Operational
proficiency
achieved
Annual Report 2013
Paladin Energy Ltd
44 Sustainable Development
46 Environment
48 Corporate Social Responsibility
55 Our People
63 Remuneration Report
58 Directors' Report
72 Financial Report
73 Consolidated Income Statement
74 Consolidated Statement of Comprehensive Income
75 Consolidated Statement of Financial Position
76 Consolidated Statement of Changes in Equity
78 Consolidated Statement of Cash Flows
79 Notes to the Consolidated Financial Statements
136 Directors’ Declaration
137 Independent Audit Report
140 Additional Information
144 Corporate Directory
01 About Paladin
05 Chairman’s Letter
06 Insights from the Managing Director/CEO
08 Nuclear Power – Getting Back On Track
10
Management Discussion and Analysis
11 Review of Operations
25 Health & Safety
28 Financial Review
36 Coporate Governance Statement
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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.
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.
operate at global best practice with particular emphasis on
safety and the environment.
Respond to the attitudes and expectations of the
communities in which it operates as part of its corporate
social responsibility obligations.
Reward employee performance and provide a fulfilling work
environment.
Act with integrity, honesty and cultural sensitivity in all of
its dealings.
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:
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
Paladin Energy Ltd
Level 4
502 Hay Street
SUBIACO WA 6008
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Paladin EnErgy lTd AnnuAl report 2013
Paladin today
ovERviEw
Paladin’s value is based on four key drivers - producing mines, quality pipeline, proven team and industry positioning.
oPERAtions
Strong production growth delivered, all underpinned by early life cycle mines.
Development and building of producing assets successfully completed.
Mines operating at nameplate capacity.
innovAtion & PRojECt PiPELinE
Proven track record in mining and processing innovation.
Established in-house technical strength.
Consolidating a unique, geographically diversified asset base.
Positioning going FoRwARd
Only non-aligned pure play uranium producer.
Long-term business strategy and vision is to gain added strength through establishment of key partnerships.
Maintain Paladin to be a partner of choice.
Focus on optimisation of producing mines. Progress well underway through technical innovation and
cost optimisation.
Project pipeline able to drive organic growth.
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KAyELEKERA MinE, MALAwi
Paladin EnErgy lTd AnnuAl report 2013
what we set out to do in 2013
Achieve steady state production at design levels for both Langer Heinrich and Kayelekera mines.
Optimise production costs at Langer Heinrich and Kayelekera.
Complete Stage 4 Langer Heinrich Mine feasibility study. (lower priority due to low uranium prices)
2013 production guidance in the range of 8.0 to 8.5Mlb U3O8.
Resource update for Kayelekera Mine.
Continue to improve NOSA health and safety system rating for Langer Heinrich and Kayelekera mines.
Consolidate sustainability reporting.
Initiate resource upgrade programmes at Michelin and Manyingee Projects.
Increase value in future term supply contracts.
Continue to seek value increase in existing pipeline projects through joint venture and M&A.
Drive organic growth through project pipeline.
Achieved Not achieved Ongoing
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Key Achievements for the year
2012
AUgUst
novEMBER
dECEMBER
Secured Long-term Off-take
Agreement with a US$200M pre-
payment with Electricité de France.
Announced cost reductions/
production optimisation initiatives of
US$60 - US$80M over next 2 years.
Record quarterly combined
production from Langer Heinrich and
Kayelekera of 2.191Mlb U3O8.
Key annual data
REvEnUE
12 %
Sales revenue up 12% from
US$365.8M to US$408.4M
PoUnds U3o8 soLd
23 %
8.25Mlb U3O8 sold, up from
6.70Mlb, a 23% increase
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P A L A d i n E n E R g y Lt d A n n u A l r e p o r t 2 0 1 3
Paladin EnErgy lTd AnnuAl report 2013
what we plan to do in 2014
2014 production guidance in the range of 8.3 to 8.7Mlb U3O8.
Further reduce unit production costs at Langer Heinrich and Kayelekera mines via:
-
-
-
Focused cost management.
Optimisation of existing processes.
Ongoing development and introduction of process innovation.
Key Achievements for the year
Key annual data
Develop resource update for Michelin project.
Improve NOSA health and safety system rating for Langer Heinrich and Kayelekera mines.
Increase value through strategic partnerships.
Commence statutory approvals process to enable a Field Leach Trial at Manyingee.
Strengthen balance sheet through debt reduction.
LAngER hEinRiCh C1 Cost oF PRodUCtion
KAyELEKERA C1 Cost oF PRodUCtion
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34.0
33.0
32.0
31.0
30.0
29.0
28.0
1,600,000
1,400,000
1,200,000
1,000,000
800,000
600,000
400,000
200,000
0
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45.0
40.0
35.0
30.0
Sept 12
Dec 12
Mar 13
Jun 13
Sept 12
Dec 12
Mar 13
Jun 13
Uranium produced - lb
C1 Cost of Production - US$/lb
Uranium produced - lb
C1 Cost of Production - US$/lb
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900,000
800,000
700,000
600,000
500,000
400,000
300,000
200,000
100,000
0
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2013
FEBRUARy
MARCh
jUnE
Bankers’ Completion Tests
satisfied at both mines.
Repaid in full the outstanding
balance of the US$325M March
2013 Convertible Bonds.
Record annual production of
8.255Mlb U3O8, well within stated
guidance of 8.0 - 8.5Mlb.
PRodUCtion
C1 Cost oF PRodUCtion yEAR on yEAR
20 %
Production up 20% from 6.9Mlb
to 8.255Mlb U3O8
9 %
Langer Heinrich Mine
reduced by 9%
24 %
Kayelekera Mine
reduced by 24%
P A 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 0 1 3
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Paladin EnErgy lTd AnnuAl report 2013
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LAngER hEinRiCh MinE, nAMiBiA
Paladin EnErgy lTd AnnuAl report 2013
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Dear Fellow Shareholders
Operationally the past financial year has
been a watershed for Paladin. Both the
Langer Heinrich and Kayelekera mines
delivered record production with the result
that the 8.255Mlb (3,745t) U3O8 annual
production was well within the stated
guidance of between 8.0 and 8.5Mlb.
Our dedicated teams based in Namibia and Malawi, with support from
our Perth based technical services team, worked hard to overcome
the occasional technical issues that arise in complex operations
such as these. Moreover, they achieved these impressive production
results whilst also substantially reducing unit costs of production.
Safety performance at both operations during the financial year
was to a high standard however, sadly, after 489 days with zero
lost time injuries at Kayelekera, a fatality occurred on 30 July 2013
in the tyre fitting workshop. On behalf of the Board, employees
and shareholders, I extend my sympathy to Mr Khwima Phiri’s
family. Following an investigation, additional procedures have been
instituted with a view to preventing such accidents in the future.
It is a frustrating irony for Paladin’s employees and shareholders
that, following some seven years of continuous building, expansion,
upgrade and modification at both operations, this impressive
operational platform should be reached when the spot price for
uranium is at an eight year low. As a consequence, the return to the
Governments of Namibia and Malawi through royalties and taxes
has also diminished. However, although our product marketing
team have worked hard to achieve the best prices possible, the
uranium price is totally beyond Paladin’s control.
As detailed further in this Annual Report, the Board and management
of Paladin feel confident that a strong future exists for the uranium
industry and, for that reason, we continue to support the existing
operations. The Langer Heinrich mine is clearly a world class, long
life, lower quartile cost mine with a bright future.
Unfortunately the Kayelekera mine has a limited resource life and, due
to the nature and location of the orebody, is a higher cost operation.
The Company is continuing to work on strategies to extend the mine
life and reduce costs in the expectation that, in a higher uranium
price environment, the Company can begin to receive a return on its
investment and see higher returns provided to Malawi.
Shareholders will recall that during the financial year, in August
2012, the Company entered into an important long-term off-take
contract with Électricité de France (EdF) for delivery of uranium in
the period 2019 to 2024 incorporating a prepayment of US$200M.
The prepayment was applied largely to repayment of convertible
notes due March 2013.
sale of a minority interest in the Langer Heinrich mine. The sharp
decline in the uranium price during the latter part of this sale process
had the consequence that the Paladin Board decided to terminate
the process after the preferred bidder advised on 1 August 2013
that it wanted to renegotiate the terms, including price, at the final
stage of the process. The Board determined it would not be in the
best interests of shareholders to continue to negotiate and took the
responsible decision that the Company would not sell a part of this
asset at a significant discount to Paladin’s underlying value.
Following that decision, the Board also determined it needed to
move quickly to allay any potential market concerns about its balance
sheet and place the Company in a position of strength, enabling the
Company sufficient time to focus on achieving an optimal outcome in
future negotiations on asset sales to achieve debt reduction.
With the circumstances as they evolved, the Paladin Board took the
prudent approach to make a placement to stabilise its cash position
enabling Paladin to continue to operate through this weak price
environment and providing essential time to complete our strategic
initiatives.
The equity raising was successfully completed in a difficult equity
market and this clearly reflects strong institutional support for both
Paladin and the future of the uranium industry.
The Paladin Board remains committed to asset sales and will
continue to keep the door open for the sale of a minority interest
in Langer Heinrich. However, it was felt important to send a strong
message to potential bidders that Paladin will not be forced to sell
its most valuable asset in this current weak market.
I am pleased that during the year the Company released on its
website its first Sustainability Report under the Global Reporting
Initiative. This is a comprehensive set of information on sustainability
practices and I encourage shareholders to review this report. As I
note in the report, Paladin’s core focus over recent years – particularly
since the events in Japan in March 2011 – has been building on the
foundations of business sustainability under extremely challenging
market conditions.
In addition to the work on reducing production costs, the Company
has moved to reduce costs throughout the organisation such
as significantly deferring exploration and, unfortunately, making
redundant a number of our staff. Regardless, our intention remains
to retain our core capability in studied anticipation of improvement
in the uranium price. On behalf of the Board, I wish to thank all
staff for remaining loyal and dedicated to the Company during these
difficult economic times. I thank John Borshoff also for his tireless
efforts and offer to remain on a reduced salary. I sincerely hope that
the future will offer due reward for all employees, shareholders and
supporting communities.
Yours faithfully
The contract with EdF represented a key component of Paladin’s
strategic initiatives aimed at improving the Company’s balance sheet.
The other component of the strategic initiatives involved a potential
Rick Crabb
BJuris(Hons),LLB,MBA,FAICD
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john BoR shoFF mAnA ging DireC tor /Ceo
Insights from the
Managing Director/
CEO
Dear Shareholder
Those that have been following Paladin
for many years will know that we have
been building the Company with a specific
vision in mind. Even with the unique
challenges of uranium and the short-term
negative reaction from Fukushima the
uranium industry nevertheless offers a
great opportunity to create a company of
global significance in the energy sector with
appropriate rewards for its shareholders.
The construction of two technologically innovative mining operations
in Africa and the concurrent assembly of a geographically
diversified project pipeline to provide the nursery and basis for the
establishment of additional uranium mines (when prices justify)
reflect two of our three major cornerstone principles for achieving
the Paladin vision. The third equally important cornerstone was
building the Company’s human capital, ensuring the right blend of
expertise and experience required to establish and guide a mining
company involved with the intricacies of dealing with uranium. With
these cornerstones in place, Paladin remains well differentiated
from its peers.
Thus, Paladin has moved itself into a prominent position in the global
uranium mining and nuclear fuel supply landscape.
Today, the forward thinking approach that Paladin has taken,
establishing uniqueness both operationally and strategically in the
uranium industry, has given the Company value both tangible and
intangible, through its achievements to date and the platform it has
created for future opportunities.
I have spoken about the benefits that would arise for Paladin from
the technically innovative processes we conceived and deployed
at our mines and the advantages these would confer in terms of
cost minimisation and production optimisation in later years. At
the same time, I have also spoken about the need for a uranium
price increase to incentivise much needed supply growth as well
as the other significant constraints that are limiting new uranium
mine development. As a result, the uranium industry is struggling to
achieve a sustainable level of production to ensure sufficient future
supply. Worryingly for the uranium consumers, nearly all the major
uranium mining companies have effectively and independently
started calling a halt to their respective greenfield expansion
programmes until certain price thresholds are met, starting from a
minimum price for uranium of about US$70/lb.
Last November I advised that we had reached an important
milestone in the development of Paladin. For the first time in nearly
eight years Paladin had moved from being in a predominantly
construction growth phase into one of production. I also advised
that the Company had begun a broad cost reduction/production
optimisation programme that, by its nature could only be attempted
once construction activities were completed and the operations had
reached their design performances and were essentially de-risked.
Our work over the last twelve months to June clearly show the
positive results and trends for both production increases and unit
cost reductions which are a considerable achievement in improving
our operations and corporate performance.
to build Langer
heinrich today,
would take capital
expenditure in
the vicinity of
Us$0.9bn to
Us$1.1bn
It is pleasing to note that the FY13 costs
reductions we forecast in early November
2012 were exceeded at both sites, and
further gains are expected for FY14. At
Langer Heinrich Mine, the C1 cost of
production was reduced by 9% compared
to end FY12. At Kayelekera Mine, the C1
cost of production for FY13 was reduced
by 24% on a similar comparison. Further
improvement is expected from both sites.
Our safety record for FY13 remained at
a high standard over all our operations.
Tragically, post reporting period in late
July, a fatality occurred at the Kayelekera
Mine site in our maintenance workshop
with a freak accident involving the repair
of a light vehicle tyre. Safety remains
our number one priority and our policy
is for zero harm to our workforce and
procedures are being
reviewed and
reinforced to ensure this type of accident
will not occur again.
06
Paladin EnErgy lTd AnnuAl report 2013
The hugely escalating capital costs now required to build uranium
mines combined with the complex stakeholder issues that need to
be resolved to accommodate the demanding regulatory regimes
mean that the experienced operators are best positioned to provide
growth. It will be very difficult in this extreme environment for the next
generation of junior companies to contribute substantially and build
projects that would cost from US$300M - US$400M and upwards
to well over US$1bn for conventional mining operations along with
all the attendant risks that need to be negotiated. For instance, to
build Langer Heinrich today, would take a capital expenditure in the
vicinity of US$0.9bn to US$1.1bn.
As an experienced leader and innovator in this complex environment,
Paladin is in a prime position to benefit its shareholders.
Our efforts to unlock value from our existing 100% owned assets
continue with the focus on selling a minority interest in our Langer
Heinrich Project. This is necessary to strengthen our balance
sheet by reducing overall debt. As we have previously disclosed,
negotiations with one party were at an advanced stage when the
uranium price downtown provoked the other party to choose to
renegotiate the price and other terms. To preserve shareholder
value, Paladin had no choice other than to terminate the discussions
and defer efforts to sell the minority interest in this world class asset
until the market environment improves.
A minority interest in Langer Heinrich offers the only opportunity in
the world for a party to acquire at a valuable equity-level participation
in an operating uranium mining project, which has significant upside
potential and a long mine life with immeasurable strategic value. The
Company is confident that it will achieve its objective of receiving fair
value, having shown its resolve that it will not discount the significant
scarcity value that the project has earned and that will be the driving
factor in price determination.
Mr John Borshoff
B.Sc., F.AusIMM, FAICD
Managing Director/Chief Executive Officer
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Since Paladin built Kayelekera in 2011, no greenfield uranium
mine developments have been undertaken. In fact, if anything, the
industry has regressed. The Trekkopje project in Namibia has been
terminated by the French and the Imouraren project in Niger has been
delayed. BHP has indefinitely deferred their Olympic Dam expansion
in Australia and abandoned their multi mine uranium strategy
altogether having sold the Yeelirrie project in Western Australia.
Apart from the new Chinese-owned Husab project in Namibia
currently in its early construction phase, and the long-delayed Cigar
Lake project in Canada, nothing of any significance is happening
elsewhere in terms of net new uranium mine development. On the
contrary, several major producers are experiencing production
constraints which will limit their ability to maintain output at current
levels over the next six or so years. In other words, the uranium
industry is seeing stagnating performance and is basically running
out of time to achieve necessary supply growth targets. No one
with economic sense is prepared to invest more capital to grow
greenfield production at anywhere near current uranium prices. In a
very real way, this is placing Paladin in an excellent position to take
advantage when prices inevitably do increase to correct the severe
imbalance that currently exists.
Consider the irony. The nuclear power industry post-Fukushima is
normalising and returning to growth. This is evident when one looks
at what is happening in existing and emerging nuclear economies.
In China, India, the UAE, along with Russia, South Korea and the
UK, nuclear power programmes have been re-affirmed. There are
now 68 nuclear reactors under construction in 13 countries.
However, the supply outlook for uranium post-Fukushima presents
a stark contrast. Although demand has overcome post-Fukushima
uncertainty, supply has gone into a tailspin with the projected supply
gap ever widening. Despite the building demand fundamentals,
uranium producers are exhibiting a perfectly rational unwillingness
to grow capacity under current conditions. I believe the supply
shortage is now unavoidable and will be undeniably apparent sooner
rather than later. The consumers – the world’s nuclear utilities – are
hoping against hope that somehow the mining industry will commit
economic suicide and add new production at a time when returns
offered by current prices are negative. This will not happen.
The problem of supply growth is not only limited by today’s uranium
price. Timely supply will become even more difficult to achieve as
other crucial drivers have their full negative impact such as a lack
of confidence in achieving an elevated and sustainable pricing
structure and a lack of conviction in the financial markets.
Although the key issue is the poor pricing outlook, which provides
no solid incentive to start new production, additional constraints
beyond finance are also retarding supply growth. This ranges from
the technical, political and regulatory to the poorer quality of available
exploitable ore bodies. All of these challenges will significantly
decrease the ability of the industry to advance the development of
much needed new mines in an orderly and timely manner. I would
say that the situation has arrived where it is almost impossible for
the mining industry to meet the projected demand over at least the
next decade and a half.
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Paladin EnErgy lTd AnnuAl report 2013
dUstin gARR ow exeCutiVe gener Al mAnA ger - mArketing
Nuclear power –
Getting back on track
More than two years after the Great East
Japan Earthquake and resultant tsunami
struck the Tohuku region, causing massive
loss of life and widespread physical
destruction including the Fukushima Dai-ichi
nuclear power plants operated by Tokyo
Electric Power Company, the world’s nuclear
power programmes are now facing the
future with renewed confidence.
Globally, there are 435 operable nuclear power plants (a number
that includes 48 plants in Japan that are still off-line pending re-start
approvals by Japan’s Nuclear Regulation Authority) that produced
approximately 11% of the world’s electricity in 2012. Sixty-eight
new nuclear power reactors, located in 12 countries, are now
under construction, with a total of 162 reactors in the “planned”
category, both numbers of which are higher than immediately prior
to the Fukushima event. Therefore, subsequent to the necessary
reappraisal of nuclear power in light of the Fukushima experience,
the demand outlook for nuclear fuel and its basic component, natural
uranium concentrates, has never been brighter. Now, however the
principal focus must return to future uranium supply.
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nUMBER oF REACtoRs
350
325
300
275
250
225
200
175
150
125
100
75
50
25
0
>
>
>
Under Construction
Planned
Proposed
Jan-10
Mar-11
Jun-13
> Fukushima
Source: World Nuclear Association
nUCLEAR PowER woRLdwidE
Reactors / (Capacity)
435 (371.9GWe)
68 (71.2GWe)
162 (183.0GWe)
316 (358.7GWe)
Current Nuclear
Capacity
Under
Construction
Planned
Proposed
Countries
China
Russia
India
South Korea
Japan
United States
30
17 (14.0GWe)
33 (24.2GWe)
20 (4.4GWe)
23 (20.8GWe)
50 (44.4GWe)
13
28 (30.6GWe)
10 (9.2GWe)
7 (5.3GWe)
4 (5.4GWe)
3 (3.0GWe)
103 (101.6GWe)
3 (3.6GWe)
28
49 (56.0GWe)
24 (24.2GWe)
18 (15.1GWe)
6 (8.7GWe)
9 (13.0GWe)
9 (10.9GWe)
37
120 (123.0GWe)
20 (20.0GWe)
39 (45.0GWe)
-
3 (4.1GWe)
15 (24.0GWe)
Source: World Nuclear Association
Learn about the nuclear industry:
www.paladinenergy.com.au
08
Paladin EnErgy lTd AnnuAl report 2013
globally,
there are 435
operable nuclear
power plants
that produced
approximately
11% of the world’s
electricity in 2012
Market and supply issues
The uranium market has experienced contradictory conditions over
the past year in which reasserted medium and long-term demand
growth has been temporarily masked by short-term excess supply
and, as a result, unsustainably weak prices.
World uranium production has continued to rise in response to
higher prices prevailing prior to Fukushima reaching 68,805mt U3O8
(151.7Mlb) in 2012, up 9% on 2011 production. However, this is still
below estimated reactor demand of 172Mlb U3O8 in 2012. Most of
the production increase is attributable to Namibia and Kazakhstan,
neither of which will sustain these growth rates in the longer term.
Short-term price weakness became evident in mid-2012 and
erosion of both spot and mid-term pricing continued throughout the
year, with the spot uranium price falling to US$39.50/pound U3O8 by
the end of FY2013.
woRLd URAniUM PRodUCtion & sPot PRiCEs
FRoM 2005-2012
inevitably,
persistent
The
price weakening
represents a serious threat to the future
viability of not only the worldwide uranium
production sector but,
for
nuclear fuel consumers and the stability
of the market. Historically the industry
has relied upon a significant quantity
from “secondary
of uranium flowing
sources” to make up total supply i.e.
government stockpile disposals, enricher
sales, and, for the last twenty years, the
Russia-United States Highly Enriched
Uranium
(HEU) programme, which
provided the annual equivalent of 24Mlb
U3O8 to the market in competition with
primary uranium production (but with
a heavily subsidised cost base). The
HEU arrangement terminates at the end
of CY2013, thus requiring the uranium
production industry to fill not only that
supply gap but also provide for new
reactor demand growth by establishing
up to 90Mlb U3O8 of new production
annually by 2020 – a herculean challenge.
$
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U
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160
140
120
100
80
60
40
20
0
80,000
70,000
60,000
50,000
40,000
30,000
20,000
10,000
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UxC Spot price US$/lb
World Production (tonnes U3O8)
Kazakhstan Production (tonnes U3O8)
Namibia Production (tonnes U3O8)
Source: World Nuclear Association and Ux Consulting
sUPPLy gRowth UnCERtAinty
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Internal analytical work done by Paladin (which is supported by
several independent analysts) demonstrates that, at current prices,
there is very little possibility that the uranium industry will meet
2020 demand requirements. In fact, in the absence of a major re-
setting of prices back to sustainable pre-Fukushima levels of at least
US$70/lb U3O8, there is an imminent uranium supply shortfall which
will only be exacerbated by the slow development lead times and
rising cost pressures affecting mining projects worldwide. These
very real impediments to bringing new production to the market are
not adequately understood by some elements of the consumer side
of the nuclear industry.
It is likely that the fundamental supply and demand imbalances will
begin to assert themselves in the market over the near-to-mid-term,
leading to higher prices and an improved investment outlook for
uranium producers.
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200
150
100
50
0
Kazakhstan
growth after
2004
8
96% Paladin
Required primary
production to satisfy
demand
Supply gap
widening
???
0
9
Estimated production from
mines existing as of 2004
Estimated production from
mines existing as of 2012
?
2003
2004
2005
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
view our latest webcast:
www.paladinenergy.com.au
140
120
100
80
60
40
20
b
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/
$
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Paladin EnErgy lTd AnnuAl report 2013
dARRyL BUtCh ER exeCutiVe gener Al mAnAger - projeC t DeVelopment
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.
Management
Discussion and
Analysis
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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 2013. The effective date of
this report is 29 August 2013.
The Financial Report has been prepared in accordance with
Australian Accounting Standards, International Financial Reporting
Standards (IFRS) as issued by the International Accounting
Standards Board, 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 2013 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.
10
Paladin EnErgy lTd AnnuAl report 2013
review of operations
CANADA
AUSTRALIA
Michelin
Advanced Exploration
Postville
LA B RA D OR
Happy Valley - Goose Bay
Quebec
Oobagooma
Exploration
Manyingee
Resource Definition
NE WFOU NDLAND
0
300
Kilometres
St. John’s
Perth
0
1000
Kilometres
Bigrlyi
Advanced Exploration
Darwin
N T
Alice Springs
Mount Isa Projects
Pre Development
Angela / Pamela
Advanced Exploration
W A
QL D
S A
Brisbane
Adelaide
N S W
Sydney
V IC
Melbourne
Paladin 100%
Paladin 41.71%
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
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NIGER
NAMIBIA
MALAWI
Angola
Zambia
Tanzania
Langer Heinrich
Operating Mine plus Expansion
Karonga
Zambia
Mzuzu
Kayelekera
Operating Mine
plus Expansion
Swakopmund
Walvis Bay
Windhoek
Botswana
N AMI BIA
Lake
Malawi
M ALAWI
Lilongwe
Mozambique
Algeria
Libya
Takardeit
Exploration
Arlit
Agadez
NIGE R
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 19.50% 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 177,265t U3O8 (390.1Mlb) at 0.07% U3O8 in the Indicated and Measured categories (including ROM
stockpiles) and 81,773t of U3O8 (180.3Mlb) at 0.06% U3O8 in the Inferred Resource category. A summary of the status of each of the advanced projects
is detailed in the following table. This table does not include additional JORC(2004) and NI 43-101 compliant Mineral Resources from Bikini, Andersons,
Mirrioola, Watta and Warwai deriving from Paladin’s 82.08% ownership of Summit Resources Ltd, as well as the Duke Batman and Honey Pot deposits.
11
Paladin EnErgy lTd AnnuAl report 2013
URAniUM PRodUCtion
Project
Overview
Mining Method/
Deposit Type
Outlook
Resources
*Langer Heinrich Mine - 100%
(Namibia, Southern Africa)
The Company’s cornerstone asset
commenced production in 2007.
The Stage 3 expansion is complete
with production at 5.2Mlb per annum
(pa). Studies are underway for a further
expansion to 8.5Mlb pa.
Conventional
open pit; calcrete
Project life in
excess of 20
years
M&I (inc
stockpiles):
Inferred:
*Kayelekera Mine – 100%
(Malawi, Southern Africa)
Paladin’s second uranium mine is
operating at near nameplate of 3.3Mlb
pa.
Conventional
open pit;
sandstone
Delineate
additional
resources
for mine life
extension
M&I (inc
stockpiles):
Inferred:
URAniUM dEvELoPMEnt
Project
Overview
Mining Method/
Deposit Type
Outlook
Resources
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*Aurora Project – 100%
(Labrador, Canada)
Paladin’s first entry into Canada.
Resource definition and additional
exploration commenced in the second
half of calendar year 2012 and is
ongoing.
**Manyingee Project – 100%
(Western Pilbara,
Western Australia)
Resource definition and extension drilling
commenced in July 2012 and is ongoing.
Oobagooma Project – 100%
(West Kimberley,
Western Australia)
*Valhalla, Skal & Odin
Deposits – 91.04%
(Queensland, Australia)
A key pipeline asset for Paladin.
Paladin’s primary Australian asset. Efforts
are ongoing to develop a flow sheet
and expand the resource before moving
towards a Feasibility Study.
*Bigrlyi Deposit – 41.71%
(Northern Territory, Australia)
Limited work within the JV tenements.
Co-operative arrangement to assess
nearby regional targets.
*Angela Deposit – 100%
Planning is underway for resource
extension and development
(Northern Territory, Australia)
drilling.
Open pit -
underground;
metasomatic
In-situ leach;
sandstone
In-situ leach;
sandstone
Open pit -
underground;
metasomatic
Open pit -
underground;
sandstone
Open pit -
underground;
sandstone
Resource
definition and
extension
drilling has
commenced
M&I:
Inferred:
3 year staged
feasibility study
required
M&I:
Inferred:
3 year reserve/
resource drilling
required
Exploration
target:
M&I:
Inferred:
M&I:
Inferred:
Development
dependent
on market
conditions
Future direction
of project will
be determined
by market
conditions
Future direction
of project will
be determined
by market
conditions
124.1Mt @ 0.052%
(142.2Mlb U3O8)
17.8Mt @ 0.06%
(22.8Mlb U3O8)
15.8Mt @ 0.076%
(26.6Mlb U3O8)
5.4Mt @ 0.06%
(7.4Mlb U3O8)
40.2Mt @ 0.09%
(83.8Mlb U3O8)
29.1Mt @ 0.08%
(53.0Mlb U3O8)
7.9Mt @ 0.102%
(17.8Mlb U3O8)
5.5Mt @ 0.05%
(6.2Mlb U3O8)
8.0Mt @ 0.12%-
0.14% (U3O8)
57.2Mt @ 0.07%
(93.7Mlb U3O8)
16.3Mt @ 0.06%
(22.0Mlb U3O8)
4.7Mt @ 0.14%
(14.1Mlb U3O8)
2.8Mt @ 0.11%
(7.1Mlb U3O8)
Inferred:
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.
*Conforms to JORC(2004) guidelines & is NI 43-101 Compliant.
**Conforms to JORC(1999) guidelines.
(a) For Kayelekera, the Government of Malawi holds a 15% equity interest in the subsidiary, Paladin (Africa) Limited, the holder of the Kayelekera Mining Licence.
(b) For Valhalla, Skal & Odin, 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.
Langer Heinrich and Kayelekera Mineral Resources have been depleted for mining to the end of June 2013.
M&I = Measured and Indicated.
12
Paladin EnErgy lTd AnnuAl report 2013
MARK ChALMERs exeCutiV e gener Al mAnAger - proD uC tion
namibia
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 and conventional alkaline leach plant in
early 2007 with annual production of 2.7Mlb of U3O8 achieved in
2008/2009. Soon afterwards, a Stage 2 expansion was undertaken
to increase production to 3.7Mlb pa U3O8 followed by construction
and commissioning of the Stage 3 expansion, completed in FY2012.
The mine has produced consistently at a rate of 5.2Mlb pa U3O8 for
the past 12 months.
Langer Heinrich is a surficial, calcrete type uranium deposit
containing a Mineral Resource of 77,980t U3O8 at a grade of 0.054%
U3O8 (250ppm U3O8 cut-off grade) in seven mineralised zones
designated Detail 1 to 7 (see figure below), along the length of
the Langer Heinrich valley 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.
oPERAtions
This year marked the first year of production without major
construction occurring simultaneously with production. Production
for the year totalled 5.292Mlb (2,401t) U3O8, up 20% from the
previous year’s total of 4.417Mlb (2,004t) U3O8. With various stages
of expansion, the mine has now sustained production increases of
approximately 20% year on year for the past four consecutive years.
As FY2013 was the first steady state operating year, there was a
substantial focus on final commissioning and optimisation. This focus
was not only on the newer Stage 3 configuration, but also on the older
Stage 1 and 2 equipment. The results thus far have been impressive,
providing significant gains in efficiency and reduction in costs of
operation. These gains have placed the operation in a very strong
position going forward and further improvements are anticipated.
During the year, the mine ramped-up to meet Stage 3 ore feed
requirements with the mining of 7,610,806t of ore at an average
grade of 568ppm U3O8, an increase of 16% over the previous year.
The total mined tonnages (ore and waste) were 27,751,086t at an
average stripping ratio of 2.65:1.
Ore feed into the plant totalled 3,439,902t, an increase of 30% over
the previous year, at an average grade of 812ppm U3O8. This was
11% lower than the feed grade of 909ppm U3O8 the previous year.
Recovery also improved substantially to 86.0%, up from 83.2%. All
of these positive production metrics reflect the benefit of the Stage
3 equipment and the additional efficiencies obtained largely due to
steady state operations and a sharp focus on optimisation initiatives.
Production for
the year totalled
5.292Mlb U3o8,
up 20% from the
previous year’s
total of 4.417Mlb
U3o8
initiative
the Company
In November 2012,
to materially
announced an
reduce the operating and unit costs
at LHM. In this announcement, a 7.5%
reduction on costs was forecast and, in
the June quarterly report, the Company
was pleased to announce that the C1
cost of production for FY2013 had been
reduced by 9% compared to June 2012,
with further cost reductions expected in
FY2014.
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24000E
28000E
32000E
36000E
40000E
D7
D2
D1
D5
D3
D6
D4
Current
Reserve Base
N
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0
0
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8
-
N
0
0
0
2
9
-
To Gawib Flats
& Swakopmund
EPL 3500
Legend
Old airstrip
ML 140
Plant
Surficial Cover
D7
Detail Grid Area
Ore Reserves >250ppm U3O8
Mineral Resource >250ppm U3O8
Crystalline rock
Area of 2010 Resource Drilling
Area of 2009 Infill Drilling
Airstrip
Camp
River
N
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Kilometres
2
To Tikos Flats
& Main Road
13
Paladin EnErgy lTd AnnuAl report 2013
The Stage 4 expansion study continued to advance with a re-
focussed mandate, as the efficiencies and capacities of the various
Stage 3 units of equipment in the plant were realised and became
better quantified. This has presented a unique opportunity to
improve on and optimise various aspects of the Stage 4 study and
resultant expected future outcomes and underlines the feasibility of
increasing production up to 8.7Mlb U3O8 pa at a time when higher
uranium prices justify expansion. During the interim, various piloting
and testing programmes will continue in order to consider the
available options and enhancements in preparation for this future
expansion. The goal of this work is higher production, with reduced
unit costs and improved process efficiencies, while reducing feed
grade into the plant to the reserve average of 520ppm U3O8. The
work undertaken will ensure that the project will be in an excellent
position to respond at short notice for expansion when the price
incentive is considered to be sufficient. Mineral Resources and Ore
Reserves conforming to both the JORC(2004) code and NI 43-101
are detailed below.
MinERAL REsoURCE EstiMAtE (dEPLEtEd FoR Mining At
End oF jUnE 2013) FoR dEtAiLs 1 to 7
250ppm Cut-off
Measured Resources
Indicated Resources
Measured + Indicated
Stockpiles
Inferred Resources
Mt
25.3
70.1
95.5
28.6
17.8
Grade
% U3O8
0.055
0.055
0.055
t U3O8
Mlb
U3O8
13,851
30.54
38,729
85.38
52,580
115.92
0.042
11,932
26.31
0.06
10,335
22.9
(Figures may not add due to rounding and are quoted inclusive of any Ore Reserves, and
have been depleted for mining to the end of June 2013)
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
Proved Ore Reserve
Probable Ore Reserve
Stockpiles
Mt
20.0
59.4
28.6
Total Ore Reserve
108.1
Grade
% U3O8
0.055
0.057
0.042
0.052
t U3O8
11,093
33,616
11,932
Mlb
U3O8
24.46
74.11
26.31
56,642
124.87
Ore Reserve has been depleted for mining to the end of June 2013
The Ore Reserve was estimated from the original un-depleted
Measured and Indicated Mineral Resource of 139.3Mt at a grade of
0.055% U3O8. The Mineral Resource estimate was completed using
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.
These reserves form the basis of the continuing life of mine plan for
the Project. The revised mine plan allows a project life in excess of
20 years, based on a processing feed rate of 3.45Mt/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.
An application has been made to the Ministry of Mines and
Energy to convert the EPL to a mining lease. The Environmental
Impact Assessment to accompany the mining lease application
was completed as part of the Stage 4 assessment and has been
submitted to the Ministry of Environment and Tourism.
LAngER hEinRiCh PRoCEss FLow diAgRAM
Alkaline Leach
(heat)
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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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LAngER hEinRiCh MinE
stAgE 2 And 3 ExPAnsion
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malawi
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
lenses within
mudstones. Uranium mineralisation occurs as
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 5,520 hectares was granted
in April 2007 for a period of 15 years, following the completion of
the Development Agreement with the Government of Malawi. A
Bankable Feasibility Study and EIA followed and construction
started in June 2007 with completion in early 2009.
After a number of early commissioning challenges, targeted
upgrades and modifications the operations made a step change
improvement in production rates in the last half of FY2013.
oPERAtions
KM produced 2.963Mlb (1,344t) U3O8, 20% greater than the
2.478Mlb (1,124t) U3O8 produced in FY2012. The project produced
consistently at around 90% of nameplate for the past 20 months
and is now only temporarily limited by the RIP/elution section which
is further being debottlenecked and modified to increase uranium
transfer and hence production in this area. Once this is completed,
sustained production of 3.3Mlb per annum will be possible.
The Company is pleased to note that the continued systematic
approach to addressing the various technical and bottleneck
challenges within the plant have progressed markedly through
the year. This includes improvements to the milling, leach and RIP
efficiencies, completion of modifications in the RIP section, increased
rates of production of the onsite acid plant and improvements in
onsite generator fuel efficiencies.
The open cut mine produced 1,072,225t of ore at an average grade
of 1,353 ppm U3O8 with ore and waste mined tonnage totalling
4,473,685t. This resulted in an annualised stripping ratio of 3.17:1
and Run of Mine (ROM) stockpile supplies of approximately four
months ahead of the processing plant requirements at year end.
Due to poor mining equipment availability, ROM stockpiles dropped
from six months supply from the previous year. Although existing
stocks are still more than adequate, toward the end of the financial
year, the mining contractor imported a number of new units of
equipment and the production trends were well on the upswing to
restore ROM inventories.
16
Feed into the plant for the year totalled 1,389,282t at an average
grade of 1,143 ppm U3O8 at an average recovery of 84.6%, reflecting
a 16% increase in tonnes over the previous year and slightly
reduced grades. Recoveries increased to 84.6% from 82.1% the
previous year. Ore feed blends demonstrated that the plant could
consistently process in the order of 20-25% mudstone ores without
any material difficulties.
In November 2012, the Company announced an initiative to reduce
unit operating costs at KM by 7.5%. This was a major focus as the
operation moved from ramp-up phase to sustainable production.
The main area of reduction was a marked decrease in imported
acid and the achievement of acid independence later in the year.
The largest contributors to acid independence were ore blend
management and the acid plant optimisation, which now routinely
produces 250tpd of acid as compared to 220tpd previously. In
addition to acid savings, there were further substantial savings
made as a consequence of the debottlenecking and optimisation
discussed above, as well as in areas such as reagents, reducing
the workforce and transport plus a reduction in theft due to a
more targeted security programme. The Company reported that
the C1 cost of production for FY2013 at KM was reduced by 24%
compared to June 2012. In addition, initiatives in acid recycling and
grid power connection, are expected to result in further substantial
cost reductions in FY2014.
MinERAL REsoURCEs And oRE REsERvEs EstiMAtion
A revised and updated geological model is being developed for the
project based on extensive pit mapping and structural modelling.
Additional work is being carried out by the mine geologists,
assisted by external consultants, to improve the understanding of
the structurally complex nature of the resource. This information
is expected to be incorporated into a revised and updated mineral
resource estimate in the future. At this stage, no additional resource
drilling is anticipated; however, this may be reviewed based on the
geology modelling results.
Mineral Resources and Ore Reserves conforming to both the
JORC(2004) code and NI 43-101 are detailed below.
MinERAL REsoURCE At 300PPM U3o8 CUt-oFF
Measured Resources
Indicated Resources
Total Measured &
Indicated
Grade ppm
U3O8
Mt
0.87
13.43
1,071
722
t U3O8
931
Mlb
U3O8
2.05
9,694
21.37
14.30
743
10,625
23.42
Stockpiles
Inferred Resources
1.54
5.4
945
623
1,454
3,336
3.21
7.4
(Figures may not add due to rounding and are quoted inclusive of any Ore Reserves and
are depleted for mining to end of June 2013)
The Mineral Resource is unchanged from that previously reported
except for depletion due to mining activities to 30 June 2013. The
Mineral Resource estimate is based on Multi Indicator Kriging
techniques with a specific adjustment based on parameters derived
from the mining process.
Learn about our projects:
www.paladinenergy.com.au
Paladin EnErgy lTd AnnuAl report 2013
KAyELEKERA MinE
RiP And ELUtion
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oRE REsERvEs
Economic analysis on this Resource has indicated a break-even
cut-off grade of 400ppm U3O8.
oRE REsERvE At 400PPM U3o8 CUt-oFF
Proved Reserve
Probable Reserve
Stockpiles
Total Ore Reserve
Grade ppm
U3O8
Mt
0.49
5.98
1.54
8.01
1,230
907
945
934
t U3O8
605
5,423
1,454
7,483
Mlb
U3O8
1.33
11.96
3.21
16.50
(Figures may not add due to rounding and are depleted for mining to end of June 2013)
The underlying Ore Reserve is unchanged from the one announced
in 2008 and has only been depleted for mining until 30 June 2013.
The updated Mineral Resource estimate, which will be based on all
drilling to date, is expected to result in the estimation of additional
Measured and Indicated category material.
The cost, processing, mining and pricing parameters used in the Ore
Reserve estimation are now well understood, and as such, their use
in any updated Ore Reserve estimation can be reasonably justified.
KAyELEKERA PRoCEss FLow diAgRAM
The 2011 drilling showed that the mineralisation was not fully
delineated, particularly at depth with additional mineralisation
identified below and to the west of the current mine units. Once the
updated geological model has been completed, an assessment of
the potential economic viability of this deeper mineralisation will be
undertaken. Pending the outcome of this assessment, additional
drilling may be completed further to the west.
ExPLoRAtion
Regional exploration drilling involved the completion of 14 holes
totalling 1,784m in the Mlowo area in North Mpata approximately
15km north-east of the mine site. Drilling was terminated early due
to technical problems of the drilling contractor and no alternate
contractor could be sourced at short notice. Although uranium
mineralisation was frequently encountered, all intersections were sub-
economic and no more drilling is likely to be undertaken in this area.
Other exploration work concentrated on ground geophysical and
geological surveys of seven target areas in preparation for drilling in
the Mwakenja and Mwopa areas north-west of the mine site as well
as in the North Rukuru Basin and the Livingstonia area to the south
of the mine site.
Milling
Size reduction of crushed ore
Crushing
Tailings Disposal
Acid Leach
Extraction of uranium into
solution using acid liquor
Resin-in-Pulp
Adsorption and concentration
of uranium on ion-exchange
resin from slurry
Truck to
Walvis Bay
Ship to
Converter
Run-of-mine Ore
Elution
Desorption of
uranium from
resin into
solution
Precipitation
Precipitation
of uranium
from solution
Drying
Packaging
18
Paladin EnErgy lTd AnnuAl report 2013
Canada
Michelin Project
The Michelin Project is located 140km north-east of Goose Bay,
Labrador, Canada, and 40km south-west of the community of
Postville. This project is held 100% through the Aurora Energy Ltd
group, wholly owned by Paladin.
Paladin completed the acquisition of the uranium assets of Aurora
Energy Resources Inc. (Aurora) from Fronteer Gold Inc. in February
2011. Paladin now holds title to significant uranium assets within the
highly prospective Central Mineral Belt (CMB) of Eastern Canada.
enacted an amendment to the Labrador Inuit Lands Act, formally
lifting that moratorium. The Nunatsiavut Government is a regional,
aboriginal government formed in 2005. Five of Paladin’s six deposits
fall within the Labrador Inuit Lands, the area administered by the
Nunatsiavut Government.
The CMB contains publically reported 83.9Mlb U3O8 Measured and
Indicated Mineral Resources as well as an additional 86.6Mlb U3O8
Inferred Mineral Resource in 12 deposits owned by various parties.
The largest of these deposits is Michelin, the star of Aurora’s CMB
project and one of the world’s top five albitite-hosted resources.
Seven of the deposits, with 83.9Mlb U3O8 Measured and Indicated
Mineral resources and 66.7Mlb U3O8 of Inferred Mineral resource, are
within 50km of the potential Michelin mill site. With the exception of
one, Aurora owns all of these deposits. The table below summarises
Aurora’s uranium resources in Labrador.
