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BuiLding
BusinEss
REsiLiEncE
AnnuAl RepoRt 2014
Paladin Energy Ltd
Follow Paladin at
Follow Paladin at
www.paladinenergy.com.au
www.paladinenergy.com.au
About Paladin
Chairman’s Letter
Insights From The Managing Director/CEO
Nuclear Power – Demand Growing But Supply
Stagnating
Management Discussion and Analysis
Review of Operations
Health & Safety
Financial Review
Sustainable Development
Environment
Corporate Social Responsibility
Our People
Coporate Governance Statement
01
05
06
08
10
11
24
26
34
35
37
42
45
Directors' Report
Remuneration Report
Financial Report
Contents of The Financial Report
Consolidated Income Statement
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes In Equity
Consolidated Statement of Cash Flows
Notes To The Consolidated Financial Statements
Directors’ Declaration
Independent Audit Report
Additional Information
Corporate Directory
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72
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76
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79
124
125
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131
Corporate
Values
create shareholder wealth by developing the considerable opportunities Paladin has and continues to generate.
Become a major player in the global uranium supply market.
Operate at global best practice with particular emphasis on safety and the environment.
Reward employee performance and provide a fulfilling work environment.
contribute to the growth and prosperity of the countries in which Paladin operates by conducting operations in an efficient
and effective manner and by seeking out opportunities for expansion.
Respond to the attitudes and expectations of the communities in which it operates as part of its commitment to corporate
social responsibility.
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:
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
Paladin today
OvErviEw
paladin’s value is based on five key drivers - producing mines, quality pipeline, proven
team, industry positioning and sustainability of operations.
OPEraTiOns
langer Heinrich Mine
- Consistently operating at or above nameplate.
- Successful process innovation at langer Heinrich should provide a pathway to
C1 cash costs1 of uS$22/lb during FY2016.
- Focus on process and cost optimisation.
Kayelekera Mine
- placed on care and maintenance due to low uranium prices
and non-profitability.
- Maintaining plant, infrastructure and critical aspects of intellectual property
and operational knowhow to allow for a quick restart, when justified.
- Care and maintenance to preserve the orebody to recommence production once
the uranium price provides sufficient incentive (circa uS$75/lb).
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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.
technical innovation and cost optimisation an ongoing focus.
project pipeline able to drive organic growth.
1 Refer to ‘Non IFRS Measure’ in Financial Review section.
P a l a d i n E n E r g y l T d A n n u A l r e p o r t 2 0 14
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ThE yEar aT a glancE
2014 whaT wE sET
OUT TO dO
2014 production guidance in the range of 8.3 to 8.7Mlb U3O8.
- Revised guidance 7.8 to 8.0Mlb U3O8. Achieved 7.94Mlb.
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.
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Develop resource update for Michelin project.
✕
Improve NOSA health and safety system rating for Langer Heinrich and
Kayelekera mines.
- High emphasis on training and cultural change going forward.
Increase value through strategic partnerships.
>
Commence statutory approvals process to enable a Field Leach Trial at Manyingee.
Sell minority equity interest in selected uranium asset.
>
Strengthen balance sheet through debt reduction.
Achieved
✕
Not achieved
>
Ongoing
2015 whaT wE
Plan TO dO
2015 production guidance for Langer Heinrich in the range of 5.4 to 5.8Mlb U3O8.
Continue to reduce unit production costs at Langer Heinrich via:
-
-
-
Focused cost management.
Optimisation of existing processes.
Ongoing development and introduction of process innovation.
Improve health and safety performance across the Group.
Increase value through strategic partnerships.
Advance approvals process to enable a Field Leach Trial at Manyingee.
Strengthen balance sheet through continued debt reduction.
Maintain Kayelekera Mine in operational ready status.
2 Refer to ‘Reconciliation of C1 Cost of Production to Cost of Goods Sold’ in Financial Review section.
2
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achiEvEmEnTs
FOr ThE yEar
October 2013
Implementation of further
savings and optimisation
initiatives in place to be
realised in FY2014 and
FY2015.
december 2013
Record quarterly combined
production from Langer
Heinrich and Kayelekera of
2.2Mlb U3O8 at near or above
budget production and
below budget unit cost.
january 2014
Reported sale of 25%
minority interest in Langer
Heinrich to subsidiary of
China National Nuclear
Corporation for US$190M
(settled on 23 July 2014).
january 2014
Refinancing of Langer
Heinrich and Kayelekera
facilities, allowing significant
reduction in debt repayments
over CY2014 and CY2015.
February 2014
Decision to place Kayelekera
on care and maintenance,
saving appreciable cash
outflows at current uranium
prices and preserving
operation for quick restart.
February 2014
Revised production
guidance of 7.8Mlb to
8.0Mlb following decision to
place Kayelekera on care
and maintenance (achieved
7.94Mlb for FY2014).
june 2014
Revised Mineral Resource
update for Michelin Project
with 25% increase in
Measured and Indicated
Resources.
june 2014
C1 cost of production2
year-on-year – Langer
Heinrich reduced by 4%.
TOTal PrOdUcTiOn lb
9,000,000
8,000,000
7,000,000
6,000,000
b
l
5,000,000
4,000,000
3,000,000
2,000,000
1,000,000
FY2011
FY2012
FY2013
FY2014*
* Production reduced in FY2014 following the decision to place Kayelekera on
care and maintenance in February and production ceasing on 6 May 2014
KEy annUal daTa
salEs
8.66 Mlb u
o
8
3
8.66Mlb U3O8 sold, up from 8.25Mlb in FY2013
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salEs rEvEnUE
328.8 M
langEr hEinrich minE
c1 cOsT OF PrOdUcTiOn
langEr hEinrich PrOdUcTiOn
b
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/
$
$
U
31.5
31.0
30.5
30.0
29.5
29.0
28.5
28.0
27.5
FY2011
FY2012
FY2013
FY2014*
o
8
3
5.59 Mlb u
Langer Heinrich production 5.59Mlb U3O8
5.7% above FY2013
KayElEKEra PrOdUcTiOn
Mlb u
2.35
o
8
3
Kayelekera production 2.35Mlb U3O8 (production ceased
6 May following care and maintenance decision 7 February)
P a l a d i n E n E r g y l T d A n n u A l r e p o r t 2 0 14
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DeAr Fellow SHAreHolDer,
tHe FinAnCiAl YeAr enDing 30 June 2014 MArKeD A perioD oF
ConSiDerAble ACtivitY At Your CoMpAnY. now iS An opportune
MoMent to reFleCt on reCent eventS AnD tHe poSitive iMpACt
Your boArD believeS tHeSe CoMbineD eventS HAve HAD on pAlADin’S
FinAnCiAl poSition AnD long-terM StrAtegiC outlooK.
pAlADin HAS SuCCeSSFullY CoMpleteD tHree SigniFiCAnt StrAtegiC
initiAtiveS SinCe MiD-JAnuArY tHAt HAve StrengtHeneD tHe CoMpAnY’S
bAlAnCe SHeet AnD ForeCASt CASH Flow in 2014 AnD 2015. tHeSe Are:
• The sale of a 25% inTeresT in The langer heinrich operaTion
For uS$190M;
• The successful refinancing of The langer heinrich and KayeleKera
proJeCt FinAnCe FACilitieS, reSulting in A uS$78M reDuCtion in Debt
repAYMentS over 2014 AnD 2015; AnD
• The suspension of producTion aT KayeleKera, resulTing in an
iMproveMent in pAlADin’S ForeCASt CASH Flow poSition oF
uS$27M - $35M to tHe enD oF 2015.
4
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CHAirMAn
Individually, each of these developments is significant; together, they
positively impact Paladin’s cash flow by more than US$295M. They
provide a strong financial and strategic foundation to navigate the
current low uranium price environment and to prepare for a period
of future growth when prices inevitably recover. In that respect, we
have already seen improvement in the uranium price over the past
few weeks, although considerable further uplift is needed to support
a global sustainable supply industry.
This was a necessary step due to the financial losses that Paladin
has incurred at Kayelekera. It will not reopen until it is profitable to do
so and this will ensure the long-term sustainability of the operation
and ultimately generate superior returns for all of Kayelekera’s
stakeholders, including the people of Malawi. The support of the
Government of Malawi during this transition to care and maintenance
is appreciated and it is important to state that Paladin remains
committed to maintaining a strong presence in Malawi.
The introduction of CNNC Overseas Uranium Holding Limited, a
subsidiary of China National Nuclear Corporation, as Paladin’s new
25% partner at Langer Heinrich is a significant development which I
believe will have broad positive implications for Paladin’s future.
China has the largest and most ambitious nuclear energy programme
of any country in the world. It currently has 20 nuclear power reactors
in operation; a further 28 under construction and more scheduled for
development, according to the World Nuclear Association. CNNC is
China’s largest nuclear generating operator and is involved across
the entire nuclear spectrum – from scientific research through to
generator construction and operation.
CNNC paid US$190M (A$200M) for 25% of Langer Heinrich - a
modern, world-class uranium operation and the highest quality open
pit operation in the industry. Paladin’s alignment with the leading
nuclear organisation in China, an emerging nuclear superpower, is
a carefully considered strategic move. China’s impressive nuclear
programme has a growing necessity for primary uranium supply as
it continues its expansion programme, so there is obviously future
potential and logic for further collaboration with Paladin in order to
satisfy those needs.
Paladin offers a unique platform in the global uranium industry
through its combination of unparalleled project development and
technical expertise, a large resource base spread across several of
the world’s major uranium basins and, importantly, an independent
corporate structure.
