5.42%
0.5 - 4 years
A$3.88
0.8 - 4 years
A$4.48
The expected volatility was determined using an historical sample of 1 years historic data.
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notes to the Consolidated finanCial statements
For ThE yEar EndEd 30 JunE 2011
NOTE 26. INTERESTS IN JOINTLY CONTROLLED ASSETS
(a)
Joint Venture Details
Bigrlyi Joint Venture
The Bigrlyi Joint Venture is involved in the identification of and exploration for uranium resources in the
Northern Territory, Australia. The joint venture is between Energy Metals Ltd 53.29%, Southern Cross
Exploration NL 5.0% and Northern Territory Uranium Pty Ltd (NTU) 41.71% (NTU is 100% owned by
Paladin) with Energy Metals Ltd as manager and operator of the joint venture.
Angela Joint Venture
The Angela Joint Venture is involved in the identification of and exploration for uranium resources on
tenements to the south of Alice Springs in the Northern Territory, Australia. The joint venture is between
Cameco Australia Pty Ltd (Cameco) 50% and Paladin NT Pty Ltd (PNT) 50% (PNT is 100% owned by
Paladin) with Cameco as manager and operator of the joint venture.
Other Joint Ventures
The Group also has a number of other interests in joint ventures to explore for uranium and other minerals.
The Group’s share of expenditure in respect of these exploration activities is expensed in accordance with
the accounting policy stated in Note 2(s) and no revenue is generated. The Group’s share of the assets and
liabilities in respect of these joint ventures is not material.
(b)
Assets Utilised in the Bigrlyi and Angela Joint Ventures
The Group’s share of the assets utilised in these jointly controlled assets, which are included in the
Consolidated Financial Statements, is as follows:
Non Current Assets
Exploration and evaluation expenditure
Total assets
CONSOLIDATED
2011
US$M
36.3
36.3
2010
US$M
26.0
26.0
The interest of NTU in the Bigrlyi Joint Venture was acquired on 7 September 2006 and includes the
allocation of the acquisition value.
The interest of PNT in the Angela Project joint venture was acquired on 20 February 2008.
(c)
Commitments Relating to the Joint Venture
Share of tenement commitments (Note 22)
CONSOLIDATED
2011
US$M
2.7
2010
US$M
2.6
(d)
Impairment
No assets employed in the jointly controlled assets were impaired during the year (2010: US$Nil).
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notes to the Consolidated finanCial statements
For ThE yEar EndEd 30 JunE 2011
NOTE 27. ASSET ACQUISITION
Acquisition of NGM Resources Limited
Paladin Energy Ltd acquired a controlling interest on 25 October 2010 of the voting shares of NGM, a public
company based in Australia involved in the exploration for uranium resources in Niger. The takeover was
completed on 10 December 2010 with the acquisition of 100% of the issued share capital for the issue
of 7,155,938 Paladin shares for a cost of US$30.1M and direct cost of US$1.8M. In addition the existing
available for sale investment and investment revaluation reserve of US$2.4M was transferred to form part of
the investment.
The acquisition was treated as an acquisition of an asset as the transaction involved the acquisition of
exploration licences, the intellectual property surrounding these licences and research performed to
date only.
The cash outflow on acquisition is as follows
Net cash acquired with the subsidiary
Direct cost relating to acquisition
Net consolidated cash outflow
Assets acquired
Cash and cash equivalents
Other assets
Exploration and evaluation expenditure
Other liabilities
Net assets
US$M
0.6
(1.8)
(1.2)
0.6
0.2
34.0
(0.5)
34.3
Acquisition of Aurora Uranium Assets
On 1 February 2011, Paladin Energy Ltd acquired the uranium assets of Aurora Energy Resources Inc.
(“Aurora”) from Fronteer Gold Inc. (“Fronteer”).
The transaction was completed for a total consideration of US$260.6M via the issuance of 52,097,937
ordinary shares in Paladin at A$5.04 and direct cost of US$2.3M.
With completion of this transaction, Fronteer held approximately 6.7% of Paladin’s ordinary shares, subject
to a four-month hold period under Canadian securities laws. Fronteer also entered into an agreement
that set out procedures designed to ensure that any disposition of shares by Fronteer will occur in an
orderly fashion. Following the announcement of the takeover of Fronteer by Newmont Mining Corporation
(Newmont) this shareholding transferred to Newmont, which will assume all obligations under the
agreements.