In December 2011, the Nunatsiavut Government voted to lift the
three year moratorium of the mining development and production
of uranium on Labrador Inuit land. In March 2012, the Government
U3O8 Mineral Resources, conforming to the Joint Ore Reserves
Committee (JORC) guidelines, reported by Aurora for the Michelin
Project are as follows:
Deposit
Measured Mineral Resources
Indicated Mineral Resources
Inferred Mineral Resources
Cut-off 0.05%
& 0.02% U3O8
Michelin
Jacques Lake
Rainbow
Inda
Nash
Gear
Total
Mt
7.1
0.9
0.2
Grade %
0.08
0.09
0.09
t U3O8
5,926
747
193
8.1
0.08
6,866
(15.1Mlb)
Mt
Grade %
23.0
6.0
0.8
1.2
0.7
0.4
32.0
0.11
0.07
0.09
0.07
0.08
0.08
0.10
t U3O8
24,522
4,327
655
826
564
270
Mt
Grade %
16.0
8.1
0.9
3.3
0.5
0.3
0.10
0.05
0.08
0.07
0.07
0.09
t U3O8
16,370
4,103
739
2,171
367
279
31,164
(68.7Mlb)
29.1
0.08
24,029
(53.0Mlb)
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Ed BECKER exeCutiVe generAl mAnAger - geology AnD explorAtion
niger
Project Agadez
Project Agadez is located in northern Niger, north-west Africa,
30km west and north-west of the township of Agadez. It includes
four exploration concessions, Tagait 4 (TAG4), Toulouk 1 (TOU1),
Terzemazour 1 (TER1), and Ekazan 1 (EKA1) covering a total area
of 990km2.
for sandstone
The tenements are located in the Tim Mersoï Basin and are
prospective
in
Carboniferous, Permian and Jurassic sediments. The basin has
historically produced in excess of 280Mlb U3O8 from two mines
(Somair and Cominak) held by Areva.
type uranium mineralisation
The Project contains a low-grade Inferred Mineral Resource of
11Mlb U3O8 at 210ppm U3O8 at a cut-off grade of 120ppm U3O8,
defined by the previous owners, in shallow sediments. Paladin,
however, is targeting higher grade uranium mineralisation in the
lower stratigraphies of the area. In early 2011, Paladin carried out a
drilling programme that further defined targets for follow-up in the
prospective strata. Information from this drilling was used to plan
a 15,000m follow up drilling campaign; however, this was put on
hold due to the deteriorating security situation, particularly within
the Agadez region.
Following an escalation in terrorist activities in the Agadez and Arlit
areas, all fieldwork on the project has ceased and a force majeure
has been requested from the government authorities for indefinite
suspension of further expenditure.
Exploration licences TAG4, TOU1 and TER1 were halved due to
statutory requirements for renewal and were subsequently re-
granted for another three years.
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. Following
the decision by the Nunatsiavut Government to define a process for
lifting the moratorium on uranium processing, Paladin considers the
mineral resources associated with the Michelin project to be current
mineral resources as defined in National Instrument (NI) 43-101. A
technical report titled “Michelin Uranium Project, Labrador, Canada,
NI 43-101 Technical Report on Preliminary Assessment,” with an
effective date of 1 August 2009, was previously filed by Fronteer
Development Group Inc (the previous owner of Aurora) on Sedar.
Paladin carried out drilling programmes at Michelin and surrounding
areas during both the 2012 northern summer field season and 2013
northern winter field season. A total of 32 diamond core drill holes
including 7,920m, which included 28 holes drilled at the Michelin
Project and an additional four at the Running Rabbit Lake Prospect
1km east-north-east of the Michelin ore body.
Paladin carried
out drilling
programmes
at Michelin and
surrounding areas
during both the
2012 northern
summer field
season and 2013
northern winter
field season.
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Uranium mineralisation at Michelin occurs
in strongly foliated felsic and mafic Aillik
Group rocks in the N60°E-striking, 50°SE-
dipping lenticular main zone and in two
small hanging wall lenses. Drill intercepts
targeting gaps
in previous drilling
generally showed more variable intercepts
than expected; however, in general, they
confirmed the core of the mineralisation.
An updated resource estimate is planned
for August/September 2013. Some large
~100m drilling gaps still exist in the south-
west portion of the Michelin mineralisation
and these will be targeted for the next
drilling programme.
Geological mapping, prospecting and
ground geophysical surveys were carried
out along the Michelin trend east and west
of the main mineralised zone. The results
will now be combined to develop detailed
targets for future follow up scout drilling.
Exploration data from the current 2013
northern summer field season will be used
to plan for an expanded winter drilling
programme expected to commence in
February 2014.
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Paladin EnErgy lTd AnnuAl report 2013
Queensland
Summit Resources (Aust) Pty Ltd (SRA), a wholly owned subsidiary
of Summit Resources Limited (Summit), operates the Isa Uranium
Joint Venture (IUJV) as well as the Mount Isa North Uranium Project.
Paladin has an 82.08% majority shareholding in Summit. These
areas cover approximately 1,356km2 and host a number of uranium
deposits and resources including the Valhalla and Skal deposits.
In January 2009, Paladin completed the takeover of Fusion Resources
Ltd (Fusion). This added Fusion’s Valhalla North Project uranium
resources, including Honey Pot and Duke Batman, on 361km2 of
prospective ground, to the suite of Queensland uranium properties.
The Queensland Government lifted the 27-year old ban on uranium
mining in Queensland on 22 October 2012. Paladin’s response to
this positive change is to pursue a long-term investment strategy
in Australia.
isa Uranium joint venture (iUjv)
sUMMit REsoURCEs (AUst) Pty Ltd (sRA) 50% And MAnAgER
MoUnt isA URAniUM Pty Ltd (MiU) 50%
The IUJV covers ground containing the Valhalla, Odin and Skal
uranium deposits 40km north of Mount Isa in Queensland.
Participants in the Joint Venture are SRA and 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 1,633km2 held 100% and managed by SRA and Paladin.
N
m
0
0
0
0
2
8
7
N
m
0
0
0
0
8
7
7
N
m
0
0
0
0
6
7
7
N
m
0
0
0
0
4
7
7
320000mE
340000mE
Gunpowder
Honey Pot
X
X
Sunshine
EPM12572
X
X
Duke Batman
Joker
EPM12572
EPM12572
Mount Isa
QLD
Brisbane
3
1
5
7
1
M
P
E
EPM17513
EPM17513
Watta Hills
X
X
Warwai
EPM17519
X
Rich John
Project
Odin
X
X
Valhalla
EPM17514
Mirrioola
Bikini
X
X
X
X
Skal
Valhalla North -
Fusion
Isa North - Summit
Isa Uranium
Joint Venture
Uranium
Prospect
Mine
Station
N
m
0
0
0
0
2
7
7
N
New May Downs
0
Km
10
EPM17511
X
X
Andersons
Red Alpha
X
X
MOUNT ISA
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Deposit
Measured Resources
Indicated Resources
Inferred Resources
Paladin
Attribution
Cut-off
ppm U3O8
230
250
250
250
250
250
250
250
250
250
Valhalla*
Skal*
Odin*
Bikini*
Andersons*
Watta
Warwai
Mirrioola*
Duke Batman*
Honey Pot
Total
Mt
16.0
Grade
ppm
t U3O8
819
13,116
Mt
18.6
14.3
8.2
5.8
1.4
Grade
ppm
840
640
555
497
1,449
t U3O8
15,662
9,177
4,534
2,868
2,079
0.5
1,370
728
Mt
9.1
1.4
5.8
6.7
0.1
5.6
0.4
2.0
0.3
2.6
16.0
819
13,116
48.8
718
35,048
34.0
Total Resource
Attributable to Paladin
14.6
819
11,940
(26.3Mlb)
43.8
719
31,530
(69.5Mlb)
29.9
Grade
ppm
643
519
590
493
1,639
404
365
555
1,100
700
563
568
t U3O8
5,824
708
3,430
3,324
204
2,260
134
1,132
325
1,800
19,141
16,984
(37.4Mlb)
91.0%
91.0%
91.0%
82.0%
82.0%
82.0%
82.0%
82.0%
100%
100%
(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.
21
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A mineral resource estimate for the Valhalla, Odin and Skal deposits
is included at the end of this section.
Western Australia
Work within the Joint Venture during the year concentrated on
mineralogical and metallurgical testing, which will be used to develop
a new processing flow-sheet for these types of mineralisation.
Mount isa north Uranium Project
sUMMit REsoURCEs (AUst) Pty Ltd (sRA) 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 in detail. 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, Warwai, Mirrioola and Andersons
uranium deposits, in addition to numerous other uranium prospects.
Work during the year concentrated on Watta and Warwai and their
mineral resource status is shown in the table at the end of this section.
Regional exploration confirmed targets for future follow-up drilling.
valhalla north Project
The Valhalla North Project (held 100%) is located on two tenements
currently totalling 361km2, 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.
Following extensive validation and revision of the existing drill data,
an update to the Watta Mineral Resource was completed. No drilling
has been completed since the previous Mineral Resource estimate
in 2007. The Warwai deposit, located 1.5km south-east of Watta,
has been included in the updated Mineral Resource estimate for the
first time. A total of 31 Summit and historic core holes were used in
the Mineral Resource estimate and the new resource is included in
the Mount Isa overall resource statement at the end of this section.
Resource And development status
Mount isa Region - All Projects
temperature and pressure alkaline
Further metallurgical testwork confirmed that the ore is amenable
to high
leach. Previous
mineralogical and metallurgical work showed the mineralisation to
be of a very fine grained and sometimes refractory nature, containing
increased gangue carbonate minerals. This explains a high acid
consumption by such leach tests resulting in marginal economics at
current uranium prices. Alkaline leaching the ore, however, showed
acceptable recoveries of 80 to 90% at high temperature and
pressure, with normal reagent consumption. Radiometric sorting of
the mineralisation showed further encouraging results. Testwork in
FY2014 will aim at confirming an economic flow-sheet based on
alkaline leach and radiometric sorting.
The JORC and NI43-101 compliant Mineral Resources under
Paladin’s management in the Mount Isa region now totals 106.2Mlb
U3O8 Measured and Indicated Mineral Resources and 42.2Mlb
U3O8 Inferred Mineral Resources. Of this, 95.8Mlb U3O8 Measured
and Indicated Mineral Resources as well as 37.4Mlb U3O8 Inferred
Mineral Resources are attributable to Paladin. 51.4% of the Mineral
Resources are located at Valhalla; the rest is distributed over the
Bikini, Skal, Odin, Andersons, Mirrioola, Watta, Warwai, Duke
Batman and Honeypot deposits. The table on the previous page lists
JORC and NI43-101 compliant Mineral Resources by deposit, on a
100% project basis.
22
Manyingee Uranium Project (Manyingee)
Manyingee (held 100%) is located in the north-west of Western
Australia, 1,060km 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
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.
Manyingee is an in-situ recovery amenable sandstone-type uranium
deposit occurring in a palaeochannel of Cretaceous age in the West
Pilbara region of Western Australia. The deposit contains 8,080t
(17.8Mlb) of U3O8 at a grade of 0.1% of Indicated Mineral Resources
and 2,810t (6.2Mlb) of U3O8 at a grade of 0.05% of Inferred Mineral
Resources.
The mineralisation was first identified in 1974 and was followed
by resource drilling to 1984 and a field leach trial in 1985 carried
out by AFMEX. Although the field leach trial, at that time, did not
prove economically successful, it did prove that the mineralisation is
amenable to solution mining.
Paladin acquired the project in June 1998. The evaluation showed
that new experience since the previous operator’s work could
substantially improve on the existing results, making the project
economically viable.
In late 2011, Paladin’s Programme of Works was approved by the
Western Australian Department of Mines and Energy. After completing
archaeological clearance of the proposed work areas, Paladin
commenced drilling in August 2012 and continued into November.
Up to two rotary mud drill rigs were on site and a total of 96 holes for
9,036m of rotary mud and 242m of PQ core were completed.
Drilling confirmed the previously identified mineralisation. Current
work is concentrated on upgrading the geological model, comparing
assay, equivalent gamma and equivalent Prompt Fission Neutron
uranium grades to confirm the grades to be used for an updated
resource estimate.
A total of 35 water bores were installed. Initial pump testing was
carried out in November and monitoring of physical and chemical
properties continued into December 2012 and April 2013. The pump
tests show permeabilites in the main mineralised aquifer sufficient
for an in-situ recovery (ISR) operation. The results will be used to
develop an updated ground water model for the Manyingee aquifer
to be applied in any future ISR operations.
Preliminary metallurgical test results indicate that an alkaline leach
solution under 6 bars of oxygen pressure (approximately equivalent
to the depth of the ore body under the water table) will leach between
65% and 90% of the contained uranium.
Work is now focused on completing a test mining proposal
document to obtain permission to carry out a Field Leach Trial.
Paladin proposes to develop the project over a 4-5 year period
starting with drilling, metallurgical testwork and engineering studies
leading to a Field Leach Trial and, potentially, to a subsequent
Bankable Feasibility Study. The proposed
includes
sufficient time to obtain regulatory approvals for mining. The current
development model for the project is to produce approximately 900t
(2Mlb) of U3O8 per year with a mine life in excess of 10 years.
timeline
Paladin EnErgy lTd AnnuAl report 2013
Manyingee contains JORC
Resources as shown below at a cut-off grade of 300ppm U3O8.
(1999) Code compliant Mineral
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.
Mineral
Resource
Classification
Indicated
Inferred
Tonnes
Mt
Grade
ppm U3O8
7.9
5.5
1,020
500
Metal
t U3O8
8,080
2,810
Metal
Mlb U3O8
17.8
6.2
Bigrlyi joint venture (Bjv)
EnERgy MEtALs LiMitEd 53.29% And MAnAgER
noRthERn tERRitoRy URAniUM Pty Ltd 41.71%
soUthERn CRoss ExPLoRAtion nL 5%
(Figures may not add due to rounding)
Note: for NI 43-101 requirements, previous tonnages, grades, assays and
other technical data relating to the Manyingee deposit are taken from historical
records prior to the implementation of the current NI 43-101. While the data are
believed to have been acquired, processed and disclosed by persons believed
to be technically competent, they were estimated prior to the implementation of
NI 43-101 and are therefore regarded as historic resources. A Qualified Person
as defined in NI 43-101 has not done sufficient work to classify the historical
estimate as current Mineral Resources. Paladin is not treating the historical
estimates as current Mineral Resources as defined in NI 43-101 and for this
reason the historical estimates should not be relied upon. The mineral resource
classifications used in this estimate would be equivalent in nature to those
defined in NI 43-101 as there has been no substantive change in the JORC
Code definition of Indicated or Inferred Mineral Resources subsequent to the
JORC (1999) Code. The historical information is presented on the basis that it
may be of interest to investors.
oobagooma Uranium Project (oobagooma)
The Oobagooma Project (held 100%) 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 long-standing applications for exploration
licences covering approximately 452km².
In 1998 Paladin acquired a call option in relation to the purchase of
Oobagooma. This arrangement was recently varied so that Paladin
Energy Minerals NL is now the applicant and will, upon the anticipated
grant, hold the exploration licence directly. Recent changes to the
Mining Act 1978 (WA) now permit the grant of tenements within the
Yampi Sound Defence Training Area and Paladin Energy Minerals NL
holds a first-ranking application. The exploration licence application
is 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 for access to the project area. 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.
The Oobagooma project area was explored by Afmeco Mining
and Exploration Pty Ltd (an Australian subsidiary of French nuclear
company Areva, which at the time was called Cogema) in the
period from 1983 to 1986 during which time extensive zones of
uranium mineralisation were discovered. Exploration for sandstone
hosted uranium targets focused on the Lower Carboniferous Yampi
Sandstone. The uranium mineralisation is largely controlled by
a package of reduced sediments located centrally in the Yampi
Sandstone at 45 to 80m depth to the north and 80 to 120m in the
south of the prospect area. 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.
The BJV covers ten granted Exploration Retention Licences (ERLs)
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%).
Energy Metals Limited, as the Manager of the BJV, announced in
June 2011 the completion of a Pre-Feasibility Study (PFS) for the
Bigrlyi Project. The PFS undertaken by EME confirmed that mining
the Anomaly 4, Anomaly 15 and Anomaly 2 deposits using a
combination of open pit and underground mining and processing
ore through a relatively simple acid leach circuit would produce
around 10Mlb U3O8 and positive cash flow of around $120M over
a mine life of approximately 8 years. The study parameters were
based around a uranium price of US$80/lb and an exchange rate
of A$0.85/US$1. Under current market conditions the project is not
viable. However, one key finding of the PFS was that a substantial
increase in the resource base that underpins the project, especially
if those resources are amenable to open pit mining, would have a
positive impact on the economics of the project.
In late June 2011, Energy Metals Ltd released an updated Mineral
Resource estimate, conforming to both the JORC(2004) guidelines
and NI 43-101, based on all drilling to date. 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
U3O8
Metal Mlb
U3O8
Indicated
Inferred
4.7
2.8
1,366
1,144
6,400
3,200
14.0
7.1
Work is ongoing collating all previous data and updating the geological model.
Angela-Pamela Project
The Angela-Pamela deposits (held 100%) contain sandstone hosted
uranium mineralisation formed at geochemical (redox) boundaries by
deposition of uranium from groundwater. It is located approximately
25km south of the central business district of Alice Springs, and
straddles the Old South Road and the Central Australian Railway.
In November 2006, Cameco Australia Pty Ltd (Cameco) and Paladin
Energy Minerals NL (Paladin) submitted an Exploration Licence
application for 12 blocks covering the Angela and Pamela uranium
prospects south of Alice Springs for a total of 37.67km2.
In October 2008, Exploration Licence 25758 was granted to the
Cameco (50%) and Paladin (50%) Joint Venture for a period of six
years. The project was managed by Cameco during the 2009 and
2010 drilling programmes with management of the project handed
over to Paladin in September 2011.
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
Following extensive compilation and validation of historic data and
drilling programmes in 2009 and 2010, Paladin undertook an initial
estimate of U3O8 mineral resource at Angela-Pamela, Australia. This
estimate is in compliance with the NI 43-101 and the JORC guidelines.
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Paladin EnErgy lTd AnnuAl report 2013
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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. 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.
The Liberal-National Party Coalition Government of the State of
Western Australia supports uranium mining in Western Australia and
several uranium mining projects have progressed to environmental
assessment (and in one case, approval) 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.
A state election held in Queensland on 24 March 2012 resulted in
a change of government from Labor to a Liberal-National Party
(“LNP”). The previous state Labor Government in Queensland would
not grant a licence to mine uranium.
Mineral Resource
Classification
Tonnes
Mt
Grade
ppm
U3O8
Metal
t U3O8
Inferred
10.7
1,310
13,980
Metal
Mlb
U3O8
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.
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.
In late June 2013, Paladin became the sole owner of the Angela
project following the completion of an agreement to purchase the
50% interest previously held by Cameco.
Field work in FY2013 included the completion of drill site rehabilitation
and limited environmental monitoring. Currently, no activity is being
undertaken.
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 Hutson B.E, all of whom are
members of the AusIMM. Messrs Becker, Princep and Hutson each have
sufficient experience that is relevant to the style of mineralisation and type of
deposit under consideration and to the activity that he is undertaking to qualify
as Competent Persons as defined in the 2004 Edition of the “Australasian Code
for Reporting of Exploration Results, Mineral Resources and Ore Reserves”,
and Messrs Princep and Hutson as a Qualified Person as defined in NI 43-101.
Messrs Becker, Princep and Hutson are full-time employees of Paladin Energy
Ltd and consent to the inclusion of this information in the form and context in
which it appears.
Australia’s uranium politics
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.
The state based Labor Government of South Australia supports
existing mines and is receptive to new uranium projects.
The state based Country Liberal Government of the Northern
Territory also supports existing mines and is receptive to new
uranium projects, including Paladin’s Angela-Pamela Project. The
opposition Labor Party supports uranium mining, although has, in
the past, opposed development of the Angela-Pamela Project.
24
Subsequent to the election, Premier Campbell Newman announced
a change in government policy to facilitate uranium mining in
Queensland. On 30 October 2012, he announced the establishment
of the Uranium Implementation Committee, which would establish
a best-practices framework for the recommencement of uranium
mining in Queensland. In March 2013, the Queensland Uranium
Implementation Committee completed its report to the Queensland
Government recommending a policy framework for the orderly
development and operation of a recommenced uranium mining and
export industry in Queensland.
Uranium database
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 written down
value of the capitalised database is US$Nil.
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 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.
deep yellow Ltd (dyL)
PALAdin 19.50%
DYL is an ASX-listed, advanced stage uranium exploration company
with a portfolio of 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 focus is in Namibia, where its operations are conducted by its
wholly owned subsidiary Reptile Uranium Namibia (Pty) Ltd (RUN).
RUN, the operator, holds 100% of two EPLs covering 1,346km2 and
five joint venture EPLs covering 2,098km2. 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 high grade
alaskite Omahola Project, where mining studies are being conducted
and the next phase of metallurgical testwork is being planned as
inputs into a PFS. Drilling was completed earlier this year and a new
prospectivity analysis is well advanced, identifying multiple new
targets that have the potential for similar higher grade alaskites.
Paladin EnErgy lTd AnnuAl report 2013
siMon s oLoMons Senior gener Al mAnAger - teChniC Al SerViCeS
health and Safety
Paladin continues to be 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 that states
that the safety, health and well-being of employees, contractors and
the community reflect the core value to Paladin’s operations in line
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).
the year, Paladin undertook
During
two external National
Occupational Safety Association (NOSA) grading audits of its
operations – LHM and KM – and is pleased to report the following
health and safety external audit results:
LHM: the site achieved a 4-Star NOSA Platinum rating; and
KM: the site achieved a 5-Star NOSA Platinum rating.
In addition, the Company’s Lost Time Injury Frequency Rate (LTIFR)
increased from 0.9 to 1.1 over the previous year. This rate still
compares very favourably with West Australian metalliferous surface
mining LTIFR of 3.0. For FY2013, there were six LTIs compared to
seven LTIs for the previous year.
In May 2013, a senior Safety & Health Advisor was recruited in the
Group to further improve this area within the Company. A draft set
of OH&S Standards have been developed to augment the policies
already in place and are being progressively distributed to all sites
for feedback. It is expected that these Standards will be finalised
early in the new financial year and approved by the Board in late
2013 prior to implementation. Auditing of all sites against these
Standards will commence in late FY2014.
LAngER hEinRiCh MinE
LHM continues to focus on safety, health, environmental and
radiation (SHER) management. The fourth NOSA grading audit was
conducted in November, 2012 and the operation obtained a ‘4’ Star
Platinum (health, safety and environment) grade rating. Although the
site had an improved audit performance (91.3% to 92.4%) over the
previous year audit, a below standard Disability Injury Frequency
Rate (DIFR), which also includes restricted injury lost days, of 6.24
was above the 5.0 limit for a ‘5’ Star achievement.
Operational Area
Employees
Mine
Contractors
Contractors incl
construction
Employees
Mine
Contractors
Contractors incl
construction
Langer Heinrich Mine
Kayelekera Mine
Hours Worked
Lost Time Injuries
Fatalities
LTIFR
736,536
1,068,541
805,519
1,960,001
642,287
36,998
2
0
2.7
1
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1
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0
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Langer Heinrich Mine
Total LTIFR = 1.1
Duration rate = 55.7
0
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0.0
0
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0
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0
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Kayelekera Mine
Total LTIFR = 0.0
Duration rate = 0.0
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Operational Area
Hours Worked
Lost Time Injuries
Fatalities
LTIFR
Perth
Corporate
Office
Exploration
Group
Employees
Contractors
Paladin
Employees
All Contractors
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52,889
2,986,755
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Duration rate = 0.0
Exploration LTIFR = 13.8
Duration rate 5.0
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0.7
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1.5
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.
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Paladin EnErgy lTd AnnuAl report 2013
To obtain certain star performances in NOSA there are two criteria
one needs to achieve. Firstly meet or be less than the DIFR target for
each level (ie not to exceed the target number) with this factor being
based on one’s safety performance over the past year and secondly
meet the audit effort performance via a site audit (ie one is audited
against a prescriptive set of criteria in five categories). At LHM for
FY2012, it achieved a result from the site audit that was higher than
the 5 Star target ie 92.4%, which was better than the previous year’s
audit result of 91.3%. However, it failed in its DIFR as it had too many
disabling injuries (where the person who was injured could return
to work but not in his normal occupation due to an injury. These
‘disabling’ injuries include lost time injuries as well.)
During the year, LHM reported three LTIs – two LHM employees and
a Karibib Mining and Construction Company (KMCC) contractor
employee. The site annual LTIFR improved marginally from 1.3
to 1.1. The mining contractor, KMCC, has obtained international
OHSAS 18001 certification,which will further assist in improving
the site occupational health and safety performance. As at 30 June
2013, the site had worked 97 days without a LTI.
A Safety Action Plan was implemented in July 2012 to address an
upward LTI trend evident in the latter part of FY2012. Key components
of the plan include increased and formalised workplace inspections
and work observations by supervisors, hazard identification for all
site activities and the implementation of a behaviour-based safety
approach (Unwritten Ground Rules – IGRs) that investigates the
current culture and the need to change behaviours. This plan has
been successful in refocusing the workforce towards a safer work
environment. In addition, a ‘drive to stay alive’ road safety campaign
has seen a decrease in reported unacceptable driving practices on
the mine access road.
Access control to the mining lease area and to restricted areas on
the mine site is of a high standard following the measures taken last
year. No reported unauthorised accesses were recorded. Further
improved control is expected with the installation of biometric
readers at the main gate plant protection office.
In terms of occupational monitoring, radiation work is continuing on
building the monitoring database so that radiation conditions at LHM
can be characterised. A reporting strategy is being developed for the
Government as well as a system to regularly inform the workforce
of their working conditions. A revised Radiation Management Plan
will be submitted to the Namibian regulators in FY2014. Worker
radiation doses over the past year were a small fraction of the
recommended annual limit. For the 2012 calendar year, the mean
Designated Worker annual dose was 2.4 mSv compared with
the internationally recommended annual dose limit of 20 mSv for
occupational radiation exposure.
LHM continues to be actively involved with the Chamber of Mines’
Uranium Institute in Namibia, a leading source of advocacy, training
and research on uranium related issues.
KAyELEKERA MinE
Like LHM, KM put a concentrated effort into its SHER management
during the year with the continued implementation of the NOSA
safety system. The third NOSA grading audit was conducted in
June 2013 and the operation achieved a ‘5’ Star Platinum (health,
safety and environment) grade rating with an improved preliminary
performance score of 92.0% (from 90.0%). For its annual safety
performance within the NOSA system, KM received the following
safety awards:
1st place award – CMB 253 NOSA Integrated Five Star System
Sector C1 (open pit mines) – KM gained the highest overall
score during the audit period 1 April 2012 to 31 March 2013 in
Sector category – Section C1;
1st place award – SHE Risk Manager of the Year Mining – Roy
Liesching, Safety, Health & Radiation Manager at KM; and
3rd place award – Top Ten Mining Company – of all companies,
audited by NOSA in the Mining Sector.
The site reported no LTIs for the year therefore, the site annual LTIFR
decreased from 0.6 to zero (0.0). As at 30 June 2013, the site had
worked 459 days without an LTI.
It was with great sadness the Company reported a workplace
fatality post year end on 31 July. A Malawi national employee,
Mr. Khwima Phiri, who was employed in the mine’s engineering
workshop, died after being struck in the chest by a light vehicle
wheel he was inflating at the time. Following an investigation,
additional procedures have been instituted with a view to preventing
such accidents in the future. This served as a stark reminder to all
that safety is of paramount importance and the policy of zero harm
to all and vigilance must be maintained always. Our thoughts are
with the family of Mr Phiri.
During the year, site safety improvements included training
employees in various safety disciplines such as the safe use of hand
tools, working safely at height and risk/hazard identification and
management. All employees and contractors underwent awareness
training regarding the contents and requirements of the site Health
and Safety Policy and Health and Safety target and objectives. The
plant road was also upgraded, increasing safety for all vehicles and
equipment.
As radiation working conditions stabilise at KM, opportunities are
being investigated to optimise engineering controls so that radiation
exposures are As Low As Reasonably Practicable. In the coming
year, the Radiation Management System will be enhanced as
improvements made to infrastructure are commissioned. The mean
Designated Worker annual radiation dose was 2.1 mSv for the 2012
calendar year, compared with the internationally recommended
annual occupational radiation dose limit of 20 mSv.
ExPLoRAtion
Paladin’s diversified exploration continued during the year with
programmes undertaken across Queensland, Western Australia,
Malawi and Canada. All the exploration programmes involved drilling
activities and field work being undertaken in remote locations.
Exploration reported three LTIs for the year - two contractors in
Malawi (same incident) and one contractor on the Aurora project
(Canada) - increasing the annual Exploration LTIFR rate from 0.0 to
13.8. As at 30 June 2013, the Exploration group had worked 107
days without a LTI.
An in-house Exploration OH&S Management System, developed
to provide consistency across all Paladin exploration sites, is
being implemented at all active sites. In FY2013, implementation
of this system was 60% complete for Malawi (commenced in late
FY2012) and around 30% complete at both the Manyingee (Western
Australia) and Aurora (Canada) projects. It is expected that the full
system implementation will be completed by the end of FY2014.
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Read our health and safety Policy:
www.paladinenergy.com.au
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Financial review
sUMMARisEd inCoME stAtEMEnt
Revenue
Gross profit
Exploration and evaluation expenses
Administration, marketing and site
non-production costs
Other expenses and income
Loss before interest and tax
Finance costs
Income tax (expense)/benefit
Loss after tax
Loss after tax attributable to:
Non-controlling interests
Members of the parent
Year Ended 30 June
2013
US$M
411.5
25.0
(1.4)
(39.5)
(305.9)
(321.8)
(63.8)
(88.4)
(474.0)
(53.1)
(420.9)
(474.0)
2012
US$M
367.4
23.9
(2.5)
(47.0)
(197.2)
(222.8)
(56.7)
78.7
(200.8)
(28.0)
(172.8)
(200.8)
Loss per share –
basic and diluted (US cents)
(49.1)
(20.2)
operational overview
LHM commenced production in 2007 with a capacity of 2.7Mlb
U3O8 pa. After operating at this level for a sustained period of
time, construction of the Stage 2 expansion to 3.7Mlb U3O8 pa
commenced in CY2008. LHM reached the Stage 2 design capacity
in December 2009. The plant has consistently operated at the
3.7Mlb U3O8 pa rate from the beginning of CY2010. Construction of
the Stage 3 expansion to 5.2Mlb U3O8 commenced at the beginning
of CY2010 and was completed at 31 March 2012. Commercial
production was declared from 1 April 2012. The plant has achieved
Stage 3 design performance and the focus has turned to production
optimisation. The plant achieved record annual production totalling
5.292Mlb U3O8 for FY2013, 20% higher than FY2012.
Construction of KM, with a 3.3Mlb U3O8 design capacity, commenced
in 2007, and after a two-year construction phase, the mine entered
its production ramp-up phase in CY2009. 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. During FY2012, the operation
made substantial positive steps toward the design of 3.3Mlb U3O8
pa through a programme of plant upgrades aimed at addressing
bottlenecks. The plant achieved record annual production totalling
2.963Mlb U3O8 for FY2013, 20% higher than FY2012. The focus at
KM has turned to production optimisation with acid recycling (Nano
technology) project and grid power supply representing two key
elements. Acid recycling initiatives are scheduled for commissioning
in the September 2013 quarter and the grid power is scheduled for
completion in the March 2014 quarter.
28
References below to 2013 and 2012 refer to the equivalent twelve
months ended 30 June 2013 and 2012 respectively.
C1 cost of production = cost of production excluding product
distribution costs, sales royalties and depreciation and amortisation
before adjustment for impairment. C1 cost, which is non-IFRS
information, is a widely used ‘industry standard’ term. C1 cost
information (unreviewed) has been extracted from the financial
statements. (Refer to Reconciliation of C1 of Production to Cost of
Goods Sold below). For an analysis of total cost of sales refer to
Note 5(b) to the financial statements.
Analysis of income statement
AnALysis oF REvEnUE And gRoss PRoFit
Year Ended 30 June
2013
US$M
2012
US$M
Up
12%
408.4
365.8
Revenue from sales of
uranium oxide
Interest income and
other revenue
Total revenue
Cost of sales
Impairment – inventory
and stores and
consumables
Gross profit
Up
5%
Realised uranium
sales price
3.1
411.5
(355.6)
(30.9)
25.0
1.6
367.4
(304.5)
(39.0)
23.9
US$49.5/lb
US$54.6/lb
Mlb U3O8
Mlb U3O8
LHM sales volume(1)
KM sales volume(2)
Total sales volume
LHM production
KM production
Total production
Up
Up
Up
Up
Up
Up
23%
24%
23%
20%
20%
20%
5.548
2.705
8.253
5.292
2.963
8.255
4.518
2.180
6.698
4.417
2.478
6.895
(1) Includes 0.580Mlb (2012: 0.650Mlb) of LHM material sold through Paladin Energy
Ltd/Paladin Nuclear Ltd.
(2) Includes 0.100Mlb of KM material sold through Paladin Energy Ltd/Paladin
Nuclear Ltd.
Revenue increased 12%, from US$367.4M in 2012 to US$411.5M in
2013 due to a 12% increase in sales of uranium from US$365.8M
in 2012 to US$408.4M in 2013. Sales volume in 2013 of 8.253MIb
U3O8 increased by 23% from 6.698MIb U3O8 in 2012. The average
realised uranium sales price in 2013 was US$49.5/lb U3O8 (2012:
US$54.6/lb U3O8) compared to the average UxC spot price for the
year of US$43.9/lb U3O8.
Paladin EnErgy lTd AnnuAl report 2013
REConCiLiAtion oF C1 Cost oF PRodUCtion to Cost oF goods soLd
Year Ended 30 June 2013
Year Ended 30 June 2012
LHM
KM
Total
LHM
KM
Total
Volume Produced (lb)
5,292,474
2,962,652
8,255,126
4,416,696
2,478,109
6,894,805
Cost of Production (C1)
US$M
159.5
US$M
126.2
US$M
285.7
US$M
136.2
US$M
129.8
US$M
266.0
Cost of Production/lb (C1)
US$30.0/lb
US$42.6/lb
US$30.8/lb
US$52.4/lb
Depreciation & amortisation
Production distribution costs
Royalties
Inventory movement
Other
Cost of goods sold
28.4
6.1
7.4
(1.3)
14.7
214.8
20.2
7.3
4.2
(18.0)
0.9
140.8
48.6
13.4
11.6
(19.3)
15.6
20.6
4.3
7.1
(6.5)
10.9
355.6
172.6
27.2
7.5
2.8
(37.3)
1.9
131.9
47.8
11.8
9.9
(43.8)
12.8
304.5
Gross Profit in 2013 of US$25.0M is 5% higher than in 2012
(US$23.9M) due to a 23% increase in sales volume and a lower
impairment of KM inventory of US$30.9M (2012: US$39.0M),
which has been partially offset by lower prices. An impairment
was required to reduce the cost of KM inventory held to a net
realisable value using the continued low uranium prices. The C1
cost of production for LHM, for the year, in 2013 remained relatively
stable at US$30.0/lb U3O8 (2012: US$30.8/lb U3O8). The C1 cost
of production for KM in 2013 decreased to US$42.6/lb U3O8 (2012:
US$52.4/lb U3O8). These results provide evidence that the cost
benefits from the cost optimisation programme are being realised.
Further improvements in C1 costs are expected over the next 12 to
18 months as a number of cost saving initiatives at both sites have
yet to be fully implemented.
Exploration and Evaluation Expenditure of US$1.4M in 2013, which
relates to early stage work and project generation activities in
Australia and Malawi, decreased from 2012 (US$2.5M).
AnALysis oF AdMinistRAtion, MARKEting ExPEnsEs & sitE
non-PRodUCtion Costs
Year Ended 30 June
2013
US$M
2012
US$M
4%
(21.9)
(21.0)
Corporate & marketing
Restructure costs
Mines sites (LHM & KM)
Canadian operations
Up
Up
100%
Down
22%
Down
84%
Non-cash – share-based payments Down
43%
Non-cash – depreciation
Down
9%
LHM Stage 4 expansion project
Down
69%
KM research and development
Up
100%
(0.3)
(8.5)
(0.4)
(3.9)
(1.9)
(1.1)
(1.5)
-
(10.9)
(2.5)
(6.9)
(2.1)
(3.6)
-
Total
(39.5)
(47.0)
Administration, Marketing and Non-production Costs have
decreased by US$7.5M from US$47.0M to US$39.5M. There has
been a decrease of US$3.0M in non-cash share-based payments
expense as there was a reduction in the number of share rights
granted compared to 2012, a decrease of US$2.5M relating to the
LHM Stage 4 expansion project and a decrease in expenditure of
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US$2.4M relating to non production costs at LHM and KM. These
savings have been partially offset by expenditure of US$1.5M
relating to a metallurgical research and development project at KM
and restructure costs of US$0.3M. Corporate and marketing costs
have increased due to one-off costs in relation to consultants and
advisory services.
Other Expenses and Income have increased from US$197.2M to
US$305.9M due predominantly to a higher impairment charge of
the KM assets in 2013 of US$237.9M compared to US$178.0M in
2012 and the US$62.1M (2012 US$Nil) impairment of exploration
assets. The Niger exploration assets were impaired to US$Nil by an
impairment charge of US$37.4M due to the cessation of exploration
activities by Paladin in Niger as a consequence of increased political
risk. The Angela Uranium Project was impaired to a carrying value of
US$Nil by an impairment charge of US$6.8M and the Bigrlyi Project
was impaired to a carrying value of US$10M by an impairment
charge of US$17.9M due to a decision to reduce the amount being
spent and on planned studies on these projects until the uranium
price increases. The continued low uranium price has resulted in
a reduction of the recoverable value of KM assets, resulting in the
impairment charge. This was partially offset by a lower write-off of
the fixed costs of KM of US$3.7M predominantly during the August
2012 plant shutdown compared to US$9.7M in the comparative year.
Finance Costs have increased from US$56.7M by US$7.1M to
US$63.8M due to all interest being expensed in 2013 compared
to 2012 where a proportion of the LHM project finance interest was
capitalised as part of the Stage 3 expansion and the accretion of
higher funding costs relating to LHM project finance. Finance costs
relate primarily to interest payable and accretion on the outstanding
US$134M convertible bonds issued 11 March 2008 repaid in March
2013, the US$300M convertible bonds issued 5 November 2010,
the US$274M convertible bonds issued 30 April 2012, the US$68.1M
project finance loan for KM and the US$101.5 M project finance loan
for LHM Stage 3.
Income Tax Expense of US$88.4M for the year to 30 June 2013 is
predominantly the result of the de-recognition of the US$98.2M KM
net deferred tax assets (“DTA”) at 31 December 2012 arising from
unrealised foreign exchange losses and carry forward tax losses
previously recognised. The unrealised foreign exchange difference on
intercompany loans has arisen due to the extreme devaluation of 104%
in the Malawian Kwacha over the previous 12 months from an average
of US$1 = MWK160 to US$1 = MWK 327 at 31 December 2012.
29
Paladin EnErgy lTd AnnuAl report 2013
lower than the comparative quarter
Loss after tax for the quarter ended September 2012 of US$45.9M
is
loss of US$123.3M
predominantly as a result of a smaller impairment of the KM assets
in 2012 compared to 2011.
sEgMEnt disCLosURE (REFER to notE 4 in thE FinAnCiAL
stAtEMEnts)
The profit before tax and finance costs for the year of US$49.3M in
the Namibian segment decreased by US$11.1M (2012: US$60.4M)
as higher sales volumes have been offset by lower prices. The
Malawian segment reflected a loss before tax and finance costs
for the year of US$276.9M, which is higher compared to a loss
of US$242.6M in 2012 predominantly as a result of the higher
impairment of the KM assets in 2013 compared to 2012. Exploration
includes an impairment expense for the Niger, Angela and Bigrlyi
assets. In the Unallocated portion, the Company reflected the
remaining Income Statement activities, which for 2013 comprise
mainly marketing, corporate, finance and administration costs.
This area includes an impairment loss on available for sale financial
assets of US$5.0M (2012: US$8.0M). This area has remained fairly
static from a net loss before finance costs in 2012 of US$31.3M to a
net loss of US$31.4M in 2013.
C1 cost of production for LHM has fallen from US$32.2/lb in the
June 2012 quarter to US$29.4/lb in the June 2013 quarter, a
decrease of 9%.
C1 cost of production for KM has fallen quarter on quarter from
US$52.2/lb in the June 2012 quarter to US$39.2/lb in the June 2013
quarter, a decrease of 25%.
These results provide evidence that the cost benefits from the cost
optimisation programme at KM are being realised.
Further improvements in C1 costs are expected over the next 12 to
18 months as a number of additional cost saving initiatives at both
sites have yet to be fully implemented.
Non-controlling Interest in net losses of US$53.1M is attributable
to the 18.0% interest in Summit held by third parties and the 15%
interest in PAL held by the Government of Malawi.
Loss after Tax attributable to the members of the parent for 2013 of
US$420.9M was higher than the loss after tax for 2012 of US$172.8M
predominantly as a result of the de-recognition of the KM net DTA
and the recognition of the KM impairments and impairments of
exploration assets discussed earlier. The loss before impairments
and de-recognition of the KM net DTA was US$86.7M.
Loss per Share noted on the Income Statement reflects the
underlying result for the specific reported periods and the additional
shares issued in 2013 compared to 2012.
Total revenues for the quarters ended March 2013 and December
2012 have increased when compared to the equivalent comparative
quarter as a result of higher sales volumes of uranium, whereas total
revenues for the quarters ended June 2013 and September 2012
are lower than the comparative quarter. The decrease in revenue in
September 2012 quarter is due to lower sales volumes of uranium.
The decrease in revenue in June 2013 quarter is due to lower prices
partially offset by higher sales volumes.
Uranium sales tend to fluctuate quarter on quarter due to the
uneven timing of contractual commitments and resultant delivery
scheduling by utility customers.
Loss after tax for the quarter ended June 2013 of US$173.3M
is higher than the comparative quarter
loss of US$35.2M
predominantly as a result of the higher impairment charge of the KM
assets and the impairment of exploration assets in 2013, discussed
earlier, compared to 2012.
Loss after tax for the quarter ended March 2013 of US$54.1M is
higher than the comparative quarter loss of US$17.5M predominantly
as a result of the impairment charge of the KM assets in 2013 of
US$44.8M compared to US$Nil in 2012.