Shareholders should also recall the US$200M long-term offtake
agreement Paladin entered into with Électricité de France S.A (EdF)
in September 2012. EdF is the world’s largest uranium consumer. Its
deal with Paladin represents the first of its type and was concluded
after, we understand, EdF considered a range of potential uranium
supply partners.
Through our new partnership with CNNC and the offtake agreement
with EdF, Paladin has formed long-term strategic partnerships with
two of the world’s most important nuclear organisations, while
continuing to maintain its independence at the corporate level. We
view this unique position as a strong endorsement of Paladin’s
corporate strategy, asset base and technical expertise. It gives rise to
the potential for a range of strategic initiatives and alternatives which
can add meaningful value for Paladin shareholders.
The first half of 2014 also has seen a continuation of our decisive
action to reduce the Company’s cost base.
In early February, Paladin made a difficult decision to suspend
production at the Kayelekera Mine in Malawi. Putting an operation
onto care and maintenance is never an easy decision. Paladin regrets
the impact this painful but necessary decision has had on many
Kayelekera employees and their families and, more broadly, on the
Malawian economy, but it came only after the Company had endured
years of financial burden in supporting the loss-making operation.
As shareholders will be aware, the price of uranium has faced a
severe downturn since 2011, when an earthquake struck Japan
and the resultant tsunami impacted the Fukushima nuclear reactor.
Since July 2013, the spot uranium price traded down to US$28.00/lb,
the lowest level seen for approximately eight years. This period has
been characterised by financial losses and closures at a number of
uranium operations, while planned expansions and new projects have
effectively been halted. August 2014 saw a welcome improvement in
the spot price to US$31.50/lb and hopefully this positive trend will
continue into 2015 and beyond.
Paladin has undertaken a range of cost reduction measures across
its business in response to the difficult conditions. In the past two
years, Paladin has reduced its corporate head count by 35% and
taken US$80 - US$100M in cash costs out of the operations. The
cost reduction programme will continue in FY15, when cash costs
at the Langer Heinrich operation are expected to be further reduced.
Importantly, Langer Heinrich continues to perform strongly as one
of the world’s lowest cost conventional uranium mines and remains
profitable in even the current price environment. It has a 17 year mine
life and capacity to be expanded further when uranium prices reach
US$75/lb and appear sustainable.
A considerable amount of work completed in 2014 culminated in
the landmark announcements I outlined earlier, however the entire
Paladin team is conscious there is still much work to be done in the
current financial year.
Sadly, two fatalities during the past year (one at each operation)
was a stark reminder to all that a fresh and renewed focus on safety
awareness was necessary. This is now underway as explained in the
safety and health section of this report.
I again extend my appreciation on behalf of the Board to John
Borshoff and his team for their hard work during another complex
and difficult period.
On behalf of the Paladin Board and management team, I also
would like to thank our shareholders for their ongoing support as
we strive to achieve excellence across our organisation in whatever
circumstances and to position the Company to take full advantage of
the nuclear upturn when this inevitably occurs.
Yours faithfully
Rick Crabb
BJuris(Hons),LLB,MBA,FAICD
P a l a d i n E n E r g y l T d A n n u A l r e p o r t 2 0 14
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MAnA ging DireCtor/Ceo
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dirEcTOr/cEO
Dear Shareholder
While we at Paladin are making every effort into reducing costs, optimising production and aligning
with key strategic partners to strengthen our balance sheet, all with notable success, the uranium
market continues to present a true conundrum. We have substantial divergence between an
extremely bright, longer-term, outlook, coupled with severely depressed current uranium prices.
All of this is at a time when China, Russia, the Middle East and India are confirming, and showing
aggressive attitudes towards, growth in nuclear electrification and sending a clear message that
nuclear power generation is on an ascending path. Further, Europe is seriously revisiting and revising
its commitment to renewables, now demanding economic reasoning for wind and solar, not just
allowing justification on ideological grounds. Add to this, President Obama's recent edict to reduce
coal-fired generation emissions, calling for a 30% reduction by 2030, putting a solid floor on the
existing US nuclear fleet. In fact, the US may well have to grow its nuclear capacity. So we
definitely have a very interesting situation with regard to uranium.
In terms of reactor new builds, China recently gave us a glimpse
of its nuclear electrification targets going from 60Gw by 2020 to
150-200Gw by 2030, then rising to 300Gw plus into the 2030’s and
beyond. These are staggering numbers by any score coming from
just one country, and an enormous amount of uranium is going to be
required to feed that expansion programme alone. Most recently, the
National Development and Reform Commission (NDRC) announced
its intent to shorten the approval time for seven reactor projects
currently in preliminary stages, showing China’s clear intention to
fully support its vital nuclear programmes.
In Japan, the Nuclear Regulation Authority (NRA) granted preliminary
approval of the safety test report for Sendai 1 & 2 owned by Kyushu
Electric Power Company (16 July) leading to what is expected to be
a measured reactor restart programme. This could ultimately result
in as much as two-thirds of Japan’s nuclear capacity re-entering
commercial operations over the next few years.
On the flipside of this increasing nuclear optimism and the evidence
supporting the pending supply shortage, it has been a hard year
for those in the uranium mining industry. In response to severely
depressed uranium prices, Paladin put its Kayelekera Mine on care
and maintenance, as did UraniumOne with its Honeymoon ISR Mine
and Rössing production is down 40%. In the United States, some
ISR start-up operations are on partial production, sufficient only to
deliver into the few term contracts they hold.
At a uranium spot price of US$28/lb, there can be no sustainable
future – for the explorers, for the miners, or, for that matter, for the
nuclear industry as a whole. With half to two-thirds of the present
annual production capacity operating above the current spot price,
it is clear no one will invest in replacing existing capacity as it runs
down, never mind investing in growth of supply.
The sole reason some of the uranium companies are currently
surviving is because of multi-year term contracts enabling average
realised prices in the mid-US$40/lb range. This accounts for just
30% to 40% of global production. Even for these companies,
however, this is not the long-term safe haven that it would at first
seem to be - it is merely a strategy for near-term survival, leaving
little opportunity to both replenish depleting production and to start
supply growth to satisfy future demand in the mid to longer-term.
Every uranium miner is saying they need a sustainable
uranium price of Us$65/lb to Us$75/lb
Even those companies committed to preparing for the future remain
paralysed by current market conditions and the short-term mindset
of many utilities. No one is seriously investing in greenfield uranium
project evaluation and certainly not in development. Every uranium
miner is saying they need a sustainable uranium price of US$65/
lb to US$75/lb to even start to think about investing large amounts
of capital to build needed new uranium mines. Apart from drilling
in the South West of Canada’s Athabasca Basin, Paladin’s work
in Labrador and some minor exploration elsewhere in the world,
exploration is effectively at a standstill. Despite all of this, a majority
of nuclear utilities still cannot seem to recognise the deep trouble
supply sustainability is in, never mind its growth. The market is
blinded from this supply deficit reality by the temporary uranium
surplus caused by Fukushima and supplemented by enrichment
facility operations (underfeeding).
Organisations such as the World Nuclear Association (WNA) and Ux
Consulting (UxC) are forecasting a near-decade long surplus market
with UxC stating uranium price will stay sub US$45/lb to US$50/lb
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P a l a d i n E n E r g y l T d A n n u A l r e p o r t 2 0 14
Our 2014 study indicates that this supply stagnation
will lead to a shortfall of about 35mlb per annum by
2020 and, on this basis, we expect the start of positive
price reaction occurring late 2014/early 2015 to
incentivise much needed supply growth.
for the next 7 years. On the other hand, the uranium mining industry
itself is saying no new greenfield expansion will happen unless the
uranium price reaches US$65/lb to US$75/lb, for which decisions
need to happen in the next few years. Am I missing something
here or does someone really think serious mining companies or
developers are going to invest just to lock-in long-term financial
losses? I think not.
Something is askew in my opinion. If fuel supply is integral to having
a functional nuclear generating industry (which, of course, it is)
and the uranium miners are correct in their forecast of pending
uranium shortage earlier rather than later, then the situation is surely
unsustainable. If the market forecasters, who base supply on the
theoretically possible, are correct, then obviously most, if not all, of
the uranium mining and exploration sector is at some risk and even
the status quo cannot be maintained because there just will not be a
uranium mining industry to be had. It is simply an untenable situation
as, at the moment, we have a lose-lose scenario for both supplier
and consumer. If I were a utility fuel buyer, I would be very worried
indeed by all this, even if I was picking up some cheap product in
the short-term.
There is hope however. Paladin has just completed its 4th annual
supply/demand analysis, which is very much derived from a
supply side expertise and I would like to share with you some of
the key findings of this study. This, by the way, broadly aligns with
the Cameco3 findings and, where we differ is in the timing of price
recovery – we say 6 to 12 months and they say 12 months to 18-24
months. Both of us say there are significant supply shortfalls from
2020 and beyond. Our study shows a widening supply gap starting
2016. Term contracting of uranium is behind schedule, especially in
the US, thanks mainly to procrastination due to Fukushima. The US
utilities now need to act fast to fill their term contract needs for the
2016-2021 period. This is normally done 18-24 months beforehand,
meaning the uranium price reacts well before a period of actual
shortage and, in this current situation, we would expect a positive
price reaction in the next 6 to 12 months.
supply, NOT what is theoretically possible. This is in addition to
other key constraining considerations accounting for risk associated
with deposit quality, the approvals process, metallurgical issues,
geopolitical matters, costs of production, CAPEX and financing
limitations.