The acquisition was treated as an acquisition of an asset as the transaction involved the acquisition of
exploration licences, the intellectual property surrounding these licences and evaluation performed to
date only.
The cash outflow on acquisition is as follows
Net cash acquired
Direct cost relating to acquisition
Net consolidated cash outflow
Assets acquired
Other assets
Exploration and evaluation expenditure
Other liabilities
Net assets
US$M
-
(2.3)
(2.3)
1.5
261.8
(0.4)
262.9
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notes to the Consolidated finanCial statements
For ThE yEar EndEd 30 JunE 2011
NOTE 28. 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 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 2011 Financial Report:
Uranium Sales Agreement Signed
On 22 August 2011, the Company announced the signing of a series of term uranium sales agreements
for output from the Langer Heinrich Stage 3 expansion. The agreements have been signed with three new
customers in the United States and further strengthens Paladin’s already significant presence within the
U.S. nuclear market. Production commitments from the new agreements total more than 2.8Mlb U3O8 with
deliveries beginning in 2012 and extending through to 2016. Contractual pricing provisions incorporate both
fixed and base (escalated) mechanisms ranging from the low- to -mid-$60’s per pound U3O8.
Langer Heinrich Mine, Namibia
Execution of US$141M Project Finance Facility for Stage 3 Expansion
On 26 August 2011, the Company announced that the financing documentation required for the Stage
3 expansion had been finalised and executed. The Stage 3 expansion of LHM in Namibia will increase
production to 5.2Mlb pa from its current capacity of 3.7Mlb pa.
The initial development funding for the project has been via Paladin’s existing cash reserves. The Langer
Heinrich Stage 3 expansion is now fully financed and is on track to reach nameplate capacity in the 1st
quarter of 2012.
Paladin and a syndicate of banks executed a US$141M Project Financing Facility, consisting of a 6 year
Project Finance Facility of US$135M with a Costs Overrun Facility of US$6M. The facility is being provided
without a parent company guarantee from Paladin. The facilities are being provided by Société Générale (as
Agent), Nedbank Capital, Standard Bank Plc, Barclays Capital (the investment banking division of Barclays
Bank PLC) and Rand Merchant Bank, a division of FirstRand Bank Limited (RMB). Drawdown on the
financing is subject to fulfilment of conditions precedent usual for this type of facility.
NOTE 29. NON-CASH FINANCING AND INVESTMENT ACTIVITIES
Issue of shares to acquire 100% of NGM Resources Ltd
Issue of shares to acquire the Aurora uranium assets
CONSOLIDATED
2011
US$M
30.1
260.6
2010
US$M
-
-
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notes to the Consolidated finanCial statements
For ThE yEar EndEd 30 JunE 2011
NOTE 30. EARNINGS PER SHARE
(i) Basic Earnings Per Share
Basic earnings per share are calculated by dividing the profit attributable to equity holders of the Company
by the weighted average number of ordinary shares outstanding during the period.
(ii) Diluted Earnings Per Share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take
into account the after income tax effect associated with dilutive potential ordinary shares and the weighted
average number of shares assumed to have been issued for no consideration in relation to dilutive potential
ordinary shares. Diluted earnings per share is the same as basic earnings per share in 2011 and 2010 as
the Group is in a loss position.