Loss after tax for the quarter ended December 2012 of US$147.6M
is a turnaround from the profit of US$3.2M in the comparative
quarter. The loss is predominantly due to the de-recognition of the
US$98.2M KM net DTA and the recognition of the KM impairment
discussed earlier.
sUMMARy oF QUARtERLy FinAnCiAL REsULts
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Total revenues
Sales volume
Loss after tax attributable to members
Basic and diluted loss per share
Total revenues
Sales volume
(Loss)/profit after tax attributable to members
Basic and diluted (loss)/profit per share
US$M
Mlb
US$M
US cents
US$M
Mlb
US$M
US cents
2013
Jun Qtr
2013
Mar Qtr
109.6
2.326
(173.3)
(20.1)
2012
Jun Qtr
126.2
2.241
(35.2)
(3.9)
106.4
1.920
(54.1)
(6.4)
2012
Mar Qtr
67.8
1.137
(17.5)
(1.8)
2012
Dec Qtr
134.2
2.783
(147.6)
(17.1)
2012
Sep Qtr
61.3
1.224
(45.9)
(5.5)
2011
Dec Qtr
2011
Sep Qtr
70.4
1.318
3.2
0.6
103.0
2.002
(123.3)
(15.1)
30
Paladin EnErgy lTd AnnuAl report 2013
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Paladin EnErgy lTd AnnuAl report 2013
sUMMARy oF QUARtERLy PRodUCtion REsULts
LHM
Production U3O8
C1 cost of production
KM
Production U3O8
C1 cost of production
2013
Jun Qtr
2013
Mar Qtr
2012
Dec Qtr
2012
Sep Qtr
2012
Jun Qtr
Mlb
US$/lb
Mlb
US$/lb
1.353
29.4
0.790
39.2
1.230
29.8
0.762
39.8
1.419
29.6
0.772
43.5
1.290
31.8
0.639
49.0
1.322
32.2
0.726
52.2
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sUMMARisEd stAtEMEnt oF CoMPREhEnsivE inCoME
Net loss after tax
Net loss on available-for-sale
financial assets
Transfer of realised gains to other
income on disposal of available-for-
sale financial assets
Transfer of impairment loss on
available-for-sale financial assets
to income statement
Foreign currency translation
Income tax on items of other
comprehensive income
Total comprehensive loss
for the year
Year Ended 30 June
2013
US$M
(474.0)
2012
US$M
(200.8)
(5.3)
(25.8)
(1.2)
-
5.0
(75.7)
0.1
8.0
(44.0)
3.3
(551.1)
(259.3)
Net Loss after Tax is discussed under the Summarised Income
Statement section.
Foreign Currency Translation relates to the foreign currency
translation reserve movement as a result of the translation of
subsidiaries with Australian and Canadian dollar
functional
currencies into the Company presentation currency of US dollars on
an ongoing basis and for the comparative period.
Transfer of Realised Gains to Other Income in 2013 of US$1.2M
relates to the disposal of an available-for-sale financial asset.
Net Loss on Available-for-Sale Financial Assets in 2013 of US$5.0M
primarily relates to the fair value decrement in available-for-sale
financial assets attributable to a decrease in the share price.
Income Tax on Items of Other Comprehensive Income in 2013
relates to tax on movements in available-for-sale financial assets.
sUMMARisEd stAtEMEnt oF FinAnCiAL Position
Year Ended 30 June
2013
US$M
324.4
1,513.3
1,837.7
131.4
1,058.1
1,189.5
648.2
2012
US$M
391.6
1,956.1
2,347.7
253.9
899.0
1,152.9
1,194.8
Total current assets
Total non current assets
Total assets
Total current liabilities
Total non current liabilities
Total liabilities
Net Assets
32
Current Assets have decreased to US$324.4M at 30 June 2013 due
to a decrease in cash, inventories and trade and other receivables.
Cash and cash equivalents have decreased from US$112.1M to
US$78.1M at 30 June 2013 as a result of the repayment of US$134M
convertible bonds, principal repayments for KM and LHM project
finance facilities of US$46.9M, payments for plant and equipment,
exploration and evaluation project expenditure as well as finance
costs, corporate costs and an increase in inventories. This has been
partially offset by the receipt of long-term off-take agreement funds
of US$200.0M from EdF and an increase in receipts from customers.
Trade and other receivables have decreased from US$82.8M
to US$78.3M at 30 June 2013 as a result of a decrease in VAT
receivable predominantly due to a decrease in VAT receivable in
Namibia due to the decrease in expenditure with the completion of
Stage 3 in FY2012.
Inventories have decreased from US$186.5M to US$158.8M at 30
June 2013 predominantly due to LHM inventory produced at a lower
cost per lb resulting from cost optimisation improvements and KM
inventory being valued at a lower net realisable value due to the
lower uranium prices when compared to 2012. Sales volumes for
the year of 8.253Mlb U3O8 matching production of 8.255Mlb U3O8,
whereas in 2012 sales volumes for the year of 6.698Mlb U3O8 were
0.197Mlb U3O8 lower than production of 6.895Mlb U3O8. Additionally,
there was a lower KM inventory impairment discussed under the
Summarised Income Statement section.
Non Current Assets have decreased
from US$1,956.1M to
US$1,513.3M at 30 June 2013 as a result of the de-recognition of
the KM net DTA, the decrease in property, plant and equipment,
mine development and intangible assets due to the KM impairment
discussed under the Summarised Income Statement section and
a decrease in the exploration assets, which is due to the foreign
exchange movement on the Australian and Canadian dollar
denominated exploration assets because of the increase in value
of the US dollar against both currencies and the impairment of the
Niger, Angela and Bigrlyi projects discussed under the Summarised
Income Statement section. Additionally, there was a decrease
in the fair value of other financial assets primarily attributable to
the decrease in the share price of DYL and the foreign exchange
movement due to the depreciation of the Australian dollar against
the US dollar. ROM stockpiles at LHM increased as planned as part
of Stage 3 production expansion in order to meet the future mine
plan ore-blend requirements.
Current Liabilities have decreased from US$253.9M to US$131.4M
at 30 June 2013 primarily as a result of the repayment of the
US$134M convertible bonds. Additionally there has been a slight
decrease in creditors of US$9.2M, which has been partially offset
by an increase in employee provisions of US$6.5M due to a transfer
from non current employee provisions.
Paladin EnErgy lTd AnnuAl report 2013
Non Current Liabilities have increased from US$899.0M to
US$1,058.1M at 30 June 2013 primarily due to the receipt of the
long-term off-take agreement funds of US$200.0M and an increase
in the KM rehabilitation provision, which has been partially offset by
a decrease in employee provisions and a decrease in the non current
portion of interest bearing loans and borrowings of US$40.9M. This
is mainly attributable to the repayment of project financing for KM of
US$29.9M and LHM of US$17.0M, offset by the accretion relating
to convertible bonds.
sEgMEnt disCLosURE (REFER to notE 4 in thE FinAnCiAL
stAtEMEnts)
In the Statement of Financial Position as at 30 June 2013, the
Group reflected an increase in assets for the Namibian segment in
the period predominantly due to an increase in inventory and plant
and equipment additions, predominantly the new tailings facility
which has been partially offset by depreciation and amortisation.
For the Malawian segment, assets have decreased as a result of
the de-recognition of the KM net DTA and the KM impairments.
The Exploration segment has decreased due to the impairment
of the Niger, Angela and Bigrlyi assets and the strengthening of
the US dollar against the Australian and Canadian dollars, which
has resulted in a decrease in the US dollar value of exploration
assets within Australian and Canadian dollar functional currency
subsidiaries. This has been partially offset by additional capitalised
exploration expenditure.
sUMMARisEd stAtEMEnt oF ChAngEs in EQUity
Total equity at the beginning of
the financial year
Total comprehensive loss for the year
Recognised value of unlisted employee
options and performance share rights
Movement in other reserves
Contributions of equity, net of
transaction costs
Total equity at the end of the
financial year
Year Ended 30 June
2013
US$M
1,194.8
(551.1)
4.5
-
-
2012
US$M
1,355.2
(259.3)
7.4
25.1
66.4
648.2
1,194.8
Total Comprehensive Loss for the Year Ended 30 June 2013 is
discussed under the Statement of Comprehensive Income section.
Recognised Value of Unlisted Employee Options and Performance
Rights in 2013 totals US$4.5M (2012: US$7.4M). During the period
1,717,850 performance share rights vested (2012: 1,113,275). Of
these, 175,332 were issued from shares held in trust by Paladin
Energy Ltd and 1,542,518 resulted in additional shares being issued.
No performance rights were granted (2012: 1,980,400).
Contributions of Equity in 2012 of $63.2M relates to the share
placement of 56,866,232 shares at A$1.20 each. The number of
fully paid ordinary shares on issue at 30 June 2013 is 837,187,808,
an increase of 1,542,518 during the year. Performance rights of
3,358,957 remain outstanding at 30 June 2013 to the employees
and consultants directly engaged in corporate, mine construction,
operations, exploration and evaluation work. No share options
remain outstanding.
sUMMARisEd stAtEMEnt oF CAsh FLows
Year Ended 30 June
Net cash inflow/(outflow) from
operating activities
Net cash outflow from investing
activities
Net cash (outflow)/inflow from
financing activities
Net decrease in cash and cash
equivalents
Cash and cash equivalents at the
beginning of financial year
Effects of exchange rate changes
on cash and cash equivalents
Cash and cash equivalents at the
end of the financial year
2013
US$M
194.5
(46.2)
(181.5)
(33.2)
112.1
(0.8)
78.1
2012
US$M
(125.8)
(82.2)
201.5
(6.5)
117.4
1.2
112.1
Net Cash Inflow from Operating Activities was US$194.5M in 2013
(2012: net cash outflow US$125.8M), primarily due to receipts
from customers of US$400.0M (2012: US$313.9M) and receipt of
the long-term off-take agreement funds of US$200.0M (2012: Nil).
This was partially offset by payments to suppliers and employees
of US$364.8M (2012: US$401.1M). The LHM and KM operations
generated US$86.8M in cash in 2013 before investment in
working capital required to support higher production levels and
payments for administration, marketing and site non-production
costs of US$33.9M. The remaining expenditure was US$1.4M for
exploration (2012: US$2.5M) and net interest paid of US$41.4M
(2012: US$36.6M).
Net Cash Outflow from Investing Activities was US$46.2M in
2013 and is due primarily to plant and equipment acquisitions of
US$30.6M, predominantly the new tailings facility at LHM, and
additionally capitalised exploration expenditure of US$16.5M.
Exploration expenditure in foreseeable periods will be lower. The
net cash outflow of US$82.2M in 2012 was due primarily to the
Stage 3 expansion at LHM and capitalised exploration expenditure
of US$12.1M.
Net Cash Outflow from Financing Activities of US$181.5M in 2013
is mainly attributable to the repayment of the US$134M remaining
on the US$325M convertible bonds issued on 11 March 2008,
repayment of project financing for KM of US$29.9M and LHM of
US$17.0M. The net inflow in 2012 of US$201.5M was attributable
to the US$139.0M net proceeds from the drawdown of LHM Stage
3 project finance facilities, net funds raised of US$77.1M from the
issue of the US$274M convertible bond net of the repayment of the
US$191M convertible bonds, which has been partially offset by the
full repayment of the outstanding balance of US$24.8M of the LHM
Stage 1 project finance facility, US$22.5M repayment of the LHM
Stage 3 project finance facility and US$29.9M repayment from the
KM project finance facility, as well as net proceeds received from the
2011 share placement of US$62.6M
Effect of Exchange Rate Changes on cash balances is a loss of
US$0.8M for 2013.
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33
Paladin EnErgy lTd AnnuAl report 2013
Liquidity and capital resources
The Group’s principal source of liquidity as at 30 June 2013 was
cash of US$78.1M (30 June 2012: US$112.1M). Any cash available
to be invested is held with Australian banks with a minimum AA-
Standard & Poor’s credit rating over a range of maturities. Of this,
US$75.6M is held in US dollars.
The Group’s principal sources of cash for the year ended 30 June
2013 were uranium sales receipts of US$400.0M and proceeds
from the off-take agreement with EdF of US$200.0M.
The amount outstanding at 31 March 2013 on the LHM project
finance facilities was US$101.5M and for the KM project finance
facility, US$68.1M.
The Group’s consolidated financial statements have been prepared
on a going concern basis, which contemplates the continuity of
normal business activities and the realisation of assets and the
settlement of liabilities in the ordinary course of business.
During the year ended 30 June 2013, the Group incurred net
losses after tax attributable to the members of US$420.9M (2012:
US$172.8M) and had net cash outflow of US$33.2M (2012: outflow
US$6.5M). At balance date the Group had a net working capital
surplus of US$193.0M (30 June 2012: US$137.7M) including cash
on hand of US$78.1M (30 June 2012: US$112.1M). Included within
this cash on hand is US$25.7M (30 June 2012: US$26.2M) which
is restricted for use in respect of the LHM and KM project finance
facilities.
Repayment obligations, during the year ended 30 June 2014, in
respect of interest bearing loans and borrowings are summarised
as follows:
Secured bank loans principal repayments of US$65.7M for
LHM and KM project financing; and
Interest payments of US$31.7M for LHM and KM project
financing and convertible bonds.
In addition, in arriving at its position in relation to going concern, the
Directors have given consideration to the following:
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Intention to sell a minority equity position in Langer Heinrich
Mine in Namibia;
In relation to the Manyingee Uranium Project, the acquisition terms
provide for a payment of A$0.75M (US$0.68M) by the Company to
the vendors when all project development approvals are obtained.
The Group has no other material off balance sheet arrangements.
outstanding share information
As at 29 August 2013 Paladin had 962,765,979 fully paid ordinary
shares issued. The following table sets out the fully paid ordinary
shares and those issuable under the Company Employee Performance
Share Rights Plan and in relation to the Convertible Bonds:
As at 29 August 2013
Ordinary shares
Issuable under Employee Performance Share
Rights Plan
Issuable in relation to the US$300 million
Convertible Bonds
Issuable in relation to the US$274 million
Convertible Bonds
Total
Number
962,765,979
3,237,045
55,524,708
129,919,393
1,151,447,125
Critical accounting estimates
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.
Refer to Note 3(d).
The Group has a history of refinancing some of its debt; and
Financial instruments
The Group has a history of successful equity capital raisings.
On 2 August 2013, the Company announced that it had completed a
private placement to institutional and accredited investors of 125.6M
ordinary shares raising A$88M/US$80.7M.
The following is a summary of the Group’s outstanding commitments
as at 30 June 2013:
Payments due by period
Tenements
Operating leases
Other
Oobagooma acquisition costs
Manyingee acquisition costs
Total commitments
Less than
1 yr
US$M
Total
US$M
1 to 5yrs
US$M
5yrs+ or
Unknown
US$M
31.6
3.6
52.5
0.4
0.7
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1.4
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0.4
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At 30 June 2013, the Group has exposure to interest rate risk, which
is the risk that the Group’s financial position will be adversely affected
by movements in interest rates that will increase the cost of floating
rate project finance debt or opportunity losses that may arise on
fixed rate convertible bonds in a falling interest rate environment.
Interest rate risk on cash and short-term deposits is not considered
to be a material risk due to the 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 and Malawi Kwacha cash,
receivables, payables and provisions and Australian dollar cash,
payables and Canadian payables.
The Group currently does not engage in any hedging or derivative
transactions to manage uranium price movements, 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 material.
Paladin EnErgy lTd AnnuAl report 2013
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
transactions with related parties
During the year ended 30 June 2013 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 2013, 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 2013. 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 2013.
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
stRAtEgiC initiAtivE UPdAtE
On 1 August 2013, the Company advised that it had terminated
negotiations with the lead party, and all other parties, for the sale
of a minority interest in the Langer Heinrich Mine. In the view of the
Board, the current depressed uranium price has meant that it is
unlikely that a price that appropriately reflects the strategic value of
the asset will be achieved and accordingly proceeding at this time
would be detrimental to long-term shareholder value.
Although there remains interest in the asset, Paladin believes that
the current weakness in the spot uranium price (US$35.50/lb)
should not overly influence the valuation of a flagship asset such as
Langer Heinrich. Specifically, Langer Heinrich:
has a +20 years minelife;
is a modern technologically advanced operation;
is operating in a country that is politically stable; and
is currently operating consistently at 5.2Mlb pa with further
expansion capacity.
Paladin strongly believes it can generate greater value to its
shareholders through postponing the sales process for Langer
Heinrich until there is a more a favourable uranium price environment.
More generally, Paladin believes that the current low uranium price
compromises the capacity for supply to reach clearly stated global
demand growth targets. It is generally recognised in the industry
that the process for recovery of supply growth can only reasonably
start when a sustainable US$70/lb threshold for uranium is reached
and Paladin supports this long-term price expectation.
In this context, the Langer Heinrich Mine remains a highly valuable
and strategically important operation for Paladin.
sUCCEssFUL institUtionAL PLACEMEnt oF shAREs to RAisE
A$88M / C$81M
On 2 August 2013, the Company announced that it had completed
the bookbuild for a private placement to institutional and accredited
investors of 125.6M ordinary shares (representing 15% of Paladin’s
existing issued capital) raising gross proceeds of approximately
A$88M / C$81M.
The placement was priced at A$0.70 (C$0.65) per share which
represented a 30% discount to Paladin’s last closing price on the
ASX. The new shares rank equally with existing shares. Settlement
of the new shares issued under the placement occurred on the ASX
and the TSX on Monday 12 August 2013 (in each region). Allotment
of the new shares issued under the placement occurred on Tuesday
13 August 2013 (in each region).
UBS AG, Australia Branch acted as Global Lead Placing Agent to
the placement.
AdjUstMEnt oF thE ConvERsion PRiCE oF ConvERtiBLE Bonds
On 15 August 2013, the Company announced an adjustment of the
Conversion Price in connection to the US$300M convertible bonds
due 4 November 2015 and the US$274M convertible bonds due 30
April 2017 (together, the “Bonds”).
Pursuant to the terms of the Bonds the prevailing Conversion Price
is subject to adjustment where any new issue of shares is at less
than 95% of the Current Market Price. Following the completion of
the Placement on 12 August 2013, the Conversion Prices have been
adjusted as follows:
Convertible bonds due 2015: US$5.403 (previously US$5.608)
Convertible bonds due 2017: US$2.109 (previously US$2.19)
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www.paladinenergy.com.au
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giLLiA n s wABy CompAny SeCretAry/exeCutiVe gener Al mAnAger - Corpor Ate SerViCeS
Corporate
Governance
Statement
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Corporate governance Framework
The Board of Directors of Paladin Energy Ltd is responsible for the
corporate governance of the Group.
Paladin has adopted systems of control and accountability as the
basis for the administration of corporate governance.
This Corporate Governance Statement outlines the key principles
and practices of the Company which, taken as a whole, is the
system of governance.
Shareholders are reminded that Paladin operates with a dual
listing in Australia on the ASX and in Canada on the Toronto Stock
Exchange (TSX). In formulating the governance framework, the
regulatory requirements in both Australia and Canada have been
taken into account.
The Company has complied with each of the Eight Corporate
Governance Principles and the corresponding Recommendations
as published by the ASX Corporate Governance Council. Further the
Company also complies with the Ontario Securities Commission’s
corporate governance requirements as set out in National Instrument
58-101.
The Company reviews and amends its corporate governance
policies as appropriate to reflect the growth of the Company,
current legislation and good practice. The Company’s 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 & Communication Policy is in place. This reinforces the
Company’s commitment to its continuous disclosure obligations
imposed by law.
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Information will be communicated to shareholders by:
ensuring that published financial and other statutory reports
are prepared in accordance with applicable laws and industry
best practice;
ensuring the disclosure of full and timely information about
the Company’s activities in accordance with the general and
continuous disclosure principles in the ASX Listing Rules,
the Corporations Act in Australia and all relevant legislation in
Canada;
providing detailed reports from the Chairman, 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
together with investor updates.
incorporating Q&A
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 AGMs and ask questions
of Directors, senior management and 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 (the
Company’s share registry) voting platform.
Board of directors
RoLE oF thE BoARd
The Board guides and monitors the business of Paladin on behalf
of shareholders, by whom they are elected and to whom they
are accountable. The Board is responsible for setting corporate
direction, defining policies and monitoring the business of the
Company, to ensure it is conducted appropriately and in the best
interests of shareholders.
The role of the Board is to oversee and guide the management of
the Company with the aim of protecting and enhancing the interests
of its shareholders, taking into account the interests of other
stakeholders including employees, customers, suppliers and the
wider community.
The Board operates under a Charter and has a written Code of Conduct
(Code) 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.
Paladin EnErgy lTd AnnuAl report 2013
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 evaluates the
performance of senior executives and 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.
Skill sets represented at Board level include managerial, technical,
financial, corporate, legal and commercial. Particularly, members have
a broad range of experience and expertise in the uranium business.
diRECtoR
Directors are expected to bring independent views and judgement
to the Board’s deliberations. All of the Non-executive Directors,
including the Chairman, 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.
the Company’s
website (www.
paladinenergy.com.
au) includes copies
or summaries of
key corporate
governance policy
documents.
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
provide greater ease of communications
and meetings via this medium are held
at a six week intervals between face
face meetings. Additional ad-hoc
to
meetings are held as required. 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 2012 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. Rick Crabb and Philip Baily will seek
re-election at the 2013 AGM, following their 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 20 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 knowledge of the nuclear industry 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.
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 and diverse
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
induction programme which includes provision of comprehensive
written material regarding the Company such as:
information on the financial, strategic and operational position
of the Company;
a comprehensive letter of appointment which sets out the
Company’s expectations on acceptance of the position;
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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.
Furthermore, 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 and/or the Managing
Director/CEO or obtain any other briefings they feel necessary
from the Chairman and/or the Managing Director/CEO. They
are encouraged to attend site visits in liaison with the Managing
Director/CEO, at appropriate times. Directors agree to participate
in continuous improvement programmes from time to time, as
considered appropriate.
EvALUAtion oF BoARd PERFoRMAnCE
Improvement in Board processes and effectiveness is a continuing
objective and the primary purpose of Board evaluation is to identify
ways to improve performance. The Chairman is responsible for
conducting an annual review of the Board performance.
An evaluation of the performance of the Board has been carried
out. This process involved completion of individual questionnaires
focused on process, structure, effectiveness and contributions 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.
KnowLEdgE, sKiLLs And ExPERiEnCE
To assist Directors to maintain an appropriate level of knowledge,
skill and experience in the operations of the Company, Directors
have the opportunity to undertake site visits to familiarise themselves
with the Company’s operations.
Directors are also provided with papers, presentations and briefings
on the Company’s operations and on matters which may affect
the Company. These are provided in addition to Board papers and
are designed to assist the Directors to gain relevant and timely
information to assist in their decision making process. 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 encouraged to
undertake continuing education relevant to the discharge of their
obligations as Directors of the Company. Subject to prior approval
by the Company Secretary, the reasonable cost of such education
is met by the Company.
Position dEsCRiPtions
The Board has developed and adopted written position descriptions
for the Non-executive Chairman of the Board, the Chairman of each
Board Committee, the Managing Director/CEO and the Company
Secretary.
These delineate the role and responsibility of each position and
provide clarity on the expectations for those individuals occupying
these key positions within the Company.
ConFLiCts oF intEREst
The Code of Conduct for Directors, a copy of which is available on
the Company’s website, sets out the procedure to be followed if
there is, or may be, a conflict between the personal or other interests
of a Director and the business of the Company. A Director with an
actual or potential conflict of interest in relation to a matter before the
Board does not receive the Board papers relating to that matter and
when the matter comes before the Board for discussion, the Director
withdraws from the meeting for the period the matter is considered
and takes no part in the discussions or decision-making process.
Minutes reporting on matters in which a Director is considered to
have a conflict of interest are not provided to that Director, however,
the Director is given notice of the nature of the matter for discussions
and, as much as practicable, of the general nature of the discussion
or decision reached.
REMUnERAtion
Details of the remuneration policies and practices of the Company
and the remuneration paid to the Directors (Executive and Non-
executive) and senior executives are set out in the Remuneration
Report included in the Directors’ Report. Shareholders will be
invited to consider and to approve the Remuneration Report at the
AGM in November 2013.
In relation to the Non-executive Directors, there are no termination
or retirement benefits other than those contained in statutory
superannuation plans.
indEPEndEnt AdviCE
The Board and its Committees may seek advice from independent
experts whenever it is considered appropriate. With the consent
of the Chairman, individual Directors may seek independent
professional advice, at the expense of the Company, on any matter
connected with the discharge of their responsibilities. No Director
availed himself of this right during the course of the year.
Board Committees
The Board has established Audit, Nomination, Remuneration, and
Sustainability Committees which assist in the discharge of the
Board’s responsibilities. In addition to a review by the Board, each
committee reviews its performance and Charter on an annual basis.
Board approved charters set out the terms of reference and rules
governing these Committees.
AUdit CoMMittEE
in discharging
The Audit Committee assists the Board
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.
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The role of the Audit Committee is to:
noMinAtion CoMMittEE
monitor the integrity of the financial statements of the Company,
The responsibilities of the Nomination Committee include:
reviewing significant financial reporting judgments;
review the Company’s internal financial control system and,
unless expressly addressed by a separate risk committee or by
the Board itself, risk management systems;
monitor and review the effectiveness of the Company’s internal
audit function;
monitor and review the external audit function including matters
concerning appointment and remuneration, independence
and non-audit services; and
perform such other functions as assigned by law, the
Company's constitution, or the Board.
The Audit Committee comprises three members, all of whom are
independent Non-executive Directors. The current members of the
Audit Committee are:
Donald Shumka – Committee Chairman
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.
reviewing the size and composition of the Board and making
recommendations to the Board on any appropriate changes;
developing and planning
enhancing Director competencies;
for
identifying, assessing and
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
The role of the Committee, in accordance with the Remuneration
Committee Charter, is to assist the Board with respect to remuneration
by reviewing and making appropriate recommendations on:
The number of meetings of the Audit Committee during the reporting
period and the names on the attendance record is set out in the
Directors’ Report. The Audit Committee carries out periodic self-
evaluation of its effectiveness and performance.
The Chairman of the Board includes an evaluation of the Audit
Committee’s effectiveness and performance within his overall
Board evaluation.
The external auditors are Ernst & 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 Corporations Act 2001 requires a five year mandatory auditor
rotation period for listed companies. The Corporations Legislation
Amendment (Audit Enhancement) Act 2012 passed in June 2012
introduced more flexibility on Lead Audit Partner rotation to allow
for listed companies to extend the auditor rotation period for a Lead
Audit Partner for up to two years (extended from five years to seven
years) where such an extension is consistent with maintaining the
quality of the audit provided.
After due consideration and in accordance with section 324DAB
of the Corporations Act 2001 the Audit Committee was satisfied
that the extension of tenure of the Lead Audit Partner Mr Greg
Meyerowitz for a further two years would safeguard the quality of
the audit provided to the Group and this would not give rise to a
conflict of interest situation. As such Mr Meyerowitz’s tenure as the
Lead Audit Partner for the Paladin Group was extended by a further
period of two successive financial years commencing 1 July 2013,
subject to Ernst & Young continuing to act as the Group’s auditor.
The external auditors meet with the Audit Committee without
management present at each meeting.
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 a general
meeting. In proposing the maximum amount for consideration by
shareholders, and in determining the allocation, the Remuneration
Committee will take into account the time demands made on
Directors given the increasing complexity of the Paladin Group and
such factors as fees paid to Non-executive Directors in comparable
Australian companies.
The remuneration paid to Directors and senior executives is shown
in the Directors’ Report.
The Remuneration Committee comprises three members, all of
whom are independent Directors. Sean Llewelyn is the Chairman of
the Remuneration Committee.
The current members of the Remuneration Committee are:
Sean Llewelyn – Committee Chairman
Non-executive, Independent Director
Rick Crabb
Non-executive, Independent Director, Board Chairman
Donald Shumka
Non-executive, Independent Director
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The number of meetings of the Remuneration Committee during the
reporting period and the names on the attendance record is set out
in the Directors’ Report.
Financial Reporting
CEo And CFo CERtiFiCAtion
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.
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.
In accordance with the Corporations Act 2001, ASX Corporate
Governance Principle 4 (Safeguard Integrity in Financial Reporting)
and Canadian Securities Law, relevant declarations, statements and
certifications have been provided by the Managing Director/CEO
and the Chief Financial Officer in relation to the Company’s 30 June
2013 Annual Report, including financial statements.
disclosure Controls
Paladin is committed to ensuring that shareholders and the market
are provided with full and timely information and that all stakeholders
have equal and timely access to material information concerning the
Company.
The Company understands and respects that timely disclosure
of price sensitive information is central to the efficient operation of
the ASX’s and Toronto Stock Exchange’s securities market and
has adopted a Continuous Disclosure & Communication Policy
with underlying procedures covering public announcements, the
prevention of selective or inadvertent disclosure, conduct of investor
and analysts briefings, and media communications. This Policy reflects
the commitment of the Directors and management to promoting
consistent disclosure practices aimed at accurate, timely and broadly
disseminated disclosure of material information to the market. The
Company has formed a Disclosure Control Committee which has
responsibility for overseeing and co-ordinating disclosure of all public
information. Members of this Committee are the Managing Director/
CEO, Company Secretary and Chief Financial Officer.
Risk Management
The Company has established policies on risk oversight and
management and has a risk management and internal control
system to manage the Company’s material business risks. The
Company has developed its risk management policy in line with
the implementation of the risk management system and a risk
management framework.
The Company’s Risk Management Policy is to identify, assess,
evaluate, monitor and mitigate risks which are considered
unacceptable to the Company. Operational business controls have
been identified and are in place to ensure unwanted threats to the
business are managed. Paladin has also developed the business
environment for managers and senior personnel to assess risks
and make sound business decisions. Whilst all personnel have a
responsibility to identify and report to management risks which
may materially affect the Company, the 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.
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.
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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
the Company
promotes a
standard of
excellence for
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 promotes a standard of
excellence for 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
legislation
environmental
as a minimum, development and
Environmental
of
implementation
Standards
Environmental
an
Management System, the assessment
and management of environmental risks,
continuous improvement in environmental
performance, ensuring that its employees
their
and contractors are aware of
environmental responsibilities, effective
stakeholder consultation in relation to
the Company’s operations and proposed
projects,
regular
audits and reviews and reporting on
environmental performance.
undertaking
and
and
health and safety
A
safety, health and wellbeing
The
of employees, contractors and
the
community are of core value to Paladin’s
operations.
healthy workforce
contributes to business success and the
Company’s aim is for zero injuries. The
Company encourages safe behaviour by
employees and contractors, establishes
a mindset that injuries are preventable,
provides safety education and training,
and conducts safety risk assessments.
The safety and health performance of
Paladin is measured through internal
and external internationally recognised
auditing and reporting processes.
During the year external health and safety audits were carried out
at LHM and KM.
securities ownership and dealings
The Company has a Policy for Trading in Company Securities which
is binding on all Directors and employees. As well as the overriding
prohibition, which relates to all Directors and employees, against
dealing in the Company’s securities when a person is in possession
of inside information the Policy also details additional restrictions for
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 and is reviewed on a regular basis to take
into account changes in personnel. Prescribed ‘blackout’ periods
are included in the Policy during which Restricted Employees will
be prohibited from dealing in the Company’s securities. Additionally,
Restricted Employees are at all times (irrespective of ‘blackout’
periods) 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.
The Company uses an online compliance training module to assist
in monitoring understanding of this Policy. Training is completed on
a bi-annual basis with new employees completing the training and
assessment as part of the induction process.
Codes of Conduct
The Board has approved a Code of Conduct for Directors
(incorporating underlying Guidelines
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.
the
for
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.
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.
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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.
Community Relations Policy
Paladin believes that mining and mineral processing activity can
play a central role in sustainable community development by acting
as a catalyst for positive economic and social change.
When operating in overseas jurisdictions, Paladin acknowledges
the importance of understanding that it is operating in a “visitor”
capacity in the country of interest and must engage with due
respect in all interactions.
Paladin aims to achieve a balance between the economic,
environmental and social needs in all phases of its projects by:
adhering to the laws and regulations of host countries;
respecting and responding to local customs, traditions and
cultures, unless these are at variance with the Company’s
policies and standards;
contributing to local economic development of communities;
being open and transparent in all communications and dealings
with communities and responding in a timely fashion to any
community-based grievances;
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.
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.
investing in projects that are of mutual benefit to the Company
and the community;
diversity Policy
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.
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.
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.
and
The ASX Corporate Governance Council’s
Principles
Recommendations
requires the Company to set ‘measurable
objectives’ for achieving gender diversity
and to report against them on an annual
basis. A number of objectives were
put in place since the Board approved
the Diversity Policy and the Board will
continually review these objectives and
update them as necessary.
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ensuring that any resettlement that cannot be avoided is
undertaken in compliance with local laws and such that resettled
parties are constructively engaged and fairly treated with the
principles of free prior informed consent and consultation;
local procurement and
embracing sound principles of
employment that contributes to local economic development;
encouraging, where practical, suppliers and contractors to
adopt the same or similar policies, standards and practices; and
undertaking activities in a manner that is conducive to ensuring
that the local operating company is, and remains, a responsible
member of the community.
human Rights Policy
Paladin is committed to respect for human rights and fundamental
freedoms. The aim of the Human Rights Policy is to provide the
overarching framework for the business in respecting human rights.
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.
whistleblower Policy
The Board has also approved a Whistleblower Policy which
to maintaining an open working
documents commitment
environment in which employees and contractors are able to report
instances of unethical, unlawful or undesirable conduct without fear
of intimidation or reprisal.
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Paladin opposes corruption and honours the OECD Convention
on Combating Bribery of Foreign Public Officials in International
Business Transactions (OECD Convention). Paladin is committed to
conducting its business in accordance with applicable laws, rules
and regulations, and the highest standards of business ethics,
and to full and accurate disclosure in compliance with applicable
laws, rules and regulations. The Company operates under a Code
of Business Conduct and Ethics and a Code of Conduct for its
Directors. An Anti-Bribery and Corruption (ABC) Compliance Guide
provides practical advice on ethical business conduct for Paladin
Directors, employees and third parties. A Whistleblower Policy and
procedure are also in place to facilitate disclosure of any alleged
corrupt practices.
The Company has established a Compliance Committee. The
Committee has been trained by external legal counsel, expert in
the field. The Committee operates under a Charter, its role being
to oversee Paladin’s anti-bribery and corruption compliance (as
documented in Paladin’s Anti-Bribery and Corruption Compliance
Guide) and address employee or representative’s concerns. The
roll-out of unified anti-bribery and corruption training across the
Group began during the year with around 80% of head office staff
now trained. At LHM, all management have been trained together
with a further 26 of middle management and a cross section of
other employees. All employees also received a personal copy of
the localised guide to the ABC regime. KM has trained 39 expatriate
managers and 61 Malawian managers in addition to the local
programme detailed below. Local mine site workers at KM operating
below the supervisor level have received training through a number
of mediums – story books (each worker received a personal
copy) and posters on the subject written in their local language,
together with performances by the local drama group. The story
book was produced in four languages in addition to English and
was distributed not only to all local staff but to various government
departments and the community both in the surrounding area
and in Lilongwe, the capital. Paladin also engages with significant
suppliers and contractors in regard to its stance on Anti-Bribery and
Corruption and ensures the matter is specifically addressed with
contracting parties. During the year, 5 employees were terminated
due to fraud and corruption issues.
Both LHM and KM operations have been independently assessed
for risks related to corruption by a specialist fraud and corruption
analyst from Australia and relevant corruption risks have been
identified and included in the Corporate Risk Assessment Register.
Any changes to the above Codes and Policies are considered by the
Board for approval.
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In respect to gender diversity specifically, 14% (as for 2012) of
the total workforce globally are female. This statistic is somewhat
skewed due to the cultural and educational challenges faced with
increasing the female component of the workforce in Malawi at KM,
which is also the largest division of the Group with a total of 585
employees. Here, females represent 9% (as for 2012) compared
to 46% (an increase from 42% in 2012) with Australian based
employees. Interestingly, the percentage of female employees has
remained relatively static, given the retrenchments undertaken
across the Group during the year. Details across the Group are
included in the table set out in the “Our People” section on page 55.
At a senior management level, females are represented by 15% in
Australia, 9% at KM and 27% at LHM. At mine site level at Kayelekera
female expatriates hold 5% of the supervisory roles and female
nationals hold 14%. At Langer Heinrich, female nationals hold 16%
of such roles.
MEAsURABLE oBjECtivEs
Objective
Outcome
Review Diversity Policy annually.
Reviewed and remained
unchanged.
Undertake an annual gender
pay audit to ensure equity in
remuneration practices.
Report annual data across
the Group on diversity in the
workforce.
This was undertaken as part of
the annual salary review process
although increases not granted due
to economic conditions (with the
exception of local national mine site
workers).
Commenced in 2012 and ongoing.
Encourage training and
development to assist in furthering
career goals.
123 females participated in
educational initiatives during the
year.
Develop and implement flexible
working arrangements to support
employees’ personal or family
commitments whilst continuing in
employment.
When the Board next recruits for
an independent non-executive
director, at least one woman must
be included in the list of potential
candidates.
The Company provides employees
with flexible working arrangements
and paid parental leave together
with a financial incentive paid on
return to work. Females participated
in flexible work arrangements group
wide.
Ongoing.
Further information on diversity within the Company can be found in
the Our People section of this annual report.
Anti-Bribery and Corruption Compliance
Paladin does not operate in any country rated an extreme risk for
corruption in the latest Transparency International Global Corruption
Index – Australia and Canada are in the top quartile and rank 7th and
9th respectively (out of 174 countries surveyed); Namibia is in the
second quartile and ranks 58th; Malawi and Niger are in the third
quartile, ranked 88th and 113th respectively.
view our policies online:
www.paladinenergy.com.au
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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.” Paladin applies and adheres to
the established and recognised principles
of sustainable development for all of its
activities across the world.
The commitment to sustainable development is also reflected
in Paladin’s corporate values. Paladin aims to achieve a balance
between the economic, environmental and social needs in all
phases of its projects and considers its employees, community and
all other stakeholders for this achievement. These components are
intertwined in Paladin’s sustainable development programme.
To deliver on
to sustainable
the Company’s commitment
development, Paladin has a Sustainability Committee whose role
is to provide the Board with an overview of Paladin’s performance
in the areas of health, safety, environment, social responsibility and
sustainable development, and to offer advice and recommendations
where
issues arise. The
Sustainability Committee comprises three members: the Chairman
of Paladin’s Board, Paladin’s Managing Director/CEO and non-
executive independent Board member who is also the Chairman of
the Sustainability Committee.
sustainability-related
significant
The Materiality principle is defined as topics and indicators
that reflect the organisations potential significant economic,
environmental and social impacts or that would substantively
influence the assessments and decisions of stakeholders. Prior
to public reporting, Paladin conducted an internal materiality test
on the GRI G 3.1 aspects and indicators to determine the topics
of most significance to the Company. The materiality test process
involved workshops with technical personnel and management, the
Company Secretary, Chairman and a Board Director to provide a
broad Company perspective of significance of the various indicators.
In May 2013, the materiality assessment was reviewed by the same
team to determine if any amendments are required to the ranking
of indicators, or changes to the indicators selected to be reported.
to deliver on
the Company’s
commitment
to sustainable
development,
Paladin has a
sustainability
Committee whose
role is to provide
the Board with
an overview
of Paladin’s
performance
in the areas of
health, safety,
environment, social
responsibility
and sustainable
development
The GRI categories comprise 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. Paladin’s focus is
on those indicators that are considered
material to the Company.
The information and data collected from
LHM and KM will be assessed and then
reported in Paladin’s 2013 Sustainability
Report. The report is web based and
will be placed on the Paladin website for
public access. To allow sufficient time
for data collection, assessment and
reporting for the FY2013 period the report
is expected to be available on the website
towards the end of CY2013.
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The
following discussion provides an
overview of Paladin’s environmental
on
management.
More
environmental
specific
management and quantitative data will be
provided in the 2013 Sustainability Report.
performance,
detail
CoRPoRAtE sUstAinABiLity REPoRting
During the year, Paladin produced its first Sustainability Report
for the FY2012, which can be found on the Company’s website
www.paladinenergy.com.au.
Paladin is continuing the data collection process from LHM and
KM for input into the FY2013 Sustainability Report (the 2013
Sustainability Report). The basis for the data collected is on meeting
the reporting guidelines of the Global Reporting Initiative (GRI)
Framework applying G 3.1 parameters as the GRI G4 update was
only released in May 2013.
The GRI Sustainability Reporting Guidelines provide principles and
guidance on defining report content. The four principles applied are:
Materiality
Stakeholder Inclusiveness
Sustainability Context
Completeness
Read our sustainability Report:
www.paladinenergy.com.au
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environment
our Commitment
Paladin is committed to ensuring that effective environmental
management is planned and undertaken for all aspects of its
operations. The approach to environmental management is guided
by Paladin’s Environmental Policy, which 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 for the standards,
guidelines and procedures;
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 Environmental Policy, LHM and KM each
have Environmental Policies applied at the sites that include, as a
minimum, consideration of the above points.
Paladin has established Corporate Sustainable Development
Standards for all of its operational subsidiaries. Operational
compliance with Paladin’s Standards forms part of the Corporate
Environmental 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
initialy obtained EMS certification in 2009 and was recertified in 2012.
KM is continuing in the development of an EMS for its operations.
Operational Environmental Management Plans (EMP) for both LHM
and KM have been submitted to and reviewed by the Namibian
and Malawian Governments, as well as to other stakeholders and
international financial lending institutions as part of the project financing
agreement conditions. The Operational EMPs are regularly updated
and revised as part of the sites’ continual improvement process.
Environment Regulatory Reporting
Both LHM and KM prepare various environmental reports for the
Namibian and Malawi Governments, respectively. The frequency of
regulatory reporting for LHM is bi-annual for general environmental
reports and annual for aspects such as water. Regulatory
environmental reporting at KM is conducted on a quarterly and
annual basis. The regulatory reports include raw monitoring data
reports, specific aspect reviews, general environmental reports
summarising the environmental activities undertaken on the site,
analyses of the monitoring data collected and assessment of trends
for the reporting period.
inspection and Audit Programme
The Paladin Environmental Audit Standard requires sites to establish
and implement environmental inspection and audit programmes
46
to ensure that the environmental performance of the operations is
reviewed, audited and reported to the Board. Internal and external
environmental audits are undertaken 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 specified for the uranium industry. Inspections and
audits were undertaken for both the LHM and KM operations during
the reporting period with the findings documented and actions
developed to rectify and manage the issues identified.
Energy
Energy requirements at Paladin’s operations are principally in the form
of fuel or electricity generation. Electricity at LHM is purchased from
the Namibian grid which can be supplemented, if necessary, with
power generated from the on-site power plant. Power for operations
at KM is currently generated by a diesel-fuelled power station. The
Company and ESCOM (Electricity Supply Corporation of Malawi) are
entering the implementation phase of a project to connect KM to the
national grid and hence reduce the reliance on diesel at the site. Fuel
usage at both sites for vehicles comprises diesel and minor amounts
of petrol. Emulsion is used at both sites as the explosive for blasting.
The volume of the fuels used during the reporting period is being
collated and will be reported in the 2013 Sustainability Report.
water
Paladin applies a Standard for Water Use and Water Quality at its
operations to ensure that there is efficient, safe and sustainable
use of water and that water resources and ecosystems around its
sites are protected. Paladin’s operations have water management
strategies, detailed flow diagrams, working water balances, and
have implemented water management measures to ensure that
water management objectives are achieved.
The reuse and recycling of water is maximised as much as possible
at Paladin’s operations. Water aspects as per the GRI indicator
requirements will be presented in the 2013 Sustainability Report.
Both LHM and KM are managed as non-discharge sites under
normal operating conditions.
A comprehensive surface and groundwater monitoring programme
has been implemented at each site. Water level measurements, water
abstraction and samples are routinely recorded and/or collected
according to a monitoring schedule designed to meet regulatory
requirements. Data are regularly assessed and compared to baseline
and upstream sampling points to determine any impacts of operations
on local water resources and to ensure licenced limits/guidelines are
not exceeded. All water monitoring data are collated in an Annual
Water Report that consolidates and summarises the key water
aspects across all Paladin’s exploration projects and operations.