Our key findings, when observed and evaluated from a strong supply
perspective, are that the true supply/demand situation is obscured
by the current short-term market oversupply. The paradox is with the
low uranium price that this current situation has created; is resulting
in a total lack of incentive to initiate supply growth for the 2017 to
2025 period. This is a highly-volatile state of affairs. There is simply
no opportunity to increase supply beyond what is currently being
constructed - which is limited to Cigar Lake and Husab Projects. So
the price has to move not only to support current supply, but also
to support the mid-term lack of sufficient supply. A true paradox.
Our 2014 study indicates that this supply stagnation will lead to a
shortfall of about 35Mlb per annum by 2020 and, on this basis, we
expect the start of positive price reaction occurring late 2014/early
2015 to incentivise much needed supply growth.
In the past 9 months, almost 8Mlb have been cut from production
by the uranium miners and we expect the impact of this to be felt
by the spot market in the next 12 months. If these depressed prices
continue I feel there will be more production cutbacks to come.
All this augers well for the uranium industry with current supply
tightening and future supply growth being highly constrained.
Paladin is the only significant, independent uranium company in the
world. It has the current capacity to produce 5% of global supply
and is positioning itself to take advantage of the emerging positive
outlook for uranium. In the past 18 months, we have achieved some
significant milestones which, in themselves, show that the nuclear
industry is showing signs that change has to occur very soon to
ensure a future.
Yours faithfully
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From the onset, our uranium supply/demand studies have used,
as a foundational component, incentive pricing as a fundamental
requisite in establishing the capability of the industry to increase
Mr John Borshoff
B.Sc., F.AusIMM, FAICD
Managing Director/Chief Executive Officer
3 Refer Cameco presentations (www.cameco.com).
P a l a d i n E n E r g y l T d A n n u A l r e p o r t 2 0 14
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dUsTin g arrOw
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nUclEar POwEr – dEmand
grOwing BUT sUPPly sTagnaTing
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Reactor new build programmes progressed over
the past year. Ten reactors began construction
during CY2013, with additional starts during
first half CY2014 bringing the total to 73
units, an increase of five reactors since last
year. China leads the group with 29 reactors
currently being built, followed by Russia (10),
India (6) and with South Korea and the United
States each building five reactors. The number
of reactors classified as "On Order or Planned"
has risen to 172 units, with a further 309
reactors in the "Proposed" category.
China’s commercial nuclear power programme is once again back
on track after extensive post-Fukushima safety reviews, despite
the fact that lingering effects resulting from the Great East Japan
Earthquake in March 2011 (Fukushima) continue to negatively
impact nuclear fuel markets, including natural uranium deposits
(U3O8). While the official forecast of installed nuclear capacity in
2020 is down marginally (due principally to the construction delay
during the safety review period), the expected 2020 installed
nuclear capacity is now 58Gwe (currently there are 20 reactors
operating with an installed capacity of 17.1Gwe). However, by 2030,
the installed capacity forecast expands significantly to 200Gwe.
As of June 2014, Japanese utilities have submitted applications
to the NRA for safety evaluations of 19 reactors. The NRA began
accepting review applications in July 2013, with an estimated
processing period of six months.
On 16 July, the NRA approved a draft safety test report for two
reactors, Sendai 1 & 2 (Kyushu Electric Power Company), which
had been placed on a fast-track review status. Subject to a
public review period, submission of supplemental safety-related
documentation and approval by local governments, the restart of
these initial two facilities is expected prior to the end of CY2014.
UraniUm sUPPly UndEr ThrEaT
Global uranium production rose marginally in CY2013, reaching
154Mlb as compared to the CY2012 level of 152Mlb with Kazakhstan
output rising to 58.5Mlb, an increase of almost 6% over CY2012.
Global uranium production has remained relatively stable over the
past five years, having risen from 133Mlb in 2009 up to current
levels (154Mlb). During that period, Kazakhstan’s annual uranium
output increased by 22Mlb.
Worldwide uranium production is expected to slip to around
152Mlb in CY2014 due to a variety of production problems such
as Rio Tinto’s Ranger Mine, which only recently began to reinitiate
operations following its shut-down throughout the first half of
CY2014 due to a leach tank failure.
8
P a l a d i n E n E r g y l T d A n n u A l r e p o r t 2 0 14
rEacTOrs sTaTUs: march 2011 and jUnE 2014
350
325
300
275
250
225
200
175
150
125
100
75
50
25
0
Under Construction
Planned
Proposed
Mar-11
Jun-14
Source: World Nuclear Association
A number of uranium producers have taken an increasingly pro-
active stance leading to production cut-backs and project delays,
generally in response to depressed uranium prices.
In early June, Rössing Uranium announced that production would
be reduced to a level sufficient to meet higher-priced term deliveries
through 2017, and that the workforce would be reduced by 23%.
Based upon public statements, it looks like Kazakhstan is likely to
hold production stable due to weak market conditions.
The Cigar Lake Mine in Northern Saskatchewan, which began
construction in 2005, had been slated to commence production in
late 2014; however that date has now been further delayed due to
ground freezing issues.
In addition to Paladin placing its Kayelekera Mine on care and
maintenance, UraniumOne ceased production at its Honeymoon
ISR Mine in South Australia and has reduced operations at its
Willow Creek ISR Mine in Wyoming. Ur-Energy announced that
production at its Lost Creek ISR facility, also in Wyoming, is being
limited to satisfy existing term delivery commitments. The Alta Mesa
ISR Mine in South Texas, owned by Mestena Uranium, has also
ceased operations.
What is much more important for future uranium market conditions,
a broad spectrum of proposed uranium production projects have
been deferred, including several Cameco projects as well as
the Imouraren Uranium Mine (Areva) in Niger, which has been under
construction since 2010, but has now likely been delayed until
post-2020.
nEar-TErm UraniUm marKET sTrEssEd
Persistent delays in Japanese reactor operations has destabilised
the uranium market as deliveries under term sales agreements are
deferred or cancelled and that incremental uranium is sold into the
spot market. In addition, operation of some uranium enrichment
facilities has been altered due to deferred Japanese deliveries,
which also results in incremental uranium supplies being made
available for the market (so-called “underfeeding”).
The spot uranium price declined from close to US$40/lb at
the beginning of FY2014 and traded in a narrow range of US$34-
$36/lb until March of this year when a further depression to current
levels of US$28-$29/lb occurred. These price levels are clearly
unsustainable as it leaves as much as 50-60% of current worldwide
production uneconomic.
glOBal UraniUm PrOdUcTiOn 2009-2014
160
140
120
100
80
60
40
20
0
2009
2010
2011
2012
2013
2014
Paladin
Rest of World
Source: World Nuclear Association and Paladin internal sources
8
3
O
U
b
M
l
This comprehensive analysis of the uranium market
shows an increasing uranium supply deficit in 2020
due to current persistent low uranium prices and
reactions of the production sector.
Paladin updated its internal assessment of uranium demand and
supply, taking into account a broad spectrum of market factors,
including Japanese reactor restarts, China’s massive nuclear build
programme, and recent changes to secondary uranium supplies
including the expiration of the Russia-United States Highly Enriched
Uranium Programme, which ended in December 2013.
This comprehensive analysis of the uranium market shows an
increasing uranium supply deficit in 2020 due to current persistent
low uranium prices and reactions of the production sector. In
addition to Paladin’s decision to place its Kayelekera Mine on care
and maintenance, several anticipated production facilities have
been deferred awaiting improved market conditions. It is crucial
to note that these deferred projects will not proceed unless the
uranium price more than doubles from current levels and that such
market price improvement is deemed to be sustainable.
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view our latest webcast:
www.paladinenergy.com.au
P a l a d i n E n E r g y l T d A n n u A l r e p o r t 2 0 14
9
darryl BUTchEr
exeCutive generAl MA nAger – proJeCt D eveopMent
managEmEnT discUssiOn
and analysis
The following Management Discussion and
Analysis (MD&A) for Paladin Energy Ltd
(Company) and its controlled entities
(Group) should be read in conjunction with
the Consolidated Financial Statements for
the year ended 30 June 2014. The effective
date of this report is 28 August 2014.
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The financial information presented in this MD&A has been extracted
from the attached financial statements. For the purpose of preparing
our MD&A, we consider the materiality of information. Information
is considered material if: (i) such information results in, or would
reasonably be expected to result in, a significant change in market
price or value of our shares; or (ii) there is a substantial likelihood
that a reasonable investor would consider it important in making
an investment decision; or (iii) it would significantly alter the total
mix of information available to investors. We evaluate materiality with
reference to all relevant circumstances, including potential market
sensitivity.
Additional information relating to the Company, including public
announcements, is available at www.paladinenergy.com.au.
FOrward lOOKing sTaTEmEnTs
Some of the statements contained in this MD&A, including
those relating to strategies and other statements, are
predictive in nature, and depend upon or refer to future events
or conditions, or include words such as “expects”, “intends”,
“plans”, “anticipates”, “believes”, “estimates” or similar
expressions that are forward looking statements. Forward
looking statements include, without limitation, the information
concerning possible or assumed further results of operations
as set forth herein. These statements are not historical facts
but instead represent only expectations, estimates and
projections regarding future events and are qualified in their
entirety by the inherent risks and uncertainties surrounding
future expectations generally.
The forward looking statements contained in this MD&A are
not guarantees of future performance and involve certain
risks and uncertainties that are difficult to predict. The
future results of the Group 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 Group. 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 anticipated events.