The following reflects the income and share data used in the basic and diluted earnings per share
computations:
Net loss attributable to ordinary equity holders of the Parent from
continuing operations
CONSOLIDATED
2011
US$M
2010
US$M
(82.3)
(45.6)
2011
Number of
Shares
2010
Number of
Shares
Weighted average number of ordinary shares for basic and diluted
earnings per share
744,054,692 697,428,692
Weighted average number of securities issuable under the Company’s
option and rights plans that could be potentially dilutive
4,124,583
1,766,058
Total number of securities not included in weighted average calculation
due to non-dilutive nature
113,145,440
96,054,056
NOTE 31. PARENT ENTITY INFORMATION
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(a)
Information Relating to Paladin Energy Ltd
Current assets
Total assets
Current liabilities
Total liabilities
Issued capital
Retained earnings
Option application reserve
Share based payments reserve
Available-for-sale investment revaluation reserve
Convertible bond non-distributable reserve
Total shareholders’ equity
Net loss after tax from operations
Total comprehensive loss
CONSOLIDATED
2011
US$M
2010
US$M
146.2
1,768.6
12.7
613.9
1,768.1
(734.3)
0.1
49.5
10.9
60.4
341.3
1,455.4
14.0
582.2
1,474.6
(683.9)
0.1
38.0
5.5
38.9
1,154.7
873.2
(50.4)
(45.0)
(88.5)
(107.3)
Pa l a d i n E n E r g y lT d » a n n u a l r E P o r T 2 011
notes to the Consolidated finanCial statements
For ThE yEar EndEd 30 JunE 2011
NOTE 31. PARENT ENTITY INFORMATION (continued)
(b)
Details of Any Guarantees Entered Into by the Parent in Relation to the Debts of its Subsidiaries
As part of the Project Finance Facility for the construction of the Kayelekera Mine, Paladin Energy Ltd has
provided a guarantee for the loan outstanding to the lenders until satisfaction of the Bankers Completion
Test.
(c)
(d)
Details of Any Contingent Liabilities of the Parent Entity
There are no contingent liabilities of the parent entity as at reporting date.
Details of Any Contractual Commitments by the Parent Entity for the Acquisition of Property,
Plant and Equipment
There are no contractual commitments by the parent entity for the acquisition of property, plant and
equipment as at reporting date.
(e)
Tax Consolidation
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.
(f)
Investments in Material Controlled Entities
NAME
COUNTRY OF
INCORPORATION
INVESTMENT
Paladin Finance Pty Ltd
Paladin Energy Minerals NL
Eden Creek Pty Ltd
Paladin (Africa) Ltd
Kayelekera Holdings SA
Paladin Netherlands BV
Paladin Netherlands Co-Op Holdings
Langer Heinrich Mauritius Holdings Ltd
Langer Heinrich Uranium (Pty) Ltd
Valhalla Uranium Pty Ltd
Northern Territory Uranium Pty Ltd
Mount Isa Uranium Pty Ltd
Paladin Nuclear Ltd
Summit Resources Ltd
Summit Resources (Aust) Pty Ltd
Pacific Mines Pty Ltd
Paladin NT Pty Ltd
Fusion Resources Pty Ltd
NGM Resources Pty Ltd
Indo Energy Ltd
Paladin Energy Canada Ltd
Michelin Uranium Ltd
Paladin Canada Investment (NL) Ltd
Paladin Canada Holdings (NL) Ltd
Aurora Energy Ltd
Australia
Australia
Australia
Malawi
Switzerland
Netherlands
Netherlands
Mauritius
Namibia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Canada
Canada
Canada
Canada
Canada
PERCENTAGE INTEREST HELD
2011
%
2010
%
100
100
100
85
100
100
100
100
100
100
100
100
100
82
82
82
100
100
100
100
100
100
100
100
100
100
100
100
85
100
100
-
100
100
100
100
100
100
82
82
82
100
100
-
-
-
-
-
-
-
All investments comprise ordinary shares and all shares held are unquoted, with the exception of Summit’s
shares which are quoted on the ASX and Paladin Netherlands Co-Op Holdings which issues membership
equity.
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direCtors
,
deClaration
In accordance with a resolution of the Directors of Paladin Energy Ltd, I state that:
In the opinion of the Directors:
(a) the financial statements and notes of the Company are in accordance with the Corporations Act 2001, including:
(i)
giving a true and fair view of the Company’s financial position as at 30 June 2011 and of its performance for the
year ended on that date; and
(ii) complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the
Corporations Regulations 2001;
(b) the financial statements and notes also comply with International Financial Reporting Standards as disclosed in note
2(a);
(c) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due
and payable; and
(d) this declaration has been made after receiving the declarations required to be made to the Directors in accordance
with section 295A of the Corporations Act 2001 for the financial year ending 30 June 2011.