Land Use and Biodiversity
Land use and understanding land values are important components
of sustainable development. Prior to construction activities, studies
are conducted to determine land use and land values of the area
proposed for disturbance. Relevant baseline studies are conducted
to determine the biodiversity, ecological, social and cultural heritage
values of the area. Land clearing approval processes are in place at
all Paladin sites with the aim of minimising the area of disturbance,
and ensuring areas are surveyed to assess impacts prior to clearing.
is to conserve biodiversity by obtaining
Paladin’s objective
knowledge of the ecosystems within the regions in which the
Company operates and to ensure that impacts on biodiversity are
minimised and managed. Extensive biodiversity studies have been
conducted in the area of LHM, which is located in the Namib-Naukluft
Paladin EnErgy lTd AnnuAl report 2013
National Park, to establish biodiversity composition, structure and
processes. Baseline biological studies were conducted in the area
of KM, which prior to mining was extensively modified by agricultural
and burning practices to allow subsidence farming. Aquatic
invertebrate monitoring is undertaken to assess the health of the
rivers, located in the area of KM.
Studies have been conducted at both mine sites to determine the
best locations for the waste rock dumps, taking haulage costs and
environmental aspects into consideration. The design of the dumps
and the placement of waste rock also consider other factors such
as the physical and geochemical properties of the material placed
in the dumps.
Rehabilitation
tailings
The objective of rehabilitation is to return disturbed land to a stable,
self-sustaining landform that is compatible with the surrounding
environment and 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 exploration sites
and mining operations, where practicable. Rehabilitation Plans are
developed and implemented at the sites to ensure disturbed areas
are rehabilitated appropriately and in a timely manner.
Air Emissions
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
and implemented. The common air pollutants generated by Paladin
activities which have the potential to impact on human health and/
or the environment include; particulate matter (dust), sulphur oxides
(SOx); carbon oxides (CO and CO2); and nitrogen oxides (NOx).
Dust generation during exploration activities and at the mine sites is
suppressed to enable a safe working environment and to minimise
impacts on the environment and surrounding communities. This
together with the progressive rehabilitation of disturbed areas
minimises dust generation and the associated impacts. Dust
level monitoring and dust collection is undertaken at both the
LHM and KM sites. The dust levels and sample analyses results
for the reporting period are collated in Environmental Reports and
submitted to their respective Governments.
SOx emissions are generated at the operations by the burning of
fuel for heating and power generation, and also from the on-site
production of sulphuric acid at KM. The SOx emissions from the
acid plant stack are monitored as are the environmental ground
level concentrations. Monitoring data are analysed and the results
reported in the Environmental Reports submitted to the Government.
The principal direct greenhouse gas emissions from Paladin’s
operations are those from fuel burning for power generation, boilers,
burners, emulsions for explosives and automotive exhausts. The key
indirect greenhouse gas emission relate to the energy purchased
from the Namibian electricity grid to power the LHM operations.
Greenhouse gas emission data are collected from the operating
sites that will be calculated as Carbon Dioxide (CO2) equivalent
emissions. Paladin’s current Australian activities are confined to
exploration and the Corporate Perth office. Initial estimations of
diesel consumption and purchased electricity in Australia indicate
that Paladin does not meet threshold levels to require registration
and reporting in Australia under the National Greenhouse Emissions
Reporting Act (NGER) 2007.
waste Rock
Large quantities of waste rock must be removed to allow access to
the uranium ore at both LHM and KM and this waste rock is placed
into dumps. Waste rock dump location, design and placement are
important to the Company in terms of environmental considerations
and cost. The main objectives for the final landform of the dumps
is to be stable, blend in with the surrounding landscape and be
capable of supporting a self-sustaining ecosystem.
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. Specialist TSF
engineers have designed the TSFs at both 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.
non-Mineral waste
Non-mineral waste includes typical general wastes, sewage and
some water that may be considered hazardous. The LHM and
KM operations both have waste management programmes and
procedures in place with the aim at applying the principles of reduce,
reuse and recycle wherever possible. At LHM domestic solid wastes
are separated into recyclable and non-recyclable. Recyclable
domestic waste is delivered to off site recycling depots and the
non-recyclables are taken to the municipal landfill sites. Facilities
for the recycling of waste materials in Malawi are very limited as are
suitable off site waste disposal locations. The majority of the waste
materials generated at KM require on-site disposal so the wastes are
classified and separated into their types and directed to appropriate
on site waste disposal sites. Sewerage treatment plants are installed
at both mine sites to treat sewage which is then directed to process
water pond at LHM and the TSF at KM. Waste oils are collected by
licensed contractors in both Namibia and Malawi and taken off site
for recycling or disposal.
Environmental incidents
A standardised Paladin Incident Reporting Procedure is in place to
ensure there is consistency across the business in terms of incident
classification and reporting. There were no significant environmental
incidents reported during the reporting period. Statistics and
information on incidents occurring during the reporting period will
be included in the 2013 Sustainability Report.
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 developing and operational 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 is in the process of being reviewed
and updated to reflect current and future mine plans. The closure
planning process at KM progressed during the reporting period with
a Closure Risk Assessment conducted, the Draft Closure Strategy
reviewed and the preparation of a Draft Mine Closure Plan.
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Paladin EnErgy lTd AnnuAl report 2013
Payments to the
government of
Malawi for the year
ended 30 june 2013
Royalties
USD 3,228,460
Paladin contributes significantly to those
economies in its countries of operation
through a variety of government taxes.
These are detailed below for both Malawi
and Namibia, where the Group’s mines
are located.
human Rights
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Corporate Social
responsibility
Paladin exists to create value for its shareholders. In pursuit of this
goal, the Company recognises that measurement of corporate
success encompasses economic, environmental and social values.
Paladin stakeholders expect their Company to be a good corporate
citizen with fair and beneficial business practices; operating to the
highest ethical standards; contributing to the growth and prosperity
of host countries and responding positively to community needs.
Paladin’s approach to Corporate Social Responsibility (CSR) – as
with its commitment to sustainability – involves:
Top-level support of the Board of Directors and Managing
Director/CEO.
Adherence to principles enunciated in Corporate Policy and
Procedures.
Withholding tax
USD 1,638,740
Non-Resident tax
USD 81,665
Payroll Tax
USD 5,515,468
Programmes aligned with host country Millennium Development
Goals.
TOTAL
USD 10,464,333
Personnel dedicated to achieving CSR objectives.
Compliance with recognised international codes of conduct.
Acknowledgement of voluntary standards.
Reporting in accordance with the Global Reporting Initiative.
Payments to the
government of
namibia for the
year ended
30 june 2013
Royalties
USD 6,967,760
Import duties
USD 108,812
Payroll Tax
USD 3,456,146
TOTAL
USD 10,532,718
Paladin seeks to achieve these objectives by example, both
through its own actions and by its active participation in industry
and community-based organisations that foster and promote these
values and aspirations. Below is a summary of the organisations in
which the Company participates.
Paladin played an instrumental role in establishing the Australia-
Africa Mining Industry Group (AAMIG) – an industry body that
promotes best practice in CSR among Australian mining companies
active in Africa. Paladin supports AAMIG in promoting best practice
in CSR in Africa and is seeking to ensure compliance in its own
endeavours.
Paladin has committed to the principles contained in Enduring
Value – the Australian Minerals Industry Framework for Sustainable
Development. This commitment is aligned to the 10 Sustainable
Development Principles of the International Council on Mining and
Metals.
Paladin supports the Extractive Industries Transparency Initiative
(EITI) and has registered as an EITI Supporting Company. The
EITI is a global initiative to improve governance in resource-rich
countries through the verification and full publication of company
payments and government revenues from oil, gas and mining. In
line with Paladin's commitment to combat corruption and bribery as
well as to respecting human rights, its corporate values of honesty
and integrity, and as a contributor to the local economies of host
countries, Paladin endorses the principles and criteria of the EITI.
Taxes paid by Paladin to the Malawian and Namibian governments
are presented in the Company's Sustainability Report.
Paladin also upholds the Voluntary Principles on Security and
Human Rights, complies with the Equator Principles and has
strengthened its internal compliance regime in relation to anti-
bribery and corruption issues. Whilst not a signatory, Paladin also
supports the ten principles of the UN Global Compact.
Paladin’s CSR programmes are developed, managed and assessed
in compliance with the Group’s Community Relations Policy.
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to
is committed
Paladin
respecting
human rights and fundamental freedoms.
The Company’s overall approach to
human rights issues is reflected in its
Human Rights Policy, which can be found
on the Paladin website.
The aim of the Human Rights Policy is to
provide the overarching framework for the
business in respecting human rights. The
Board reviews this regularly to ensure that
it is current and that the requirements of
the Policy reflect Paladin’s commitment to
human rights principles.
industry Participation
As a leading participant in the global
uranium sector, Paladin plays an active
and responsible role in public policy
development, both corporately in Australia
and through Group subsidiary companies
in their respective constituencies.
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.
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
its
contribution to sustainable development
and society. As a member, Paladin
supports the Enduring Value principles as
a framework for sustainable development.
internationally,
in
Senior management across the Group are
actively involved in a number of industry
and policy making organisations at
both board and committee level. These
include the AUA, MCA, Uranium Council
of Australia, Advisory Group for IAEA,
AAMIG and the Chamber of Mines and
Energy of Namibia. In addition, Mr Greg
Walker, General Manager - International
Affairs, who is resident in Malawi, is
Australia’s Honorary Consulate to Malawi.
Paladin EnErgy lTd AnnuAl report 2013
Mr Walker provides consular assistance to the growing Australian
community in Malawi, as well as assisting the Australian Embassy
in Harare to promote Australia’s political and commercial interests
in Malawi. Paladin’s Lilongwe office serves as Australia’s Honorary
Consulate in Malawi.
The majority of deaths from severe malaria in childhood are caused
by the delayed administration of effective antimalarial treatment.
There is a relentless deterioration in the clinical condition of a young
child with malaria who fails to get effective treatment, with death
ensuing in a matter of hours or days.
LHM was a founding member of the Swakopmund-based Uranium
Institute in 2009. The Institute provides support and advice for
industry members, operates a Uranium Information Centre and
engages with the public and scientific community through hosting
training and information events, meetings and workshops. The
Institute’s aim is to improve the quality of heathcare, environment
management and radiation safety in Namibia.
The Company supports the Uranium Institute financially, through
the participation and commitment of LHM senior personnel and by
providing internal auditing services to the Institute. LHM is an active
member of the Institute’s Health, Environment and Radiation Safety and
Security Committee, which addresses industry-related environmental
health and radiation issues. LHM leads the Institute’s Water Committee
and actively supports its radiation training programme by providing
lecturers, instrumentation and on-site training.
Paladin also undertook the following activities during the year:
Sponsorship of and participation in the UK-Malawi Trade and
Investment Forum held in London, United Kingdom, in March
2013 during a state visit to the UK by Malawian President Dr.
Joyce Banda and senior ministers of the Government of Malawi.
LHM continued to provide strong support for the third Namibian
Mining Expo and Conference organised by the Chamber
of Mines of Namibia in Windhoek in May. The 2013 Expo
showcased achievements of Namibia’s mining industry and
its contribution to Namibia’s economy and society, under the
theme "Growing the Cake for Socio-Economic Prosperity." The
2013 Expo attracted more than 100 exhibitors and provided an
important forum for interaction between industry leaders and
stakeholders.
stakeholder interaction
Regular meetings are conducted with the stakeholder groups in
countries where Paladin has interests. These interactions include
regular and/or informal meetings with:
Community groups
Environmental groups
Host nation government ministers and senior civil servants
Indigenous groups
Civil Society Organisations and
Employees and their representative organisations
international initiatives
MALARiA tREAtMEnt FoR ChiLdREn
Paladin has continued to support to Suda Ltd (previously known
as Eastland Medical Systems Limited) for Suda’s development of
ArTiMist™, a sub-lingual (under the tongue) spray for the treatment
of severe and complicated malaria in children.
Suda has recently completed its Phase III trial of ArTiMist™ which
was a comparative study against intravenous quinine. The report
from the trial identified that ArTiMist™ was superior when compared
to IV quinine. Approximately 95% of the patients treated with
ArTiMist™ had parasite count reduced by more than 90% within 24
hours versus 40.6% of the patients treated with IV quinine.
Suda believes that ArTiMist™ has the potential to be an effective pre-
referral medication and has the potential to significantly reduce child
mortality and the adverse effects suffered by children, particularly
within the first 24 hours of infection.
Malawi
Paladin continues to fulfil its social development undertakings under
the terms of the Kayelekera Mine Development Agreement with
in excess of US$16M having been spent to date, across over 70
social development projects. The largest of those projects was the
Garnet Halliday Karonga Water Supply Project, at a cost in excess
of US$10M.
The Australian Government handbook on Social Responsibility
in the Mining and Metals Sector in Developing Countries draws
on examples of Australian leading practice in Corporate Social
Responsibility in Africa. Paladin’s Social Management Plan for KM
was selected as a case study in the handbook.
A social baseline study conducted as part of the Environmental
Impact Assessment undertaken prior to the establishment of KM
identified the town of Karonga and villages in the immediate vicinity of
KM as areas most likely to be affected by the development of mining
operations. Accordingly, Paladin’s CSR programmes focused on
these areas, however the Company believes that it is very important
to have a broader CSR footprint encompassing villages located
along the M26 highway that provides access from Karonga to KM.
These villages are remote and generally lacking in the most basic
facilities. These communities have high volumes of freight transport
passing through or in the vicinity of their villages; however, they
did not benefit like those in the immediate areas of the mine site.
Paladin adopted the concept of the “Corridor of Care” specifically
to bring benefits to these isolated villages. Projects have included
the construction of school classrooms, teacher housing (a major
concern for village communities) and renovation and electrification
of the Wiliro Clinic, which serves the area.
Community Liaison
Paladin engages with communities via various forums including the:
Government Liaison Committee (GLC) – this is the peak forum
between PAL and the central Government of Malawi;
Karonga District community, through monthly District Executive
Committee (DEC) stakeholder’s meetings; and
Kayelekera Village Elders – bi-weekly meeting are held with the
Kayelekera Village Traditional Authority (village headman) and
village elders to discuss social issues.
Projects undertaken during the year included:
LoCAL BUsinEss dEvELoPMEnt PRogRAMME
A programme to promote local involvement, economic growth and
business development in communities is in progress. Opportunities
are being explored for skills transfer and technical advice from
Kayelekera’s experienced workforce to local businesses. KM
currently has several hospitality students gaining work experience
in the camp kitchen.
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Paladin also supports the UK-based MicroLoan Foundation in the
Karonga region, which provides micro-loans to women’s groups for
small scale co-operative business ventures. To date, around 23 groups
involving over 300 women have completed training and received loans.
All small infrastructure projects outside the mine, and many inside,
are now contracted out to tradesmen once employed and trained by
KM and then assisted to set up businesses as private contractors.
gARnEt hALLidAy KARongA wAtER sUPPLy PRojECt UPgRAdE
Paladin continues to provide technical support and assistance to
the Northern Region Water Board (NRWB) in the maintenance of the
plant. During the year Paladin completed a project to improve the
reliability of the water supply to Karonga. This involved repositioning,
re-laying and anchoring a total of 760m of pipeline on the lakebed,
complete with a redesigned intake strainer system. Mota-Engil
precast 92 concrete blocks to weight the pipeline. This involved
weights of 2.5 tonnes per nine metres of pipe – which is three times
the required anchoring weight for this type of pipeline. The Karonga
Water Plant has experienced significantly improved pumping
efficiency since the completion of this work.
during the year
Paladin completed
a project to improve
the reliability of
the water supply
to Karonga.
this involved
repositioning,
re-laying and
anchoring a total of
760m of pipeline
on the lakebed,
complete with a
redesigned intake
strainer system.
KARongA AiRPoRt iMPRovEMEnts
to
In January 2013, Paladin and Puma
Energy Ltd handed over two reconditioned
Dennis fire engines
the Deputy
Transport and Infrastructure Minister, Mrs
Chimango Mughogho Gondwe, for use
at Karonga International Airport. The fire
engines, with a capacity of 1,800 litres,
have upgraded Karonga’s safety rating to
a Category 2 Airport. The Minister noted
that the fire engines would enhance safety
in Karonga District, as they would serve
Karonga District Council, which does not
have its own fire service. The fire engines
were imported from the United Kingdom
by Puma and Paladin. Paladin also
constructed a drainage system around
the runway to offset erosion problems and
refurbished on-site office accommodation.
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CoMMUnity hEALth CARE
Paladin continues to assist the local (Wiliro) government medical
staff with meals and transport, in order for them to conduct the
weekly general and monthly infants’ clinics in Kayelekera village,
which serves 550 - 650 patients a month, alleviating the need for
villagers to travel for treatment to Wiliro.
Land has been set aside for construction of a new health centre in the
Kayelekera village and discussions are underway with the Minister of
Health to agree an appropriate design and construction timetable.
CoMMUnity EdUCAtion
Paladin continues to produce education-through-story books
covering a broad range of community focused subjects (see table
below which lists the titles produced). These booklets are written
by Paladin’s Social Development Officer, Robyn Nottingham, who
is based in Malawi and are translated into three local languages and
distributed to KM employees, students and the community.
Book Title
Subject
Alex's Scary Experience
Management of fever/malaria
During the year, eight new books were produced, focusing on other
health and lifestyle issues – dental health, management of cuts,
scrape wounds and simple bone fractures, good nutrition, honesty,
loans and debt, and bribery. These books have proven to be
extremely popular. To date, a total of 31 titles have been produced
with over 138,000 copies distributed covering a broad range of
community focused subjects.
FLood RELiEF
In April 2013, the Company provided MWK5M in immediate flood
relief to assist with food and temporary shelter following severe
flooding north of Karonga. Exploration personnel and equipment
were also made available to assist in relief efforts.
EdUCAtionAL sUPPoRt
Support for education for children in Kayelekera and nearby villages
is ongoing through donations to the schools towards wages for nine
teachers. In August, Kayelekera primary’s badly damaged fence along
the road was rebuilt, providing greater safety to the 580 children,
and the landfill behind it aiding in control of soil erosion. Over 200
shrubs were provided and planted at both the primary and secondary
schools, for aesthetics as much to provide a further barrier, and paint
was supplied for the secondary school classrooms.
Safe!
Miriam
Prevention of HIV infection
Prevention of HIV infection
A number of employees at the mine are also assisted in ongoing
studies as detailed in the Our People section.
Raymond's Decision
Alcohol abuse
Alfred's Money
Wise use of wages
Henry Does Some Thinking
Trash
What Will Happen?
Delivery
How Many?
Who Did It?
Family Planning
Abuse of girls/women's issues
Three Boys and a Mystery
Prevention of diarrhoea
Ella Helps Her Little Brother
Prevention of dehydration
What Happened?
My Father
Drugs
Honesty
Anthony's Boozing Den
Alcohol abuse
The Trap
Ben
My Choice
Stealing
Bribery and Corruption
Prevention of HIV infection
Anna Oversomes Her Fear
Leprosy
What Happened in the Garden?
Management of cuts
MALARiA vECtoR ContRoL PRogRAMME
Paladin runs a mosquito control programme four times a year
in Kayelekera Village. A baseline threat assessment survey
was conducted in August 2007 by world-renowned consultant
entomologist, Professor Richard Hunt, to assess the impact on
the local mosquito population of commonly used insecticides.
Insecticides used by the Government of Malawi in other regions of
the country were selected and procured from local suppliers.
A Vector Control Programme team was recruited from Kayelekera
Village and sent to Lilongwe for a five-day training course to World
Health Organisation standards. Spraying details are reported
annually to Karonga District Hospital and the District Health Office.
ConstRUCtion oF nEw sERE RivER Foot BRidgE
Due to the high water levels after heavy rains, a footbridge was
constructed over the Sere River in Kayelekera Village, in 2008 which
was replaced in the past year.
Martin's Land
Deforestation
ChRistMAs sChooL distRiBUtion
Class Assignment
Uses of water as medication
Amazing!
The Big Scam
Care of the newborn
Smoking
The Christmas Story
Christmas story
Each December, Paladin celebrates Christmas in the villages around
the mine with donations of exercise books and pens, snacks and a
toy for each child attending the six schools in the immediate area.
Approximately 1,900 school children received gifts.
The Football Game
Management of a simple fracture
hiv/Aids AwAREnEss And hEALth CAMPAigns
The Blue Bicycle
Management of a scrape wound
Smile
Dental health
Susi Goes Shopping
Buying healthy food
A Good Plan
Sneeze
Loans and debt
Chest infections
Dingile (Uranium)
Issues about uranium mining
Paladin HIV/AIDS Awareness programmes continued in local
communities. The very popular local Nyange Nyange drama team
was funded and transported to visit 127 schools during the year,
targeting key causes of HIV spread, being alcohol abuse and
oversized families which exacerbate poverty and force girls into
high-risk situations. Public HIV-awareness dramas were also held
in three locations.
Read about our community focus:
www.paladinenergy.com.au
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namibia
LHUPL continued to play an active and leading role in the positive
interface between the mining industry and community in Namibia,
through its support for the Chamber of Mines and Energy of Namibia
and the Chamber’s Uranium Institute and through Langer Heinrich’s
own social development programme.
LHUPL recognises its social responsibility and has a strong
commitment to supporting activities which benefit the coastal
community and the development of Namibia in line with Namibia’s
Millennium Development Goals and determined in consultation with
community stakeholder groups. These initiatives respond primarily to
Namibia’s most chronic problem, endemic unemployment, which is
exacerbated by poor education results and substandard skill levels.
MondEsA yoUth oPPoRtUnitiEs (Myo)
LHUPL has been the principal sponsor of the MYO organisation since
2010. MYO provides educational assistance to improve English,
mathematics and computer skills for students drawn from five schools
in the disadvantaged areas of the Mondesa and DRC Townships in
Swakopmund with 120 students currently enrolled in the programme.
MYO’s objective is to encourage completion of secondary education
as a precursor to further academic or vocational study.
The programme focuses on educating the “whole child” and, in
doing so, covers the academic, emotional, physical and cultural
aspects of their life. Students receive a daily nutritious lunch and are
also taken out on outings to enhance their knowledge of Namibia
and increase their social skills.
nAtionAL MAthEMAtiCs CongREss
Sponsorship of the National Mathematics Congress continued. The
objective of the Congress is to improve the standard of mathematics
education at primary and secondary levels across Namibia.
Teachers, both primary and secondary, look forward to the National
Mathematics Congress both as an opportunity to upgrade their
mathematical and professional knowledge and skills, and as an
event providing them with inspiration and motivation to face the ever
increasing challenges in the classroom. The 8th Congress, held
over 3 days in May 2013, had 215 attendees.
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“The 2013 Congress focused on “Problem Solving” and it is hoped
that the participants in this year’s Congress will take the first steps
towards making a National Mathematics Competition in Namibia a
reality,” said the project coordinator Ms. Margaret Courtney-Clark.
MAthEMAtiCs sUPPoRt And EnRiChMEnt PRogRAMME
This programme, developed by the founder of the National
Mathematics Congress, focuses on the development of mathematical
process skills such as problem solving, reasoning, communicating
and making connections. It is aimed at secondary school learners
who have the potential to excel in the more advanced levels offered
at schools with 84 students participating during the past year. The
programme, has, through the variety of activities, achieved its aims to:
support able learners to reach their academic potential;
develop mathematical problem solving and reasoning skills; and
extend and enrich syllabus topics.
The 2012 project yielded excellent results with many distinctions
and all participants passing their mathematics subject.
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BURsARy sChEME
One of LHUPL’s strategies to develop Namibian skills has been to
launch a full time bursary scheme. This was introduced in 2010
to provide opportunities for talented Namibians to develop their
skills and competencies in readiness to occupy positions currently
held by non-Namibians. To-date, this scheme has delivered good
results, with two mining engineers (both women) and two geologists
recently joining the Company.
thE APPREntiCE PRogRAMME And niMt sUPPoRt
LHUPL joined hands with the Namibian Institute of Mining and
Technology (NIMT) in 2007 when LHUPL approached NIMT to offer
their mechanical and electrical artisans the opportunity to undergo
practical training at LHM. Since then, more than 200 students have
undertaken their practical training at LHM and on completion of
their studies, a number of the students have taken up employment
at the mine.
sChooL sUPPoRt PRojECt
LHUPL has budgeted to provide small scale project funding to
state schools on the Swakopmund Coast, with the supply of text
books for secondary school learners. Text books were handed
over to the various schools in preparation for the 2012/2013 school
years. This year however, on recommendation from the Ministry of
Education, primary schools will be the beneficiaries - collaboration
with the Ministry ensures the assistance supports the Namibian
Government’s Vision 2030.
gRAdUAtE tRAining initiAtivE
This is focused on young Namibians with potential who have
chosen to defy humble beginnings and to prepare themselves for
professional life.
These young graduates are now available in the market and mostly
possess an eagerness and enthusiasm for their newly-found
professions; however they lack one vital element: experience. The
“10,000 hour rule”, for example, maintains that to truly master a skill,
a person must put in 10,000 hours of deliberate practice.
Langer Heinrich’s aim is to assist new graduates in getting the
first number of hours of the required 10,000 hours under their belt
and to be able to record this on their CVs. Nine recently-qualified
graduates commenced with this programme and are being trained
for 12 months, whilst ensuring that they acquire the necessary skill
and experience for future employment.
hiv/Aids PRogRAMME
Langer Heinrich continues to be active with HIV/AIDS related
activities through its Peer Educators. This year focused on educating
employees about health issues and participating in fundraising
events for the Namibia Cancer Association and HIV/AIDS charity
groups. Blood donations clinics are run every three months for
employees to participate in.
othER CoMMUnity initiAtivEs
Langer Heinrich continues to support two feeding programmes for
underprivileged children in Walvis Bay and Swakopmund (catering
for between 600 and 700 children per day) in addition to supporting
various small scale community projects and sporting activities
during the year, reaffirming its commitment to the local community.
53
Paladin EnErgy lTd AnnuAl report 2013
Australian initiatives
Canada
In 2011, 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.
Paladin also continued its involvement with the ASX Thomson
Reuters Charity Foundation. 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 medical
research for children.
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In Labrador, Aurora continued to hold biannual consultation
sessions in the towns nearest the Michelin project area: Postville,
Makkovik and Rigolet. Aurora also supported a variety of youth-
focused projects including the Aurora Volleyball Tournaments in
Postville and Makkovik, the Aboriginal Youth Career Fair, the Multi-
cultural Youth Gathering and Labrador Winter Games teams.
Aurora also maintained its involvement with events of cultural
importance to the Inuit of Labrador, supporting traditional dog team
sled competitions in the region and seasonal community festivals.
It also became a partner in the Reclamation of Labrador Exploration
Sites (ROLES) Project, an industry-led initiative to clean-up abandoned
mineral exploration sites. The project is expected to take three years,
progressing in phases: identification and inventory of abandoned
exploration sites throughout Labrador (with input from community
members), site assessment, and removal of waste materials at priority
sites. ROLES works directly with local communities and companies
and aims to provide opportunities for site rehabilitation training
among these stakeholders. Aurora is providing in-kind support to this
initiative in the form of counsel on project configuration, environmental
management, and communications.
Employee Charitable Foundation, supported
by Paladin
the
involvement of
Friends and Employees of Paladin for African Children (FEPAC) is a
charitable foundation established in 2008 by Paladin employees to
fund social projects that are outside the scope of the Company’s
CSR programmes. Paladin supports
its
employees in FEPAC and donates 25c for every A$1 raised and
also provides administrative support. To date, FEPAC has raised
$765,000 through employee donations, an annual golf day and
quiz night. The charity supports six projects in Malawi that assist
orphaned children with educational needs and vocational training
courses, such as brick laying, carpentry and tailoring. Currently 110
teenagers have completed these courses and have been provided
with tools to enable them to earn money to support their younger
siblings. These projects include a school for visually impaired and a
school for deaf children. In connection with the latter, support is also
provided to the ABC Hearing Clinic, an NGO operating in Lilongwe.
During the year, FEPAC financed construction of a second teacher’s
house and a three-classroom block at the School for Deaf Children
in Karonga, in co-operation with the Australian Government
(AUSAID/DAP) which funded 50%. Two-classroom blocks were also
constructed at two other government primary schools in the District.
As a follow-up to previous donations of exercise books and pens for
school children in six schools near KM, FEPAC undertook to provide
atlases, dictionaries and some textbooks, 36 small solar panel sets
as an incentive for teachers to remain in remote locations and 206
soccer balls.
FEPAC also took on the sponsorship of drama and books in school.
Drama is a traditional art and teaching form used to promote social
messaging in Malawi. FEPAC sponsors the Nyange Nyange Drama
Group who regularly perform dramas covering health and social
issues to primary schools in the Karonga District.
The second annual Charity Golf Day was held in Namibia, organised
by local employees, raising N$87,550. The funds were donated to
Walvis Bay Kids Haven Children’s Home.
Paladin EnErgy lTd AnnuAl report 2013
our people
The Company has spent the past year focussing on stabilising its
workforce in all key regions to ensure efficiencies are achieved
wherever possible. Globalisation of human resources processes
continues to be an ongoing focus with an emphasis on global
integration and local adaptation.
In line with the strategy of consolidation as opposed to growth, only
those positions that are deemed critical have been replaced when
natural attrition occurred, leading to a slight reduction in headcount
figures globally. Despite challenging market conditions (including
ongoing skills shortages, productivity and wage pressures), Paladin
remains focussed on attracting, retaining and motivating the best
talent at all of its sites.
As part of its retention strategy Paladin provides career development
opportunities, learning and development options and competitive
remuneration packages with data sourced from reputable global
survey companies. Similar to previous years, there has been
global transfer of skills and experience where appropriate, to foster
development of personnel and knowledge retention.
In ensuring that the right talent management foundations are in
place, there has continued to be emphasis placed on employee
relations, communication and learning. Following the success of
the INVOCOM (Employee Involvement through Communication
for Commitment and Innovation) methodology at Langer Heinrich,
the same programme was launched at Kayelekera and has been a
contributor to improved business performance through its model of
organisational, operational and service excellence. Almost all staff
members on site have completed a three day training programme
focussed on understanding the concepts of culture and business
to facilitate improved communication and understanding amongst
supporting a
diverse workforce
remains one of the
cornerstones of
Paladin’s strategy
and the Company
is committed to an
equitable gender
balance amongst
its workforce.
a multicultural workforce. Senior staff
members at Kayelekera have been
involved in a 360° feedback programme
which has been developed to improve
their managerial skills and assist
in
improving performance across the Group.
As in previous years, employees were
supported to access a variety of training
options
including conferences, short
training courses, seminars and post
graduate university and professional
studies. Amongst other training initiatives
a St. John’s Ambulance workplace first
aid course was delivered at head office
and was well attended with the acquired
skills useful both in and outside the
workplace. The roll-out of training in
the Company’s Anti-Bribery Committee
compliance regime was a key focus
during the year.
Turnover for the Group is detailed in the following table. The average
annual rate for large companies was 11.7% as reported in the
Australian Institute of Management National Salary Survey 2012. The
Australian based voluntary turnover sits at 18.5% (combined Head
Office and Exploration) which reflects both Paladin’s programme of
rationalisation as well as the challenges faced in the recruitment and
retention of high quality mining professionals. Exit interviews are
undertaken to further understand the causes of voluntary turnover
with those who leave typically doing so to advance their careers or
for personal reasons.
All of Paladin’s HR practices are fair and consistent to ensure that
they are free from unlawful discrimination. Supporting a diverse
workforce remains one of the cornerstones of Paladin’s strategy and
the Company is committed to an equitable gender balance amongst
its workforce. Further information on diversity can be found in the
Corporate Governance Statement.
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Paladin EnErgy lTd AnnuAl report 2013
Australia (head office & Mount isa)
Malawi (Kayelekera Mine)
The Australian headcount is currently 63, of which females represent
46%. Retention remains an ongoing challenge in the Australian
context. The Australian voluntary turnover rate was 18.5%, a
significant increase on last year’s rate; however, it is consistent with
Paladin’s desire to contract headcount wherever possible to achieve
efficiency aims. The Mount Isa office, in particular, has contracted
substantially, going from 6 employees in July last year to 0.6 full time-
equivalent in July of this year. This is consistent with a reduction in
exploration expenditure for the immediate future and also a change
in execution of future Mount Isa exploration programmes with a
greater emphasis on campaign style programmes managed from
the Perth office.
14 Perth based positions were made redundant during the year.
Location
Total
Female
%
Local
Nationals
%
Turnover
%
Australia Corporate,
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49%
n/a
22%
administration,
financial &
technical services
Exploration
Namibia
LHM
Malawi
KM
Exploration
Canada
Exploration
Exploration
Niger
Total
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39%
n/a
14.7%
96.7%
9%
5%
43%
17%
84%
100%
79%
100%
44%
9.9%
7.9%
5.0%
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18
333
567
18
14
6
1001
Exploration
Paladin’s exploration group consists of 12 geologists,
two
geophysicists, three full time database administrators and one GIS
co-ordinator supported by external contractors and consultants.
Paladin has exploration teams located at both mine sites in Africa
whose focus is near mine resource extension and regional resource
development and a regional exploration team in Canada. In addition,
an exploration team is based in the Perth office and is focussed on
the Manyingee and Spinifex Well projects in Western Australia as
well as supporting the Company’s projects worldwide.
Paladin has a strong track record
in retaining geoscience
professionals with the majority of staff having a minimum of
three years’ tenure with the Company with a number employed
directly after graduation from universities around the world. The
Company supports development for exploration geologists through
secondments to either the African or Canadian projects to gain
experience in different geological terrains and cultures as well as
mine site development. In order to retain and mentor the exploration
group, the Company undertakes regular workshops, both regionally
and globally, to update their knowledge in the latest techniques
and processes. The Company also uses these workshops to
transfer knowledge from expert professionals in various geoscience
disciplines and to enable Company geologists to share their
experiences with their colleagues. During the year a number of
Company geoscientists gave presentations at various national and
international conferences and technical meetings.
56
Employee numbers totalled 585 at year end, a reduction of 174
on the previous year. This was as a result of ongoing efficiency
improvements throughout the period and the retrenchment of
106 employees in January 2013 following an exercise to identify
redundant positions. In addition to the retrenchments, 25 expatriate
contracts were not renewed at expiry. Long-term mining contractors
totalled 212 at the end of the year.
Of this current total, 95 are expatriate staff, representing 16% of
the workforce. A further three expatriates are seconded from the
Perth head office to provide specialist services for part of the year.
Amongst the expatriates, voluntary turnover has been reduced to
6%, a significant decrease from last year.
The Company reviewed salaries paid to Malawian National
employees twice during the year with a view to offsetting the
inflationary effects of the significant devaluation of the national
currency during the year under review. The first of these increases in
October 2012 amounted to 18% on basic salaries, followed in June
2013 by a further 11% increase, mirroring the inflation rate.
Training and development of Malawian Nationals continues to be a
strategic focus of the mine. Progress in the development of Process
Operator and Financial Officer skills has been especially gratifying
and capacity development is also evident in the Environmental
Management, Human Resources, Mining and Engineering
departments.
PAL has a training framework that recognises and addresses its
business goals by way of:
On the job training – provided by coaches and mentors.
In-house training – provided by skilled experts.
External training – provided by external vendors.
External studies – provided by educational institutions.
Against this backdrop, and in the context of rigorous efforts to
contain expenditure at all levels, the focus for the past year has been
on training and development on site - in a number of key aspects of
the business and covering a large number of employees – as follows:
Personal Development Plans have been developed for 35
targeted ‘high-potential’ employees - with the objective of
identifying individual training and development needs and to
develop these employees into positions of greater responsibility
and authority.
510 employees participated in Climate Creation* workshops
facilitated by specialist external service providers.
25 employees attended training on the topic of Performance
Management.
145 employees were trained in INVOCOMS* facilitation skills.
4 employees are currently on funded studies at external
educational institutions.
84 employees participated in the training component of the
Company’s Anti-Bribery and Corruption initiative, launched
during the year. This training will continue to cover all employees
in the year ahead.
*The creation of a “Prosperity Partnership”, designed to create a
shared vision for the on-going success of the mine, commenced
in July 2012 with a number of Climate Creation Workshops. In
conjunction with these workshops (which were completed in May
2013), INVOCOMS Skills training workshops (aimed at improving the
effectiveness and communication flow of meetings at all levels of the
organisation) commenced in October 2012 and continued through
June 2013.
Paladin EnErgy lTd AnnuAl report 2013
Employee wellness
remains an ongoing
feature of the
LhUPL employee
engagement
programme as
the health and
well-being of
all employees
is integral to
corporate success.
some positions
Filling
remains a
challenge due to the on-going skills
shortage in Namibia. LHUPL aims to
retain its employees through offering
internal study opportunities, paying
market competitive salaries and other
recognised retention strategies. Capacity
remains a priority and
development
employees are given the opportunity
to undertake
internal and external
training courses. Seven employees were
awarded part-time bursaries this past
year. The bursary scheme introduced
for Namibians presently has six full-time
students enrolled in the following courses:
Metallurgy (1), Mining Engineering (3),
Geology (post graduate) (2). A number of
the graduates have taken up employment
at LHM and are being developed
internally, whilst two of the remaining
bursary students (one a former employee)
are expected to complete studies and
commence employment in January 2014.
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In addition to its bursary programme, LHUPL has introduced
a graduate programme which provides 11 graduate positions:
geologist (4), accountant (2), metallurgist (2), chemistry PhD (1), lab
technician (1), business administration (1).
The relationship which currently exists between the Namibian
Institute of Mining Technology, LHUPL and the Ministry of Education
has proven to be beneficial to all stakeholders over the years
and will continue to be maintained to ensure that students are
accommodated for practical “hands on” training. In collaboration
with NIMT, 41 students are currently provided with work integrated
learning placements as part of their coursework and it will assist
their attaining a skilled trade qualification. It is envisaged that LHM
will retain a number of the bursary and graduate students.
Employee wellness remains an ongoing feature of the LHUPL
employee engagement programme as the health and well-being of
all employees is integral to corporate success. The occupational
health administrator coordinates efforts, reviews new programme
initiatives and manages existing programmes. The HIV/AIDS peer
educators team’s activities continued over this review period and
peer educators continue to provide counselling and assistance
to employees on the issue of HIV/AIDS and other areas where
assistance may be required.
Both of these initiatives have provided significant improvements to
the employee relations environment on the mine and will be used as a
basis for implementation of best-practice performance management
systems and processes in the year ahead. The planned introduction
of
formal performance management processes will support
development programmes through identifying employee strengths
and areas for development. It is envisaged that targeted training
initiatives and planned interventions to ensure that developmental
targets can be met will result.
Paladin has addressed the social issues detrimentally affecting
the lives of the employees and their families, through the culturally
acceptable story-telling medium. The stories, created by Paladin
staff, are in small illustrated books, and have been translated into the
most common languages of the employees (ie, English, Chitumbuka
and Chichewa) making them not only readily accessible but also
very popular. In the past year, the three key social issues of lack of
family planning, alcohol abuse and accumulation of debt have been
tackled. A fourth book, about the pervasive practice of bribery has
also been written, to reinforce the workshops that have been held
to clarify the law and Company policy about bribery and corruption.
namibia (Langer heinrich Mine)
Stability has been a feature of the past year with permanent employee
numbers remaining static at 333 - a reflection of rationalisation
through natural attrition. The average voluntary turnover rate is 7.5%
with 25 permanent employees resigning during this review period.
At the end of the year long-term contractor numbers totalled 787
which included 482 mining contractors.
The past year saw the introduction of a working partnership between
the representatives of the Mineworkers Union of Namibia and LHUPL
management and employees, each exploring the parameters of this
new relationship. Cumulative discordant views were addressed
through National Union Leadership and Management sessions
where methods of cooperation were explored, paving the way for
the conclusion of a two-year agreement on increased wages and
changed benefits, which has regard to the sustainable mining and
business operations of LHM. In addition considerable progress
was made on the Recognition and Procedural Agreement, which
structures the social partnership between an employer and a
representative trade union. Apart from the above, outstanding
matters which were referred by the local branch of the Mineworker’s
Union to the Office of the Prime Minister were concluded in favour
of LHUPL, with the ministerial committee commending LHUPL
as a fair employer and the mine being one of the best and safest
mines in Namibia. It is anticipated that the outcomes of the above
interventions will assist in resolving any potential future conflict
between the social partners and avoiding interruptions to LHM
business operations.
LHUPL is compliant with all requirements of the Affirmative Action
Act and has a consultative forum which is an integral part of its
affirmative action strategy. Furthermore, LHUPL is committed to,
and fully supports, the policy of equal opportunity employment and
non-discrimination through its measurable Affirmative Action Plan.
The Company remains committed to moving towards a workforce
with an improved gender balance. Females make up 14.7% of the
total number of permanent employees and are well represented
amongst the professional roles (27% of the senior leadership team
are female.) LHUPL currently has female employees represented in
the following disciplines, amongst others: trainee mining engineer
(2), metallurgist (2), geologist (4), chartered accountant (2), HR
practitioner (2), environmental scientist (1), artisan (2), graduate
trainee (5) and apprentice (8).
57
Paladin EnErgy lTd AnnuAl report 2013
Directors' Report
The Directors present their report on the Group consisting of Paladin Energy Ltd (Company)
and the entities (Group) it controlled at the end of, or during, the year ended 30 June 2013.
directors
the following persons were
directors of Paladin Energy
Ltd and were in office for
this entire period:
MR Ri CK wA ynE C R ABB
MR j ohn BoR shoFF
MR sEA n REvEiLLE LLEwELyn
B. Juris (Hons), LLB, MBA, FAICD
B.Sc., F.AusIMM, FAICD
LL.B
(non-executive director) Age 65
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, initially
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)
(non-executive Chairman)
Age 56
(Managing director/Chief
Executive officer) Age 68
Jurisprudence
Mr Crabb holds degrees of Bachelor
of
(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 and
advised
in relation to numerous
project developments 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
a number of
successful public companies. He is
also the non-executive chairman of
Ashburton Minerals Ltd (since 1999),
Golden Rim Resources Ltd (since
2001) and Otto Energy Ltd (since
2004). Mr Crabb is a councillor on
the Western Australian Division of
the Australian Institute of Company
Directors.
in
Mr Crabb was appointed to the
Paladin Board on 8 February 1994
and as Chairman on 27 March 2003.
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
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Mr Borshoff is a geologist who has
been involved in the Australian and
African exploration and mining
industry
for over 30 years. Mr
International
Borshoff worked
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.
in
has
Borshoff
experience
Mr
extensive
knowledge of the uranium industry
and
company
management and strategic 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
Paladin EnErgy lTd AnnuAl report 2013
MR d onALd s hUMK A
MR P EtER M ARK d onKin
MR Phi LiP B AiLy
Ms g iLLiA n s wABy
B.A., MBA
BEc, LLB., F Fin, MAICD
BSc, MSc
B.Bus, FCIS, FAICD
(non-executive director) Age 71
(non-executive director) Age 56
(non-executive director) Age 69
Mr Shumka is a Vancouver based
Corporate Director with 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
is also a director of Eldorado Gold
Corp.
(since May 2005), Alterra
Energy Corp. (since March 2008),
Lumina Copper Corp. (since January
2009) and Anfield Nickel Corp. (since
December 2010).
Mr Shumka was appointed to the
Paladin Board on 9 July 2007.
special Responsibilities
Mr Donkin has over 30 years’
experience
including
in finance,
20 years arranging finance in the
mining sector. He was previously
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 arranging
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
is a director of
Allegiance Coal Ltd (since 2010) and
was previously a director of Sphere
Minerals Ltd
(from March 2010
to November 2010) and Carbine
Tungsten Ltd (from February to April
2013).