10
P a l a d i n E n E r g y l T d A n n u A l r e p o r t 2 0 14
review of operations
AUSTRALIA
Bigrlyi
Advanced Exploration
Michelin
Advanced Exploration
Postville
Happy Valley - Goose Bay
Oobagooma
Exploration Target
Manyingee
Resource Definition
Darwin
NT
Alice Springs
Mount Isa Projects
Pre Development
Angela / Pamela
Advanced Exploration
Quebec
NEW FO UNDLA ND
AN D LAB RA DOR
WA
QLD
SA
Brisbane
0
300
Kilometres
St. John’s
Perth
0
1000
Kilometres
Adelaide
NSW
Sydney
VIC
Melbourne
CANADA
Paladin 100%
Paladin 75%
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
Algeria
Libya
Langer Heinrich
Operating Mine plus Expansion
Takardeit
Exploration
Arlit
Agadez
NIGER
Chad
Mali
Niamey
Burkina
Faso
Benin
Swakopmund
Walvis Bay
Windhoek
Botswana
NA M IBI A
Nigeria
0
300
Kilometres
Atlantic
Ocean
Blantyre
South Africa
0
300
Kilometres
Zimbabwe
0
300
Kilometres
Kayelekera
Mine on Care
and Maintenance
Karonga
Zambia
Mzuzu
Lake
Malawi
MALA WI
Lilongwe
Mozambique
In addition to the resources illustrated above, the Company has a 18.67% interest in Deep Yellow Ltd (ASX: “DYL”) which has projects located near
Langer Heinrich in Namibia and Mount Isa in Australia.
Unless specifically noted, Mineral Resources were prepared and first disclosed under the JORC Code 2004. These estimates have not
been updated since to comply with JORC Code 2012 on the basis that the information that the estimates are derived from has not materially
changed since it was last reported.
Paladin’s attributable Mineral Resource inventory, with effect from 23 July 2014, includes 156,202t U3O8 (344.4Mlb) at 0.07% U3O8 in the
Indicated and Measured categories (including ROM stockpiles) and 70,909t of U3O8 (156.3Mlb) 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 or Warwai deriving from Paladin’s 82.08%
ownership of Summit Resources Ltd, nor from the Duke Batman or Honey Pot deposits.
P a l a d i n E n E r g y l T d A n n u A l r e p o r t 2 0 14
11
UraniUm PrOdUcTiOn
Project
Overview
Mining Method/
Deposit Type
Outlook
Resources
*Langer Heinrich Mine - 75%
(Namibia, Southern Africa)
The Company’s cornerstone asset
commenced production in 2007.
Conventional
open pit; calcrete
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.
Paladin’s second uranium mine, capable
of operating at nameplate of 3.3Mlb pa.
*Kayelekera Mine – 85%
(Malawi, Southern Africa)
UraniUm dEvElOPmEnT
Project life in
excess of 20
years
M&I (inc
stockpiles):
119.8Mt @ 0.052%
(136.2Mlb U3O8)
Inferred:
17.6Mt @ 0.06%
(22.6Mlb U3O8)
Conventional
open pit;
sandstone
Currently
on care and
maintenance
due to low
uranium prices
M&I (inc
stockpiles):
Inferred:
15.0Mt @ 0.072%
(23.9Mlb U3O8)
5.4Mt @ 0.06%
(7.4Mlb U3O8)
Project
Overview
Mining Method/
Deposit Type
Outlook
Resources
*Aurora Project – 100%
(Labrador, Canada)
Paladin’s first entry into Canada.
Resource definition and additional
exploration has restarted and is ongoing.
Open pit -
underground;
metasomatic
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**Manyingee Project – 100%
(Western Pilbara,
Western Australia)
Resource update has been completed
and planning for a field leach trial is
underway.
In-situ leach;
sandstone
Oobagooma Project – 100%
A key pipeline asset for Paladin.
(West Kimberley,
Western Australia)
*Valhalla, Skal & Odin
Deposits – 91.04%
(Queensland, Australia)
One of Paladin’s significant Australian
assets. Metallurgical studies are
progressing towards developing a
comprehensive processing flowsheet.
In-situ leach;
sandstone
Open pit
-underground;
metasomatic
*Bigrlyi Deposit – 41.71%
(Northern Territory, Australia)
Limited work within the JV tenements.
Co-operative arrangement to assess
nearby regional targets.
Open pit -
underground;
sandstone
*Angela Deposit – 100%
(Northern Territory, Australia)
Planning has been completed for
resource extension and development
drilling.
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:
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
47.6Mt @ 0.10%
(100.8Mlb U3O8)
21.9Mt @ 0.08%
(39.8Mlb U3O8)
8.4Mt @ 0.09%
(15.7Mlb U3O8)
5.4Mt @ 0.09%
(10.2Mlb 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)
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, in addition the Mineral Resource for the Michelin deposit conforms to the JORC(2012) guidelines.
**Conforms to JORC(2012) 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 2014.
M&I = Measured and Indicated.
12
P a l a d i n E n E r g y l T d A n n u A l r e p o r t 2 0 14
marK chalmErs
exeCutive generAl MAnAger – proD uCtion
namibia
langEr hEinrich minE (lhm)
OPEraTiOns
Following the sale of a 25% equity stake to CNNC Overseas
Uranium Holding Limited (CNNC), a wholly-owned subsidiary of
China National Nuclear Corporation, Paladin owns 75% of LHM in
Namibia through its Namibian subsidiary, Langer Heinrich Uranium
(Pty) Ltd (LHUPL). Paladin purchased the Langer Heinrich project
in August 2002 and, following development and construction,
production commenced 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 over 5.2Mlb pa U3O8 for the past 12 months.
Langer Heinrich is a surficial, calcrete type uranium deposit
containing a Mineral Resource of 61,787t U3O8 at a grade of 0.052%
U3O8 in the Measured and Indicated categories (including ROM
stockpiles) and 10,246t U3O8 at a grade of 0.06% U3O8 of Inferred
material (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.
Langer Heinrich continued its historic upward trend with record
production of 5.592Mlb (2,537t) U3O8 in FY2014, up 5.7% from the
previous year’s total of 5.292Mlb (2,401t) U3O8 and 2.8% greater
than the FY2014 budget. During the FY2014 year, the project clearly
demonstrated the robustness of the process and the ability to
produce at above design rates and below design feed grades.
All of these positive production outcomes in mining and processing
demonstrate dynamic improvements as the last of the Stage 3
equipment was fully integrated and the additional efficiencies of
this equipment were advanced by a combination of steady state
operations and a strong focus on optimisation initiatives.
With the declining uranium price, initiatives to reduce the operating
and unit costs at LHM continued to be front and centre, with a
number of improvements identified and implemented.
Future production and possible expansion options to allow the
treating of much lower feed grade are still being considered and
advanced. Various evaluations have been completed or planned
on piloting and testing programmes to test the most promising
options and enhancements. The goal of this work is to increase
production at lower unit costs and at lower grades. The focus is also
on improved process efficiencies and operability.
24000E
28000E
32000E
36000E
40000E
-88000N
-88000N
D7
D2
D1
D5
D3
D6
D4
To Gawib Flats
& Swakopmund
EPL 3500
ML 140
-92000N
Legend
Mineral Resources >250ppm U3O8
Delineation Drilling
D7
Detail Grid Area
PLANT
N
0
1
2km
-92000N
To Tikos Flats
& Main Road
24000E
28000E
32000E
36000E
40000E
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P a l a d i n E n E r g y l T d A n n u A l r e p o r t 2 0 14
13
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 covers the western extension of the mineralised Langer
Heinrich paleochannel. An application to convert the EPL to a
mining lease is currently in place and progressing through the
regulatory process. An Environmental Impact Assessment (EIA) was
lodged with the Ministry of Environment and Tourism supporting the
mining lease application and this has now been accepted with the
Certificate being forwarded to the Ministry of Mines and Energy.
minEral rEsOUrcEs and OrE rEsErvEs EsTimaTiOn
Mineral Resources and Ore Reserves conforming to both the
JORC(2004) code and NI 43-101 are detailed below.
minEral rEsOUrcE EsTimaTE (250PPm U3O8 cUT-OFF)
Measured Resources
Indicated Resources
Measured + Indicated
Stockpiles
Inferred
Mt
22.4
67.0
89.4
30.4
17.6
Grade
% U3O8
0.055
0.055
0.055
t U3O8
Mlb
U3O8
12,410
27.36
36,877
81.30
49,288
108.66
0.041
12,500
27.56
0.06
10,246
22.6
(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 2014).
OrE rEsErvE EsTimaTE (250PPm U3O cUT-OFF)
Proved
Probable
Stockpiles
Total
Mt
17.1
56.3
30.4
103.8
Grade
% U3O8
0.057
0.056
0.041
0.052
t U3O8
9,653
31,764
12,500
Mlb
U3O8
21.28
70.03
27.56
53,917
118.87
Ore Reserve has been depleted for mining to the end of June 2014.
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14
P a l a d i n E n E r g y l T d A n n u A l r e p o r t 2 0 14
Malawi
KayElEKEra minE (Km)
OPEraTiOns
Kayelekera is located in northern Malawi, 52km west (by road) of the
provincial town of Karonga and 12km south of the main road that
connects Karonga with the township of Chitipa to the west.
Kayelekera is a sandstone-hosted uranium deposit associated
with the Permian Karoo sediments and is hosted by the Kayelekera
member of the North Rukuru sediments of the Karoo. The
mineralisation is associated with seven variably oxidised, coarse
grained arkoses, separated by shales and chocolate coloured
mudstones. Uranium mineralisation occurs as lenses primarily
within 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, ML152, 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.