On behalf of the Board
Mr John Borshoff
Managing Director/CEO
Perth, Western Australia
31 August 2011
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,
s report to the members of paladin energy ltd
independent auditor
Independent auditor’s report to the members of Paladin Energy Ltd
Report on the financial report
We have audited the accompanying financial report of Paladin Energy Ltd, which comprises the consolidated statement
of financial position as at 30 June 2011, the consolidated income statement and statement of comprehensive income, the
consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, notes
comprising a summary of significant accounting policies and other explanatory information, 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 of the financial report that gives a true and fair view in
accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal controls as the
directors determine are necessary to enable the preparation of the financial report that is free from material misstatement,
whether due to fraud or error. In Note 2, the directors also state, in accordance with Accounting Standard AASB 101
Presentation of Financial Statements, that the financial statements comply with International Financial Reporting Standards.
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. Those standards require that we comply with relevant ethical requirements
relating to audit engagements and plan and perform the audit to obtain reasonable assurance about 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 the auditor’s 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, the auditor
considers 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 complied with 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.
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Liability limited by a scheme approved under Professional Standards Legislation
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,
s report to the members of paladin energy ltd
independent auditor
Opinion
In our opinion:
a. the financial report of Paladin Energy Ltd is in accordance with the Corporations Act 2001, including:
i
giving a true and fair view of the consolidated entity’s financial position as at 30 June 2011 and of its performance
for the year ended on that date; and
ii complying with Australian Accounting Standards and the Corporations Regulations 2001; and
b. the financial report also complies with International Financial Reporting Standards as disclosed in Note 2.
Report on the Remuneration Report
We have audited the Remuneration Report included in pages 71 to 85 of the directors’ report for the year ended 30
June 2011. 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.
Opinion
In our opinion, the Remuneration Report of Paladin Energy Ltd for the year ended 30 June 2011, complies with section
300A of the Corporations Act 2001.
Ernst & Young
G H Meyerowitz
Partner
Perth
31 August 2011
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,
s report to the members of paladin energy ltd
independent auditor
Independent auditor’s report to the members of Paladin Energy Ltd
We have audited the accompanying financial report of Paladin Energy Ltd, prepared for the purposes of complying with
Canadian securities regulatory requirements, which comprises the statement of financial position as at 30 June 2011 and
30 June 2010 and the consolidated income statement and statement of comprehensive income, statement of changes
in equity and cash flow statement for the years ended 30 June 2011 and 30 June 2010, 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 International Accounting Standards (including the Interpretations). 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.
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 International Standards on Auditing. 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 Australian professional accounting bodies.
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.
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Liability limited by a scheme approved under Professional Standards Legislation
Pa l a d i n E n E r g y lT d » a n n u a l r E P o r T 2 011
,
s report to the members of paladin energy ltd
independent auditor
Auditor’s Opinion
In our opinion:
1. the financial report of Paladin Energy Ltd, prepared for the purposes of complying with Canadian securities regulatory
requirements, presents fairly, in all material respects, the financial position of the consolidated entity at 30 June 2011
and 30 June 2010 and of their performance for the years ended 30 June 2011 and 30 June 2010; and
2. the financial report also complies with International Financial Reporting Standards as issued by the International
Accounting Standards Board.
Ernst & Young
Perth
31 August 2011
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,
s report to the members of paladin energy ltd
independent auditor
Paladin Energy Ltd
Comments by auditor for Canadian readers
Reporting standards under Canadian generally accepted auditing standards may differ from those under International
Standards on Auditing in the form and content of the auditor’s report, depending on the circumstances.
Ernst & Young
Perth
31 August 2011
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additional information
Pursuant to the Listing Requirements of ASX as at 16 September 2011:
(a)
Distribution and number of holders
Range
1
1,001
5,001
10,001
100,001
-
-
-
-
-
1,000
5,000
10,000
100,000
maximum
Total Holders
11,910
12,317
3,114
2,307
192
29,840
3,094 shareholders hold less than a marketable parcel of shares.
(b)
Top twenty shareholders
The twenty largest shareholders hold 77.35% of the total shares issued.