Mr Donkin was appointed to the
Paladin Board on 1 July 2010.
Chairman of Audit Committee from
9 July 2007
special Responsibilities
Member of Remuneration
Committee from 10 August 2007
Member of Audit Committee from 25
November 2010
Member of Nomination Committee
from 10 August 2007
industry,
Mr Baily is a metallurgist with more
than 40 years’ experience in the
mining
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
CoMPAny sECREtARy And
ExECUtivE gEnERAL MAnAgER -
CoRPoRAtE sERviCEs Age 53
and
financial
involved
Ms Swaby has been
in
corporate
administration for listed companies,
as both Director and Company
Secretary covering a broad range of
industry sectors, for over 30 years.
Ms Swaby has extensive experience
in the area of secretarial practice,
corporate governance, management
accounting and corporate and
financial management. In addition
to her role as Group Company
Secretary, the divisions of human
resources,
legal and corporate
social responsibility also fall under
her management in the role of EGM-
Corporate Services.
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Ms Swaby is past Chair of the
Western Australian Council of
Chartered Secretaries of Australia,
a former Director on their National
Board and a
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. She is a director
of Australia-Africa Mining Industry
Group (AAMIG).
for
view our Executive team:
www.paladinenergy.com.au
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Paladin EnErgy lTd AnnuAl report 2013
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
Sustainability Committee
Name
Mr Rick Crabb
Mr John Borshoff
Mr Sean Llewelyn
Mr Donald Shumka
Mr Peter Donkin
Mr Philip Baily
Number
attended
Number
eligible
to attend
Number
attended
Number
eligible
to attend
Number
attended
Number
eligible
to attend
Number
attended
Number
eligible
to attend
12
12
12
11
12
12
12
12
12
12
12
12
-
-
4
4
4
-
-
-
4
4
4
-
2
-
2
2
-
-
2
-
2
2
-
-
3
3
-
-
-
3
3
3
-
-
-
3
Of the above Board meetings, 4 were face to face with the
remainder held via electronic means. The Board meeting schedule
also includes a scheduled conference call mid quarter between the
face to face meetings.
12 Board meetings were held. By way of reference, an independent
survey by CRA Plan Manager Pty Ltd states the average number of
board meetings is 12 for small companies and around 20 for larger
companies.
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interests in the securities of the Company
As at the date of this report, the interests of the Directors in the
securities of Paladin Energy Ltd were:
Share rights (issued
under the Paladin
Employee Plan)
150,000*
500,000**
Director
Paladin Shares
Mr John Borshoff
16,027,394
Mr Rick Crabb
Mr Sean Llewelyn
Mr Donald Shumka
Mr Peter Donkin
Mr Philip Baily
5,181,528
100,000
200,000
15,000
12,000
Review and Results of operations
A detailed operational and financial review of the Group is set out on
pages 10 to 35 of this report under the section entitled Management
Discussion and Analysis.
The Group’s loss after tax for the year is US$420.9M (2012:
US$172.8M) representing an increase of 144% from the previous year.
dividends
No dividend has been paid during the financial year and no dividend
is recommended for the current year.
significant Changes in the state of Affairs
There were no significant changes in the state of affairs of the Group
during the financial year not otherwise dealt with in this report.
significant Events after the Balance
sheet date
Nil
Nil
Nil
Nil
Nil
Other than disclosed below, 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 2013 Financial Report:
*
due to vest on 26 March 2014 subject to performance conditions
** due to vest on 5 November 2013 subject to performance conditions
stRAtEgiC initiAtivE UPdAtE
Resignation, Election and Continuation in
office of directors
In accordance with the Constitution of the Company, Mr Rick Crabb
and Mr Philip Baily will seek re-election at the 2013 Annual General
Meeting, following their 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 and Canada.
On 1 August 2013, the Company advised that it had terminated
negotiations with the lead party, and all other parties, for the sale
of a minority interest in the Langer Heinrich Mine. In the view of the
Board, the current depressed uranium price has meant that it is
unlikely that a price that appropriately reflects the strategic value of
the asset will be achieved and accordingly proceeding at this time
would be detrimental to long-term shareholder value.
Although there remains interest in the asset, Paladin believes that
the current weakness in the spot uranium price (US$35.50/lb)
should not overly influence the valuation of a flagship asset such as
Langer Heinrich. Specifically, Langer Heinrich:
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Paladin EnErgy lTd AnnuAl report 2013
has a +20 years minelife;
is a modern technologically advanced operation;
is operating in a country that is politically stable; and
is currently operating consistently at 5.2Mlb pa with further
expansion capacity.
Paladin strongly believes it can generate greater value to its
shareholders through postponing the sales process for Langer
Heinrich until there is a more a favourable uranium price environment.
More generally, Paladin believes that the current low uranium price
compromises the capacity for supply to reach clearly stated global
demand growth targets. It is generally recognised in the industry
that the process for recovery of supply growth can only reasonably
start when a sustainable US$70/lb threshold for uranium is reached
and Paladin supports this long-term price expectation.
In this context, the Langer Heinrich Mine remains a highly valuable
and strategically important operation for Paladin.
sUCCEssFUL institUtionAL PLACEMEnt oF shAREs to RAisE
A$88M / C$81M
On 2 August 2013, the Company announced that it had completed
the book-build for a private placement to institutional and accredited
investors of 125.6M ordinary shares (representing 15% of Paladin’s
existing issued capital) raising gross proceeds of approximately
A$88M / C$81M.
The placement was priced at A$0.70 (C$0.65) per share which
represented a 30% discount to Paladin’s last closing price on ASX.
The new shares rank equally with existing shares. Settlement of the
new shares issued under the placement occurred on the ASX and
the TSX on Monday 12 August 2013 (in each region). Allotment of
the new shares issued under the placement occurred on Tuesday
13 August 2013 (in each region).
UBS AG, Australia Branch acted as Global Lead Placing Agent to
the placement.
AdjUstMEnt oF thE ConvERsion PRiCE oF ConvERtiBLE Bonds
On 15 August 2013, the Company announced an adjustment of the
Conversion Price in connection to the US$300M convertible bonds
due 4 November 2015 and the US$274M convertible bonds due 30
April 2017 (together, the “Bonds”).
Pursuant to the terms of the Bonds the prevailing Conversion Price
is subject to adjustment where any new issue of shares is at less
than 95% of the Current Market Price. Following the completion of
the Placement on 12 August 2013, the Conversion Prices have been
adjusted as follows:
Convertible bonds due 2015: US$5.403 (previously US$5.608)
Convertible bonds due 2017: US$2.109 (previously US$2.19)
Likely developments
Likely developments in the operations of the Group constituted by
the Company and the entities it controls from time to time are set out
under the section entitled Management, Discussion and Analysis.
Environmental Regulations
The Group is subject to significant environmental regulation in
respect to its exploration, evaluation, development and operational
activities for uranium projects under the laws of the countries in
which its activities are conducted. The Group currently has 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
Details of the remuneration received by the Key Management
Personnel prepared in accordance with statutory requirements and
accounting standards are detailed further in the Remuneration Report.
The disclosure below aims to provide an overall picture of the group-
wide remuneration platform and not simply focus on Key Management
Personnel. The strategies outlined for Executive remuneration apply
across the Group. This extends to the consideration of relevant short-
term and long-term incentives. Given the difficulties being currently
experienced in attracting and retaining quality staff in the global
resource sector and, more particularly, in the much narrower uranium
sector, the focus is on policies to assist in attraction, motivation
and retention of staff across the Group. This does, however, have
to be balanced by the prevailing financial and economic conditions
being experienced by the Company at the time and the priorities on
allocation of cash resources. The remuneration strategy for the past
year reflects the focus on maintaining Group cash reserves given the
continuing downturn in uranium prices.
The Managing Director/CEO voluntarily reduced his salary by
25% from 1 December 2011 to 30 November 2012 (which he
later extended to the end of his current contract, 26 November
2013) setting the tone for the cost rationalisation programme
undertaken across the Group.
There were no salary increases across the Group given the
continuing poor uranium prices, with the exception of local
employees at the Kayelekera Mine and Langer Heinrich Mine.
Given the economic state of Malawi and the significant devaluation
of the kwacha, increases of 18% and 11% was given in October
2012 and June 2013 respectively, reflecting CPI adjustments.
Local workers in Namibia were given a 10% increase with effect
from 1 January 2013, reflecting local CPI adjustments.
No cash bonuses were paid this year as a result of continuing
poor uranium prices against US$404,000 for the prior year.
No share rights were granted during the year apart from 50,000
granted, but not yet issued, to the new CFO appointed in July
2012 as a sign on bonus.
A total of 1,717,000 share rights vested during the year (0.21%
of issued capital).
There was no increase in Non-executive Directors’ remuneration
during the year.
Long-term incentives on issue at balance date comprise:
– 3,358,957 share rights representing 0.40% of the issued
capital.
– All of the outstanding options on issue were cancelled during
the year due to the performance conditions not being met.
No further options will be issued under those plans.
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ExECUtivE REMUnERAtion – CAsh vALUE oF EARnings REALisEd
In keeping with the Company’s practice since 2011, the tables
below set out the cash value of earnings realised, by the Managing
Director/CEO and other executives considered to represent Key
Management Personnel for 2013 and 2012 and the intrinsic value
of share-based payments that vested to the executives during the
period. This is in addition and different to the disclosures required
by the Corporations Act and Accounting Standards, particularly
in relation to share rights. As a general principle, the Accounting
Standards require a value to be placed on share rights based on
probabilistic calculations at the time of grant which are reflected in
the remuneration report even if ultimately the share rights do not
vest because performance hurdles are not met. By contrast this
table discloses the intrinsic value of share rights, which represents
only those share rights which actual vest and result in shares issued
to a KMP. The intrinsic value is the Company’s closing share price
on the date of vesting.
The Company believes that this additional information is useful
to investors as recognised by the 2009 Productivity Commission
in Australia’. The
Inquiry Report
Commission recommended that remuneration reports should
include actual levels of remuneration received by the individuals
named in the report in order to increase its usefulness to investors.
‘Executive Remuneration
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 2013 year. The tables do not include the accounting
value for share rights 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 Mr 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$.
2013 (A$’000) / (Us$’000)
Name
Base Salary &
Superannuation
Cash
Bonus
Other
Total
Cash
LTIP
26 Mar
2010
LTIP
5 Nov
2010(3)
LTIP
15 Feb
2011(4)
LTIP
2 Apr
2012(5)
Total
A$
US$
A$ US$
A$
US$
A$
US$
A$
US$
A$
US$
A$
US$
A$
US$
A$
US$
Mr John Borshoff 1,534 1,573
Mr Dustin Garrow
666 683
Ms Gillian Swaby
-
-
Mr Mark Chalmers
517
530
Mr Alan Rule(8)
471
484
Total
3,188 3,270
-
-
-
-
-
-
-
-
-
-
-
-
- 567(6) 582(6)
54(7)
56(7)
-
-
-
-
-
1,534 1,573 148(1)
152
666
567
571
471
683
65(2)
582
58(2)
586
484
-
-
66
60
-
-
-
16
12
-
-
-
16
12
-
-
-
-
-
-
131
134
-
-
-
-
621
638
3,809 3,908
271
278
28
28
131
134
-
8
7
10
-
25
-
8
7
10
-
1,682 1,725
755
775
581
471
773
795
596
484
25
4,264 4,373
Refer to the Compensation of Key Management Personnel table later in the Remuneration Report for audited information required in accordance with the Corporations Act 2001
and its regulations.
Exchange rate used is average for year US$1 = A$0.97471.
(1) Value of share rights granted on 26 March 2010 and vesting on 26 March 2013 at a market price of A$0.985.
(2) Value of share rights granted on 26 March 2010 and vesting on 1 September 2012 at a market price of A$1.295.
(3) Value of share rights granted on 5 November 2010 and vesting on 1 September 2012 at a market price of A$1.295.
(4) Value of share rights granted on 15 February 2011 and vesting on 15 February 2013 at a market price of A$1.21.
(5) Value of share rights granted on 2 April 2012 and vesting on 1 September 2012 at a market price of A$1.295.
(6) Fees for services paid to a company of which Ms Gillian Swaby is a director and shareholder. Ms Swaby was appointed acting Chief Financial Officer during the interim period
after Mr Garry Korte resigned with effect from 24 May 2012 and Mr Alan Rule assumed the position on 23 July 2012.
(7) Living away from home allowance.
(8) Mr Alan Rule commenced on 23 July 2012.
2012 (A$’000) / (Us$’000)
Name
Base Salary &
Superannuation
Cash
Bonus
Other
Total
Cash
LTIP
26 Mar
2010(1)
LTIP
5 Nov
2010(2)
LTIP
15 Feb
2011(3)
Total
A$
US$
A$
US$
A$
US$
A$
US$
Mr John Borshoff
1,747
1,802
Mr Dustin Garrow
654
674
Ms Gillian Swaby
Mr Gary Korte(6)
Mr Mark Chalmers
-
497
500
-
513
516
Total
3,398 3,505
-
-
-
30
30
60
- 1,717(4)
1,771(4)
3,464
3,573
-
-
31
31
-
-
554(5)
571(5)
-
-
61(7)
63(7)
654
554
527
591
674
571
544
610
A$
-
61
55
27
-
US$
-
63
57
28
-
A$
-
16
12
10
-
38
US$
A$
US$
A$
US$
-
17
13
10
-
40
-
-
-
-
180
186
-
-
-
-
3,464
3,573
731
801
564
591
754
827
582
610
180
186
6,151 6,346
62 2,332
2,405 5,790 5,972
143
148
Exchange rate used is average for year US$1 = A$0.96971.
(1) Value of share rights granted on 26 March 2010 and vesting on 1 September 2011 at a market price of A$2.03.
(2) Value of share rights granted on 5 November 2010 and vesting on 1 September 2011 at a market price of A$2.03.
(3) Value of share rights granted on 15 February 2011 and vesting on 15 February 2012 at a market price of A$1.665.
(4) Other represents accrued annual leave (140 days) and accrued long service leave (80 days) paid out.
(5) Fees for services paid to a company of which Ms Gillian Swaby is a director and shareholder. Ms Swaby was appointed acting Chief Financial Officer during the interim period
after Mr Garry Korte resigned with effect from 24 May 2012 and Mr Alan Rule assumed the position on 23 July 2012.
(6) Mr Garry Korte resigned with effect from 24 May 2012.
(7) Living away from home allowance.
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remuneration report
(Audited)
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
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 Group, directly or indirectly, including any Director
whether executive or otherwise of the parent company.
performance;
provide competitive and fair reward;
be flexible and responsive in line with market expectations;
align Executive
shareholders; and
interests with those of the Company’s
comply with applicable legal requirements and appropriate
standards of governance.
Key Management Personnel comprise:
Mr Rick Crabb, Non-executive Chairman
Mr John Borshoff, Managing Director/CEO
Mr Sean Llewellyn, Non-executive Director
Mr Donald Shumka, Non-executive Director
Mr Philip Baily, Non-executive Director
Mr Peter Donkin, Non-executive Director
Ms Gillian Swaby, Company Secretary and
Executive General Manager – Corporate Services
Mr Alan Rule, Chief Financial Officer
(Commenced 23 July 2012)
Mr Dustin Garrow, Executive General Manager - Marketing
Mr Mark Chalmers, Executive General Manager – Production
For the purposes of this report, the term ‘Executive’ encompasses
the Managing Director/CEO, senior executives, managers and
company secretary of the Parent and the Group.
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.
This strategy applies group wide for all employees. Information in
relation to the compensation on Non-executive Directors is detailed
later in this Remuneration Report.
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 Board is cognisant of general shareholder concern that long-
term equity-based remuneration be linked to Company performance
and growth in shareholder value. The share rights plan addresses
this with performance conditions including reference to Earnings
per Share (EPS), Total Shareholder Return (TSR) and Market Price
conditions. These conditions apply to share rights currently on issue
and these performance conditions will be reviewed to determine the
appropriateness to the business prior to any further issues.
The table below compares the earnings per share to the closing share
price for the Company's five most recently completed financial years.
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30 June
2009
30 June
2010
30 June
2011
30 June
2012
30 June
2013
EPS
US$(0.78) US$(0.08) US$(0.11) US$(0.21) US$(0.49)
Share Price
A$4.93
A$3.59
A$2.52
A$1.25
A$0.88
The remuneration structure for the Key Management Personnel/
Executives has three elements:
The Remuneration Committee, chaired by Mr Sean Llewelyn, held
two 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.
fixed remuneration;
short-term variable remuneration; and
long-term incentives.
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. The remuneration for the Managing Director/CEO is
determined by the Remuneration Committee.
Any salary reviews and bonus payments are effective from 1
January in the year.
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Paladin EnErgy lTd AnnuAl report 2013
These are detailed as follows:
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.
Elements
Details
MAnAging diRECtoR/CEo
Remuneration
Component
Fixed
Remuneration
Variable
Performance
Linked
Remuneration
(“at risk”
remuneration)
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Annual base
salary determined
as at 1 January
each year
Statutory
superannuation
contributions
Expatriate benefits
Foreign
assignment
allowance
Short-term
incentive, paid
as a cash bonus
Long-term
incentive, granted
under the Rights
Plan
The ‘not at risk’ cash component
which may include certain salary
sacrifice packaging.
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.
Fixed Remuneration
This is reviewed annually with consideration given to both the
Company and the individual’s performance and effectiveness.
As competition in the global resource sector continues to grow,
and given an even narrower sector of uranium expertise, a key to
attracting and retaining talent is to maintain 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 did not engage remuneration consultants, however
it subscribes to a number of remuneration surveys and reports
including Boardroom Remuneration Review (Connect 4),), The
Resource Report and 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 publication, Executive and Board Remuneration Report
produced by Ernst & Young.
There were no salary increases across the Group given the
continuing poor uranium prices, with the exception of local
employees at the Kayelekera Mine and Langer Heinrich Mine. Given
the economic state of Malawi and the significant devaluation of the
kwacha, increases of 18% and 11% was given in October 2012 and
June 2013 respectively, reflecting CPI adjustments. Local workers in
Namibia were given a 10% increase with effect from 1 January 2013,
reflecting local CPI adjustments.
64
There was no increase in the fixed remuneration (inclusive of
superannuation) of A$2,044,224 (US$2,097,264). Base salary was
voluntarily reduced by 25% to A$1,533,600 (US$1,573,391) from
1 December 2011 to 30 November 2012 (which he later extended
to the end of his current contract, 26 November 2013). The
remuneration level 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 have 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 one years average base salary for the two years immediately
preceding the termination date. This benefit reflects approximately
20 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. A new
contract is currently being negotiated.
variable Remuneration
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. In respect of the 2012 calendar year, no bonuses
were paid having regard to continuing poor uranium prices and the
priority of cost reduction and cash conservation with the uranium
industry continuing to experience difficult times. This compared to
the 2011 calendar year, where a total of A$404,421 (US$417,054),
((2010 : A$1,009,000 (US$1,040,517)), was paid across the Group,
rewarding only those personnel who had demonstrated exceptional
performance and contribution given the poor uranium prices and
delays in the ramp-up of KM at that time.
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) health, safety and environmental performance;
(b) production performance;
(c) project development performance;
(d) additional uranium resources delineated;
(e) performance of the Company in meeting its various other
objectives;
Paladin EnErgy lTd AnnuAl report 2013
(f)
financial performance of the Company; and
(g) such other matters determined by the Remuneration
Committee in its discretion.
The above must, however, be viewed in the context of the operating
environment and the priorities in terms of the allocation of cash.
MAnAging diRECtoR/CEo
A bonus of up to 100% of base salary can be achieved under the
terms of his contract, having consideration to outcomes achieved
during the year, to be determined by the Remuneration Committee.
For the calendar year 2012 no bonus was awarded in line with the
philosophy applying to all staff referred to earlier. No bonus was paid
the previous year given the similar economic circumstances at that
time. Matters to be considered as key outcomes for the CY2013
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:
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
legislation). This
the Australian corporate
percentage now stands at 0.076%.
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
The share rights on issue from prior year grants are subject to a
range of vesting and performance conditions:
Vesting and Performance Conditions
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
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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. No share rights were granted to Mr J
Borshoff during the years ended 30 June 2012 and 2013. During the
year ended 30 June 2013 150,000 share rights vested in accordance
with their vesting conditions (the EPS measure, as detailed later
in this report). The initial measurement of the TSR performance
condition attached to the remaining 150,000 share rights due to
vest during the year was calculated. Mr Borshoff elected to have
these share rights retested at the end of year four in accordance
with the terms of the Rights Plan.
Factor
1
2
3
Production and financial performance meeting
or exceeding expectations.
Sustainability matters achieving expectations.
Successful outcome of strategic initiatives in
accordance with strategy.
4 Organisational factors meeting expectations.
5 Other factors at the discretion of the
Remuneration Committee
Indicative
Weighting
35%
10%
40%
5%
10%
The Remuneration Committee may, in its discretion, vary the
weighting to account for unusual/unexpected events or outcomes
during the year. Any bonus payable, relating to the 2013 calendar
year, would be paid out in CY2014.
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. In 2009, the Company has implemented an Employee
Performance Share Rights Plan (the Rights Plan) together with a
Contractor Performance Share Rights Plan (the Contractor Rights
Plan). These plans are referred to jointly as the Rights Plans and were
reaffirmed by shareholders at the 2012 Annual General Meeting.
As a consequence of adopting the Rights Plans, no further grants
have been made under the previous Executive Share Option Plan
(EXSOP) 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.
All of the outstanding options under the EXSOP were cancelled
during the year due to failing to meet the vesting conditions.
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.
65
Paladin EnErgy lTd AnnuAl report 2013
The performance conditions of all share rights granted to Managing
Director/CEO are:
Proportion of share rights to which
performance hurdle applies
Performance measure
50%
50%
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.
why wERE thEsE vEsting Conditions sELECtEd?
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. A review is currently underway
to consider whether the various performance conditions, other than
time based vesting, are the most appropriate for the Group. It is likely
that, in future, performance measures related more to internal hurdles
that support the Group’s strategic objectives may be adopted.
Details of the various vesting and performance conditions follow:
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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 and competition is high for quality personnel. 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.
Total Shareholder Return (TSR)
Except for the MD/CEO, 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. 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 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 the 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 to the TSRs of a peer group of
companies as described above.
The base and stretch targets for the TSR performance condition are as follows:
Relative TSR percentile ranking
Less than 50th percentile
at 50th percentile
Greater than the 50th percentile but less
than the 75th percentile
At 75th percentile or greater
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
Pro-rated vesting between 51% and 99% of the share rights subject to the TSR condition
100% of the share rights subject to the TSR condition
Market Price Performance (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.
Earnings Per Share (EPS)
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. Prior to 1 July 2013, 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. This was due to the development phase the Company was in and the importance of the CEO
leading the Company into positive earnings. However in respect of any share rights issued after 1 July 2013, only EPS growth measured to a positive
number will be applicable. 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:
Compound growth in EPS over the
performance period
Less than 10% pa
At 10% pa
More than 10% pa but less than 20% pa
At 20% pa or greater
Percentage of share rights that may vest if the EPS hurdle is met
0% of the share rights subject to the EPS condition
50% of the share rights subject to the EPS condition
Pro rated vesting between 51% and 99% of the share rights subject to the EPS condition
100% of the share rights subject to the EPS condition
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Paladin EnErgy lTd AnnuAl report 2013
BALAnCE oF shARE Rights At 30 jUnE 2013
Date rights granted
26 March 2010
5 November 2010
5 November 2010
5 November 2010
5 November 2010
5 November 2010
15 February 2011
2 April 2012
2 April 2012
2 April 2012
2 April 2012
2 April 2012
Total
Vesting date
26 March 2014
5 November 2013
5 November 2013
1 September 2013
1 September 2013
1 September 2013
15 February 2014
1 September 2013
31 December 2013
1 September 2014
1 September 2014
1 September 2014
Vesting performance conditions
TSR
TSR
EPS
Time based
TSR
Market price (base price A$3.62)
Time based
Time based
Time based
Time based
TSR
Market price (base price A$1.94)
Number
150,000(1)
250,000(1)
250,000(1)
366,947
293,560
440,340
125,650(2)
235,410
20,000
442,350
313,880
470,820
3,358,957
(1) Managing Director/CEO grant
(2)
Issued pursuant to retention programme, vesting time based only in order to retain quality personnel.
In summary, this balance represents 0.40% of the issued capital
whilst the proportion of time based share rights represents 0.14%.
shAREs ACQUiREd UndER thE Rights PLAn
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
share rights relative to total issued shares is very insignificant (0.40%)
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.
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 26(g) and Note 26(k) of the financial statements to see
the key inputs used for valuation of the long-term incentives.
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
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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. In the event employment is terminated for
any of retirement, disablement, redundancy or death, after the first
anniversary one third will be payable and after the second anniversary
two thirds will be payable. The cash award varies between 50% and
100% of the average annual salary over the 3 year period. The first
grant under this programme was on 1 July 2010 (payment date 1 July
2013) with a second on 1 January 2012 (payment date 1 January
2015). No proportion of these bonuses vested or were paid in the
financial year ended 30 June 2013 (30 June 2012: US$Nil).
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. This has proved to be an
important tool when seeking to fill senior management roles.
Key Elements of non-Executive director
Remuneration strategy
The focus of the remuneration strategy is to:
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. Fees paid for the year to 30 June
2013 total A$1,024,400 (US$1,050,979). A number of independent
surveys looking at companies from a market capitalisation, (A$1bn
- $3bn) perspective show Non-executive Director’s fees from
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A$156,000 (62.5th percentile) to A$194,000 (90th percentile). In
relation to Non-executive Chairman, the analysis ranges from
A$322,000 (50th percentile) to A$391,000 (90th percentile). The
median Audit Committee Chair fee is A$38,000.
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.
Remuneration
Component
Elements
Details
(per annum)
Base Fee
Must be contained
within aggregate limit
Chairman
A$338,000 (US$346,770)
Non-executive Directors are also entitled to be reimbursed for
reasonable expenses incurred whilst engaged on Company
business. There is no entitlement 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.
Non-executive Director
A$166,400 (US$170,307)
RotAtion oF diRECtoRs
Committee Fees* Paid to the Chairman of
A$21,000 (US$21,545)
Superannuation
the Audit Committee
Statutory contributions
are included in the fees
set out above
Statutory % of fees
Mr Rick Crabb and Mr Philip Baily will retire by rotation and seek
re-election at the 2013 Annual General Meeting.
1200 Maximum Fee Cap A$1.2M
* This is the only fee paid to any committee member. All other duties are remunerated as
part of the base fee.
The following graph is provided to give a clearer understanding of
the Non-executive Directors’ remuneration.
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
0
0
0
,
$
A
m
u
n
n
a
r
e
p
1000
800
600
400
200
0
120
160
160
180
65
325
166
166
166
187
338
166
166
166
187
338
P Baily
P Donkin
S Llewelyn
D Shumka*
I Noble
Chairman
2011
2012
2013
* Includes A$21K in relation to Audit Committee Chair fees
CoMPEnsAtion oF KEy MAnAgEMEnt PERsonnEL FoR thE yEAR EndEd 30 jUnE 2013 oF thE gRoUP
Short-Term Benefits
Post Employment
Long-Term Benefits
Share-
Based
Payment*
Total
Total
Total
Performance
Related
Total
Performance
Related
Salary
& fees
Cash bonus
Other
Company
Benefits
Other
Super-
annuation
Retirement
Benefits
Long-Term
Incentive
Plan
Long Service
Leave
Share
Rights
US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 A$’000
US$’000
%
Directors
Mr Rick Crabb
Mr John Borshoff
Mr Sean Llewellyn
Mr Donald Shumka
Mr Philip Baily
Mr Peter Donkin
Subtotal
Key Management Personnel
Ms Gillian Swaby
Mr Alan Rule(3)
Mr Dustin Garrow
Mr Mark Chalmers
Subtotal
Total
330
1556
157
192
157
157
2,549
-.
467
683
513
1,663
4,212
-.
-.
-.
-.
-.
-.
-.
-.
-.
-.
-.
-.
-.
-.
-.
-.
-.
-.
-.
-.
-.
-.
-.
56.(4)
56
56
-.
-.
-.
-.
-.
-.
-.
582.(2)
-.
-.
-.
582
582
17
17
14
-.
14
14
76
-.
17
-.
17
34
-.
59.(1)
-.
-.
-.
-.
59
-.
-.
-.
-.
-.
110
59
-.
-.
-.
-.
-.
-.
204
214
242
139
799
799
-.
104
-.
-.
-.
-.
-.
347
338
-.
834
2,570
2,505
834
-.
-.
-.
-.
171
192
171
171
166
187
166
166
-.
-.
-.
-.
104
834
3,622
3,528
834
-.
-.
-.
-.
-.
516
1,302
1,269
-.
698
680
153
1,078
1,050
91
816
795
760
3,894
3,794
104
1,594
7,516
7,322
61
-.
75
18
154
988
-.
32.5
-.
-.
-.
-.
4.7
-
6.9
2.2
Notes to the Compensation Table
Presentation Currency
The compensation table has been presented in US$, 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 2012 more than 85% of KMP’s contracts for services were denominated in A$ and this eliminates the effects of fluctuations in the US$
and A$ exchange rate. Exchange rate used is average for year US$ 1 = A$0.97471
(1) This is the amount required to be accrued in 2013 for the payment at a future date (as yet undetermined) of a retirement benefit to Mr Borshoff under the terms of his Services Contract.
(2) Other represents fees paid for services to a company of which Ms Gillian Swaby is a director and shareholder.
(3) Mr Alan Rule commenced 23 July 2012.
(4) Living away from home allowance.
* A reconciliation of this figure in A$ follows to enable a clearer understanding of how this number is calculated.
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Paladin EnErgy lTd AnnuAl report 2013
1200 Maximum Fee Cap A$1.2M
0
0
0
,
$
A
m
u
n
n
a
r
e
p
1000
800
600
400
200
0
2011
2012
2013
* Includes A$21K in relation to Audit Committee Chair fees
P Baily
P Donkin
S Llewelyn
D Shumka*
I Noble
Chairman
REConCiLiAtion oF shARE-BAsEd PAyMEnt CoMPEnsAtion oF KEy MAnAgEMEnt PERsonnEL
FoR thE yEAR EndEd 30 jUnE 2013 oF thE gRoUP
Share Rights
granted 26 March 2010
(vesting 2010 to 2013)
Share Rights
granted 5 November 2010
(vesting 2011 to 2013)
Share Rights
granted 15 February 2011
(vesting 2012 to 2014)
Share Rights
granted 2 April 2012
(vesting 2012 to 2014)
Total Share-Based Payment
A$’000
US$’000
A$’000
US$’000
A$’000
US$’000
A$’000
US$’000
A$’000
US$’000
242
242
27
-
30
-
57
249
249
28
-
31
-
59
299
308
570
570
59
-
79
-
138
708
585
585
61
-
81
-
142
727
-
-
-
-
379.(1)
389.(1)
-
-
-
379
379
-
-
-
389
389
-
-
37
-
41
-
-
38
-
42
88.(2)
91.(2)
166
166
171
171
812
812
502
-
150
88
740
834
834
516
-
154
91
761
1,552
1,595
Directors
Mr John Borshoff
Subtotal
Executives
Ms Gillian Swaby
Mr Alan Rule
Mr Dustin Garrow
Mr Mark Chalmers
Subtotal
Total
It should be noted that time or performance vesting conditions are attached to all of the share rights referred to above. These are detailed elsewhere in this report.
Exchange rate used as the average for year US$1 = A$0.97471
(1) Issued pursuant to retention programme, vesting time based only in order to retain quality personnel.
(2) Includes A$37,000 relating to 50,000 time-based shares negotiated as a sign-on bonus to assist in attracting quality personnel.
CoMPEnsAtion oF KEy MAnAgEMEnt PERsonnEL FoR thE yEAR EndEd 30 jUnE 2012 oF thE gRoUP
Short-Term Benefits
Post Employment
Long-Term Benefits
Share-
Based
Payment*
Total
Total
Total
Performance
Related
Total
Performance
Related
Salary
& fees
Cash bonus
Other
Company
Benefits
Other
Super-
annuation
Retirement
Benefits
Long-Term
Incentive
Plan
Long Service
Leave
Share
Rights
US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 A$’000
US$’000
%
Directors
Mr Rick Crabb
Mr John Borshoff
Mr Sean Llewellyn
Mr Donald Shumka
Mr Philip Baily
Mr Peter Donkin
Subtotal
Key Management Personnel
Ms Gillian Swaby
Mr Garry Korte (4)
Mr Dustin Garrow
Mr Mark Chalmers
Subtotal
Total
332
1,785
157
193
157
157
2,781
-
496
674
499
1,669
4,450
-
-
-
-
-
-
-
-
31
-
31
62
62
-
-
-
-
-
-
-
-
-
-
63.(6)
63
-
16
-
1,771.(1)
16
839.(2)
-
-
-
-
1,771
14
-
14
14
74
-
-
-
-
839
-
-
-
-
-
-
-
-
-
348
338
104
894
5,409
5,246
-
-
-
-
-
-
-
-
171
193
171
171
166
187
166
166
-.
894
-.
-.
-.
-.
104
894
6,463
6,269
894
571.(3)
-
-
-
-
571
16
-
16
32
-
-
-
-
-
239
(99)
281
81
502
-
-
-
-
-
1,162
1,972
1,912
(139).(5)
305
296
328
1,283
1,244
30
720
699
1,381
4,280
4,151
128
(46)
150
35
267
63
2,342
106
839
502
104
2,275 10,743 10,420
1,161
-
16.5
-
-
-
-
6.5
(15.1)
11.3
4.8
Notes to the Compensation Table
Presentation Currency
The compensation table has been presented in US$, 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. Exchange rate used is average for year US$ 1 = A$0.96971
(1) Other represents accrued annual leave (140 days) and accrued long service leave (80 days) paid out.
(2) This is the present value of the amount required to be accrued in 2012 for the payment at a future date (as yet undetermined) of a retirement benefit to Mr Borshoff under the
terms of his Services Contract.
(3) Other represents fees paid for services to a company of which Ms Gillian Swaby is a director and shareholder
(4) Mr Garry Korte – resigned 24 May 2012.
(5) Includes a credit of US$150,000 relating to share rights forfeited upon resignation.
(6) Living away from home allowance.
* A reconciliation of this figure in A$ follows to enable a clearer understanding of how this number is calculated.
69
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REConCiLiAtion oF shARE-BAsEd PAyMEnt CoMPEnsAtion oF KEy MAnAgEMEnt PERsonnEL
FoR thE yEAR EndEd 30 jUnE 2012 oF thE gRoUP
Share Rights
granted 26 March 2010
(vesting 2010 to 2013)
Share Rights
granted 5 November 2010
(vesting 2011 to 2013)
Share Rights
granted 15 February 2011
(vesting 2012 to 2014)
Share Rights
granted 2 April 2012
(vesting 2012 to 2014)
Total Share-Based Payment
A$’000
US$’000
A$’000
US$’000
A$’000
US$’000
A$’000
US$’000
A$’000
US$’000
297
297
173
(97)
192
-
268
565
306
306
178
(100)
198
-
276
582
570
570
83
(38)
111
-
156
726
588
588
86
(39)
114
-
161
749
-
-
-
-
856.(1)
883.(1)
-
-
-
856
856
-
-
-
883
883
-
-
14
-
16
29.(3)
59
59
-
-
15
-
16
30.(3)
61
61
867
867
894
894
1,126
(135).(2)
319
29
1,339
2,206
1,162
(139).(2)
328
30
1,381
2,275
directors
Mr John Borshoff
Subtotal
Executives
Ms Gillian Swaby
Mr Garry Korte
Mr Dustin Garrow
Mr Mark Chalmers
Subtotal
Total
It should be noted that time or performance vesting conditions are attached to all of the share rights referred to above. These are detailed elsewhere in this report.
Exchange rate used as the average for year US$1 = A$0.96971
(1) Issued pursuant to retention programme, vesting time based only.
(2) Includes a credit of A$146,000 relating to share rights forfeited upon resignation.
(3) Includes A$9,000 relating to 50,000 time-based shares negotiated as a sign-on bonus to assist in attracting quality personnel.
Mr Dustin Garrow, Executive General Manager - Marketing
Term of agreement – no fixed term.
Base salary, of US$683,385.
No termination benefit is specified in the agreement.
Notice period 6 months.
Retention bonus – 100%.
Mr Mark Chalmers, Executive General Manager – Production
Term of Agreement – no fixed term.
Base salary, inclusive of superannuation of A$514,500.
No termination benefit is specified.
Notice period 3 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.
shARE Rights vEstEd As shAREs -
KEy MAnAgEMEnt PERsonnEL (gRoUP)
30 June 2013
Directors
Mr John Borshoff
Executives
Ms Gillian Swaby
Mr Dustin Garrow
Mr Mark Chalmers
Total
Vested as shares
150,000
167,833
68,000
7,500
393,333
Contracts for services
Remuneration and other terms of employment for the Key Management
Personnel are normally formalised in contracts for services.
All contracts with Key Management Personnel may be terminated early by
either party providing between 3 to 6 months written notice or providing
payments in lieu of the notice period (based on fixed component of
remuneration). On termination notice by the Company, any rights that
have vested, or that will vest during the notice period, will be released.
Rights that have not yet vested will be forfeited.
Mr John Borshoff, Managing Director/CEO
Term of agreement – 4 years commencing 27 November 2009.
Base salary, inclusive of superannuation, A$2,044,244. Base salary was
voluntarily reduced by 25% to A$1,533,600 from 1 December 2011 to
30 June 2013, and further extended by him to the end of his current
contract, 26 November 2013.
3 months long service leave after 5 years continual service.
Payment of a benefit on retirement or early termination by the Company,
other than for gross misconduct, equal to one year’s average base salary
for the 2 years immediately preceding the termination date.
A new contract is currently being negotiated.
Ms Gillian Swaby, Company Secretary and Executive General
Manager – Corporate Services
Fees are paid in the ordinary course of business for services to a
company of which Ms Gillian Swaby is a director and shareholder.
Consultancy agreement with no fixed term.
Annual fee A$567,000.
Notice period 3 months.
No termination benefit is specified in the agreement.
Retention bonus – 100%.
Mr Alan Rule, Chief Financial Officer (Commenced 23 July 2012)
Term of agreement – no fixed term.
Base salary, inclusive of superannuation of A$500,000.
No termination benefit is specified in the agreement.
Notice period 6 months.
Retention bonus – 100%.
50,000 time-based share rights negotiated as a sign-on bonus to assist
in attracting quality personnel. These will be issued at the time of the
next issue of Company Performance Shares Rights.
End oF AUdit Ed REMUnER A tion REP oR t
70
Paladin EnErgy lTd AnnuAl report 2013
share Rights
non-Audit services
The outstanding balance of share rights at the date of this report
are as follows:
Date rights
granted
Vesting date
Vesting
performance
conditions
26 March 2010
26 March 2014
5 November 2010
5 November 2013
5 November 2010
5 November 2013
TSR
TSR
EPS
5 November 2010
1 September 2013
Time based
5 November 2010
1 September 2013
TSR
5 November 2010
1 September 2013
Market price
(base price
A$3.62)
Number
150,000.(1)
250,000.(1)
250,000.(1)
348,960
279,170
418,755
15 February 2011
15 February 2014
Time based
125,650.(2)
2 April 2012
1 September 2013
Time based
2 April 2012
31 December 2013
Time based
2 April 2012
1 September 2014
Time based
2 April 2012
1 September 2014
TSR
2 April 2012
1 September 2014
Total
Market price
(base price
A$1.94)
224,085
20,000
423,475
298,780
448,170
3,237,045
The following non-audit and assurance services were provided by
the Company’s auditor, Ernst & Young. The Directors are satisfied
that the provision of non-audit and assurance services is compatible
with the general standard of independence for auditors imposed
by the Corporations Act. The nature and scope of each type of
non-audit and assurance service provided means that auditor
independence was not compromised.
Ernst & Young received or are due to receive the following amounts
for the provision of non-audit services:
Tax compliance services
International tax consulting
Tax advice on mergers and acquisitions
Other tax advice
Total
US$’000
114
180
48
169
511
Signed in accordance with a resolution of the Directors.
(1) Managing Director/CEO grant
(2) Issued pursuant to retention programme, vesting time based only in order to retain
quality personnel.
1,717,850 shares were issued on the vesting of share rights during
the year ended 30 June 2013. 4,217,329 options were cancelled
having failed to achieve performance conditions.
Mr John Borshoff
Managing Director/CEO
Perth, Western Australia
29 August 2013
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.
Auditor’s independence declaration to the
directors of Paladin Energy Ltd
In relation to our audit of the financial report of Paladin Energy Ltd
for the year ended 30 June 2013, 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.
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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.
Ernst & Young
Auditor
Ernst & Young were appointed auditors for the Company on 21 June
2005, which was approved by shareholders at the 2005 Annual
General Meeting on 9 November 2005.
Auditor independence and non-Audit services
The Directors received the following declaration from the auditor of
Paladin Energy Ltd.
G H Meyerowitz
Partner
29 August 2013
71
Paladin EnErgy lTd AnnuAl report 2013
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
going ConCern
SummAry oF SigniFiCAnt ACCounting poliCieS
Segment inFormAtion
reVenueS AnD expenSeS
inCome tAx
CASh AnD CASh eQuiVAlentS
trADe AnD other reCeiVABleS
inVentorieS
note 10.
other FinAnCiAl ASSetS
note 11.
property, plAnt AnD eQuipment
note 12.
mine DeVelopment
note 13.
explorAtion AnD eVAluAtion expenDiture
note 14.
intAngiBle ASSetS
note 15.
trADe AnD other pAyABleS
note 16.
intereSt BeAring loAnS AnD BorroWingS
note 17.
proViSionS
note 18.
uneArneD reVenue
note 19.
ContriButeD eQuity AnD reSerVeS
note 20.
FinAnCiAl inStrumentS
note 21.
key mAnAgement perSonnel
note 22.
AuDitorS’ remunerAtion
note 23.
CommitmentS AnD ContingenCieS
note 24.
employee BeneFitS
note 25.
relAteD pArtieS
note 26.
ShAre-BASeD pAyment plAnS
note 27.
intereStS in jointly ControlleD ASSetS
note 28.
eVentS AFter the BAlAnCe DAte
note 29.
eArningS per ShAre
note 30.
pArent entity inFormAtion
73
74
75
76
78
79
79
79
91
94
95
97
98
99
100
100
102
103
108
109
109
112
113
113
116
122
126
127
128
128
129
132
133
134
134
72
P A 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 0 1 3
Consolidated inCome statement
the year ended 30 June 2013
Revenue
Revenue
Cost of sales
Impairment – inventory and stores and consumables
Gross profit
Other income
Exploration and evaluation expenses
Administration, marketing and non-production costs
Other expenses
Loss before interest and tax
Finance costs
Net loss before income tax
Income tax (expense)/benefit
Net loss after tax
Attributable to:
Non-controlling interests
Members of the parent
Net loss after tax
Loss per share (US cents)
notes
5(a)
5(b)
2013
US$M
2012
US$M
411.5
(355.6)
(30.9)
367.4
(304.5)
(39.0)
25.0
23.9
5(c)
3.0
13
(1.4)
2.6
(2.5)
5(d)
5(e)
(39.5)
(47.0)
(308.9)
(199.8)
(321.8)
(222.8)
5(f)
(63.8)
(56.7)
(385.6)
(279.5)
6(a)
(88.4)
78.7
(474.0)
(200.8)
(53.1)
(420.9)
(474.0)
(28.0)
(172.8)
(200.8)
Loss after tax from operations attributable to ordinary equity holders of the Company
– basic and diluted (US cents)
29
The above Consolidated Income Statement should be read in conjunction with the accompanying notes.