Due to the sustained low uranium price, it was announced in
February 2014 that processing would cease at Kayelekera and
that the site would be placed on care and maintenance. Following
a period of reagent run-down, processing was completed in early
May 2014. It is expected that production will recommence once
the uranium price provides a sufficient incentive (circa US$75/lb)
and grid power supply (ESCOM) is available on site to replace the
existing diesel generators with low cost hydroelectricity.
Kayelekera Mine - Malawi
KM produced 2.350Mlb (1,066t) U3O8, down from last year, as a
result of the transition to care and maintenance in the last quarter of
the year. Once uranium prices offer sufficient incentive for restart,
production, with some RIP/elution upgrades, is expected to be up
to 3.3Mlb per annum.
During the year, the project made exceptional progress on cost
reductions mainly on the acid supply front, where the project became
acid independent through a number of measures. Improvements
made were increases in onsite acid production, and the addition of
the nano-filtration plant, which assisted with acid recycle. In addition
to acid management, other improvements were also realised in the
milling, leach and RIP efficiencies, particularly with completion of
modifications in the RIP section.
In late 2012, the Company announced a major cost reduction
initiative to substantially reduce operating costs at KM. This has
been a major focus for the past 18 months as the project attained
sustainable and steady production. The main area of savings was
through a significant reduction in acid importation, which has
been a major cost barrier for the past few years. This area was
very closely managed and resulted in C14 costs being reduced to
approximately US$33/lb, a reduction of nearly 40% over the past
two years. In addition, initiatives such as grid power connection
which, while not concluded as originally scheduled, still remain as
further opportunities for cost reduction.
4 Refer to ‘Non IFRS Measure’ in Financial Review section.
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P a l a d i n E n E r g y l T d A n n u A l r e p o r t 2 0 14
15
minEral rEsOUrcEs and OrE rEsErvEs EsTimaTiOn
Ore Reserves
A revised and updated geological model has been completed
for the project based on extensive pit mapping and structural
modelling. This work was undertaken to significantly improve the
understanding of the structurally complex nature of the resource
and aid in targeting mineralisation within the regional tenement
package. At this stage, no additional resource drilling within the
Kayelekera deposit is anticipated; however, this may be reviewed
based on analysis of the geology modelling.
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
Economic analysis on this Mineral 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
0.39
5.34
1.59
7.32
1,168
882
756
870
t U3O8
457
4,709
1,199
Mlb
U3O8
1.00
10.38
2.64
6,365
14.03
Measured
Indicated
Total Measured &
Indicated
Grade ppm
U3O8
Mt
0.74
12.71
1,011
700
t U3O8
753
Mlb
U3O8
1.66
8,901
19.62
(Figures may not add due to rounding and are depleted for mining to end of June 2014).
The underlying Ore Reserve is unchanged from that announced in
2008 and has only been depleted for mining until 30 June 2014.
13.45
717
9,654
21.28
ExPlOraTiOn
Stockpiles
Inferred
1.59
5.4
756
623
1,199
3,334
2.64
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 2014).
The Mineral Resource is unchanged from that previously reported
except for depletion due to mining activities to 30 June 2014. The
Mineral Resource estimate is based on Multi Indicator Kriging
techniques with a specific adjustment based on parameters derived
from the mining process.
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Exploration work throughout the year concentrated on ground
surveys within 5km of the mine site. Geological and geophysical
work was used in conjunction with geochemistry to identify
targets close to the mine site for future drilling. The intention is
to define additional resources to be available when the mining
operation restarts.
16
P a l a d i n E n E r g y l T d A n n u A l r e p o r t 2 0 14
Ed BEcKEr
exeCutive generAl M AnAging – geologY AnD explorAtion
Canada
michElin PrOjEcT
Paladin Energy Ltd, through its wholly-owned subsidiary Aurora
Energy Ltd (Aurora), holds rights to 91,500 hectares within the
Central Mineral Belt of Labrador (CMB), Canada, approximately
140km north of Happy Valley-Goose Bay and 40km southwest of
the community of Postville.
Paladin completed the acquisition of Aurora in February 2011
and, in March 2012, the Nunatsiavut Government, a regional,
aboriginal government formed in 2005, lifted the three year
moratorium on the mining, development and production of uranium
on Labrador Inuit Land. Five of Paladin’s six deposits in this project
area fall within these lands. Paladin started exploration in the
summer of 2012.
Aurora claims cover a significant area of prospective ground over
the CMB. 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, half of
which are covered by the Aurora tenements. The largest of these
deposits is Michelin, the flagship of Aurora’s CMB project and one
of the world’s top five albitite-hosted resources.
Over the last financial year, Aurora carried out geological and
geophysical ground surveys in the northern summer of 2013 and
a 15-hole, 4,432m drilling programme in February and March
2014. On 26 June 2014, Paladin announced a revised Mineral
Resource estimate for the Michelin Deposit, conforming to both the
JORC(2012) Code and Canadian National Instrument 43-101.
The 2014 Mineral Resources estimate for the Michelin Deposit
was successful in converting some 13.2Mlb U3O8 of previously
Inferred category material into the Measured and Indicated
categories, as well as adding an additional 3.8Mlb U3O8 for a Measured
and Indicated Mineral Resource total of 84.1Mlb U3O8. Additional
Mineral Resources remaining in the Inferred category now stand at
22.9Mlb U3O8.
OPEn PiT POrTiOn cUT-OFF gradE 250PPm
Mt Grade %
Mlb
Measured Resources
Indicated Resources
Measured + Indicated
Inferred Resources
10.46
5.94
16.39
1.64
0.09
0.09
0.09
0.13
UndErgrOUnd POrTiOn cUT-OFF gradE 500PPm
Measured Resources
Indicated Resources
Measured + Indicated
Inferred Resources
addiTiOnal POTEnTial
5.11
16.00
21.11
7.17
0.11
0.11
0.11
0.11
21.63
12.26
33.89
4.86
12.45
37.79
50.24
18.02
cOmBinEd
Measured Resources
Indicated Resources
Measured + Indicated
Inferred Resources
15.57
21.93
37.50
8.81
0.10
0.10
0.10
0.12
34.08
50.05
84.13
22.88
The additional drilling in 2012 and 2013 has infilled some areas
within the previous Mineral Resource and allowed for the creation of
a much more robust geological interpretation. The Mineral Resource
detailed above is broken down on a similar basis to the previous
Mineral Resource estimated by Aurora in 2009. Following pit
optimisation studies using previous costs and a variety of uranium
prices, the Open Pit (OP) and Underground (UG) split is determined
now to be approximately 230m below surface (or 100m RL).
The Michelin Deposit is still open along strike and at depth. Drilling programmes have already been designed to both infill and extend the
existing Mineral Resource. In addition, there are also a number of promising targets within the Michelin – Rainbow trend, which are actively
being explored and are expected to contribute to the economic viability of the project. Additional Mineral Resources for other deposits
within the Michelin project are detailed below.
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Measured Mineral Resources
Indicated Mineral Resources
Inferred Mineral Resources
Cut-off 0.05%
& 0.02% U3O8
Jacques Lake
Rainbow
Inda
Nash
Gear
Total
Mt
0.9
0.2
Grade %
0.09
0.09
t U3O8
747
193
1.1
0.09
940
(2.1Mlb)
Mt
6.0
0.8
1.2
0.7
0.4
9.1
Grade %
0.07
0.09
0.07
0.08
0.08
0.07
t U3O8
4,327
655
826
564
270
Mt
8.1
0.9
3.3
0.5
0.3
Grade %
t U3O8
0.05
0.08
0.07
0.07
0.09
4,103
739
2,171
367
279
6,642
(14.6Mlb)
13.1
0.06
7,659
(16.9Mlb)
P a l a d i n E n E r g y l T d A n n u A l r e p o r t 2 0 14
17
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The Mineral Resources for the satellite deposits 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 carried out by Aurora.
The updated 2014 Mineral Resource Estimate for the Michelin
Deposit has provided added confidence in the character of the
mineralisation with the significant increase in Measured and
Indicated category material. Importantly, in addition, the near surface
open pittable portion of the deposit now contains a substantial
increase in both uranium grade and contained metal. Future drilling
will concentrate on expanding the Mineral Resources at both the
Michelin Deposit and the deposits and prospects occurring in the
immediate surrounds.
Queensland
K aip o ko k B ay
Gear
Inda
Nash
Alaska
CANADA
Postville
United States of America
Michelin
Rainbow
Jacques Lake
Aurora
Deposits
N
0
Km
10
Scale: 1:200,000
In October 2012, the Queensland Government lifted a 27-year old
ban on uranium mining. This decision enables Paladin to refocus on
the development of its uranium holdings in the Mount Isa region of
northwest Queensland.
(Summit) acquired
Paladin has an 82.08% majority shareholding in Summit Resources
Limited
in 2007. Summit’s wholly-owned
subsidiary, Summit Resources (Aust) Pty Ltd (SRA), operates
the Isa Uranium Joint Venture (IUJV) and the Mount Isa North
Project (MINP).
The three projects include 10 deposits containing 106.2Mlb U3O8
Measured and Indicated Mineral Resources as well as 42.2Mlb
U3O8 Inferred Mineral Resources. The bulk of the mineralisation
is concentrated in the Valhalla deposit. 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 below lists JORC(2004)
and NI 43-101 compliant Mineral Resources by deposit, on a 100%
project basis.