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Holder
CDS & Co
HSBC Custody Nominees (Australia) Limited
National Nominees Limited
JP Morgan Nominees Australia Limited
CEDE & Co
Citicorp Nominees Pty Limited
Mr J Borshoff*
JP Morgan Nominees Australia Limited
HSBC Custody Nominees (Australia) Limited – A/C 2
UBS Wealth Management Australia Nominees Pty Ltd
Share Direct Nominees Pty Ltd <26885 Account>
AMP Life Limited
Mr Rick Crabb*
Cogent Nominees Pty Limited
Queensland Investment Corporation
UBS Nominees Pty Ltd
Share Direct Nominees Pty Ltd <10026 A/C>
UBS Nominees Pty Ltd
HSBC Custody Nominees (Australia) Limited – A/C 3
Australian Reward Investment Alliance
No. of Shares
155,339,182
125,593,742
71,247,901
66,001,928
36,463,548
33,761,726
21,877,394
19,198,143
18,666,209
7,766,299
7,370,000
6,045,554
4,881,528
4,591,643
4,525,891
4,011,447
3,573,077
3,093,091
2,842,013
2,638,824
602,189,140
%
19.95
16.13
9.15
8.48
4.68
4.34
2.81
2.81
2.40
1.00
0.95
0.78
0.63
0.59
0.58
0.52
0.46
0.40
0.37
0.34
77.35
*
Aggregates all associated holdings
Substantial shareholders as disclosed in substantial shareholder notices given to the Company are as
follows:
Newmont Mining Corporation
52,097,937
6.699%
(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.
Pa l a d i n E n E r g y lT d » a n n u a l r E P o r T 2 011
additional information
Tenements held
URANIUM PROJECTS
NAMIBIA – AFRICA
Project
Tenements
Interest %
JV Partner/s
Operator
Note
Langer Heinrich
Gawib
1 MLI
1 EPL
NIGER – AFRICA
Tagait 4
Terzemazour 1
Toulouk 1
1 EPL
1 EPL
1 EPL
MALAWI – AFRICA
Kayelekera
Chilumba
Chilongo
Mpata
Mapambo
Chitsu
1 MLI
1 EPL
1 EPL
1 EPL
1 EPL
1 EPL
(A)
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
LABRADOR/NEWFOUNDLAND – CANADA
Central Mineral Belt
33 MLC
100.00%
-
-
-
-
-
-
-
-
-
-
-
-
QUEENSLAND
Isa North
Valhalla North
5 EPMs
3 MDLs
2 EPMs
NORTHERN TERRITORY
Angela and Pamela
Bigrlyi
Walbiri
Malawiri
Minerva
Beatrice South
Mount Gilruth
1 EL
1 EL
10 ERLs
20 MCs
2 MLs
1 ERL
1 ERL
12 ERLs
1 EL
1 EL
WESTERN AUSTRALIA
Manyingee
Spinifex Well
Oobagooma
3 MLs
1 EL
4 ELs
SOUTH AUSTRALIA
Petermorra
Mt Yerila
1 EL
1 EL
(A)
(A)
(A)
(A)
(A)
(A)
(A)
(A)
(A)
(A)
Pa l a d i n E n E r g y lT d » a n n u a l r E P o r T 2 011
82.05%
82.05%
100.00%
(see Note 3)
(see Note 3)
-
50.00% Cameco Australia Pty Ltd
50.00% Cameco Australia Pty Ltd
41.71% ) Energy Metals Limited
41.71% ) Southern Cross Exploration NL
41.71% )
58.13% Energy Metals Limited
47.96% Energy Metals Limited
100.00%
33.33% Afmeco Mining and Exploration Pty Ltd
33.33% Afmeco Mining and Exploration Pty Ltd
100.00%
100.00%
100.00%
-
-
-
20.00%
15.00%
Quasar Resources Pty Ltd
Quasar Resources Pty Ltd
J E Risinger
LHU
LHU
IEL
IEL
IEL
PAL
PAL
PAL
PAL
PAL
PAL
AUR
SRA
SRA
FSN
Cameco
Cameco
EME
EME
EME
EME
EME
NTU
Afmeco
Afmeco
PEM
PEM
PEM
Quasar
Quasar
1
1
1
1
1
1
2,3
2,3
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additional information
Tenements held (continued)
NON-URANIUM PROJECTS
QUEENSLAND
Project
Tenements
Interest %
JV Partner/s
Operator
Note
Western Isa Joint Venture (See Note 4)
(Summit Resources (Aust) Pty Ltd, Pacific Mines Pty Ltd)
Isa South
May Downs
Mount Kelly
Constance Range
SOUTH AUSTRALIA
(A)
4 EPMs
4 EPMs
1 EPM
3 EPMs
1 EPM
5 EPMs
20.00%
20.00%
18.00%
20.00%
20.00%
20.00%
MM Mining (Qld) Limited
MM Mining (Qld) Limited
MM Mining (Qld) Limited
Centaurus Metals Limited
MM Mining (Qld) Limited
MM Mining (Qld) Limited
MM Mining (Qld) Limited
Reaphook JV
1 EL
7.50%
Perilya Limited
Signature Resources NL
4
4
4
4
4
4
MMM
MMM
MMM
MMM
MMM
MMM
Perilya
n
o
i
T
a
m
r
o
F
n
i
l
a
n