(49.1)
(20.2)
73
Financial RepoRtpaladin eneRgy ltd AnnuAl report 2013
Consolidated statement of Comprehensive inCome
for the year ended 30 June 2013
Net loss after tax from operations
Other comprehensive income
notes
2013
US$M
2012
US$M
(474.0)
(200.8)
Items that may be subsequently reclassified to profit or loss:
Transfer of realised gains to other income on disposal of available-for-sale financial assets
Net loss on available-for-sale financial assets
(1.2)
(5.3)
-
(25.8)
Transfer of impairment loss on available-for-sale financial assets to income statement
5.0
8.0
Foreign currency translation
Income tax on items of other comprehensive income
Items that will not be subsequently reclassified to profit or loss:
Foreign currency translation attributable to non-controlling interests
Other comprehensive loss for the year, net of tax
Total comprehensive loss for the year
Total comprehensive loss attributable to:
Non-controlling interests
Members of the parent
(67.8)
(40.7)
0.1
3.3
(7.9)
(77.1)
(3.3)
(58.5)
(551.1)
(259.3)
(61.0)
(490.1)
(31.3)
(228.0)
(551.1)
(259.3)
The above Consolidated Statement of Comprehensive Income should be read in conjunction with the accompanying notes.
74
Financial RepoRtpaladin eneRgy ltd AnnuAl report 2013
Consolidated statement of finanCial position
as at 30 June 2013
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Prepayments
Inventories
TOTAL CURRENT ASSETS
Non current assets
Trade and other receivables
Inventories
Other financial assets
Property, plant and equipment
Mine development
Exploration and evaluation expenditure
Deferred tax asset
Intangible assets
TOTAL NON CURRENT ASSETS
TOTAL ASSETS
LIABILITIES
Current liabilities
Trade and other payables
Interest bearing loans and borrowings
Provisions
TOTAL CURRENT LIABILITIES
Non current liabilities
Interest bearing loans and borrowings
Deferred tax liabilities
Provisions
Unearned revenue
TOTAL NON CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Contributed equity
Reserves
Accumulated losses
Parent interests
Non-controlling interests
TOTAL EQUITY
notes
2013
US$M
2012
US$M
7
8
9
78.1
78.3
9.2
158.8
112.1
82.8
10.2
186.5
324.4
391.6
8
9
10
11
12
13
6(d)
14
0.1
141.4
10.3
301.0
42.8
1,004.9
-
12.8
0.1
114.2
15.5
491.7
88.3
1,143.2
85.0
18.1
1,513.3
1,956.1
1,837.7
2,347.7
15
16
17
57.9
63.6
9.9
67.1
183.4
3.4
131.4
253.9
16
6(d)
17
18
614.2
186.9
57.0
200.0
655.1
203.5
40.4
-
1,058.1
899.0
1,189.5
1,152.9
648.2
1,194.8
1,845.7
106.6
(1,295.5)
656.8
(8.6)
1,839.2
177.8
(874.6)
1,142.4
52.4
648.2
1,194.8
19(a)
19(c)
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
75
Financial RepoRtpaladin eneRgy ltd AnnuAl report 2013
Consolidated statement of Changes in equity
for the year ended 30 June 2013
Contributed
equity
available
-for-sale
reserve
share-based
payments
reserve
Convertible
bond non-
distrib-
utable
reserve
foreign
CurrenCy
revaluation
reserve
US$M
US$M
US$M
US$M
Balance at 1 July 2011
1,768.1
11.7
49.5
60.4
Loss for the period
Other comprehensive loss
Total comprehensive loss for the year net of tax
Share-based payment
Vesting performance rights
Contributions of equity, net of transaction costs
Convertible bonds – equity component,
net of tax and transaction costs
Convertible bonds – buyback
-
-
-
-
4.7
66.4
-
-
-
(14.5)
(14.5)
-
-
-
-
-
-
-
-
7.4
(4.7)
-
-
-
-
-
-
-
-
-
27.9
(2.8)
US$M
68.8
-
(40.7)
(40.7)
-
-
-
-
-
Balance at 30 June 2012
1,839.2
(2.8)
52.2
85.5
28.1
14.9
0.1
(0.2)
(874.6)
1,142.4
52.4
1,194.8
Balance at 1 July 2012
1,839.2
Loss for the period
Other comprehensive loss
Total comprehensive loss for the year net of tax
Share-based payment
Vesting performance rights
-
-
-
-
6.5
Balance at 30 June 2013
1,845.7
(2.8)
-
(1.4)
(1.4)
-
-
(4.2)
52.2
85.5
28.1
14.9
0.1
(0.2)
(874.6)
1,142.4
52.4
1,194.8
-
-
-
4.5
(6.5)
-
-
-
-
-
-
(67.8)
(67.8)
-
-
50.2
85.5
(39.7)
14.9
0.1
(0.2)
(1,295.5)
656.8
(8.6)
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
premium on
aCquisition
reserve
US$M
option
reserve
US$M
reserve
US$M
appliCation
Consolidated
aCCumulated
attributable
to owners of
the parent
non-
Controlling
interests
US$M
US$M
losses
US$M
14.9
0.1
(0.2)
(701.8)
1,271.5
83.7
1,355.2
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(172.8)
(172.8)
(420.9)
(420.9)
-
-
-
-
-
-
-
-
-
(172.8)
(55.2)
(228.0)
7.4
-
66.4
27.9
(2.8)
(420.9)
(69.2)
(490.1)
4.5
-
(28.0)
(3.3)
(31.3)
-
-
-
-
-
-
-
(53.1)
(7.9)
(61.0)
total
US$M
(200.8)
(58.5)
(259.3)
7.4
-
66.4
27.9
(2.8)
(474.0)
(77.1)
(551.1)
4.5
-
648.2
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Financial RepoRtpaladin eneRgy ltd AnnuAl report 2013
Consolidated statement of Changes in equity
for the year ended 30 June 2013
total
US$M
US$M
US$M
US$M
US$M
(0.2)
-
-
-
-
-
-
-
-
Consolidated
reserve
aCCumulated
losses
attributable
to owners of
the parent
non-
Controlling
interests
(701.8)
1,271.5
83.7
1,355.2
(172.8)
-
(172.8)
-
-
-
-
-
(172.8)
(55.2)
(228.0)
7.4
-
66.4
27.9
(2.8)
(28.0)
(3.3)
(31.3)
-
-
-
-
-
(200.8)
(58.5)
(259.3)
7.4
-
66.4
27.9
(2.8)
Contributed
equity
US$M
available
-for-sale
reserve
share-based
payments
reserve
US$M
US$M
Convertible
bond non-
distrib-
utable
reserve
US$M
foreign
CurrenCy
revaluation
reserve
premium on
aCquisition
reserve
option
appliCation
reserve
US$M
US$M
Balance at 1 July 2011
1,768.1
11.7
49.5
60.4
14.9
0.1
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Loss for the period
Other comprehensive loss
Total comprehensive loss for the year net of 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
4.7
66.4
7.4
(4.7)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(14.5)
(14.5)
-
-
-
-
-
-
-
-
-
(1.4)
(1.4)
US$M
68.8
(40.7)
(40.7)
(67.8)
(67.8)
-
-
-
-
-
-
-
-
-
27.9
(2.8)
-
-
-
-
-
-
-
-
-
-
-
Balance at 30 June 2012
1,839.2
(2.8)
52.2
85.5
28.1
14.9
0.1
(0.2)
(874.6)
1,142.4
52.4
1,194.8
Balance at 1 July 2012
1,839.2
(2.8)
52.2
85.5
28.1
14.9
0.1
(0.2)
(874.6)
1,142.4
52.4
1,194.8
Loss for the period
Other comprehensive loss
Total comprehensive loss for the year net of tax
Share-based payment
Vesting performance rights
6.5
4.5
(6.5)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(420.9)
-
(420.9)
-
-
(420.9)
(69.2)
(490.1)
4.5
-
Balance at 30 June 2013
1,845.7
(4.2)
50.2
85.5
(39.7)
14.9
0.1
(0.2)
(1,295.5)
656.8
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
(53.1)
(7.9)
(61.0)
-
-
(8.6)
(474.0)
(77.1)
(551.1)
4.5
-
648.2
77
Financial RepoRtpaladin eneRgy ltd AnnuAl report 2013
Consolidated statement of Cash flows
for the year ended 30 June 2013
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers
Payments to suppliers and employees
Interest received
Proceeds from long-term off-take agreement
Interest paid
Exploration and evaluation expenditure
Other income
notes
2013
US$M
2012
US$M
400.0
(364.8)
1.0
200.0
(42.4)
(1.4)
2.1
313.9
(401.1)
1.4
-
(38.0)
(2.5)
0.5
NET CASH INFLOW/(OUTFLOW) FROM OPERATING ACTIVITIES
7(a)
194.5
(125.8)
CASH FLOWS FROM INVESTING ACTIVITIES
Capitalised exploration expenditure
Payments for property, plant and equipment
Payments for available-for-sale investments
Proceeds from sale of property, plant & equipment
Proceeds from sale of investments
NET CASH OUTFLOW FROM INVESTING ACTIVITIES
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from convertible bonds
Repayment of convertible bonds
Convertible bond finance costs
Share placement
Equity fundraising costs
Project finance facility establishment costs
Repayment of borrowings
Proceeds from borrowings
(16.5)
(30.6)
(1.4)
0.4
1.9
(46.2)
-
(134.0)
(0.4)
-
-
(0.2)
(46.9)
-
(12.1)
(70.1)
-
-
-
(82.2)
274.0
(191.0)
(5.9)
64.7
(2.1)
(2.0)
(77.2)
141.0
NET CASH (OUTFLOW)/INFLOW FROM FINANCING ACTIVITIES
(181.5)
201.5
NET DECREASE 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
(33.2)
(6.5)
112.1
(0.8)
117.4
1.2
CASH AND CASH EQUIVALENTS AT THE END OF THE FINANCIAL YEAR
7
78.1
112.1
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
78
Financial RepoRtpaladin eneRgy ltd AnnuAl report 2013
NOTE 1. COrpOraTE iNfOrmaTiON
The Financial Report of Paladin for the year ended 30 June 2013 was authorised for issue in accordance with a resolution of the
Directors on 23 August 2013.
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
10 to 35.
NOTE 2. GOiNG CONCErN
The Group’s consolidated financial statements have been prepared on a going concern basis which contemplates the continuity of
normal business activities and the realisation of assets and the settlement of liabilities in the ordinary course of business.
During the year ended 30 June 2013, the Group incurred net losses after tax attributable to the members of US$420.9M (2012:
US$172.8M) and had net cash outflow of US$33.2M (2012: US$6.5M). At balance date the Group had a net working capital surplus
of US$193.0M (2012: US$137.7M) including cash on hand of US$78.1M (2012: US$112.1M). Included within this cash on hand is
US$25.7M (2012: US$26.2M) which is restricted for use in respect of the LHM and KM project finance facilities.
Repayment obligations, during the year ending 30 June 2014, in respect of interest bearing loans and borrowings are summarised as
follows:
Secured bank loans principal repayments of US$65.7M for LHM and KM project financing; and
Interest payments of US$31.7M for LHM and KM project financing and convertible bonds.
In addition, in arriving at its position in relation to going concern, the Directors have given consideration to the following:
intention to sell a minority equity position in Langer Heinrich Mine in Namibia;
the Group has a history of refinancing some of its debt; and
the Group has a history of successful equity capital raisings.
On 2 August 2013, the Company announced that it had completed a private placement to institutional and accredited investors of
125.6M ordinary shares raising A$88M/US$80.7M.
NOTE 3. 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, which have been measured at fair value. Where necessary, comparatives have been reclassified and repositioned for
consistency with current year disclosures. For the purposes of preparing the consolidated financial statements, the Company is a for-
profit entity.
In addition to these Australian requirements further information has been included in the Consolidated Financial Statements for the
year ended 30 June 2013 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 2012.
(b) New accounting Standards and Interpretations
(i) Changes in accounting policy and disclosures
The Group has adopted all new and amended Australian Accounting Standards and AASB interpretations effective from 1 July 2012,
including:
Reference
Title
AASB 2011-9
Amendments to Australian Accounting Standards -Presentation of Other Comprehensive Income
[AASB 1, 5, 7, 101, 112, 120, 121, 132, 133, 134, 1039 & 1049]
This standard requires entities to group items presented in other comprehensive income on the basis of
whether they might be reclassified subsequently to profit or loss and those that will not.
The new and amended Standards and Interpretations had no impact on the financial position or performance of the Group.
79
Notes to the CoNsolidated FiNaNCial statemeNtsFor the year eNded 30 JuNe 2013Financial RepoRtpaladin eneRgy ltd aNNual report 2013
NOTE 3. SUmmarY Of SiGNifiCaNT aCCOUNTiNG pOLiCiES (CONTiNUEd)
(b) New accounting Standards and Interpretations (continued)
(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 2013, outlined in the table below:
Reference
AASB 10
Title
Summary
Consolidated Financial
Statements
Application Date
of Standard*
Application
Date for
Group*
1 January 2013
1 July 2013
1 January 2013
1 July 2013
1 January 2013
1 July 2013
1 January 2013
1 July 2013
AASB 10 establishes a new control model that applies to
all entities. It replaces parts of AASB 127 Consolidated
and Separate Financial Statements dealing with the
accounting for consolidated financial statements and UIG-
112 Consolidation - Special Purpose Entities.
The new control model broadens the situations when an
entity is considered to be controlled by another entity and
includes new guidance for applying the model to specific
situations, including when acting as a manager may give
control, the impact of potential voting rights and when
holding less than a majority voting rights may give control.
Consequential amendments were also made to this and
other standards via AASB 2011-7 and AASB 2012-10.
AASB 11 replaces AASB 131 Interests in Joint Ventures
and UIG-113 Jointly- controlled Entities - Non-monetary
Contributions by Ventures.
AASB 11 uses the principle of control in AASB 10 to
define joint control, and therefore the determination of
whether joint control exists may change. In addition
it removes the option to account for jointly controlled
entities (JCEs) using proportionate consolidation. Instead,
accounting for a joint arrangement is dependent on
the nature of the rights and obligations arising from the
arrangement. Joint operations that give the venturers a
right to the underlying assets and obligations themselves
is accounted for by recognising the share of those assets
and obligations. Joint ventures that give the venturers a
right to the net assets is accounted for using the equity
method.
Consequential amendments were also made to this and
other standards via AASB 2011-7, AASB 2010-10 and
amendments to AASB 128.
AASB 12 includes all disclosures relating to an entity’s
interests in subsidiaries, joint arrangements, associates
and structured entities. New disclosures have been
introduced about the judgments made by management
to determine whether control exists, and to require
summarised information about joint arrangements,
associates, structured entities and subsidiaries with non-
controlling interests.
AASB 13 establishes a single source of guidance for
determining the fair value of assets and liabilities. AASB
13 does not change when an entity is required to use fair
value, but rather, provides guidance on how to determine
fair value when fair value is required or permitted.
Application of this definition may result in different fair
values being determined for the relevant assets.
AASB 13 also expands the disclosure requirements for
all assets or liabilities carried at fair value. This includes
information about the assumptions made and the
qualitative impact of those assumptions on the fair value
determined.
Consequential amendments were also made to other
standards via AASB 2011-8.
AASB 11
Joint Arrangements
AASB 12
Disclosure of Interests
in Other Entities
AASB 13
Fair Value
Measurement
80
Notes to the CoNsolidated FiNaNCial statemeNtsFor the year eNded 30 JuNe 2013Financial RepoRtpaladin eneRgy ltd aNNual report 2013 NOTE 3. 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
Interpretation
20
Stripping Costs in the
Production Phase of a
Surface Mine
AASB 2012-2 Amendments
to Australian
Accounting Standards
- Disclosures -
Offsetting Financial
Assets and Financial
Liabilities
AASB 2012-5 Amendments to
Australian Accounting
Standards arising from
Annual Improvements
2009-2011 Cycle
AASB 2012-9 Amendment to
AASB 1048 arising
from the withdrawal
of Australian
Interpretation 1039
AASB 2011-4 Amendments to
Australian Accounting
Standards to
Remove Individual
Key Management
Personnel Disclosure
Requirements
[AASB 124]
This interpretation applies to stripping costs incurred
during the production phase of a surface mine. Production
stripping costs are to be capitalised as part of an
asset, if an entity can demonstrate that it is probable
future economic benefits will be realised, the costs can
be reliably measured and the entity can identify the
component of an ore body for which access has been
improved. This asset is to be called the “stripping activity
asset”.
The stripping activity asset shall be depreciated or
amortised on a systematic basis, over the expected
useful life of the identified component of the ore body
that becomes more accessible as a result of the stripping
activity. The units of production method shall be applied
unless another method is more appropriate.
Consequential amendments were also made to other
standards via AASB 2011-12.
AASB 2012-2 principally amends AASB 7 Financial
Instruments: Disclosures to require disclosure of the effect
or potential effect of netting arrangements. This includes
rights of set-off associated with the entity’s recognised
financial assets and liabilities on the entity’s financial
position, when the offsetting criteria of AASB 132 are not
all met.
AASB 2012-5 makes amendments resulting from the
2009-2011 Annual Improvements Cycle. The standard
addresses a range of improvements, including the
following:
Repeat application of AASB 1 is permitted (AASB 1).
Clarification of the comparative information
requirements when an entity provides a third
balance sheet (AASB 101 Presentation of Financial
Statements).
AASB 2012-9 amends AASB 1048 Interpretation of
Standards to evidence the withdrawal of Australian
Interpretation 1039 Substantive Enactment of Major Tax
Bills in Australia.
This amendment deletes from AASB 124 individual
key management personnel disclosure requirements
for disclosing entities that are not companies. It also
removes the individual KMP disclosure requirements for all
disclosing entities in relation to equity holdings, loans and
other related party transactions.
Application Date
of Standard*
Application
Date for
Group*
1 January 2013
1 July 2013
1 January 2013
1 July 2013
1 January 2013
1 July 2013
1 January 2013
1 July 2013
1 July 2013
1 July 2013
81
Notes to the CoNsolidated FiNaNCial statemeNtsFor the year eNded 30 JuNe 2013Financial RepoRtpaladin eneRgy ltd aNNual report 2013 NOTE 3. 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
AASB 1053
Application of Tiers of
Australian Accounting
Standards
This standard establishes a differential financial
reporting framework consisting of two tiers of reporting
requirements for preparing general purpose financial
statements:
Application Date
of Standard*
1 July 2013
Application
Date for
Group*
1 July 2013
(a) Tier 1: Australian Accounting Standards.
(b) Tier 2: Australian Accounting Standards –
Reduced Disclosure Requirements.
Tier 2 comprises the recognition, measurement and
presentation requirements of Tier 1 and substantially
reduced disclosures corresponding to those requirements.
The following entities apply Tier 1 requirements in
preparing general purpose financial statements:
(a) For-profit entities in the private sector that have public
accountability (as defined in this standard).
(b) The Australian Government and State, Territory and
Local governments.
The following entities apply either Tier 2 or Tier 1
requirements in preparing general purpose financial
statements:
(a) For-profit private sector entities that do not have
public accountability.
(b) All not-for-profit private sector entities.
(c) Public sector entities other than the Australian
Government and State, Territory and Local
governments.
Consequential amendments to other standards to
implement the regime were introduced by AASB 2010-2,
2011-2, 2011-6, 2011-11, 2012-1, 2012-7 and 2012-11.
AASB 2012-3 adds application guidance to AASB
132 Financial Instruments: Presentation to address
inconsistencies identified in applying some of the
offsetting criteria of AASB 132, including clarifying the
meaning of “currently has a legally enforceable right of
set-off” and that some gross settlement systems may be
considered equivalent to net settlement.
This Interpretation confirms that a liability to pay a levy
is only recognised when the activity that triggers the
payment occurs. Applying the going concern assumption
does not create a constructive obligation.
1 January 2014
1 July 2014
1 January 2014
1 July 2014
AASB 2012-3 Amendments to
Australian Accounting
Standards - Offsetting
Financial Assets and
Financial Liabilities
Interpretation
21
Levies^
82
Notes to the CoNsolidated FiNaNCial statemeNtsFor the year eNded 30 JuNe 2013Financial RepoRtpaladin eneRgy ltd aNNual report 2013 NOTE 3. 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*
AASB 9
Financial Instruments AASB 9 includes requirements for the classification and
1 January 2015
1 July 2015
measurement of financial assets. It was further amended
by AASB 2010-7 to reflect amendments to the accounting
for financial liabilities.
These requirements improve and simplify the approach
for classification and measurement of financial assets
compared with the requirements of AASB 139. The main
changes are described below:
(a) Financial assets that are debt instruments will be
classified based on (1) the objective of the entity’s
business model for managing the financial assets; (2)
the characteristics of the contractual cash flows.
(b) Allows an irrevocable election on initial recognition
to present gains and losses on investments in equity
instruments that are not held for trading in other
comprehensive income. Dividends in respect of these
investments that are a return on investment can be
recognised in profit or loss and there is no impairment
or recycling on disposal of the instrument.
(c) Financial assets can be designated and measured at fair
value through profit or loss at initial recognition if doing
so eliminates or significantly reduces a measurement
or recognition inconsistency that would arise from
measuring assets or liabilities, or recognising the gains
and losses on them, on different bases.
(d) Where the fair value option is used for financial liabilities
the change in fair value is to be accounted for as
follows:
The change attributable to changes in credit risk are
presented in other comprehensive income (OCI).
The remaining change is presented in profit or loss.
If this approach creates or enlarges an accounting
mismatch in the profit or loss, the effect of the changes in
credit risk are also presented in profit or loss.
Further amendments were made by AASB 2012-6 which
amends the mandatory effective date to annual reporting
periods beginning on or after 1 January 2015. AASB
2012-6 also modifies the relief from restating prior periods
by amending AASB 7 to require additional disclosures on
transition to AASB 9 in some circumstances.
Consequential amendments were also made to other
standards as a result of AASB 9, introduced by AASB
2009-11 and superseded by AASB 2010-7 and 2010-10.
* Designates the beginning of the applicable annual reporting period unless otherwise stated.
^ The AASB have not yet issued the Australian equivalent of this Interpretation.
The potential effect of these Standards is yet to be fully determined. For Standards and Interpretations effective from 1 July 2013, it is
not expected that the new Standards and Interpretations will significantly affect the Group’s financial performance. As at the application
date of Interpretation 20, the Group did not have any assets in relation to stripping costs incurred during the production phase of a
mine.
83
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NOTE 3. SUmmarY Of SiGNifiCaNT aCCOUNTiNG pOLiCiES (CONTiNUEd)
(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 3(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.
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; 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.
Impairment of Property, Plant and Equipment; Mine Development and Intangibles
(ii)
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 internal review of asset values at each reporting date, 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 valuation
model.
(iv) Carrying Value of Exploration and Evaluation Expenditure
The Group reviews the carrying value of exploration and evaluation expenditure at each reporting date. 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.
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(d) Significant Accounting Judgements, Estimates and Assumptions (continued)
(v) Deferred Tax Assets and Liabilities (continued)
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.
(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 valuation model or
Monte-Carlo simulation model as appropriate, using assumptions detailed in Note 26.
(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.
(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. Upon the sale of a
subsidiary the FCTR attributable to the parent is recycled to the Income Statement.
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Notes to the CoNsolidated FiNaNCial statemeNtsFor the year eNded 30 JuNe 2013Financial RepoRtpaladin eneRgy ltd aNNual report 2013 NOTE 3. SUmmarY Of SiGNifiCaNT aCCOUNTiNG pOLiCiES (CONTiNUEd)
(f) Foreign Currency Translation (continued)
(iii) Group Companies (continued)
The following material operating subsidiaries have a US dollar functional currency:
Paladin Finance Pty Ltd
Paladin (Africa) Limited
Langer Heinrich Uranium (Pty) Ltd
Paladin Nuclear Ltd
Indo Energy Ltd
The following material operating subsidiaries have an Australian dollar functional currency:
Northern Territory Uranium Pty Ltd
Mount Isa Uranium Pty Ltd
Paladin Energy Minerals NL
Summit Resources (Aust) Pty Ltd
Fusion Resources Pty Ltd
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.
Interest Revenue
(ii)
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) Unearned Revenue
Revenue from the long-term off-take agreement is a payment for future product to be delivered. Advance customer payments are
unearned revenues at the time of receipt. When the product is delivered to the customer the unearned revenue will be released to the
Income Statement on an undiscounted basis.
(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.
86
Notes to the CoNsolidated FiNaNCial statemeNtsFor the year eNded 30 JuNe 2013Financial RepoRtpaladin eneRgy ltd aNNual report 2013 NOTE 3. SUmmarY Of SiGNifiCaNT aCCOUNTiNG pOLiCiES (CONTiNUEd)
(j) Business Combinations
Business combinations are accounted for using the acquisition method. 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. Prior to 1 July 2009 the purchase method of accounting was used to account for business combinations.
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.
(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 Energy Ltd and 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 forecast prices.
(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.
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 Statement of Financial Position. Loans and receivables are
carried at amortised cost using the effective interest method.
87
Notes to the CoNsolidated FiNaNCial statemeNtsFor the year eNded 30 JuNe 2013Financial RepoRtpaladin eneRgy ltd aNNual report 2013 NOTE 3. SUmmarY Of SiGNifiCaNT aCCOUNTiNG pOLiCiES (CONTiNUEd)
(o) Investments and Other Financial Assets (continued)
(ii) Held-to-Maturity Investments
Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturities that the
Group’s management has the positive intention and ability to hold to maturity. Held-to-maturity investments are carried at amortised
cost using the effective interest method.
(iii) Available-for-Sale Financial Assets
Available-for-sale financial assets, comprising principally marketable equity securities, are non-derivatives that are either designated in
this category or not classified in any of the other categories. They are included in non current assets unless management intends to
dispose of the investment within 12 months of the balance 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
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 Statement of Comprehensive Income.
(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.
(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
Plant and equipment
Leasehold improvements
Mine plant and equipment
20 years
10 years
2-6 years
7 years
lesser of life of asset and unit of production basis
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.
88
Notes to the CoNsolidated FiNaNCial statemeNtsFor the year eNded 30 JuNe 2013Financial RepoRtpaladin eneRgy ltd aNNual report 2013 NOTE 3. SUmmarY Of SiGNifiCaNT aCCOUNTiNG pOLiCiES (CONTiNUEd)
(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
Exploration and evaluation expenditure related to areas of interest is capitalised and carried forward to the extent that:
rights to tenure of the area of interest are current; and
(i)
(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.
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. 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.
Intangibles
(t)
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 Statement of Comprehensive Income when the asset is derecognised.
89
Notes to the CoNsolidated FiNaNCial statemeNtsFor the year eNded 30 JuNe 2013Financial RepoRtpaladin eneRgy ltd aNNual report 2013 NOTE 3. 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.
Interest Bearing Loans and Borrowings
(v)
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 26, no further options will be granted pursuant to the EXSOP.
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 and rights at grant date is independently determined using the Black-Scholes valuation 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 valuation model.
The rights that contained a market based performance condition (TSR and market price) were valued using a Monte-Carlo simulation
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 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.
90
Notes to the CoNsolidated FiNaNCial statemeNtsFor the year eNded 30 JuNe 2013Financial RepoRtpaladin eneRgy ltd aNNual report 2013 NOTE 3. SUmmarY Of SiGNifiCaNT aCCOUNTiNG pOLiCiES (CONTiNUEd)
(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 finance 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.
(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 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. Unallocated portion covers the Company’s sales and marketing,
treasury, corporate and administration.
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 3 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.
91
Notes to the CoNsolidated FiNaNCial statemeNtsFor the year eNded 30 JuNe 2013Financial RepoRtpaladin eneRgy ltd aNNual report 2013 NOTE 4. SEGmENT iNfOrmaTiON (CONTiNUEd)
The following tables present revenue, expenditure and asset information regarding operating segments for the years ended 30 June
2013 and 30 June 2012.
exploration
namibia
malawi
unalloCated
Consolidated
US$M
US$M
US$M
US$M
US$M
Year ended 30 June 2013
Sales to external customers
Other revenue
Inter segment sales
Total segment revenue
Elimination of inter segment sales
Total consolidated revenue
Cost of goods sold
Impairment of inventory
Gross Profit/(Loss)
Other expenses
Impairment of asset
Segment (loss)/profit before income tax
and finance costs
Finance costs
(Loss)/profit before income tax
Income tax benefit/(expense)
(Loss)/profit after income tax
At 30 June 2013
Segment assets/total assets
-
-
-
-
-
-
-
-
-
(0.7)
(62.1)
(62.8)
-
(62.8)
0.2
(62.6)
265.4
-
9.9
275.3
(9.9)
265.4
143.0
1.9
4.9
149.8
(4.9)
144.9
(214.8)
(140.8)
-
50.6
(1.3)
(30.9)
(26.8)
(12.2)
-
(237.9)
49.3
(7.1)
42.2
(1.4)
40.8
(276.9)
(6.4)
(283.3)
(85.0)
(368.3)
-
1.2
-
1.2
-
1.2
-
-
1.2
(27.6)
(5.0)
(31.4)
(50.3)
(81.7)
(2.2)
(83.9)
408.4
3.1
14.8
426.3
(14.8)
411.5
(355.6)
(30.9)
25.0
(41.8)
(305.0)
(321.8)
(63.8)
(385.6)
(88.4)
(474.0)
1,009.3
639.1
140.2
49.1
1,837.7
australia
Canada
malawi
namibia
other
Consolidated
US$M
US$M
US$M
US$M
US$M
US$M
Non current assets by country*
757.3
262.4
-
483.2
0.1
1,503.0
In 2013, the two most significant customers equated on a proportionate basis to 25% (US$101.0M Namibia, Malawi) and 18%
(US$71.5M Namibia) of the Group’s total sales revenue.
* Excluding deferred tax assets and financial instruments.
92
Notes to the CoNsolidated FiNaNCial statemeNtsFor the year eNded 30 JuNe 2013Financial RepoRtpaladin eneRgy ltd aNNual report 2013 NOTE 4. SEGmENT iNfOrmaTiON (CONTiNUEd)
exploration
namibia
malawi
unalloCated
Consolidated
US$M
US$M
US$M
US$M
US$M
Year ended 30 June 2012
Sales to external customers
Other revenue
Inter segment sales
Total segment revenue
Elimination of inter segment sales
Total consolidated revenue
Cost of goods sold
Impairment of inventory
Gross Profit/(Loss)
Other expenses
Impairment of asset
Segment (loss)/profit before income tax
and finance costs
Finance costs
(Loss)/profit before income tax
Income tax benefit/(expense)
(Loss)/profit after income tax
At 30 June 2012
Segment assets/total assets
-
-
-
-
-
-
-
-
-
(1.3)
-
(1.3)
-
(1.3)
0.4
(0.9)
239.2
-
15.1
254.3
(15.1)
239.2
126.6
-
-
126.6
-
126.6
(172.6)
(129.1)
-
66.6
(6.2)
(39.0)
(41.5)
(23.1)
-
(178.0)
60.4
(7.8)
52.6
(4.2)
48.4
(242.6)
(7.5)
(250.1)
65.2
(184.9)
-
1.6
-
1.6
-
1.6
-
-
1.6
(32.9)
(8.0)
(39.3)
(41.4)
(80.7)
17.3
(63.4)
365.8
1.6
15.1
382.5
(15.1)
367.4
(301.7)
(39.0)
26.7
(63.5)
(186.0)
(222.8)
(56.7)
(279.5)
78.7
(200.8)
1,148.0
628.7
465.1
105.9
2,347.7
australia
Canada
malawi
namibia
other
Consolidated
US$M
US$M
US$M
US$M
US$M
US$M
Non current assets by country*
863.4
260.0
233.5
461.9
36.8
1,855.6
In 2012, the two most significant customers equated on a proportionate basis to 22% (US$79.9M Namibia, Malawi) and 11%
(US$41.0M Namibia, Malawi) of the Group’s total sales revenue.
* Excluding deferred tax assets and financial instruments.
93
Notes to the CoNsolidated FiNaNCial statemeNtsFor the year eNded 30 JuNe 2013Financial RepoRtpaladin eneRgy ltd aNNual report 2013 NOTE 5. rEVENUES aNd EXpENSES
(a) Revenue
Sale of uranium
Interest income from non-related parties
Other revenue
Total
(b) Cost of Sales
Production costs before depreciation and amortisation
Depreciation and amortisation
Impairment loss reversed on sale of inventory
Product distribution costs
Royalties
Total
(c) Other Income
Foreign exchange gain (net)
Profit on convertible bond buyback
Gain on disposal of available for sale investments
Total
(d) Administration, Marketing and Non-Production Costs
Corporate and marketing
Restructure costs
Mine sites (LHM & KM)
Canadian operations
Non-cash – share-based payments
Non-cash - depreciation
LHM Stage 4 expansion study
KM research and development
Total
(e) Other Expenses
Impairment of exploration assets
Impairment for available for sale financial assets
KM fixed costs during plant shutdown
Impairment of asset (1)
KM Slope remediation (2)
KM medical expenses (3)
2013
US$M
408.4
0.9
2.2
2012
US$M
365.8
1.4
0.2
411.5
367.4
(305.8)
(56.7)
32.2
(12.9)
(12.4)
(256.7)
(49.3)
23.4
(11.6)
(10.3)
(355.6)
(304.5)
1.4
-
1.6
3.0
(21.9)
(0.3)
(8.5)
(0.4)
(3.9)
(1.9)
(1.1)
(1.5)
(39.5)
(62.1)
(5.0)
(3.7)
(237.9)
(0.2)
-
1.4
1.2
-
2.6
(21.0)
-
(10.9)
(2.5)
(6.9)
(2.1)
(3.6)
-
(47.0)
-
(8.0)
(9.7)
(178.0)
(3.3)
(0.8)
Total
(308.9)
(199.8)
(1) The continued deterioration of the uranium price has resulted in a reduction of the carrying value to the recoverable amount of US$Nil
of the KM assets from US$237.9M resulting in an impairment charge of US$237.9M (2012: US$178.0M).
(2) Slope remediation expenditure expensed prior to the outcome of the insurance claim. Claim settled in June 2013 with proceeds
reflected in ‘other income’.
(3) KM medical expenditure expensed pending the outcome of an insurance claim currently with the underwriter.
94
Notes to the CoNsolidated FiNaNCial statemeNtsFor the year eNded 30 JuNe 2013Financial RepoRtpaladin eneRgy ltd aNNual report 2013
NOTE 5. rEVENUES aNd EXpENSES (CONTiNUEd)
(f) Finance Costs
Interest expense
Accretion relating to convertible bonds (non-cash)
Mine closure provision discount interest expense
Facility costs
Total
2013
US$M
(40.7)
(17.7)
(2.1)
(3.3)
(63.8)
2012
US$M
(36.4)
(12.9)
(1.8)
(5.6)
(56.7)
Total depreciation and amortisation expense for the year included in the Consolidated Income Statement is US$52.1M (2012:
US$51.4M).
NOTE 6. iNCOmE TaX
(a) Income Tax Benefit/(Expense)
Current income tax
Current income tax benefit/(expense)
Deferred income tax
Related to the origination and reversal of temporary differences
De-recognising of Malawi deferred tax assets
Tax benefits previously not recognised now recognised
Adjustments relating to prior period
Income tax (expense)/benefit reported in the Income Statement
(b) Amounts Charged or Credited Directly to Equity
Deferred income tax related to items charged or credited directly to equity:
Unrealised loss on available-for-sale investments
Convertible bonds
Changes in foreign exchange
Other and prior period
2013
US$M
2012
US$M
1.3
(0.1)
(7.2)
(82.3)
0.2
(0.4)
(88.4)
-
-
17.7
2.3
59.7
-
11.9
7.2
78.7
3.3
(13.3)
5.6
4.9
Income tax benefit reported in equity
20.0
0.5
95
Notes to the CoNsolidated FiNaNCial statemeNtsFor the year eNded 30 JuNe 2013Financial RepoRtpaladin eneRgy ltd aNNual report 2013
NOTE 6. iNCOmE TaX (CONTiNUEd)
Numerical Reconciliation of Income Tax Benefit to Prima Facie Tax Payable
(c)
Loss before income tax expense
Tax at the Australian tax rate of 30% (2012 – 30%)
Tax effect of amounts which are not deductible/(taxable) in calculating taxable income:
Share-based payments
Convertible bonds
Permanent foreign exchange differences
Other expenditure not allowable
Difference in overseas tax rates
Under/over prior year adjustment
Losses not recognised/(derecognised)
Other foreign exchange differences
Other
2013
US$M
2012
US$M
385.6
279.5
115.7
83.8
(1.2)
(0.1)
48.4
(0.9)
161.9
(6.6)
5.8
(105.4)
(119.0)
(25.1)
(1.8)
-
114.9
(1.5)
195.4
(9.5)
7.2
(1.7)
(111.3)
(1.4)
Income tax (expense)/benefit reported in the Income Statement
(88.4)
78.7
(d) Deferred Income Tax
Deferred tax liabilities
Accelerated prepayment deduction for tax purposes
Accelerated depreciation for tax purposes
Exploration expenditure
Recognition of acquired exploration expenditure
Capitalised interest
Convertible bond
Gross deferred tax liabilities
Set off of deferred tax assets
Net deferred tax liabilities
Deferred tax assets
Revenue losses available for offset against future taxable income
Equity raising costs
Provisions for employee benefits
Inventory
Available for sale securities
Accruals
Foreign currency balances
Interest bearing liabilities
Other
Gross deferred tax assets
Set off against deferred tax liabilities
Net deferred tax assets recognised
0.6
116.6
22.2
157.5
1.3
15.1
0.9
157.8
23.7
175.2
6.1
20.5
313.3
(126.4)
384.2
(180.7)
186.9
203.5
(67.8)
(1.7)
(0.7)
2.4
(11.6)
(11.5)
(32.3)
(3.0)
(0.2)
(126.4)
126.4
-
(167.5)
(1.8)
(0.5)
(1.8)
(9.2)
(5.2)
(13.4)
(66.0)
(0.3)
(265.7)
180.7
(85.0)
The net deferred tax assets recognised are in respect of revenue losses expected to be offset against future taxable income.
96
Notes to the CoNsolidated FiNaNCial statemeNtsFor the year eNded 30 JuNe 2013Financial RepoRtpaladin eneRgy ltd aNNual report 2013
NOTE 6. iNCOmE TaX (CONTiNUEd)
(e) Tax Losses
2013
US$M
2012
US$M
Australian unused tax losses for which no deferred tax asset has been recognised
(278.8)
(208.7)
Other unused tax losses for which no deferred tax asset has been recognised(1)
(253.0)
(6.2)
Total unused tax losses for which no deferred tax asset has been recognised
(531.8)
(214.9)
Potential tax benefit at the Australian tax rate of 30%
(159.6)
(64.5)
(1) Includes US$5.3M losses in Canada with expiry dates commencing in 2032
This benefit for tax losses will only be obtained if:
(i) the Consolidated Entities derive future assessable income of a nature and of an amount sufficient to enable the benefit from the
deductions for the losses to be realised;
(ii) the Consolidated Entities continue to comply with the conditions for deductibility imposed by tax legislation; and
(iii) no changes in tax legislation adversely affect the Consolidated Entities in realising the benefit from the deductions for the losses.
NOTE 7. CaSH aNd CaSH EQUiVaLENTS
Cash at bank and on hand
Short-term bank deposits
Total cash and cash equivalents
2013
US$M
9.8
68.3
2012
US$M
21.8
90.3
78.1
112.1
Total cash and cash equivalents includes US$25.7M (2012: US$26.2M) restricted for use in respect of the LHM and KM project finance
facilities (refer to Note 16).
Cash at bank earns interest at floating rates based on daily bank deposit rates. Short-term deposits are made for varying periods
depending on the immediate cash requirements of the Group, and earn interest at the respective short-term deposit rates.
97
Notes to the CoNsolidated FiNaNCial statemeNtsFor the year eNded 30 JuNe 2013Financial RepoRtpaladin eneRgy ltd aNNual report 2013
NOTE 7. CaSH aNd CaSH EQUiVaLENTS (CONTiNUEd)
(a)
Reconciliation of Net Loss After Tax to Net Cash Flows Used
in Operating Activities
Net loss
(474.0)
(200.8)
2013
US$M
2012
US$M
Adjustments for
Depreciation and amortisation
Gain recognised on re-measurement to fair value
Gain on disposal of investments
Net exchange differences
Share-based payments
Non-cash financing costs
Inventory impairment and obsolescence expense
Asset impairment
Available-for-sale asset impairment
Interest capitalised as property, plant and equipment
Exploration impairment
Changes in assets and liabilities
Decrease in prepayments
Increase in trade and other receivables
Increase/(decrease) in trade and other payables
Increase in provisions
Increase in unearned revenues
Increase in inventories
Increase/(decrease) in deferred tax liabilities
Decrease/(increase) in deferred tax assets
52.1
-
(1.6)
(3.5)
4.2
22.1
30.9
237.9
5.0
-
62.1
1.0
(4.1)
0.4
4.2
200.0
(30.4)
3.2
85.0
51.4
(1.2)
-
(1.7)
7.2
20.4
39.0
178.0
8.0
(3.3)
-
5.5
(61.9)
(0.8)
1.5
-
(88.4)
(16.7)
(62.0)
Net cash flows provided by/(used in) operating activities
194.5
(125.8)
NOTE 8. TradE aNd OTHEr rECEiVaBLES
Current
Trade receivables
GST and VAT
Sundry debtors
Total current receivables
(a)
(b)
2013
US$M
2012
US$M
60.4
13.5
4.4
78.3
52.0
22.9
7.9
82.8
(a) Trade receivables are non-interest bearing and are generally on 30 day terms. Carrying value approximates fair value due to the short-
term nature of the receivables. An allowance for doubtful debts is made when there is objective evidence that a trade receivable is
impaired. No allowance has been recognised for the current year or the previous year.
(b) GST and VAT debtor relates to Australia, Namibia, Malawi, Netherlands and Canada.
Non Current
Sundry debtors
Total non current receivables
98
0.1
0.1
0.1
0.1
Notes to the CoNsolidated FiNaNCial statemeNtsFor the year eNded 30 JuNe 2013Financial RepoRtpaladin eneRgy ltd aNNual report 2013
NOTE 9. iNVENTOriES
Current
Stores and consumables (at cost)
Stockpiles (at cost)
Stockpiles (at net realisable value)
Work-in-progress (at cost)
Work-in-progress (at net realisable value)
Finished goods (at cost)
Finished goods (at net realisable value)
2013
US$M
2012
US$M
33.5
2.0
-
2.3
11.4
57.5
52.1
39.4
0.4
4.2
2.2
11.3
72.2
56.8
Total current inventories at the lower of cost and net realisable value
158.8
186.5
(a) Inventory Expense
Inventories sold recognised as an expense for the year ended 30 June 2013 totalled US$351.4M (2012: US$301.7M) for the Group as
part of cost of goods sold.
(b) Impairment of Inventory Expense
During 2013 inventory held at KM was reduced to net realisable value resulting in an impairment loss of US$22.1M (2012: US$31.9M)
for the year, recognised in cost of sales.