Deposit
Valhalla*
Skal*
Odin*
Bikini*
Andersons*
Watta
Warwai
Mirrioola
Duke Batman*
Honey Pot
Total
Cut-off
ppm U3O8
230
250
250
250
250
250
250
250
250
250
Total Resource
Attributable to Paladin
(Figures may not add due to rounding)
Measured & Indicated
Mineral Resources
Inferred Mineral Resources
Paladin
Attribution
Mt
34.7
14.3
8.2
5.8
1.4
Grade
ppm
830
640
555
497
1,449
t U3O8
28,778
9,177
4,534
2,868
2,079
0.5
1,370
728
64.9
58.5
742
743
48,164
43,470
(95.8Mlb)
Mt
9.1
1.4
5.8
6.7
0.1
5.6
0.4
2.0
0.3
2.6
34.0
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
1,799
19,140
16,983
(37.4Mlb)
91.0%
91.0%
91.0%
82.0%
82.0%
82.0%
82.0%
82.0%
100%
100%
*Deposits estimated using Multiple Indicator Kriging within a wireframe envelope. All other Mineral 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.
Metallurgical and mineralogical testwork has resulted in a better
understanding of the uranium mineralisation. The mineralisation was
shown to be of a very fine grained and sometimes refractory nature,
containing increased carbonate gangue minerals. Alkaline leaching
has shown acceptable recoveries of 80 to 90% at high temperature
and pressure, with normal reagent consumption. Radiometric
sorting of the mineralisation also showed further encouraging results.
Testwork in the coming years will aim at confirming an economic
flow-sheet based on alkaline leach and radiometric sorting.
The exploration is managed through the three previously listed
projects. The locations are shown in the following map and details
are as follows:
18
P a l a d i n E n E r g y l T d A n n u A l r e p o r t 2 0 14
isa UraniUm jOinT vEnTUrE (iUjv)
mOUnT isa nOrTh PrOjEcT (minP)
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. Mineral Resource
estimates are included in the table on the previous page.
Participants in the joint operation are SRA and Mount Isa Uranium
Pty Ltd (MIU), each holding a 50% interest, with SRA as manager.
MIU is a wholly-owned subsidiary of Valhalla Uranium Pty Ltd (VUL),
a formerly public company and now a wholly-owned subsidiary
of Paladin. Paladin’s effective participating interest in the IUJV
is 91.04% through its ownership of 82.08% of the issued capital
of Summit.
Ground subject to the IUJV covers 17.24km2 at Valhalla and 10km2
at Skal. These two areas lie within a larger holding of contiguous
tenements of 1,356km2 held 100% and managed by SRA and
Paladin as outlined in the map below.
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
Carlton Hills
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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The MINP is located 10 to 70km north and east of Mount Isa and
contains numerous uranium prospects. The area is 100% held and
managed by SRA utilising Paladin staff and expertise. Exploration
continues on MINP 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, Mirrioola, Watta, Warwai and Andersons
uranium deposits, as well as numerous other uranium prospects.
Mineral Resource estimates are shown in the table on page 18.
valhalla nOrTh PrOjEcT (vnP)
The VNP is located on EPM 12572 totalling 361km2, situated
approximately 80km 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. The project includes the Duke Batman and Honey Pot
deposits and Mineral Resource estimates are listed in the table on
page 18.
POsiTivE QUEEnsland UraniUm POliTics
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.
Subsequent to the election, on 22 October 2012, Premier Campbell
Newman announced a change in government policy to allow
and facilitate 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.
In September 2013, the Minister for Natural Resources and Mines
released an action plan to implement a best practice regulatory
framework for uranium mining in Queensland.
western Australia
manyingEE UraniUm PrOjEcT (manyingEE)
Manyingee is located in the north-west of Western Australia,
1,100km north of Perth and 85km inland from the coastal township of
Onslow. The property is comprised of three mining leases covering
1,307 hectares. Paladin also holds one granted Exploration Licence
(EPL 08/1496) totalling 89km2 at Spinifex Well, 25km north-east of
Manyingee. Paladin purchased Manyingee in 1998 from Afmeco
Mining and Exploration Pty Ltd (AFMEX), a subsidiary of Cogema
from France.
Between 1973 and 1984, approximately 400 holes were drilled by
the previous owners to establish the extent and continuity of the
sediment-hosted uranium mineralisation contained in permeable
sandstone in paleochannels. Field trials by AFMEX demonstrated
that the Manyingee sandstone-hosted uranium deposit is amenable
to extraction by in-situ recovery (ISR).
In 2012, Paladin drilled 96 holes for 9,026m of Rotary Mud and 242m
of PQ core. The drilling resulted in a new geological model and, on
14 January 2014, Paladin announced an updated Mineral Resource
for the Manyingee Project. The Mineral Resource estimate conforms
to both the JORC(2012) Code and NI 43-101.
P a l a d i n E n E r g y l T d A n n u A l r e p o r t 2 0 14
19
Mineral
Resource
Category
Unit
U2
Indicated
Inferred
U3a
Indicated
Inferred
U3b Indicated
Inferred
U3c
Indicated
Inferred
U4
Indicated
Inferred
Total Indicated
Inferred
Tonnes
Mt
Grade
ppm
U3O8
Metal
t U3O8
Metal
Mlb
U3O8
1.46
1.33
2.65
1.88
2.61
1.17
1.18
0.72
0.47
0.30
8.37
5.41
1.7
1.7
1.7
1.7
1.7
1.7
1.7
1.7
1.7
1.7
885
830
895
960
850
790
745
790
765
680
850
850
Metal
t
1,292
1,110
2,380
1,806
2,214
925
881
569
362
203
2.85
2.45
5.25
3.98
4.88
2.04
1.94
1.25
0.80
0.45
15.71
7,127
10.17
4,613
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The 2014 Mineral Resource Estimate is based on a combination
of validated historical drilling and the 96 Rotary Mud and Diamond
holes drilled by Paladin. The validation of the historical data, along
with Prompt Fission Neutron (PFN) probe logging of recent drill
holes, has resulted in a change to the disequilibrium factor used to
determine uranium grades. This change has resulted in a reduction
in the Indicated Mineral Resource grade; however the overall grade
of the deposit has increased due to revised geological modelling
and estimation techniques.
Indian Ocean
Onslow
on compiling a Field Leach Trial proposal document to be submitted
in 2015.
At Spinifex Well, 20km north of Manyingee, follow-up drilling by
Paladin identified four prospective redox fronts at depths between
85m and 120m with mineralisation greater than 0.025% U3O8 and
0.5m was intersected in 10 holes (best intersection being 1.9m at
0.13% U3O8) and further testwork is warranted.
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 now comprises one application for an EPL covering
approximately 450km².
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.
The Oobagooma project area was explored by AFMEX between
1983 and 1986, during which time extensive zones of uranium
identified a historic
mineralisation were discovered. AFMEX
resource of 21.9Mlb U3O8 at 0.12% U3O8 with a 0.035% cut-off.
Paladin has classified this mineralisation as an exploration target,
but, after examining the AFMEX data, Paladin believes that following
validation of all existing data, there is good potential to upgrade the
exploration target within the area to 40 to 50Mlb U3O8.
Previous tonnages, grades, assays and other technical data for Oobagooma
are taken from historical records prior to the implementation of JORC or NI
43-101. While the data are believed to have been acquired, processed and
disclosed by persons believed to be technically competent, it is unverifiable at
present. A Competent Person as defined under the JORC Code or Qualified
Person as defined under NI 43-101 has not done sufficient work to classify the
historical estimate as current Mineral Resources. Paladin is not treating any
historical estimates as current Mineral Resources as defined in either the JORC
Code or NI 43-101 and the historical estimates should not be relied upon.
Exmouth
Exmouth Gulf
Learmonth
0
30
Kilometres
Manyingee
Yanrey
WESTERN
AUSTRALIA
West
Nanutarra
Roadhouse
AUSTRALIA
Perth
The geology of the deposit is well understood, having been subject
to extensive exploration over a number of years. The stratigraphic
sequence within the deposit has been defined from the extensive
dataset of downhole electric logs. A total of 35 water bores was
installed at the Manyingee site by Paladin in 2012, which are used
for ongoing monitoring of physical and chemical properties of the
aquifer containing the uranium mineralisation. Paladin believes that
the Mineral Resources on the mining leases can be increased and
that commencement of production at the project can be achieved
in a 4-5 year time frame. Current work on the project concentrates
20
P a l a d i n E n E r g y l T d A n n u A l r e p o r t 2 0 14
Bigrlyi jOinT vEnTUrE (Bjv)
Minderoo
EnErgy mETals limiTEd 53.29% and managEr
nOrThErn TErriTOry UraniUm PTy lTd 41.71%
sOUThErn crOss ExPlOraTiOn nl 5%
The BJV covers ten granted Exploration Licences in Retention
(ELRs), located in the Ngalia Basin approximately 320km north-
west of Alice Springs in the Northern Territory. Participants in the
Project 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 (EME), as the Manager of the BJV, announced
in June 2011 the completion of a Pre-Feasibility Study (PFS) for the
Bigrlyi Project showing that, under current market conditions, is not
economically viable. A substantial increase in the resource base
that has been identified to date is required, especially resources
amenable to open pit mining to help the economic outcome of
this project. EME is exploring the wider Ngalia Basin for additional
resources on its 100% owned licences.
In late June 2011, EME 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.
niger (west Africa)
PrOjEcT agadEZ
Project Agadez is located in northern Niger, north-west Africa,
30km west and north-west of the township of Agadez. It includes
three exploration concessions: Tagait 4 (TAG4); Toulouk 1 (TOU1);
Terzemazour 1 (TER1); and, one application Ekazan 1 (EKA1), all
covering a total area of 990km2. The concessions cover sandstone
type uranium mineralisation in the Tim Mersoï Basin. In 2012 Areva
produced in excess of 11Mlb U3O8 from two mines located less than
100km north of Paladin’s concessions. Since start up in the 1970’s,
close to 300Mlb U3O8 have been produced out of the basin.