o
i
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Pa l a d i n E n E r g y lT d » a n n u a l r E P o r T 2 011
additional information
Tenements held (continued)
Operators
EME
FSN
LHU
MIU
MMM
NTU
PAC
PAL
PEM
SRA
AUR
IEL
Notes
Energy Metals Limited
Fusion Resources Pty Ltd
Langer Heinrich Uranium (Pty) Limited
Mount Isa Uranium Pty Ltd
MM Mining (Qld) Limited
Northern Territory Uranium Pty Ltd
Pacific Mines Pty Ltd
Paladin (Africa) Ltd
Paladin Energy Minerals NL
Summit Resources (Aust) Pty Ltd
Aurora Energy Ltd
Indo Energy Ltd
Paladin Equity
(direct and indirect)
Note
0%
100%
100%
100%
0%
100%
100%
100%
100%
82.05%
100%
100%
1
2
1. Paladin holds 85% equity in Paladin (Africa) Limited (“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 82.08% equity holding in Summit Resources Limited
which in turn holds 100% equity interest in Summit Resources (Aust) Pty Ltd (“SRA”) and Pacific Mines Pty Ltd.
3. The Vallhalla and Skal uranium deposits lie within the Isa North tenement block within defined blocks of land (17 km²
and 10 km² respectively) subject to the Isa Uranium Joint Venture between SRA (50% and Operator) and Mount Isa
Uranium Pty Ltd (50%).
4. The Western Isa Joint Venture tenements are held by SRA/Pacific Mines Pty Ltd. MM Mining (Qld) Limited earned
80% equity in the Western Isa Joint Venture tenements through expenditure of A$8M within three years of
commencement (10 December 2007). Transfer documents have been lodged with the Department of Employment,
Economic Development and Innovation, which assigns 80% of SRA’s interest to MMM.
Tenement Types
EL
Exploration Licence (Australia)
EPL
Exclusive Prospecting Licence (Africa)
EPM Exploration Permit for Minerals (Australia)
ERL
Exploration Retention Licence (Australia)
MC Mineral Claim (Australia)
ML
Mining Lease (Australia)
MLI Mining Licence (Africa)
MLC Mineral Licence (Newfoundland/Labrador)
(A)
Pending Application
Pa l a d i n E n E r g y lT d » a n n u a l r E P o r T 2 011
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list of abbreviations
A$
bcm
BFS
Australian dollars
bank cubic metres
Bankable Feasibility Study
CCD
Counter Current Decantation
DFS
Definitive Feasibility Study
DIFR
disabling incident frequency rate
ft
g
feet
gram
M
Mlb
m
Ma
MIK
mm
MMI
mSv
million
million pounds
metres
million years
Multiple Indicator Kriging
millimetres
Mobile Metal Ion
millisiverts
g/m3
grams per cubic metre
Mtpa
million tonnes per annum
s
n
o
i
T
a
i
V
E
r
B
B
a
F
o
T
s
i
l
g/t
hr
ISO
ISR
grams per tonne
hours
International Organisation for Standardisation
in situ recovery
JORC
Joint Ore Reserves Committee
K
kg
kg/t
km
KM
km²
kW
lb
thousand
kilogram
kilogram per tonne
kilometres
Kayelekera Mine
square kilometres
kilowatts
pounds
LHM
Langer Heinrich Mine
LHUPL
Langer Heinrich Uranium (Pty) Ltd
LTI
lost time injury
170
LTIFR
lost time injury frequency rate
NOSA
National Occupational Safety Association
NPV
net present value
pa
PAL
ppb
per annum
Paladin (Africa) Limited
parts per billion
ppm
parts per million
QC
RC
RIP
t
quality control
reverse circulation
resin-in-pulp
tonnes
t/m3
tonnes per cubic metre
tpa
tph
U
U3O8
US$
w:o
tonnes per annum
tonnes per hour
uranium
Uranium Oxide
US dollars
waste to ore ratio
Pa l a d i n E n E r g y lT d » a n n u a l r E P o r T 2 011
shareholder reporting timetable
Important Dates
28 October 2011
September Quarterly Activities Report (ASX)
14 November 2011
September Quarterly Financial Statements including MD&A (TSX)
15 November 2011
Conference Call and Investor Update
24 November 2011
Annual General Meeting to be held in Perth, Western Australia