(c) Stores and Consumables Obsolescence Expense
During 2013 stores and consumables held at KM were reduced by US$Nil (2012: US$3.3M) due to obsolescence. This resulted in an
obsolescence expense recognised in cost of sales.
Non Current
Stockpiles (at cost)
Stockpiles (at net realisable value)
Total non current inventories at the lower of cost and net realisable value
141.4
-
112.3
1.9
141.4
114.2
Stockpiles at LHM and KM that are unlikely to be processed within 12 months of the balance date.
(a) Impairment of Inventory Expense
During 2013 inventory held at KM was reduced to net realisable value resulting in an impairment loss of US$8.8M (2012: US$3.8) for
the year, recognised in cost of sales.
99
Notes to the CoNsolidated FiNaNCial statemeNtsFor the year eNded 30 JuNe 2013Financial RepoRtpaladin eneRgy ltd aNNual report 2013
NOTE 10. OTHEr fiNaNCiaL aSSETS
Non Current
Available-for-sale financial assets
Total non current other financial assets
2013
US$M
10.3
10.3
2012
US$M
15.5
15.5
Available-for-Sale Financial Assets
The Group has an investment in DYL and at 30 June 2013 held 304,400,275 (2012: 224,934,461) fully paid ordinary shares.
The holding of these fully paid ordinary shares represents a 19.5% interest at 30 June 2013 (2012: 19.9%) of the ordinary shares of
DYL, a uranium explorer listed on ASX. The market value of the shares in DYL at 30 June 2013 is A$10.0M (US$9.2M) (2012: A$10.3M /
US$10.5M) based on a share price of 3.3 Australian cents per share (2012: 4.6 Australian cents).
In July 2012 the Group increased its interest in DYL from 19.9% to 23.4% following a non-renounceable entitlement issue by DYL which
was partially underwritten by Paladin. For the quarter ended 30 September 2012, DYL was categorised as an investment in associate.
During the quarter ended 31 December 2012 DYL issued shares which reduced the Group’s interest to 19.1%. As a consequence DYL
ceased to be categorised as an investment in associate. The net accounting impact of this transaction was not material to the Group.
On 14 March 2013 the remaining sub underwriting loan was converted into 7,201,993 shares which increased the Group’s interest to
19.5%.
The Group also holds minor investments in other companies.
NOTE 11. prOpErTY, pLaNT aNd EQUipmENT
Plant and equipment – at cost
Less accumulated depreciation and impairment
Net carrying value plant and equipment
Land and buildings - at cost
Less accumulated depreciation
Net carrying value land and buildings
Construction work in progress – at cost
Less impairment
Net carrying value construction work in progress
2013
US$M
704.8
(414.5)
2012
US$M
700.6
(223.1)
290.3
477.5
11.4
(2.2)
9.2
4.3
(2.8)
1.5
11.4
(1.8)
9.6
5.3
(0.7)
4.6
Net carrying value property, plant and equipment
301.0
491.7
Property, Plant and Equipment Pledged as Security for Liabilities
Refer to Note 16 for information on property, plant and equipment pledged as security.
The continued deterioration of the uranium price has resulted in a reduction of the carrying value of KM to the recoverable amount of
US$Nil resulting in an impairment loss of US$237.9M (2012: US$178.0M) which represents the write-down of KM assets including plant
and equipment, construction work in progress, mine development (Note 12) and intangible assets (Note 14) to recoverable amount
which is based on value in use. The individual recoverable amounts of the KM assets were assessed and were considered to be
negligible. In determining the value in use the cash flows were discounted at a rate of 10.5% on a pre-tax basis, US$45/lb pricing was
used and specific committed targeted cost optimisations were included. The value in use of the KM assets is highly sensitive to pricing.
An increase in the uranium spot price in future periods may result in reversal of some or all of the impairment charge recognised.
100
Notes to the CoNsolidated FiNaNCial statemeNtsFor the year eNded 30 JuNe 2013Financial RepoRtpaladin eneRgy ltd aNNual report 2013
NOTE 11. prOpErTY, pLaNT aNd EQUipmENT (CONTiNUEd)
Reconciliations
Reconciliations of the carrying amounts of each class of property, plant and equipment at the beginning and end of the year are set
out below:
total
plant
and
equipment
land and
building
ConstruCtion
work in
progress
US$M
US$M
US$M
US$M
2013
Net carrying value at start of year
Additions
Depreciation and amortisation expense
Impairment of assets
Reclassification of assets
Reclassification to mine development
Disposal of assets
Foreign currency translation
491.7
34.4
(37.1)
(186.2)
-
(0.9)
(0.5)
(0.4)
477.5
24.9
(36.7)
(184.1)
8.8
-
(0.1)
-
9.6
-
(0.4)
-
0.8
-
(0.4)
(0.4)
Net carrying value at end of year
301.0
290.3
9.2
2012
Net carrying value at start of year
Additions
Depreciation and amortisation expense
Impairment of assets
Reclassification of assets
Reclassification to mine development (1)
Reclassification to exploration
Disposal of assets
Foreign currency translation
630.1
60.0
(41.8)
(132.2)
-
(23.3)
(0.8)
(0.1)
(0.2)
486.0
13.0
(41.5)
(131.5)
175.7
(23.3)
(0.8)
(0.1)
-
9.9
0.1
(0.3)
-
0.1
-
-
-
(0.2)
4.6
9.5
-
(2.1)
(9.6)
(0.9)
-
-
1.5
134.2
46.9
-
(0.7)
(175.8)
-
-
-
-
Net carrying value at end of year
491.7
477.5
9.6
4.6
(1) Tailings Dam at LHM transferred from plant & equipment to mine development of US$23.3M
101
Notes to the CoNsolidated FiNaNCial statemeNtsFor the year eNded 30 JuNe 2013Financial RepoRtpaladin eneRgy ltd aNNual report 2013
NOTE 12. miNE dEVELOpmENT
Mine development – at cost
Less accumulated depreciation and impairment (1)
Net carrying value – mine development
Net carrying value at start of year
Additions
Depreciation and amortisation expense
Effects in changes of underlying assumptions & discount rates
Reclassification from exploration
Reclassification from property, plant and equipment (2)
Impairment
Net carrying value at end of year
(1) Refer to Note 11 for details of impairment.
2013
US$M
185.1
(142.3)
2012
US$M
167.7
(79.4)
42.8
88.3
88.3
13.9
(14.9)
2.3
-
0.8
(47.6)
106.6
11.1
(14.5)
3.6
0.1
23.3
(41.9)
42.8
88.3
(2) Tailings Dam at LHM transferred from plant & equipment to mine development of US$23.3M.
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 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. Construction of the Stage 2
expansion to 3.7Mlb pa commenced in CY2008 and design capacity was reached in December 2009. The plant consistently operated
at the 3.7Mlb pa rate from the beginning of CY2010. Construction of the Stage 3 expansion to 5.2Mlb commenced at the beginning of
CY2010 and was completed at 31 March 2012. Commercial production was declared from 1 April 2012. The plant has achieved Stage
3 design and further optimisation work will continue.
LHUPL also holds an exclusive prospecting licence, EPL 3500, covering 30km2 to the west of the mining licence. LHUPL has applied
to convert this prospecting licence into a mining licence.
Kayelekera Mine (Malawi) - Paladin 85%
KM consists of one mining licence - ML 152 - covering 5,550 hectares in northern Malawi 440km north of Lilongwe, the capital of
Malawi, and 52km west, by road 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 was 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.
Applications for renewal of four exclusive prospecting licences in northern Malawi covering 916km2 surrounding and to the south of the
KM mining licence have been lodged. An additional EPL has been applied for to the north adjacent to the Tanzanian border.
102
Notes to the CoNsolidated FiNaNCial statemeNtsFor the year eNded 30 JuNe 2013Financial RepoRtpaladin eneRgy ltd aNNual report 2013
NOTE 13. EXpLOraTiON aNd EVaLUaTiON EXpENdiTUrE
Canadian securities law requires the following description of the Group’s interests in mineral property tenements:
Michelin 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 31 March 2011. In December 2011, the
Nunatsiavut Government voted to lift the three year moratorium of the mining, development and production of uranium on Labrador
Inuit land. In March 2012, the Government enacted an amendment to the Labrador Inuit Lands Act, finally lifting that moratorium.
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, an exploration adit 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. The Company re-commenced active exploration during the northern summer
season in 2012.
Niger Project (Niger) - Paladin 100%
This project has been impaired to US$Nil due to the cessation of exploration activities as a consequence of increased political risk.
Following the completion of the takeover of 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), initially 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 21 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. After the 2011 drilling
programme was evaluated in July/August 2011, a 15,000m follow-up drilling programme was developed which was planned to start in
November 2011. This, however, has been delayed indefinitely.
By the end of 2012 licences TAG4, TOU1 and TER1 were halved due to statutory requirements for renewal and were subsequently re-
granted for another three years. The western half of TAG4 was re-applied for as a new concession, Ekazan 1 (EKA1) with the grant of
the concession pending.
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 permitted to visit the project site or directly supervise the exploration effort.
On-ground exploration and mapping has been carried out 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,
PEM. 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. By the end of 2011 the Company’s Programme of Works was approved by the
Western Australian Department of Mines and Energy. After completing archaeological clearance of the proposed work areas in April
2012, the Company commenced a drilling programme in August 2012. Data from this programme will be included in an application for
approval of a Field Leach Trial expected to be lodged in the second half of CY2013.
103
Notes to the CoNsolidated FiNaNCial statemeNtsFor the year eNded 30 JuNe 2013Financial RepoRtpaladin eneRgy ltd aNNual report 2013 NOTE 13. EXpLOraTiON aNd EVaLUaTiON EXpENdiTUrE (CONTiNUEd)
Oobagooma Uranium Project (Australia) - Paladin 100%
The Oobagooma Project, beneficially held 100% by Paladin through its wholly owned subsidiary Paladin Energy Minerals NL, 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 long-standing applications for exploration licences covering approximately 452km².
In 1998 Paladin acquired a call option in relation to the purchase of Oobagooma from Afmeco Mining and Exploration Pty Ltd, which
at the time was a subsidiary of AREVA Resources Australia Pty Ltd (AREVA Australia) . This arrangement was recently varied so that
Paladin Energy Minerals NL is now the applicant and will, upon the anticipated grant, hold the exploration licence directly. Recent
changes to the Mining Act 1978 (WA) now permit the grant of tenements within the Yampi Sound Defence Training Area and Paladin
Energy Minerals holds a first ranking application. In accordance with the revised terms of the agreement with AREVA Australia, Paladin
has paid $375,000 to AREVA Australia with a further $375,000 to be paid on final grant of the tenement. Paladin has also granted to
AREVA Australia a 1% royalty from total sales generated from the sale of product, which is consistent with the previous agreement that
has been replaced. The exploration licence application is 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
for access to the project area. 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.
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.
Bigrlyi Uranium Project (Australia) - Paladin 41.71%
This project has been impaired to a carrying value of US$10 due to a decision to reduce the amount spent and planned studies on this
project until the uranium price increases.
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. In the second half of 2011, Energy Metals Limited carried out infill and resource
extension drilling followed by detailed geological mapping early in 2012. Extensive validation of all existing data has been undertaken
and is being used to generate an updated geological model.
Isa Uranium Joint Venture (Australia) - Paladin 91.04%
The IUJV in Northern Queensland is a 50:50 joint venture between SRA (Paladin 82.08% effective ownership) and MIU (Paladin 100%
ownership) with SRA being the operator and manager. The IUJV covers two defined blocks of land totalling 27km2 containing the
Valhalla and Skal uranium deposits. Paladin’s effective equity in the IUJV was increased from 50% to 91.03% following the acquisition
of 81.9% of Summit in 2007. The current ownership of Summit is 82.08%.
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.
Odin Uranium Deposit - (Australia) – Paladin 91.04%
The Odin Uranium Deposit is located 1km north of Valhalla at EPL 17514. The deposit is essentially ‘blind’ with little or no surface
expression and its discovery is a result of an extensive regional prospectivity mapping exercise undertaken by the Company since
2009. Following a number of drilling programmes in 2009, 2010 and 2011 an Indicated and Inferred category Mineral Resource has
now been estimated.
104
Notes to the CoNsolidated FiNaNCial statemeNtsFor the year eNded 30 JuNe 2013Financial RepoRtpaladin eneRgy ltd aNNual report 2013 NOTE 13. EXpLOraTiON aNd EVaLUaTiON EXpENdiTUrE (CONTiNUEd)
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 drilling was completed on all the individual mineralised zones in late 2011 and an updated mineral
resource estimate was released in March 2012.
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. Following the completion of regional drilling programmes in 2010 and 2011 the Mineral
Resources at Andersons, Bikini and Watta have been updated along with a maiden Mineral Resource estimates for the Mirrioola and
Warwai deposits.
Angela and Pamela Projects (Australia) - Paladin 100%
This project has been impaired to US$Nil due to a decision to reduce the amount spent and planned studies on this project until the
uranium price increases.
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. Paladin assumed the management of the project in September 2011.
In late June 2013 Paladin became the sole owner of the Angela project following the completion of an agreement to purchase the
50% interest previously held by Cameco Australia Pty Ltd. Following the completion of the transaction, 100% of the resource is now
attributable to Paladin Energy Ltd.
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.
105
Notes to the CoNsolidated FiNaNCial statemeNtsFor the year eNded 30 JuNe 2013Financial RepoRtpaladin eneRgy ltd aNNual report 2013 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 2013:
areas of interest
valhalla
/skal (1)
US$M
isa north
US$M
fusion angela pamela
US$M
US$M
Balance 30 June 2012
639.4
152.5
11.9
Acquisition property payments
Project exploration and evaluation expenditure
Labour
Outside services
Other expenses
Total expenditure
Expenditure expensed
Expenditure capitalised
Foreign exchange differences
Impairment of exploration and evaluation
Balance 30 June 2013
-
0.5
0.1
0.5
1.1
-
1.1
(64.4)
-
576.1
-
0.4
-
0.3
0.7
-
0.7
(15.5)
-
137.7
-
0.1
-
-
0.1
-
0.1
(1.1)
-
10.9
7.4
-
0.1
-
0.1
0.2
(0.1)
0.1
(0.7)
(6.8)
-
The following table details the expenditures on interests in mineral properties by area of interest for the year ended 30 June 2012:
areas of interest
valhalla
/skal (1)
US$M
isa north
US$M
fusion angela pamela
US$M
US$M
Balance 30 June 2011
663.1
156.5
12.3
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
Transferred from Property, Plant & Equipment
0.9
1.3
1.2
3.4
-
3.4
(27.1)
-
-
0.8
0.7
1.1
2.6
-
2.6
(6.6)
-
-
0.1
-
0.1
0.2
(0.1)
0.1
(0.5)
-
-
Balance 30 June 2012
639.4
152.5
11.9
7.5
-
0.1
0.1
0.2
0.4
(0.2)
0.2
(0.3)
-
-
7.4
(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 Statement of Financial Position.
.
106
bigrlyi
US$M
niger
US$M
km
US$M
lhm
US$M
Canada
US$M
other
uranium
proJeCts
US$M
30.7
36.8
259.7
4.8
1,143.2
-
0.1
0.1
0.1
0.3
-
0.3
(3.1)
(17.9)
10.0
-
-
-
-
0.9
0.7
1.0
2.6
2.6
(1.3)
0.3
-
0.3
0.6
0.6
(37.4)
-
-
-
-
-
-
-
-
-
0.4
-
0.4
0.8
0.8
0.4
0.5
0.3
1.2
(1.2)
0.2
0.1
0.3
0.6
(0.6)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
0.1
0.1
0.1
(0.1)
-
3.6
2.0
3.6
9.2
-
9.2
(7.2)
-
261.7
-
1.6
0.4
0.5
2.5
-
2.5
(12.7)
-
0.8
total
US$M
0.4
6.6
4.7
6.5
17.8
(1.4)
16.4
(93.0)
(62.1)
1,004.9
total
US$M
-
6.3
3.9
5.6
15.8
(2.5)
13.3
(48.7)
(0.1)
0.8
0.4
1.3
2.4
1.3
5.0
(0.7)
4.3
(1.0)
-
8.5
-
-
-
1.1
0.1
0.8
2.0
(1.0)
1.0
(0.2)
bigrlyi
US$M
niger
US$M
km
US$M
lhm
US$M
Canada
US$M
other
uranium
proJeCts
US$M
29.4
36.0
269.1
4.0
1,177.9
30.7
36.8
259.7
4.8
1,143.2
Notes to the CoNsolidated FiNaNCial statemeNtsFor the year eNded 30 JuNe 2013Financial RepoRtpaladin eneRgy ltd aNNual report 2013
NOTE 13. EXpLOraTiON aNd EVaLUaTiON EXpENdiTUrE (CONTiNUEd)
km
US$M
lhm
US$M
Canada
US$M
other
uranium
proJeCts
US$M
total
US$M
259.7
4.8
1,143.2
The following table details the expenditures on interests in mineral properties by area of interest for the year ended 30 June 2013:
areas of interest
valhalla
/skal (1)
US$M
isa north
US$M
fusion angela pamela
US$M
US$M
Balance 30 June 2012
639.4
152.5
11.9
Acquisition property payments
Project exploration and evaluation expenditure
Labour
Outside services
Other expenses
Total expenditure
Expenditure expensed
Expenditure capitalised
Foreign exchange differences
Impairment of exploration and evaluation
Balance 30 June 2013
Acquisition property payments
Project exploration and evaluation expenditure
Labour
Outside services
Other expenses
Total expenditure
Expenditure expensed
Expenditure capitalised
Foreign exchange differences
Transferred to Mine Development
Transferred from Property, Plant & Equipment
-
0.5
0.1
0.5
1.1
-
1.1
(64.4)
-
576.1
-
-
-
-
0.9
1.3
1.2
3.4
3.4
(27.1)
-
0.4
-
0.3
0.7
-
0.7
(15.5)
-
137.7
-
-
-
-
0.8
0.7
1.1
2.6
2.6
(6.6)
0.1
0.1
0.1
(1.1)
10.9
-
-
-
-
-
-
-
-
-
0.1
0.1
0.2
(0.1)
0.1
(0.5)
The following table details the expenditures on interests in mineral properties by area of interest for the year ended 30 June 2012:
areas of interest
valhalla
/skal (1)
US$M
isa north
US$M
fusion angela pamela
US$M
US$M
Balance 30 June 2011
663.1
156.5
12.3
7.4
-
0.1
-
0.1
0.2
(0.1)
0.1
(0.7)
(6.8)
-
7.5
-
0.1
0.1
0.2
0.4
(0.2)
0.2
(0.3)
-
-
7.4
bigrlyi
US$M
30.7
-
0.1
0.1
0.1
0.3
-
0.3
(3.1)
(17.9)
10.0
bigrlyi
US$M
29.4
-
0.9
0.7
1.0
2.6
-
2.6
(1.3)
-
-
niger
US$M
36.8
-
0.3
-
0.3
0.6
-
0.6
-
(37.4)
-
niger
US$M
36.0
-
0.4
-
0.4
0.8
-
0.8
-
-
-
Balance 30 June 2012
639.4
152.5
11.9
30.7
36.8
(1) Summit has a 50% interest in the Valhalla/Skal Projects with the other 50% interest held by the Paladin Group. As a consequence
of the takeover of the Summit Group, the above table now reflects 100% of the Valhalla/Skal Projects with the non-controlling
interest reflected on the face of the Statement of Financial Position.
.
-
-
0.2
0.1
0.3
0.6
(0.6)
-
-
-
-
km
US$M
-
-
0.4
0.5
0.3
1.2
(1.2)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3.6
2.0
3.6
9.2
-
9.2
(7.2)
-
261.7
0.4
1.3
2.4
1.3
5.0
(0.7)
4.3
(1.0)
-
8.5
0.4
6.6
4.7
6.5
17.8
(1.4)
16.4
(93.0)
(62.1)
1,004.9
total
US$M
lhm
US$M
Canada
US$M
other
uranium
proJeCts
US$M
-
-
-
0.1
-
0.1
-
0.1
-
(0.1)
-
-
269.1
4.0
1,177.9
-
-
1.6
0.4
0.5
2.5
-
2.5
(12.7)
-
0.8
1.1
0.1
0.8
2.0
(1.0)
1.0
(0.2)
-
-
-
6.3
3.9
5.6
15.8
(2.5)
13.3
(48.7)
(0.1)
0.8
259.7
4.8
1,143.2
107
Notes to the CoNsolidated FiNaNCial statemeNtsFor the year eNded 30 JuNe 2013Financial RepoRtpaladin eneRgy ltd aNNual report 2013
NOTE 14. iNTaNGiBLE aSSETS
At 30 June
Intangible assets – at cost
Less accumulated depreciation and impairment (1)
Net carrying value – intangible assets
2013
US$M
2012
US$M
27.8
(15.0)
27.8
(9.7)
12.8
18.1
(1) Refer to Note 11 for details of impairment.
Amortisation of US$1.1M (2012: US$1.2M) is included in cost of sales in the Income Statement.
Movements in Intangible Assets
Movements in each group of intangible asset during the financial year are set out below:
right to
supply of
power
US$M
right to
supply of
water
US$M
kayelekera
mining
lease
US$M
total
US$M
2013
Net carrying value at 1 July 2012
Amortisation expense
Impairment
4.0
(0.2)
-
9.4
(0.4)
-
4.7
(0.5)
(4.2)
Net carrying value at 30 June 2013
3.8
9.0
-
2012
Net carrying value at 1 July 2011
Amortisation expense
Impairment
4.1
(0.1)
-
9.8
(0.4)
-
9.2
(0.7)
(3.8)
18.1
(1.1)
(4.2)
12.8
23.1
(1.2)
(3.8)
Net carrying value at 30 June 2012
4.0
9.4
4.7
18.1
(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, PEM 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$10M on agreed community infrastructure projects. This amount was recognised as an intangible asset
and was being amortised over the life of the mine estimated to be 9 years on a straight-line basis. This intangible asset has been
impaired to US$Nil, refer to Note 11 for details of impairment.
108
Notes to the CoNsolidated FiNaNCial statemeNtsFor the year eNded 30 JuNe 2013Financial RepoRtpaladin eneRgy ltd aNNual report 2013
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
Current
Secured bank loans
Unsecured convertible bonds (1)
Total current interest bearing loans and borrowings
Non Current
Unsecured convertible bonds (2)
Unsecured convertible bonds (3)
Secured bank loan
Secured bank loan
2013
US$M
57.9
57.9
2012
US$M
67.1
67.1
maturity
2013
US$M
2012
US$M
63.6
-
51.0
132.4
63.6
183.4
2015
2017
amortised to 2015
amortised to 2017
276.0
236.6
37.0
64.6
267.0
229.0
65.3
93.8
Total non current interest bearing loans and borrowings
614.2
655.1
The above figures include transaction costs which offset the balance in accordance with the requirements of Accounting Standards.
Fair value disclosures
Details of the fair value of the Group’s interest bearing liabilities are set out in Note 20(g).
Unsecured convertible bonds
(1) On 11 March 2008, the Company issued US$325M in convertible bonds with a coupon rate of 5.0% (underlying effective interest rate
of 7.13%), maturity 11 March 2013 and a conversion price of US$6.52 for Company shares. On 29 May 2012, pursuant to its tender
offer the Company repurchased and cancelled US$191M bonds. At 11 March 2013 the remaining outstanding amount of US$134M
was repaid.
(2) On the 5 November 2010, the Company issued US$300M in convertible bonds with a coupon rate of 3.625%, (underlying effective
interest rate of 7.47%) maturing on 5 November 2015 with a conversion price of US$5.61, for Company shares.
(3) On 30 April 2012, the Company issued US$274M in convertible bonds with a coupon rate of 6% (underlying effective interest rate of
10.68%) maturing on 30 April 2017 with a conversion price of US$2.19 for Company shares.
Pursuant to the terms of the Bonds the prevailing Conversion Price is subject to adjustment where any new issue of shares is at less
than 95% of the Current Market Price. Following the completion of the Placement on 12 August 2013, the Conversion Prices have been
adjusted as follows:
Convertible bonds due 2015: US$5.403 (previously US$5.608)
Convertible bonds due 2017: US$2.109 (previously US$2.19)
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).
109
Notes to the CoNsolidated FiNaNCial statemeNtsFor the year eNded 30 JuNe 2013Financial RepoRtpaladin eneRgy ltd aNNual report 2013
NOTE 16. iNTErEST BEariNG LOaNS aNd BOrrOWiNGS (CONTiNUEd)
Secured bank loans
Kayelekera Mine, Malawi - US$167M Project Finance Facility
On 30 March 2009, the Group entered into a project financing facility of US$167M for the construction of KM. 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 were 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 Paladin (Africa) Ltd. The completion test was satisfied on 25 March 2013. Post the
completion test date, the commercial bank tranche bears interest at the London Interbank Offered Rate (“LIBOR”) plus 2.5%. The ECIC
tranche bears interest at LIBOR plus 2.5% whilst the cost overrun facility bears interest at LIBOR plus 3.5%. The facilities are repayable
on a four monthly basis over the term of the loan. The Company has provided a guarantee as part of the facilities.
At 30 June 2013 US$68.1M (30 June 2012: US$98.0M) was outstanding under the KM project finance facility. A total of US$29.9M will
be repaid in the 12 months to 30 June 2014.
Langer Heinrich Mine, Namibia - US$141M Stage 3 Project Finance Facility
On 26 August 2011 the Group entered into a project financing facility of US$141M for the construction of Stage 3 of LHM. The facility
consists of a six-year US$135M project financing facility and a US$6M cost overrun facility. The facility was 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. The facility was fully drawn down during the December 2011 quarter. The
completion test was satisfied on 25 January 2013. Post the completion test date, the facility bears interest at the LIBOR plus 3.25%.
The facilities are repayable on a six monthly basis over the term of the loan. The facilities are secured with fixed and floating charges
over the assets of LHUPL and its immediate holding companies.
At 30 June 2013 US$101.5M (30 June 2012: US$118.5M) was outstanding under the LHM Stage 3 project finance facility. A total of
US$35.7M will be repaid in the 12 months to 30 June 2014.
Transaction costs relating to the establishment of the facilities have been included as part of interest bearing loans and borrowings.
Borrowing costs capitalised during the year as part of the LHM Stage 3 expansion US$0.1M (2012: US$3.3M).
Financing facilities available
At reporting date, the following financing facilities had been negotiated and were available:
2013
US$M
574.0
169.6
2012
US$M
708.0
216.5
743.6
924.5
574.0
169.6
708.0
216.5
743.6
924.5
-
-
-
-
-
-
Total facilities:
Unsecured convertible bonds
Secured bank loans
Facilities used at reporting date:
Unsecured convertible bonds
Secured bank loans
Facilities unused at reporting date:
Unsecured convertible bonds
Secured bank loans
Assets pledged as security
110
Notes to the CoNsolidated FiNaNCial statemeNtsFor the year eNded 30 JuNe 2013Financial RepoRtpaladin eneRgy ltd aNNual report 2013
NOTE 16. iNTErEST BEariNG LOaNS aNd BOrrOWiNGS (CONTiNUEd)
Secured bank loans (continued)
Financing facilities available (continued)
The carrying amounts of assets pledged as security for current and non current interest bearing liabilities (secured bank loans) are:
Current
Floating charge
Cash and cash equivalents
Trade and other receivables
Inventories
Total current assets pledged as security
Non Current
Inventories
Property, plant and equipment
Mine development
Deferred tax asset
Intangible assets
Total non current assets pledged as security
Total assets pledged as security
Assets pledged include both LHM and KM.
2013
US$M
2012
US$M
53.3
76.1
158.8
54.0
74.1
191.6
288.2
319.7
141.4
289.6
42.8
-
12.8
118.0
454.4
88.3
38.3
18.1
486.6
717.1
774.8
1,036.8
111
Notes to the CoNsolidated FiNaNCial statemeNtsFor the year eNded 30 JuNe 2013Financial RepoRtpaladin eneRgy ltd aNNual report 2013
NOTE 17. prOViSiONS
Current
Employee benefits
Total current provisions
Non Current
Employee benefits
Rehabilitation provision
Demobilisation provision
Total non current provisions
notes
2013
US$M
2012
US$M
24
24
9.9
9.9
3.0
52.3
1.7
57.0
3.4
3.4
6.5
31.9
2.0
40.4
For a description of the nature and timing of cash flows associated with the above provisions, refer to section (b) of this note.
(a) Movements in Provisions
Movements in each class of provision during the financial year, excluding provisions relating to employee benefits, are set out below:
At 1 July 2012
Arising during the year
Effects of changes in discount rates
Foreign currency movements
At 30 June 2013
2013
Current
Non current
2012
Current
Non current
demobilisation
rehabilitation
US$M
US$M
2.0
0.2
(0.1)
(0.4)
1.7
-
1.7
1.7
-
2.0
2.0
31.9
22.1(1)
2.4
(4.1)
52.3
-
52.3
52.3
-
31.9
31.9
total
US$M
33.9
22.3
2.3
(4.5)
54.0
-
54.0
54.0
-
33.9
33.9
(1) The rehabilitation provision for KM was increased during the period as a result of additional remediation costs considered necessary to
comply with national and international standards.
(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 3 to 20 years’ time.
(ii) Employee benefits
Refer to Note 24.
(iii) Demobilisation
A provision for demobilisation has been recorded in relation to LHM for the costs of demobilising the mining contractor.
112
Notes to the CoNsolidated FiNaNCial statemeNtsFor the year eNded 30 JuNe 2013Financial RepoRtpaladin eneRgy ltd aNNual report 2013
NOTE 18. UNEarNEd rEVENUE
Non Current
Unearned revenue
Total unearned revenue
2013
US$M
2012
US$M
200.0
200.0
-
-
Total prepayment of US$200M under a six year off-take agreement with EdF, a major electricity generator and distribution company in
France, to deliver a total of 13.73Mlb U3O8 in the period from 2019 to 2024. Uranium delivered under the off-take agreement will be sold
to EdF at market prices prevailing at the time of delivery bounded by escalating floor and ceiling prices.
To secure the Company’s obligation to deliver product representing the prepayment amount, EdF holds security over 60.1% of the
Group’s Michelin project in Canada. The percentage of Michelin secured will be reduced by joint agreement as the value of that project
is enhanced by the Group’s ongoing work. The Michelin security can also be replaced by other appropriate security if required.
NOTE 19. CONTriBUTEd EQUiTY aNd rESErVES
(a)
Issued and Paid Up Capital
Ordinary shares
Issued and fully paid
number of shares
2013
2012
2013
US$M
2012
US$M
837,187,808
835,645,290
1,845.7
1,839.2
Effective 1 July 1998, the Corporations legislation in place abolished the concepts of authorised capital and par value shares.
Accordingly, the Company does not have authorised capital or par value in respect of its issued shares.
Fully paid ordinary shares carry one vote per share and carry the right to dividends.
113
Notes to the CoNsolidated FiNaNCial statemeNtsFor the year eNded 30 JuNe 2013Financial RepoRtpaladin eneRgy ltd aNNual report 2013
number of shares
issue priCe
exChange
rate
A$
US$: A$
NOTE 19. CONTriBUTEd EQUiTY aNd rESErVES (CONTiNUEd)
(b) Movements in Ordinary Shares On Issue
date
Balance 30 June 2011
September 2011
October 2011
October 2011
November 2011
January 2012
February 2012
Rights vested
Share placement
Rights vested
Rights vested
Rights vested
Rights vested
Transfer from share-based
payments reserves
Tax effect on prior period
Transaction costs
777,698,217
827,515
56,866,232
37,500
54,600
1,980
159,246
Balance 30 June 2012
835,645,290(1)
(1) Includes 217,566 shares held by Paladin Employee Plan Pty Ltd.
Balance 30 June 2012
September 2012
February 2012
March 2013
Rights vested
Rights vested
Rights vested
Transfer from share-based
payments reserves
835,645,290(1)
1,180,361
143,635
218,522
total
US$M
1,768.1
-
65.3
-
-
-
-
4.7
3.2
(2.1)
1,839.2
1,839.2
-
-
-
6.5
-
1.20
-
-
-
-
-
-
-
-
1.04459
-
-
-
-
-
-
-
Balance 30 June 2013
837,187,808(1)
1,845.7
(1) Includes 43,134 shares held by Paladin Employee Plan Pty Ltd.
114
Notes to the CoNsolidated FiNaNCial statemeNtsFor the year eNded 30 JuNe 2013Financial RepoRtpaladin eneRgy ltd aNNual report 2013
NOTE 19. CONTriBUTEd EQUiTY aNd rESErVES (CONTiNUEd)
(c) Reserves
listed
option
appli-
Cation
reserve
Consol-
idation
reserve
share-
based
payments
reserve
available
-for-sale
reserve
foreign
CurrenCy
trans-
lation
reserve
Convertible
bond non-
distrib-
utable
reserve
premium on
aCquisition
reserve
US$M
US$M
US$M
US$M
US$M
US$M
US$M
total
US$M
(0.2)
0.1
49.5
11.7
68.8
60.4
14.9 205.2
At 1 July 2011
Net unrealised movement
on available-for-sale
investments
Share-based payments
Foreign currency translation
Income tax
Transfer of impairment loss
to income statement
Convertible bonds, equity
component net of tax and
transaction costs
Convertible bonds, buy
back
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2.7
-
-
-
-
-
(25.8)
-
-
3.3
8.0
-
-
-
-
(40.7)
-
-
-
-
At 30 June 2012
(0.2)
0.1
52.2
(2.8)
28.1
Net unrealised movement
on available-for-sale
investments
Share-based payments
Foreign currency translation
Income tax
Transfer of impairment loss
to income statement
Transfer realised gains to
other income
-
-
-
-
-
-
-
-
-
-
-
-
(2.0)
-
-
-
-
(5.3)
-
-
0.1
5.0
(1.2)
-
-
(67.8)
-
-
-
-
-
-
-
-
27.9
(2.8)
85.5
-
-
-
-
-
-
-
-
-
-
-
-
-
(25.8)
2.7
(40.7)
3.3
8.0
27.9
(2.8)
14.9
177.8
-
-
-
-
-
-
(5.3)
(2.0)
(67.8)
0.1
5.0
(1.2)
At 30 June 2013
(0.2)
0.1
50.2
(4.2)
(39.7)
85.5
14.9
106.6
Nature and Purpose of Reserves
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.
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 26 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 3(f).
Convertible bond non-distributable reserve
This reserve records the equity portion of the convertible bonds issued as described in Note 16.
Acquisition reserve
This reserve represents the premium paid on the acquisition of a non-controlling interest in Summit.
115
Notes to the CoNsolidated FiNaNCial statemeNtsFor the year eNded 30 JuNe 2013Financial RepoRtpaladin eneRgy ltd aNNual report 2013
NOTE 20. 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.
The financial instruments exposed to movements in the Australian dollar are as follows:
2013
US$M
0.4
0.2
7.4
2012
US$M
4.0
1.3
7.7
8.0
13.0
(10.4)
(2.4)
1.0
15.1
16.1
(8.5)
4.5
0.8
25.0
25.8
(23.0)
(23.4)
(6.9)
2.4
Financial assets
Cash and cash equivalents
Trade and other receivables
Available-for-sale financial assets
Financial liabilities
Trade and other payables
Net exposure
The financial instruments exposed to movements in the Namibian dollar are as follows:
Financial assets
Cash and cash equivalents
Trade and other receivables
Financial liabilities
Trade and other payables
Net exposure
116
Notes to the CoNsolidated FiNaNCial statemeNtsFor the year eNded 30 JuNe 2013Financial RepoRtpaladin eneRgy ltd aNNual report 2013
NOTE 20. fiNaNCiaL iNSTrUmENTS (CONTiNUEd)
(b) Market Risk (continued)
(i) Foreign Exchange Risk (continued)
The following table summarises the sensitivity of financial instruments held at balance date to movements in the exchange rate of the
Australian dollar to the US dollar and the Namibian dollar to the US dollar, with all other variables held constant. The 5% sensitivity is
based on reasonably possible changes, over a financial year, using the observed range of actual historical rates for the preceding five
year period.
Post-Tax Gain/(Loss)
AUD/USD +5% (2012: +5%)
AUD/USD -5% (2012: -5%)
NAD/USD +5% (2012: +5%)
NAD/USD -5% (2012: -5%)
IMPACT ON PROFIT/LOSS
IMPACT ON EQUITY
2013
US$M
2012
US$M
2013
US$M
2012
US$M
(0.1)
0.1
(0.2)
0.2
(0.1)
0.1
0.1
(0.1)
-
-
-
-
0.3
(0.3)
-
-
Interest Rate Risk
(ii)
Interest rate risk is the risk that the Group’s financial position will be adversely affected by movements in interest rates that will increase
the cost of floating rate debt or opportunity losses that may arise on fixed rate borrowings in a falling interest rate environment.
Interest rate risk on cash and short-term deposits is not considered to be a material risk due to the short-term nature of these financial
instruments.
The Group’s main interest rate risk arises from long-term debt. Floating rate debt exposes the Group to cash flow interest rate risk
and fixed rate debt exposes the Group to fair value interest rate risk. All other financial assets and liabilities in the form of receivables,
investments in shares, payables and provisions, are non interest bearing.
The Group currently does not engage in any hedging or derivative transactions to manage interest rate risk.
The floating rate financial instruments exposed to interest rates movements are as follows:
Financial assets
Cash and cash equivalents
Financial liabilities
Interest-bearing liabilities
Net exposure
2013
US$M
2012
US$M
68.3
90.3
(169.6)
(216.5)
(101.3)
(126.2)
The following table summarises the cash flow sensitivity of cash and cash equivalent financial instruments held at balance sheet date
following a movement in LIBOR, with all other variables held constant. The sensitivity is based on reasonably possible changes over a
financial year, using the observed range of actual historical rates for the preceding five year period.
Post-Tax Gain/(Loss)
LIBOR +1% (2012: +1%)
LIBOR -0.1% (2012: -0.1%)
IMPACT ON PROFIT/LOSS
2013
US$M
2012
US$M
(0.7)
0.1
(0.9)
0.1
117
Notes to the CoNsolidated FiNaNCial statemeNtsFor the year eNded 30 JuNe 2013Financial RepoRtpaladin eneRgy ltd aNNual report 2013
NOTE 20. fiNaNCiaL iNSTrUmENTS (CONTiNUEd)
(b) Market Risk (continued)
(iii) Market Price Risk
Price risk is the risk that the Group’s financial position will be adversely affected by movements in the market value of its available-for-
sale financial assets.
The financial instruments exposed to movements in market value are as follows:
Financial assets
Other financial assets
2013
US$M
2012
US$M
10.3
15.5
The following table summarises the sensitivity of financial instruments held at balance date to movements in the market price of
available-for-sale financial instruments, with all other variables held constant. The 25% sensitivity is based on reasonable possible
changes, over a financial year, using the observed range of actual historical prices for 2013 and 2012.
Post-Tax Gain/(Loss)
Market price +25% (2012: +25%)
Market price -25% (2012: -25%)
Post-tax impact on reserve
Market price +25% (2012: +25%)
Market price -25% (2012: -25%)
IMPACT ON EQUITY
2013
US$M
2012
US$M
-
(1.8)
1.8
-
-
(0.9)
2.7
(1.8)
(c) Liquidity Risk
The liquidity position of the Group is managed to ensure sufficient liquid funds are available to meet the Group’s financial commitments
in a timely and cost effective manner.
The Group treasury function continually reviews the Group’s liquidity position including cash flow forecasts to determine the
forecast liquidity position and maintain appropriate liquidity levels. Sensitivity analysis is conducted on a range of pricing and market
assumptions to ensure the Group has the ability to meet repayment commitments. This enables the Group to manage cash flows
on a long-term basis and provides the flexibility to pursue a range of funding alternatives if necessary. Note 16 details the repayment
obligations in respect of the amount of the facilities.
The maturity analysis of payables at the reporting date was as follows:
Payables maturity analysis
>1 year
1-2 years
2-3 years
>3 years
US$M
US$M
US$M
US$M
57.9
65.7
31.7
155.3
67.1
187.1
40.5
294.7
-
62.0
30.7
92.7
-
53.7
32.1
85.8
-
323.8
23.8
347.6
-
62.0
30.4
92.4
-
292.1
17.5
309.6
-
621.7
40.2
661.9
total
US$M
57.9
743.6
103.7
905.2
67.1
924.5
143.2
1,134.8
2013
Trade and other payables
Loans and borrowings
Interest payable
Total payables
2012
Trade and other payables
Loans and borrowings
Interest payable
Total payables
118
Notes to the CoNsolidated FiNaNCial statemeNtsFor the year eNded 30 JuNe 2013Financial RepoRtpaladin eneRgy ltd aNNual report 2013
NOTE 20. fiNaNCiaL iNSTrUmENTS (CONTiNUEd)
(d) Credit Risk
Credit risk is the risk that a contracting entity will not complete its obligation under a financial instrument that will result in a financial
loss to the Group. The carrying amount of financial assets represents the maximum credit exposure. The Group trades only with
recognised, credit worthy third parties. In addition, receivable balances are monitored on an ongoing basis with the result that the
Group’s exposure to bad debts is not significant.
The maximum exposure to credit risk at the reporting date was as follows:
Current
Cash and cash equivalents*
Trade receivables
Other receivables – other entities
Non Current
Other receivables – other entities
Total
2013
US$M
78.1
60.3
17.9
2012
US$M
112.1
52.0
30.8
156.3
194.9
0.1
0.1
156.4
195.0
* The Group’s maximum deposit with a single financial institution represents 57% (2012: 34%) of cash and cash equivalents.
The ageing of receivables at the reporting date was as follows:
Receivables ageing analysis
total
US$M
>1 year
1-2 years
2-3 years
>3 years
US$M
US$M
US$M
US$M
2013
Trade receivables
Other receivables
Total receivables
2012
Trade receivables
Other receivables
Total receivables
No receivables are past due or impaired.
60.3
18.0
78.3
52.0
30.9
82.9
60.3
17.9
78.2
52.0
30.8
82.8
-
0.1
0.1
-
0.1
0.1
-
-
-
-
-
-
-
-
-
-
-
-
119
Notes to the CoNsolidated FiNaNCial statemeNtsFor the year eNded 30 JuNe 2013Financial RepoRtpaladin eneRgy ltd aNNual report 2013
NOTE 20. fiNaNCiaL iNSTrUmENTS (CONTiNUEd)
(e) Financial Instruments Measured at Fair Value
The Group uses various methods in estimating the fair value of a financial instrument. The methods comprise:
Level 1 – the fair value is calculated using quoted prices in active markets.
Level 2 – the fair value is estimated using inputs other than quoted prices included in Level 1 that are observable for the asset or
liability, either directly (as prices) or indirectly (derived from prices).
Level 3 – the fair value is estimated using inputs for the asset or liability that are not based on observable market data.
The fair value of the financial instruments as well as the methods used to estimate the fair value are summarised in the table below:
YEAR ENDED 30 JUNE 2013
YEAR ENDED 30 JUNE 2012
valuation
teChnique-
market
observable
inputs
(level 2)
US$M
valuation
teChnique-
non market
observable
inputs
(level 3)
US$M
quoted
market
priCe
(level 1)
US$M
total
US$M
valuation
teChnique-
market
observable
inputs
(level 2)
US$M
valuation
teChnique-
non market
observable
inputs
(level 3)
US$M
quoted
market
priCe
(level 1)
US$M
total
US$M
Financial assets
Available-for-sale
investments
Listed investments
Unlisted investments
10.3
-
10.3
-
-
-
-
-
-
10.3
-
10.3
14.0
-
14.0
-
-
-
-
1.5
14.0
1.5
1.5
15.5
Quoted market price represents the fair value determined based on quoted prices on active markets as at the reporting date without
any deduction for transaction costs. The fair value of the listed equity investments are based on quoted market prices.