Paladin’s TER1 concession contains a low-grade Inferred Mineral
Resource of 11Mlbs U3O8 at 210ppm U3O8 at a cut-off grade of
120ppm U3O8 in shallow sediments. An in-house evaluation of the
estimate indicated the possibility of higher grade mineralisation
controlled by a previously unrecognised paleochannel. However,
further drilling was put on hold due to an escalation of terrorist
activities in the area. At this stage Paladin has suspended all field
activities in the Arlit and Agadez areas and a force majeure has been
requested from the government authorities for indefinite suspension
of expenditure requirements.
minEral rEsOUrcE and
OrE rEsErvE sUmmary
The following tables detail the Company’s Mineral Resources and
Ore Reserves and the changes that have occurred within FY2014.
The only changes to Mineral Resource and Ore Reserve information
were due to depletion for mining to 30 June 2014 at both Langer
Heinrich and Kayelekera (where mining ceased in December
2013 and processing ceased in May 2014) and Mineral Resource
updates for the Manyingee and Michelin deposits, as previously
announced to the ASX on the 14th January 2014 and 26th June
2014 respectively. There were no other material changes to the
Company’s Mineral Resources and Ore Reserves.
All of the Company’s Mineral Resources and Ore Reserves are
internally peer reviewed at the time of estimation and are subject
to ongoing review, as and when required. Should any Mineral
Resources or Ore Reserves be utilised within a Bankable or Definitive
Feasibility Study, it is expected that an audit by independent experts
would be conducted. For both mine sites, ongoing reconciliations
between Mineral Resource, Ore Reserve, Mining Production and
Mill Feed tonnes and grade are completed on a regular basis and,
to date, there have been no material differences identified in any of
these processes.
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Mineral
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Classification
Indicated
Inferred
Tonnes
Mt
Grade
ppm U3O8
4.7
2.8
1,366
1,144
Metal
t U3O8
6,400
3,200
Metal
Mlb U3O8
14.1
7.1
Additionally, in the Ngalia Basin, Paladin holds an interest in ELRs at
Walbiri (58%) and Malawiri (48%) in partnership with EME as well as
100% of the Mt Wedge retention lease. Previous explorers defined
exploration targets on all leases and it is expected that exploration
will be carried out on these leases, in the coming years to further
expand the resource base of the project.
angEla-PamEla PrOjEcT
Angela is a sandstone-hosted roll-front type uranium deposit (held
100% by Paladin) with an Inferred Mineral Resource of 30.8Mlb
U3O8 located in the Amadeus Basin of Australia’s Northern Territory,
approximately 25km from Alice Springs.
In November 2006, Cameco Australia Pty Ltd (Cameco) and
Paladin, in a 50:50 joint venture, won a tender in competition with
numerous other applicants, for an Exploration Licence covering the
Angela and Pamela uranium prospects.
The joint venture conducted drilling programmes during 2009
and 2010, including 172 holes totalling 32,810m. Cameco formally
withdrew from the joint venture in 2013 after determining that the
project did not meet its investment criteria at that time.
Paladin has since assumed 100% ownership of the project.
Its activities have been confined to validating UAL and Cameco
drilling data, drilling three mud rotary holes to test the feasibility of
this methodology for future programmes and preparing a revised
Mineral Resource estimate and public release of the resource report.
The Mineral Resource estimate is based on 794 holes totalling
180,468m and covers the Angela (1 to 5) and Pamela deposits.
The mineralisation plunges shallowly, approximately 9°, to the
west and the resource of 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 cut-off for the Mineral Resource is a combination of grade
greater than or equal to 300ppm U3O8 and thickness greater than
0.5m. The Mineral Resource estimate conforms to the JORC(2004)
Guidelines and complies with NI 43-101.
Mineral
Resource
Classification
Tonnes
Mt
Grade
ppm U3O8
Metal
t U3O8
Metal
Mlb U3O8
Inferred
10.7
1,310
13,980
30.8
Importantly the mineralisation includes a higher grade core at a
cut-off of 1500ppm which still contains 20.2Mlb at a grade of
2,500ppm U3O8.
P a l a d i n E n E r g y l T d A n n u A l r e p o r t 2 0 14
21
Mineral
Resources
Canada
Measured
Indicated
Inferred
Malawi
Measured
Indicated
Inferred
Stockpiles
Namibia
Measured
Indicated
Inferred
Stockpiles
Niger
Inferred
Australia
Measured
Indicated
Inferred
s
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P
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U
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i
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a
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Jacques Lake
Michelin
Rainbow
Gear
Inda
Jacques Lake
Michelin
Nash
Rainbow
Gear
Inda
Jacques Lake
Michelin
Nash
Rainbow
Kayelekera
Langer Heinrich
30 June 2013
30 June 2014
Change
M
tonnes
Grade %
U3O8
Metal
t
M
tonnes
Grade %
U3O8
Metal
t
M
tonnes
Metal
t
0.86
7.07
0.21
0.35
1.2
6.04
23.01
0.68
0.76
0.3
3.26
8.1
15.97
0.51
0.91
0.87
13.43
5.36
1.54
25.34
70.12
17.74
28.61
0.087
0.084
0.092
0.077
0.069
0.072
0.107
0.083
0.086
0.093
0.067
0.051
0.103
0.072
0.082
0.107
0.072
0.062
0.093
0.055
0.055
0.058
0.042
747
5,926
193
270
826
4,327
24,522
564
655
279
2,171
4,103
16,370
367
739
931
9,694
3,336
1,454
13,851
38,729
10,335
11,932
0.86
15.57
0.21
0.35
1.2
6.04
21.93
0.68
0.76
0.3
3.26
8.1
8.81
0.51
0.91
0.74
12.71
5.35
1.59
22.42
66.98
17.59
30.42
0.087
0.099
0.092
0.077
0.069
0.072
0.104
0.083
0.086
0.093
0.067
0.051
0.118
0.072
0.082
0.101
0.070
0.062
0.076
0.055
0.055
0.058
0.041
747
15,458
8.5
9,532
193
270
826
4,327
22,701
-1.08
-1,821
564
655
279
2,171
4,103
10,378
-7.16
-5,992
367
739
753
8,901
3,334
1,199
12,410
36,877
10,246
12,500
-0.13
-0.72
-0.01
0.05
-2.92
-3.14
-0.15
1.81
-178
-793
-2
-255
-1,441
-1,852
-89
568
Takardeit
23.21
0.021
4,943
23.21
0.021
4,943
Valhalla
Bigrlyi
Andersons
Bikini
Duke Batman
Odin
Skal
Valhalla
Manyingee
Angela
Bigrlyi
Andersons
Bikini
Duke Batman
Honey Pot
Mirrioola
Odin
Skal
Valhalla
Watta
Warwai
Manyingee
16.02
4.7
1.4
5.77
0.53
8.2
14.3
18.64
7.87
10.7
2.8
0.1
6.7
0.29
2.56
2
5.8
1.4
9.1
5.6
0.4
5.5
0.082
0.136
0.145
0.050
0.137
0.055
0.064
0.084
0.102
0.131
0.114
0.164
0.490
0.110
0.070
0.056
0.059
0.052
0.064
0.040
0.036
0.050
13,116
16.02
6,400
2,079
2,868
728
4,534
9,177
15,662
8,080
13,980
3,200
204
3,324
325
1,799
1,132
3,430
708
5,824
2,260
134
2,810
4.7
1.4
5.77
0.53
8.2
14.3
18.64
8.37
10.7
2.8
0.1
6.7
0.29
2.56
2
5.8
1.4
9.1
5.6
0.4
5.41
0.082
0.136
0.145
0.050
0.137
0.055
0.064
0.084
0.085
0.131
0.114
0.164
0.490
0.110
0.070
0.056
0.059
0.052
0.064
0.040
0.036
0.085
13,116
6,400
2,079
2,868
728
4,534
9,177
15,662
7,127
13,980
3,200
204
3,324
325
1,799
1,132
3,430
708
5,824
2,260
134
4,613
0.5
-953
-0.09
1,803
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P a l a d i n E n E r g y l T d A n n u A l r e p o r t 2 0 14
Ore
Reserves
Malawi
Proven
Probable
Stockpiles
Namibia
Proven
Probable
Stockpiles
Kayelekera
Langer Heinrich
30 June 2013
30 June 2014
Change
M
tonnes
Grade %
U3O8
Metal
t
M
tonnes
Grade %
U3O8
Metal
t
M
tonnes
Metal
t
0.49
5.98
1.54
20.01
59.44
28.61
0.123
0.091
0.093
0.055
0.057
0.042
605
5,423
1,454
11,093
33,616
11,932
0.39
5.34
1.59
17.09
56.31
30.42
0.117
0.088
0.076
0.057
0.056
0.041
457
4,709
1,199
9,653
31,764
12,500
-0.10
-0.64
0.05
-2.92
-3.13
1.81
-149
-714
-255
-1,440
-1,852
567
Mineral Resources and Ore Reserves quoted on a 100% basis.
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 2012 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.
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.
Since acquiring this substantial uranium database, which consists
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 Company has maintained and expanded this valuable
library of 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 18.67%
DYL an ASX-listed, Namibian-focussed advanced stage uranium
exploration company. It also has a listing on the Namibian Stock
Exchange (NSX).