31 January 2012
December Quarterly Activities Report (ASX)
14 February 2012
Half Yearly Financial Statements incorporating December Quarter and MD&A
(Appendix 4D – ASX)
16 February 2012
Conference Call and Investor Update (proposed date)
30 April 2012
15 May 2012
17 May 2012
31 July 2012
31 August 2012
March Quarterly Activities Report (ASX)
March Quarterly Financial Statements including MD&A (TSX)
Conference Call and Investor Update (proposed date)
June Quarterly Activities Report (ASX)
Audited Annual Financial Statements for the year ended 30 June 2011 including MD&A
(ASX/TSX) & (Appendix 4E – ASX)
4 September 2012
Conference Call and Investor Update (proposed date)
28 September 2012
Annual Information Form (TSX)
31 October 2012
September Quarterly Activities Report (ASX)
14 November 2012
September Quarterly Financial Statements including MD&A (TSX)
15 November 2012
Conference Call and Investor Update (proposed date)
22 November 2012
Annual General Meeting to be held in Perth, Western Australia
PLEASE NOTE THE ABOVE LODGEMENT DATES ARE DEADLINES AND
REPORTS MAY BE RELEASED EARLY
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Pa l a d i n E n E r g y lT d » a n n u a l r E P o r T 2 011
Investor Relations
Australia – Corporate Office
Ms Gillian Swaby
Level 4, 502 Hay Street
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
Toronto, Ontario, Canada
Telephone: (+1) 905 337 7673
Mobile: (+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
Corporate direCtory
Directors
Non-executive Chairman
Mr Rick Crabb
Managing Director/CEO
Mr John Borshoff
Non-executive Directors
Mr Sean Llewelyn
Mr Donald Shumka
Mr Peter Donkin
Mr Philip Baily
Registered Office
Level 4, 502 Hay Street
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
y
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P
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c
Paladin Energy Ltd is a company limited by shares,
incorporated and domiciled in Australia. Its registered office
and principal place of business is:
172
Paladin Energy Ltd
Level 4, 502 Hay Street
SUBIACO WA 6008
Through the use of the internet, we have ensured that
our corporate reporting is timely, complete, and available
globally at minimum cost to the Company. All press
releases, financial statements and other information are
available on our website
www.paladinenergy.com.au.
Pa l a d i n E n E r g y lT d » a n n u a l r E P o r T 2 011
friEnds & EmPloyEEs of
Paladin for afriCan ChildrEn
The friends & employees of paladin for african
children (fepac) charity was established in october
2008. The aim of fepac is to raise money to
support projects in africa, particularly malawi and
namibia, that assist children with their everyday
educational needs.
fepac holds an annual Quiz night and corporate
golf day which have proved to be extremely
popular and fepac would like to thank all the
supporters of these events. as well as this, sales of
chocolate in the perth and mount Isa offices, raffles
and christmas and easter hampers raise much
needed funds.
To date we fund six projects in malawi; mkakatavu
child care, mkakatavu vocational Training, nyungwe
blind hostel, Karonga school for the deaf, ngaramu
child care and ngaramu vocational Training.
If you would like more information on fepac please
go to page 52 of this report, alternatively please visit
the fepac pages at www.paladinenergy.com.au or
email joanne.mcdonald@paladinenergy.com.au.
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follow paladin at
www.paladinenergy.com.au
90
Pa l a d i n E n E r g y lT d » a n n u a l r E P o r T 2 011