For financial instruments not quoted in active markets, the Group uses valuation techniques such as present value techniques,
comparison to similar instruments for which market observable prices exist and other relevant models used by market participants.
These valuation techniques use both observable and unobservable market inputs.
The fair value of unlisted debt and equity securities, as well as other investments that do not have an active market, are based on latest
private share placement price before 30 June 2013.
Reconciliation for Level 3 Fair Value Movements
Opening balance
Other comprehensive income
Additions
Disposals
Closing balance
Total gain or loss stated in the table above for assets held at the end of the period
2013
US$M
1.5
(1.5)
-
-
-
(1.5)
2012
US$M
1.0
0.6
-
(0.1)
1.5
0.6
120
Notes to the CoNsolidated FiNaNCial statemeNtsFor the year eNded 30 JuNe 2013Financial RepoRtpaladin eneRgy ltd aNNual report 2013
NOTE 20. fiNaNCiaL iNSTrUmENTS (CONTiNUEd)
(f) Capital Management
When managing capital, management’s objective is to ensure adequate cash resources to meet the Company’s commitments are
maintained, as well as to maintain optimal returns to shareholders through ensuring the lowest cost of capital available to the entity.
The Company utilises a combination of debt, equity and convertible bonds to provide the cash resources required. Management
reviews the capital structure from time to time as appropriate.
The Group treasury function is responsible for the Group’s capital management, including management of the long-term debt and cash
as part of the capital structure. This involves the use of corporate forecasting models which enable analysis of the Group’s financial
position including cash flow forecasts to determine the future capital management requirements. To ensure sufficient funding for
operational expenditure and growth activities, a range of assumptions are modelled so as to provide the flexibility in determining the
Group’s optimal future capital structure.
Group treasury monitors gearing and compliances with various contractual financial covenants. The Company’s project finance facility
is subject to various financial undertakings including a negative pledge, debt service coverage ratio, loan life coverage ratio and project
life coverage ratio. At the time of reporting, the Company was in compliance with all of the facility’s financial undertakings.
Total borrowings
Less cash and cash equivalents
Net debt
Total equity
Total Capital
Gearing Ratio
2013
US$M
677.8
(78.1)
2012
US$M
838.5
(112.1)
599.7
726.4
648.2
1,194.8
1,247.9
1,921.2
48%
38%
(g) Fair Value of Financial Assets and Financial Liabilities Carried at Amortised Cost
The fair value representing the mark to market of a financial asset or a financial liability is the amount at which the asset could be
exchanged or liability settled in a current transaction between willing parties after allowing for transaction costs.
The fair values of cash and cash equivalents, trade and other receivables and trade and other payables approximate to their carrying
values, as a result of their short maturity or because they carry floating rates of interest.
The fair value of the debt component of the convertible bonds has been determined using a valuation technique based on the quoted
market price of the convertible bonds.
All financial assets and liabilities where the fair value does not approximate to the carrying value are as follows:
CARRYING
AMOUNT
2013 us$m
FAIR VALUE
2012 us$m
FAIR VALUE
CARRYING
AMOUNT
Convertible bonds – debt component
523.6
499.7
639.9
609.7
(h) Commodity Price Risk
Uranium is not traded in any significant volume on global commodity exchanges. The Group has customer sales contracts in place for
delivery over the period 2013 to 2024.
The contracted selling price is determined by a formula which references common industry published prices for spot and term
contracts and is subject to an escalating floor price and also escalating ceiling prices.
121
Notes to the CoNsolidated FiNaNCial statemeNtsFor the year eNded 30 JuNe 2013Financial RepoRtpaladin eneRgy ltd aNNual report 2013
NOTE 21. KEY maNaGEmENT pErSONNEL
(a) Details of Key Management Personnel
(i) Directors
Mr Rick Crabb
Chairman (Non-executive)
Mr John Borshoff
Managing Director/CEO
Mr Sean Llewelyn
Director (Non-executive)
Mr Donald Shumka
Director (Non-executive)
Mr Peter Donkin
Director (Non-executive)
Mr Philip Baily
Director (Non-executive)
(ii) Executives
Ms Gillian Swaby
Company Secretary and Executive General Manager – Corporate Services
Mr Dustin Garrow
Executive General Manager – Marketing
Mr Mark Chalmers
Executive General manager – Production
Mr Alan Rule
Chief Financial Officer (commenced 23 July 2012)
(b) Compensation of Key Management Personnel: Compensation by Category
Short-term employee benefits
Post employment benefits
Long-term benefits
Share-based payment
2013
2012
US$’000
US$’000
4,850
169
903
1,594
6,917
945
606
2,275
7,516
10,743
The average exchange rate used for the year to 30 June 2013 to translate the Australian dollar remuneration to Key Management
Personnel was, US$1 = A$0.97471 (2012 US$1 = A$0.96971).
122
Notes to the CoNsolidated FiNaNCial statemeNtsFor the year eNded 30 JuNe 2013Financial RepoRtpaladin eneRgy ltd aNNual report 2013
NOTE 21. KEY maNaGEmENT pErSONNEL (CONTiNUEd)
(c) Option Holdings of Key Management Personnel (Group)
30 June 2013
01 Jul 12
granted
as remun-
eration
options
exerCised
net Change
other (1)
30 Jun 13
vested/
exerCisable
not vested/
not
exerCisable
Directors
Mr John Borshoff
Executives
Ms Gillian Swaby
Mr Dustin Garrow
Total
657,000
136,018
139,915
932,933
-
-
-
-
-
-
-
-
(657,000)
(136,018)
(139,915)
(932,933)
-
-
-
-
-
-
-
-
-
-
-
-
No other Key Management Personnel held options during the year ended 30 June 2013.
(1) All outstanding options expired on 18 April 2013. These options were out of the money and had no intrinsic value at expiration date.
30 June 2012
01 Jul 11
granted
as remun-
eration
options
exerCised
net Change
other (1)
30 Jun 12
vested/
exerCisable
not vested/
not
exerCisable
Directors
Mr John Borshoff
Executives
Ms Gillian Swaby
Mr Dustin Garrow
Total
1,250,000
258,785
266,199
1,774,984
-
-
-
-
-
-
-
-
(593,000)
657,000
657,000
(122,767)
(126,284)
136,018
139,915
136,018
139,915
(842,051)
932,933
932,933
-
-
-
-
No other Key Management Personnel held options during the year ended 30 June 2012.
(1) Options that could no longer vest were cancelled on 29 June 2012. These options were out of the money and had no intrinsic value
at cancellation date.
123
Notes to the CoNsolidated FiNaNCial statemeNtsFor the year eNded 30 JuNe 2013Financial RepoRtpaladin eneRgy ltd aNNual report 2013
NOTE 21. KEY maNaGEmENT pErSONNEL (CONTiNUEd)
(d) Share Rights Holdings of Key Management Personnel (Group)
30 June 2013
Directors
Mr John Borshoff
Executives
Ms Gillian Swaby
Mr Dustin Garrow
Mr Mark Chalmers
Total
01 Jul 12
granted
as remun-
eration
vested as
shares
lapsed (1)
30 Jun 13
800,000
-
(150,000)
-
650,000
460,667
282,000
125,000
-
-
-
(167,833)
(68,000)
(7,500)
(90,000)
(100,000)
-
202,834
114,000
117,500
1,667,667
-
(393,333)
(190,000)
1,084,334
No other Key Management Personnel held share rights during the year ended 30 June 2013.
(1) Lapsed as performance conditions were not met.
30 June 2012
Directors
Mr John Borshoff
Executives
Ms Gillian Swaby
Mr Garry Korte
Mr Dustin Garrow
Mr Mark Chalmers
Total
01 Jul 11
granted
as remun-
eration
vested as
shares
forfeited
30 Jun 12
800,000
-
-
-
800,000
547,000
131,000
260,000
-
55,000
-
60,000
125,000
(141,333)
(18,500)
(38,000)
-
-
(112,500)(1)
-
-
460,667
-
282,000
125,000
1,738,000
240,000
(197,833)
(112,500)
1,667,667
No other Key Management Personnel held share rights during the year ended 30 June 2012.
(1) Mr Garry Korte resigned on 24 May 2012 and his outstanding share rights were forfeited.
124
Notes to the CoNsolidated FiNaNCial statemeNtsFor the year eNded 30 JuNe 2013Financial RepoRtpaladin eneRgy ltd aNNual report 2013
NOTE 21. KEY maNaGEmENT pErSONNEL (CONTiNUEd)
(e) Shareholdings of Key Management Personnel (Group)
Shares held in Paladin Energy Ltd (number)
30 June 2013
Directors
Mr Rick Crabb
Mr John Borshoff
Mr Sean Llewelyn
Mr Donald Shumka
Mr Peter Donkin
Mr Philip Baily
Executives
Ms Gillian Swaby
Mr Mark Chalmers
Mr Dustin Garrow
Total
balanCe
01 Jul 12
on exerCise
of options
on vesting
of rights
net Change
other
balanCe
30 June 13
4,881,528
21,877,394
100,000
200,000
15,000
12,000
118,333
-
-
27,204,255
-
-
-
-
-
-
-
-
-
-
-
150,000
-
-
-
-
167,833
7,500
68,000
300,000
(6,000,000)
-
-
-
-
5,181,528
16,027,394
100,000
200,000
15,000
12,000
-
-
(68,000)
286,166
7,500
-
393,333
(5,768,000)
21,829,588
No other Key Management Personnel held shares during the year ended 30 June 2013.
30 June 2012
Directors
Mr Rick Crabb
Mr John Borshoff
Mr Sean Llewelyn
Mr Donald Shumka
Mr Peter Donkin
Mr Philip Baily
Executives
Ms Gillian Swaby
Mr Garry Korte(1)
Mr Dustin Garrow
Total
balanCe
01 Jul 11
on exerCise
of options
on vesting
of rights
net Change
other
balanCe
30 June 12
4,881,528
21,877,394
100,000
200,000
15,000
12,000
3,586,655
9,000
-
30,681,577
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4,881,528
21,877,394
100,000
200,000
15,000
12,000
141,333
18,500
38,000
(3,609,655)
(27,500)
(38,000)
118,333
-
-
197,833
(3,675,155)
27,204,255
No other Key Management Personnel held shares during the year ended 30 June 2012.
(1) Mr Garry Korte resigned on 24 May 2012. No longer required to disclose shareholdings.
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 2013 for corporate services totalling US$582,000 (2012: US$571,000) were paid/payable
(balance outstanding at 30 June 2013 and included in trade creditors US$Nil (2012: US$Nil)) to a company of which Ms Gillian Swaby
is a director and shareholder. All amounts are excluding GST.
125
Notes to the CoNsolidated FiNaNCial statemeNtsFor the year eNded 30 JuNe 2013Financial RepoRtpaladin eneRgy ltd aNNual report 2013
NOTE 22. aUdiTOrS’ rEmUNEraTiON
The auditor of the Paladin Energy Ltd Group is Ernst & Young.
Amounts received or due and receivable by Ernst & Young (Australia) for:
Audit or review of the financial report of the consolidated Group
Other services
Taxation services:
Tax compliance services
International tax consulting
Tax advice on mergers and acquisitions
Other tax advice
Sub-total
(1) $121,000 relates to services performed in relation to the issue of Convertible Bonds.
Amounts received or due and receivable by related practices of Ernst & Young
(Australia) for:
Audit or review of the financial report of subsidiaries and audit related services
Taxation services:
Tax compliance services
International tax consulting
Other
Sub-total
2013
2012
US$’000
US$’000
563
23
101
40
48
139
914
188
13
140
30
371
658
146(1)
81
406
67
31
1,389
231
40
139
17
427
The level of non-audit related fees was driven by the tax compliance requirements of multiple jurisdictions and by the specialist advice
requirements of potential acquisitions and group restructures.
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. 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.
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.
126
Notes to the CoNsolidated FiNaNCial statemeNtsFor the year eNded 30 JuNe 2013Financial RepoRtpaladin eneRgy ltd aNNual report 2013
NOTE 23. 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
2013 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
note
2013
US$M
2012
US$M
1.0
6.0
24.6
31.6
5.4
4.8
26.6
36.8
These include commitments relating to tenement lease rentals and the minimum expenditure requirements of the Namibian, Malawian,
Canadian, Western Australian, South Australian, Northern Territorian and Queensland Mines Departments attaching to the tenements
and are subject to re-negotiation upon expiry of the exploration leases or when application for a mining licence is made.
These are necessary in order to maintain the tenements in which the Group and other parties are involved. All parties are committed
to meet the conditions under which the tenements were granted in accordance with the relevant mining legislation in Namibia, Malawi,
Australia and Canada.
(b) Mine Construction Commitments
Commitments for mine construction contracted for at the reporting date but not
recognised as liabilities, payable:
Within one year
Later than one year but not later than 5 years
More than 5 years
Total mine construction
2013
US$M
2012
US$M
-
-
-
-
1.5
-
-
1.5
(c) Operating Lease Commitments
The Group has entered into various property leases relating to rental of offices and residential accommodation.
These non-cancellable leases have remaining terms of between 1 month and 7 years. All leases include a clause to enable upward
revision of rental charge on an annual basis according to prevailing market conditions.
Future minimum rentals payable under non-cancellable operating leases as at 30 June are as follows:
Within one year
Later than one year but not later than 5 years
More than 5 years
Total operating lease commitment
2013
US$M
1.4
2.2
-
3.6
2012
US$M
1.4
3.8
-
5.2
127
Notes to the CoNsolidated FiNaNCial statemeNtsFor the year eNded 30 JuNe 2013Financial RepoRtpaladin eneRgy ltd aNNual report 2013
NOTE 23. COmmiTmENTS aNd CONTiNGENCiES (CONTiNUEd)
(d) Other Commitments
Commitments for mining, transport and reagents contracted for at the reporting date but not recognised as liabilities, payable:
Within one year
Later than one year but not later than 5 years
More than 5 years
Total other commitment
2013
US$M
50.5
2.0
-
52.5
2012
US$M
33.0
2.5
-
35.5
(e) Acquisition Costs
In 1998 Paladin acquired a call option in relation to the purchase of Oobagooma from Afmeco Mining and Exploration Pty Ltd, which
at the time was a subsidiary of AREVA Resources Australia Pty Ltd (AREVA Australia). This arrangement was recently varied so that
Paladin Energy Minerals NL is now the applicant and will, upon the anticipated grant, hold the exploration licence directly. Recent
changes to the Mining Act 1978 (WA) now permit the grant of tenements within the Yampi Sound Defence Training Area and Paladin
Energy Minerals holds a first ranking application. In accordance with the revised terms of the agreement with AREVA Australia, Paladin
has paid $375,000 to AREVA Australia with a further $375,000 to be paid on final grant of the tenement.
In relation to the Manyingee Uranium Project, the re-negotiated acquisition terms provide for a payment of A$0.75M (US$0.68M) (2012:
A$0.75M (US$0.68M)) by the Group to the vendors when all project development approvals are obtained.
(f) Bank Guarantees
As at 30 June 2013 the Group has outstanding US$959,302 (A$1,050,387) (2012: US$889,944 / A$876,016) as a current guarantee
provided by a bank for the corporate office lease, a US$219,193 (A$240,005) (2012: US$270,960 / A$266,719) guarantee for tenements
and a US$10M (2012: US$10M) KM environmental performance guarantee.
(g) Contingent Liability
A dispute has arisen between a Group company and a contractor in relation to the contract for the Stage 3 expansion at LHM. The
contractor is seeking payment of the disputed sum of US$32M. The Group denies the claim and will vigorously defend it. The Group is
also counterclaiming damages from the contractor and cross-claiming from another contractor. The precise quantum of the counter-
claim and cross claim has not yet been established but is expected to exceed the contractor’s claim.
NOTE 24. EmpLOYEE BENEfiTS
Provision for annual leave and long service leave aggregate employment benefit liabilities
Employee Benefits Expense
Wages and salaries
Defined contribution superannuation
Share-based payments
Other employee benefits
Total employee benefits expense
2013
US$M
12.9
68.1
3.4
5.0
4.6
81.1
2012
US$M
9.9
72.3
4.4
8.7
5.3
90.7
Superannuation
The Company contributes to employees’ superannuation plans in accordance with the requirements of Occupational Superannuation
Legislation. Contributions by the Company represent a defined percentage of each employee’s salary. Employee contributions are
voluntary.
Executive Share Option Plan and Employee Performance Share Rights Plan
Details of the Executive Share Option Plan and Employee Performance Share Rights Plan for the Company are disclosed in Note 26.
NOTE 25. rELaTEd parTiES
Key Management Personnel
Details relating to Key Management Personnel can be found at Note 21.
128
Notes to the CoNsolidated FiNaNCial statemeNtsFor the year eNded 30 JuNe 2013Financial RepoRtpaladin eneRgy ltd aNNual report 2013
NOTE 26. SHarE-BaSEd paYmENT pLaNS
Share-based payment expense
The share-based payment plans are described below.
2013
US$M
2012
US$M
3.9
6.9
(a) Types of Share-Based Payment Plans
Executive Share Option Plan (EXSOP)
On 21 November 2006, the EXSOP was approved by shareholders at the Company’s Annual General Meeting. The number of shares
that may be issued under the EXSOP must not exceed 5% of the total number of shares on issue.
Share options are granted to employees under the EXSOP which is designed to create a stronger link between increasing shareholder
value and employee reward. Under the EXSOP, the exercise price of the options is set at the market price of the shares on the date
of grant and performance is measured by comparing the Company’s TSR (share price appreciation plus dividends reinvested) with a
group of peer companies. The Company’s performance will be measured over three years from the date of grant. To the extent that
maximum performance is not achieved under the performance condition, performance will be retested every six months following the
first three years until the end of the fourth year.
In assessing whether the TSR hurdle for each grant has been met, the Group receives independent data from an external advisor,
who provides both the Group’s TSR growth from the commencement of each grant and that of the pre-selected peer group. The peer
group chosen for comparison is the resource companies in the S&P/ASX200 Index at the date of grant. This peer group reflects the
Group’s competitors for capital and talent.
The Group’s performance against the hurdle is determined according to Paladin’s ranking against the peer group TSR growth over the
performance period:
when Paladin is ranked over the 75th percentile, 100% of the share options will vest;
for rankings above the 50th and below the 75th percentile, the percentage of options to vest will be pro-rata between 50% and 100%;
when Paladin is ranked at the 50th percentile, 50% of the share options will vest; 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.
All outstanding options expired on 18 April 2013.
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.
129
Notes to the CoNsolidated FiNaNCial statemeNtsFor the year eNded 30 JuNe 2013Financial RepoRtpaladin eneRgy ltd aNNual report 2013
NOTE 26. SHarE-BaSEd paYmENT pLaNS (CONTiNUEd)
(a) Types of Share-Based Payment Plans (continued)
Employee Performance Share Rights Plan (continued)
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
at 50th percentile
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
Pro-rated vesting between 51% and 99% of the
than the 75th percentile
At 75th percentile or greater
Share Rights subject to the TSR condition
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% pa over the three year
performance period, calculated from the date of the grant of the Share Rights.
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
At 10% pa
0% of the Share Rights subject to the EPS condition
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:
Outstanding at the beginning of the year
Forfeited during the year
Expired during the year
Outstanding at the end of the year
Exercisable at the end of the year
(1) Options that can no longer vest were cancelled on 29 June 2012.
2013
2013 waep
2012
2012 waep
NO.
4,217,329
(97,031)
(4,120,298)
-
-
A$
4.20
4.50
4.19
-
-
NO.
8,231,791
(972,716)
(3,041,746)(1)
4,217,329
3,467,329
A$
4.36
4.50
4.53
4.20
4.56
130
Notes to the CoNsolidated FiNaNCial statemeNtsFor the year eNded 30 JuNe 2013Financial RepoRtpaladin eneRgy ltd aNNual report 2013 NOTE 26. SHarE-BaSEd paYmENT pLaNS (CONTiNUEd)
(c) 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(1)
Forfeited during the year
Vested during the year(2)
2013
NO.
6,885,882
-
(1,809,075)
(1,717,850)
2012
NO.
6,947,337
1,980,400
(928,580)
(1,113,275)
Outstanding at the end of the year
3,358,957
6,885,882
(1) No rights granted under the Contractor Performance Share Rights Plan (2012: 145,000).
(2) The weighted average share price at the vesting date is A$1.21 (2012: A$1.93).
The outstanding balance as at 30 June 2013 is represented by:
date rights granted
vesting date
vesting performanCe Conditions
number
26 March 2010
5 November 2010
5 November 2010
5 November 2010
5 November 2010
5 November 2010
15 February 2011
2 April 2012
2 April 2012
2 April 2012
2 April 2012
2 April 2012
Total
26 March 2014
5 November 2013
5 November 2013
1 September 2013
1 September 2013
1 September 2013
15 February 2014
1 September 2013
31 December 2013
1 September 2014
1 September 2014
1 September 2014
Relative total shareholder return
Earnings per share
Relative total shareholder return
Time based
Relative total shareholder return
Market price
Time based
Time based
Time based
Time based
Relative total shareholder return
Market price
150,000
250,000
250,000
366,947
293,560
440,340
125,650
235,410
20,000
442,350
313,880
470,820
3,358,957
Please refer to Outstanding Share Information table in the Management Discussion & Analysis for movements since the year end.
131
Notes to the CoNsolidated FiNaNCial statemeNtsFor the year eNded 30 JuNe 2013Financial RepoRtpaladin eneRgy ltd aNNual report 2013 NOTE 26. SHarE-BaSEd paYmENT pLaNS (CONTiNUEd)
(d) Weighted Average Remaining Contractual Life
The weighted average remaining contractual life for the share rights outstanding as at 30 June 2013 is 0.7 years (2012: 1.0 years).
(e) Weighted Average Fair Value
The weighted average fair value of share rights granted during the year was N/A (2012: A$1.47).
(f) Rights Pricing Model
The fair value of the equity-settled share rights granted under the plan is estimated as at the date of grant using either the Black-
Scholes valuation model for rights with non-market based performance conditions (time based and EPS) or the Monte-Carlo simulation
model for rights that contained a market based performance condition (TSR and market price).
The following table lists the inputs to the model used for the years ended 30 June 2013 and 30 June 2012.
Dividend yield (%)
Expected volatility (%)
Risk-free interest rate (%)
Expected life of right (years)
Closing share price at grant date (A$)
2013
2012
N/A
N/A
N/A
N/A
N/A
Nil
53%
3.57%
0.4 – 2.4 years
A$1.80
The expected volatility was determined using an historical sample of 1 year’s historic data.
NOTE 27. iNTErESTS iN JOiNTLY CONTrOLLEd aSSETS
(a) Joint Venture Details
Bigrlyi Joint Venture
The Bigrlyi Joint Venture is involved in the identification of and exploration for uranium resources in the Northern Territory, Australia. The
joint venture is between Energy Metals Ltd 53.29%, Southern Cross Exploration NL 5.0% and Northern Territory Uranium Pty Ltd (NTU)
41.71% (NTU is 100% owned by Paladin) with Energy Metals Ltd as manager and operator of the joint venture.
Other Joint Ventures
The Group also has a number of other interests in joint ventures to explore for uranium and other minerals. The Group’s share of
expenditure in respect of these exploration activities is expensed in accordance with the accounting policy stated in Note 3(s) and no
revenue is generated. The Group’s share of the assets and liabilities in respect of these joint ventures is not material.
(b) Assets Utilised in the Bigrlyi Joint Venture
The Group’s share of the assets utilised in these jointly controlled assets, which are included in the Consolidated Financial Statements,
is as follows:
Non Current Assets
Exploration and evaluation expenditure(1)
Total assets
2013
US$M
10.0
10.0
2012
US$M
37.6
37.6
The interest of NTU in the Bigrlyi Joint Venture was acquired on 7 September 2006 and includes the allocation of the acquisition value.
(1) The 2012 figure includes US$6.8m which relates to the interest in PNT in the Angela Project joint venture which is now 100% owned.
(c) Commitments Relating to the Joint Venture
Share of tenement commitments (Note 23(a))
(d) Impairment
Assets employed in the jointly controlled assets were impaired by US$17.9M during the year (2012: US$Nil).
2013
US$M
2012
US$M
0.1
1.5
132
Notes to the CoNsolidated FiNaNCial statemeNtsFor the year eNded 30 JuNe 2013Financial RepoRtpaladin eneRgy ltd aNNual report 2013
NOTE 28. EVENTS afTEr THE BaLaNCE daTE
Other than disclosed below, 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, 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 2013 Financial Report:
Strategic Initiative Update
On 1 August 2013, the Company advised that it had terminated negotiations with the lead party, and all other parties, for the sale of a
minority interest in the Langer Heinrich Mine. In the view of the Board, the current depressed uranium price has meant that it is unlikely
that a price that appropriately reflects the strategic value of the asset will be achieved and accordingly proceeding at this time would
be detrimental to long-term shareholder value.
Although there remains interest in the asset, Paladin believes that the current weakness in the spot uranium price (US$35.50/lb) should
not overly influence the valuation of a flagship asset such as Langer Heinrich. Specifically, Langer Heinrich:
has a +20 years minelife;
is a modern technologically advanced operation;
is operating in a country that is politically stable; and
is currently operating above nameplate capacity with further expansion capacity.
Paladin strongly believes it can generate greater value to its shareholders through postponing the sales process for Langer Heinrich
until there is a more a favourable uranium price environment.
More generally, Paladin believes that the current low uranium price compromises the capacity for supply to reach clearly stated global
demand growth targets. It is generally recognised in the industry that the process for recovery of supply growth can only reasonably
start when a sustainable US$70/lb threshold for uranium is reached and Paladin supports this long-term price expectation.
In this context, the Langer Heinrich Mine remains a highly valuable and strategically important operation for Paladin.
Successful Institutional Placement of Shares to raise A$88M / C$81M
On 2 August 2013, the Company announced that it had completed the bookbuild for a private placement to institutional and accredited
investors of 125.6M ordinary shares (representing 15% of Paladin’s existing issued capital) raising gross proceeds of approximately
A$88M / C$81M.
The placement was priced at A$0.70 (C$0.65) per share which represented a 30% discount to Paladin’s last closing price on the ASX.
The new shares rank equally with existing shares. Settlement of the new shares issued under the placement occurred on the ASX and
the TSX on Monday 12 August 2013 (in each region). Allotment of the new shares issued under the placement occurred on Tuesday 13
August 2013 (in each region).
UBS AG, Australia Branch acted as Global Lead Placing Agent to the placement.
Adjustment of the Conversion Price of Convertible Bonds
On 15 August 2013, the Company announced an adjustment of the Conversion Price in connection to the US$300M convertible bonds
due 4 November 2015 and the US$274M convertible bonds due 30 April 2017 (together, the “Bonds”).
Pursuant to the terms of the Bonds the prevailing Conversion Price is subject to adjustment where any new issue of shares is at less
than 95% of the Current Market Price. Following the completion of the Placement on 12 August 2013, the Conversion Prices have been
adjusted as follows:
Convertible bonds due 2015: US$5.403 (previously US$5.608)
Convertible bonds due 2017: US$2.109 (previously US$2.19)
133
Notes to the CoNsolidated FiNaNCial statemeNtsFor the year eNded 30 JuNe 2013Financial RepoRtpaladin eneRgy ltd aNNual report 2013 NOTE 29. EarNiNGS pEr SHarE
(i) Basic Earnings Per Share
Basic earnings per share are calculated by dividing the profit attributable to equity holders of the Company by the weighted average
number of ordinary shares outstanding during the period.
(ii) Diluted Earnings Per Share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after
income tax effect associated with dilutive potential ordinary shares and the weighted average number of shares assumed to have been
issued for no consideration in relation to dilutive potential ordinary shares. Diluted earnings per share is the same as basic earnings per
share in 2013 and 2012 as the Group is in a loss position.
The following reflects the income and share data used in the basic and diluted earnings per share computations:
2013
US$M
2012
US$M
Net loss attributable to ordinary equity holders of the Parent from continuing operations
(420.9)
(172.8)
NUMBER OF
SHARES
NUMBER OF
SHARES
Weighted average number of ordinary shares for basic and diluted earnings per share
858,113,521
835,645,290
Total number of securities not included in weighted average calculation due to their
antidilutive nature in the current period, that could potentially dilute basic earnings per share
in the future
181,968,119 210,255,068
The per share calculations for the current and comparative periods have been adjusted to reflect the bonus element of the private
share placement disclosed in Note 28. The adjustment factor applied was 1.04.
NOTE 30. parENT ENTiTY iNfOrmaTiON
(a) Information Relating to Paladin Energy Ltd
Current assets
Total assets
Current liabilities
Total liabilities
Issued capital
Retained earnings
Option application reserve
Share-based payments reserve
Available-for-sale investment revaluation reserve
Convertible bond non distributable reserve
Total shareholders’ equity
Net loss after tax from operations
Total comprehensive loss
2013
US$M
2012
US$M
85.1
1,387.0
158.1
1,740.3
11.8
755.1
142.0
671.7
1,845.7
(1,349.6)
0.1
50.2
-
85.5
1,839.2
(908.8)
0.1
52.2
0.4
85.5
631.9
1,068.6
(440.8)
(441.3)
(174.4)
(180.9)
(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 KM, Paladin has provided a guarantee for the loan outstanding to the
lenders.
134
Notes to the CoNsolidated FiNaNCial statemeNtsFor the year eNded 30 JuNe 2013Financial RepoRtpaladin eneRgy ltd aNNual report 2013
NOTE 30. parENT ENTiTY iNfOrmaTiON (CONTiNUEd)
(c) Details of Any Contingent Liabilities of the Parent Entity
Paladin has provided the following guarantees:
i. Guarantee of US$20.3M for the LHM Environmental Trust Fund.
(d) 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
inCorporation
investment
Country of perCentage
interest held
2012
2013
Paladin Finance Pty Ltd
Paladin Energy Minerals NL
PEM Malawi Pty Ltd
Eden Creek Pty Ltd
Paladin (Africa) Limited
Kayelekera Holdings SA
Paladin Netherlands BV
Paladin Netherlands Holdings Cooperatief U.A.
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
Australia
Malawi
Switzerland
Netherlands
Netherlands
Mauritius
Namibia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
B.V.I.
Canada
Canada
Canada
Canada
Canada
%
100
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
100
85
100
100
100
100
100
100
100
100
100
82
82
82
100
100
100
100
100
100
100
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 Holdings Cooperatief U.A. which issues membership equity.
135
Notes to the CoNsolidated FiNaNCial statemeNtsFor the year eNded 30 JuNe 2013Financial RepoRtpaladin eneRgy ltd aNNual report 2013
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 Paladin Energy Ltd are 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 2013 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 3(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 2013.
On behalf of the Board
Mr John Borshoff
Managing Director/CEO
Perth, Western Australia
29 August 2013
136
Financial RepoRtpaladin eneRgy ltd AnnuAl report 2013
independent auditor’s report to the members of paladin energy ltd
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 2013 and 30 June 2012, the consolidated statement of comprehensive income, the consolidated statement of
changes in equity and the consolidated statement of cash flows for each of the years 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 years.
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 3, 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.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
137
Financial RepoRtpaladin eneRgy ltd AnnuAl report 2013
independent auditor’s report to the members of paladin energy ltd
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 2013 and 30 June 2012 and of its
performance for each of the years ended on those dates; and
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 3.
ii
rEpOrT ON THE rEmUNEraTiON rEpOrT
We have audited the Remuneration Report included in the directors’ report for the year ended 30 June 2013. 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 2013, complies with section 300A of the
Corporations Act 2001.
Ernst & Young
G H Meyerowitz
Partner
Perth
29 August 2013
138
Financial RepoRtpaladin eneRgy ltd AnnuAl report 2013
auditor’s independenCe deClaration to the direCtors of paladin energy ltd
aUdiTOr’S iNdEpENdENCE dECLaraTiON TO THE dirECTOrS Of paLadiN ENErGY LTd
In relation to our audit of the financial report of Paladin Energy Ltd for the year ended 30 June 2013, 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
29 August 2013
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
139
Financial RepoRtpaladin eneRgy ltd AnnuAl report 2013
additional information
Pursuant to the Listing Requirements of ASX as at 10 September 2013:
(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
5,409,826
30,274,346
30,872,114
129,483,096
767,292,692
963,332,074
7,644 shareholders hold less than a marketable parcel of shares.
(B)
THE TWENTY LarGEST SHarEHOLdErS HOLd 69.65% Of THE TOTaL SHarES iSSUEd.
holder
no. of shares
N
O
i
T
a
m
r
O
f
N
i
L
a
N
O
i
T
i
d
d
a
CDS & Co
HSBC Custody Nominees (Australia) Limited
Citicorp Nominees Pty Limited
JP Morgan Nominees Australia Limited
National Nominees Limited
CEDE & Co
JP Morgan Nominees Australia Limited
Mr J Borshoff*
UBS Wealth Management Australia Nominees Pty Ltd
Warbont Nominees Pty Ltd
CS Fourth Nominees Pty Ltd
HSBC Custody Nominees (Australia) Limited – A/C 2
Mr Rick Crabb*
UBS Nominees Pty Ltd
Brispot Nominees Pty Ltd
BNP Paribas Noms Pty Ltd
HSBC Custody Nominees (Australia) Limited – A/C 3
QIC Limited
Share Direct Nominees Pty Ltd <10026 A/C>
Custodial Services Limited
* Aggregates all associated holdings
180,443,214
126,019,054
122,840,728
52,477,070
48,709,934
36,469,784
36,176,329
16,027,394
7,092,271
6,117,810
5,629,804
5,512,993
5,181,528
4,207,888
3,809,142
3,764,896
3,161,379
3,052,958
2,200,817
2,021,284
670,916,277
Substantial shareholders as disclosed in substantial shareholder notices given to the Company are as follows:
GIC Private Limited (formerly known as “Government of Singapore Investment Corporation Pte Ltd”)
L1 Capital Pty Limited
Newmont Mining Corporation
(C)
VOTiNG riGHTS
%
18.73
13.08
12.75
5.45
5.06
3.79
3.76
1.66
0.74
0.64
0.58
0.57
0.54
0.44
0.40
0.39
0.33
0.32
0.23
0.21
69.65
74,281,934
56,041,793
52,097,937
Ordinary Shares
For all shares, voting rights are one vote per member on a show of hands and one vote per share in a poll.
Share Rights
There are no voting rights attached to share rights.
(d)
UNQUOTEd SECUriTiES
Unlisted Share Rights
The Company has 1,952,575 share rights on issue, issued in accordance with the Share Rights Plan approved by
shareholders in November 2012. The number of beneficial holders of share rights totals 119.
140
Paladin EnErgy ltd AnnuAl report 2013
additional information
TENEmENTS HELd
UraNiUm prOJECTS
proJeCt
tenements
interest %
Jv partner/s
operator
note
NAMIBIA – AFRICA
Langer Heinrich
Gawib
Gawib
NIGER – AFRICA
Tagait 4
Terzemazour 1
Toulouk 1
Ekazan 1
MALAWI – AFRICA
Kayelekera
Chilumba
Chilongo
Mpata
Mapambo
Ngana
1
1
1
1
1
1
1
1
1
1
1
1
1
MLI
MLI
EPL
(A)
100.00%
100.00%
100.00%
EPL
EPL
EPL
EPL
MLI
EPL
EPL
EPL
EPL
EPL
(A)
(A)
(A)
(A)
(A)
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
31
MLC
100.00%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
QUEENSLAND
Isa North
Valhalla North
NORTHERN TERRITORY
Angela and Pamela
Bigrlyi
Walbiri
Malawiri
Minerva
Beatrice South
Mount Gilruth
WESTERN AUSTRALIA
Manyingee
Spinifex Well
Oobagooma
SOUTH AUSTRALIA
Petermorra
Mt Yerila
5
3
1
1
1
10
20
2
1
1
12
1
1
3
1
2
1
1
EPMs
MDLs (A)
EPM
82.08%
82.08%
100.00%
(see Note 3)
(see Note 3)
-
(A)
(A)
(A)
(A)
(A)
(A)
(A)
(A)
(A)
EL
EL
ERLs
MCs
MLs
ERL
ERL
ERLs
EL
EL
MLs
EL
EL
EL
EL
100.00%
100.00%
41.71%
41.71%
41.71%
58.13%
47.96%
100.00%
33.33%
33.33%
100.00%
100.00%
100.00%
20.00%
15.00%
-
-
) Energy Metals Limited
) Southern Cross Exploration NL
)
Energy Metals Limited
Energy Metals Limited
Afmeco Mining and Exploration Pty Ltd
Afmeco Mining and Exploration Pty Ltd
-
-
-
Quasar Resources Pty Ltd
Quasar Resources Pty Ltd
J E Risinger
LHU
LHU
LHU
IEL
IEL
IEL
IEL
PAL
PAL
PAL
PAL
PAL
PAL
AUR
SRA
SRA
FSN
PDN
PDN
EME
EME
EME
EME
EME
NTU
Afmeco
Afmeco
PEM
PEM
PEM
Quasar
Quasar
N
O
i
T
a
m
r
O
f
N
i
L
a
N
O
i
T
i
d
d
a
1
1
1
1
1
1
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2,3
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additional information
TENEmENTS HELd (CONTiNUEd)
NON-UraNiUm prOJECTS
proJeCt
tenements
interest %
Jv partner/s
operator
note
QUEENSLAND
Western Isa Joint Venture (See Note 4)
(Summit Resources (Aust) Pty Ltd, Pacific Mines Pty Ltd)
6
Isa South
1
EPMs 20.00%
EPM 18.00%
May Downs
Mount Kelly
Constance Range
SOUTH AUSTRALIA
Reaphook JV
3
1
4
1
operators
Aston Metals (Qld) Limited
Aston Metals (Qld) Limited
Centaurus Metals Limited
Aston Metals (Qld) Limited
Aston Metals (Qld) Limited
Aston Metals (Qld) Limited
EPMs 20.00%
EPM 20.00%
EPMs 20.00%
EL
7.50%
Perilya Limited
Signature Resources NL
4
4
4
4
4
AML
AML
AML
AML
AML
Perilya
N
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f
N
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a
N
O
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T
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d
a
Energy Metals Limited
Fusion Resources Pty Ltd
Langer Heinrich Uranium (Pty) Limited
Mount Isa Uranium Pty Ltd
Aston Metals (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 Energy Ltd
EME
FSN
LHU
MIU
AML
NTU
PAC
PAL
PEM
SRA
AUR
IEL
PDN
Notes
paladin equity
(direCt and indireCt)
0%
100%
100%
100%
0%
100%
100%
100%
100%
82.08%
100%
100%
note
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 (17km2 and 10km2
respectively) subject to the Isa Uranium Joint Venture between SRA (50% and Operator) and Mount Isa Uranium Pty Ltd (50%).
4. Aston Metals (Qld) Limited earned 80% equity in the Western Isa Joint Venture tenements through expenditure of A$8M within three
years of commencement (10 December 2007). SRA and Pacific Mines Pty Ltd have retained up to 20% equity in each of these
tenements. Aston Metals (Qld) Limited were formally known as MM Mining (Qld) Limited.
Tenement Types
EL
Exploration Licence (Australia)
EPL Exclusive Prospecting Licence (Africa)
EPM Exploration Permit for Minerals (Australia)
ERL Exploration Retention Licence (Australia)
MC Mineral Claim (Australia)
ML Mining Lease (Australia)
MLI Mining Licence (Africa)
MLC Mineral Licence (Newfoundland/Labrador)
(A)
Pending Application
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Paladin EnErgy ltd AnnuAl report 2013
additional information
LiST Of aBBrEViaTiONS
SHarEHOLdEr rEpOrTiNG TimETaBLE
A$
bcm
BFS
CCD
DFS
DIFR
ft
g
g/m3
g/t
hr
ISO
ISR
JORC
K
kg
kg/t
km
KM
km2
kW
lb
LHM
LHUPL
LTI
LTIFR
M
Mlb
m
Ma
MIK
mm
MMI
mSv
Mtpa
NI
NOSA
NPV
OK
pa
PAL
PFS
ppb
ppm
QAQC
QC
RC
RIP
t
t/m3
tpa
tph
U
U3O8
US$
w:o
Australian dollars
bank cubic metres
Bankable Feasibility Study
Counter Current Decantation
Definitive Feasibility Study
disabling incident frequency rate
feet
gram
grams per cubic metre
grams per tonne
hours
International Organisation for Standardisation
in situ recovery
Joint Ore Reserves Committee
thousand
kilogram
kilogram per tonne
kilometres
Kayelekera Mine
square kilometres
kilowatts
pounds
Langer Heinrich Mine
Langer Heinrich Uranium (Pty) Ltd
lost time injury
lost time injury frequency rate
million
million pounds
metres
million years
Multiple Indicator Kriging
millimetres
Mobile Metal Ion
millisiverts
million tonnes per annum
National Instrument
National Occupational Safety Association
net present value
Ordinary Kriging
per annum
Paladin (Africa) Limited
Pre-feasibility study
parts per billion
parts per million
Quality assurance and quality control
quality control
reverse circulation
resin-in-pulp
tonnes
tonnes per cubic metre
tonnes per annum
tonnes per hour
uranium
Uranium Oxide
US dollars
waste to ore ratio
Please note the lodgement dates are deadlines and reports may
be released early.
Important Dates
2013
31 October 2013
September Quarterly Activities Report
(ASX)
14 November 2013
September Quarterly Financial Statements
including MD&A (TSX)
15 November 2013
Conference Call and Investor Update
(proposed date)
21 November 2013
Annual General Meeting to be held in
Perth, Western Australia
2014
31 January 2014
December Quarterly Activities Report
(ASX)
13 February 2014
Half Yearly Financial Statements
incorporating December Quarter
and MD&A (Appendix 4D - ASX)
14 February 2014
Conference Call and Investor Update
(proposed date)
30 April 2014
March Quarterly Activities Report (ASX)
15 May 2014
16 May 2014
March Quarterly Financial Statements
including MD&A (TSX)
Conference Call and Investor Update
(proposed date)
31 July 2014
June Quarterly Activities Report (ASX)
28 August 2014
Audited Annual Financial Statements for
the year ended 30 June 2013 including
MD&A (ASX/TSX) & (Appendix 4E - ASX)
29 August 2014
Conference Call and Investor Update
(proposed date)
29 September 2014
Annual Information Form (TSX)
31 October 2014
September Quarterly Activities Report
(ASX)
13 November 2014
September Quarterly Financial Statements
including MD&A (TSX)
14 November 2014
Conference Call and Investor Update
(proposed date)
20 November 2014
Annual General Meeting to be held in
Perth, Western Australia
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Paladin EnErgy ltd AnnuAl report 2013
iNVESTOr rELaTiONS
Australia – Corporate Office
Mr Andrew Mirco
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: andrew.mirco@paladinenergy.com.au
North America
Mr Greg Taylor
Oakville, ON 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
(+61 8) 9323 2033
Facsimile:
Canada
Computershare Investor Services Inc.
100 University Avenue, 8th Floor
Toronto, Ontario M5J 2Y1
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Telephone: 1 800 564 6253 (within North America) or
(+1) 514 982 7555
Facsimile: (+1) 416 263 9394 or
1 888 453 0330 (within North America)
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.
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Paladin EnErgy ltd AnnuAl report 2013
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 a 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, 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
54 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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www.paladinenergy.com.au