DYL’s operations in Namibia are conducted by its 100% owned
subsidiary Reptile Uranium Namibia (Pty) Ltd (RUN). RUN holds
100% of two EPLs covering 1,346km2 and five joint venture EPLs
covering 1,764km2. 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 during the year under review
concluded that a heap leach development strategy should have
superior economics over a tank leach. Further studies are being
conducted and metallurgical testwork is being planned, which is
required to demonstrate the technical feasibility of a heap leach
project. A processing trade-off study for the Tubas Sand Project
was also completed during the year, and geological mapping
followed up on new exploration targets that were identified in the
previous year’s successful prospectivity analysis.
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P a l a d i n E n E r g y l T d A n n u A l r e p o r t 2 0 14
23
Health and Safety
Paladin is “committed to provide and maintain
a safe and healthy work environment with the
aim of “Zero Harm“ from occupational injuries
and illnesses in the work place“.
The company also “considers excellence in radiation management
performance is essential to our business success and is fully
committed to achieving minimum radiation exposure to its workers,
members of the public and the surrounding natural environment
and minimising the potential impact by the safe management of
radioactive waste at its uranium mining and processing operations”
as stated in its Occupational Health And Safety Policy and Radiation
Policy respectively.
Fy2014 cOmPany saFETy sTaTisTics
During the year, the Company tragically lost two employees
following two separate fatal incidents at its Namibian and Malawian
operations. Burns and smoke inhalation injuries were the cause of
one fatality with chest and head injuries causing the other. Paladin
extends its sincere condolences to the families of the deceased.
The Company Lost Time Injury Frequency Rate (LTIFR) increased
from 1.1 to 3.1 over the previous year. This rate is currently above
the West Australian metalliferous surface mining LTIFR of 2.3.
For FY2014, there were twelve LTIs compared to six LTIs for the
previous year.
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.
Lost Time Injury:
Frequency Rate (LTIFR): Number of lost time injuries inclusive of
fatalities per million hours worked.
Hours Worked
Lost Time Injuries
Fatalities
LTIFR
Langer Heinrich Mine
Kayelekera Mine
Employees
Mine
Contractors
Other
Contractors
Employees
Mine
Contractors
Other
Contractors
732,159
1,519,808
153,808
1,255,104
512,214
154,955
3
1
5.5
4
0
2.6
1
0
6.5
3
1
3.2
0
0
0
0
0
0
Langer Heinrich Mine Total LTIFR = 3.7
Kayelekera Mine Total LTIFR = 2.9
Fy2014 cOmPany saFETy sTaTisTics
Hours Worked
Lost Time Injuries
Fatalities
LTIFR
Perth
Corporate
Office
Exploration
Group
Employees
Contractors
Paladin
Employees
All Contractors
101,317
68,208
22,768
2,156,788
2,363,553
0
0
0
1
0
14.66
0
0
0
Perth LTIFR
= 0.0
Exploration
LTIFR = 11.0
7
2
5.1
5
0
2.1
Paladin Group +
All Contractors
LTIFR = 3.1
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P a l a d i n E n E r g y l T d A n n u A l r e p o r t 2 0 14
The Paladin Group’s increased LTIFR highlights the hazardous
environments posed in the mining and resources industry and
further determined the Company’s resolve to achieve ‘Zero Harm’.
Paladin’s safety and health performance of its operations is
measured through the external internationally recognised National
Occupational Safety Association (NOSA) Five Star System ensuring
transparency and complementing its own internal audit processes.
Occupational radiation exposure monitoring for designated worker
mean annual radiation dose resulted in a dose level of 3.7 mSv for
the CY2013 compared with the internationally recommended annual
dose limit of 20 mSv.
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.
langEr hEinrich minE
KayElEKEra minE
On 3 October 2013 LHM had a serious electrical incident resulting
in an electric flash which injured an employee and two contractors.
The most seriously injured worker, an employee, sadly passed away
on 30 October 2013. This incident is a reminder that safety must
come first and that Paladin’s aim of ‘Zero Harm’ is paramount and
vigilance must be maintained at all times.
The increase in the LTIFR at LHM has resulted in a fresh and
increased focus on safety, health, and radiation (SHR) management,
a driving point for its newly appointed General Manager/Managing
Director and his team.
During the year, LHM reported eight LTIs, of which three were
LHM employees and five were contractors. The site’s annual LTIFR
increased from 1.1 to 3.7.
a “back to basics” programme has been implemented
which includes verification of competencies through both
theoretical and practical testing and the development of
new critical procedures and associated training packages.
The mine’s 2013 NOSA grading audit conducted in January 2014
resulted in the operation attaining a 3 Star Platinum (health, safety
and environment) grade rating, down from its previous 4 star
Platinum grade rating. This decreased performance resulted in an
audit score of 73.1% down from 92.4% highlighting the need for
additional resources in the SHR area and an overall revision of the
site’s safety performance.
LHM has reviewed and strengthened key areas of general
inductions, permits to work, hazard identification, risk assessments
and isolations and personnel are currently undertaking new and
revised training, further upskilling and broadening the workforce’s
safety and health knowledge base and refocusing personnel
towards a safer work environment. A “back to basics” programme
has been implemented which includes verification of competencies
through both theoretical and practical testing and the development
of new critical procedures and associated training packages.
Regretfully, KM had one fatality on 31 July. An employee from
within the mine’s engineering workshop, a Malawi National, died
after being struck in the chest by a light vehicle wheel that he was
inflating at the time. Following a full investigation of the accident new
isolation procedures were implemented to prevent a reoccurrence.
The site reported three LTIs, all employee related, increasing the
annual LTIFR from 0.0 to 3.2. Similar to LHM, a fresh and increased
focus and awareness programme is also underway to reduce the
current LTIFR at this operation.
On 9 May, feed into the plant ceased with the transition to care
and maintenance. The commitment to a safe and healthy work
environment will remain at the forefront during this period.
There was no annual NOSA grading audit conducted in FY2014
as the operation was transitioning to care and maintenance at the
usual time of the audit. The previous grading audit result was a 5
Star Platinum rating in June 2013 and the annual NOSA grading
audit will recommence in FY2015.
The designated worker mean annual radiation dose was 3.2 mSv
for CY2013 compared with the internationally recommended annual
dose limit of 20 mSv.
ExPlOraTiOn
Paladin’s exploration activities included drilling in Canada and
limited ground surveys in remote locations undertaken for its other
projects.
Exploration reported one LTI for the year recorded on the Aurora
project (Canada) and the annual exploration LTIFR rate decreased
from 13.8 to 11.0.
Exploration continues to maintain and enhance its Safety and Health
Management System particularly in the aspects of remote area
operations including fuel transportation, cold weather operating
conditions and snow vehicle operations which is particularly
applicable to the Canadian operations.
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P a l a d i n E n E r g y l T d A n n u A l r e p o r t 2 0 14
25
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CHieF F inAnCiAl oFFiCer
Financial review
OPEraTiOnal OvErviEw
The Group has two uranium mines in Africa5, uranium exploration
projects in Australia, Africa and Canada, and a strategy to become
a major uranium mining house. The Company is incorporated under
the laws of Western Australia with a primary share market listing on
the Australian Securities Exchange (“ASX”) and additional listings
on the Toronto Stock Exchange (“TSX”) in Canada; as well as the
Munich, Berlin, Stuttgart and Frankfurt Stock Exchanges in Europe;
and the Namibian Stock Exchange in Africa.
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 on 31 March 2012. Commercial
production was declared from 1 April 2012. The plant achieved
Stage 3 design performance in FY2013, and, in FY2014, the focus
turned to process innovation and production optimisation. The
plant achieved record annual production totalling 5.592Mlb U3O8 for
FY2014, 6% higher than FY2013.
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 turned to production optimisation with the
acid recycling (nano-technology) project representing a key element.
The acid recovery plant was operational up to the cessation of ore
processing and continued to improve beyond its design criteria.
On 7 February 2014, the Company announced that it was
suspending production at KM and placing the mine on care and
maintenance due to the low uranium price and non-profitability of
the operation. The plant operated until all reagents in the supply
chain were consumed to the maximum extent possible and the plant
ceased production on 6 May 2014. After a transition period, during
which the site was made safe, the plant cleaned and all remaining
product dispatched to customers, the care and maintenance period
commenced on 26 May 2014. During care and maintenance the
project will be maintained on near-ready status with an adequate
component of staffing to keep the project in good working order
and to preserve the critical aspects of Intellectual Property and
operational knowhow.
References below to 2014 and 2013 refer to the equivalent twelve
months ended 30 June 2014 and 2013 respectively.
5 Langer Heinrich Mine, Namibia (operating). Kayelekera Mine, Malawi (on care
and maintenance).
26
P a l a d i n E n E r g y l T d A n n u A l r e p o r t 2 0 14
nOn iFrs mEasUrE
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 a non-IFRS
measure, is a widely used ‘industry standard’ term. We use this
measure as a meaningful way to compare our performance from
period to period. We believe that, in addition to conventional
measures prepared in accordance with IFRS, certain investors use
this information to evaluate our performance. C1 cost information
(unaudited) has been extracted from the financial statements. For
an analysis of total cost of sales refer to Note 11 to the financial
statements. Refer to page 28 for reconciliation.
Financial rEsUlTs
Year Ended 30 June
Change
from
2013 to
2014
2014
2013
2012
Production volume (Mlb)
(4)%
7.943
8.255
6.895
Sales volume (Mlb)
5% 8.665
8.253
6.698
Realised sales price (US$/lb)
(23)% 37.9/lb 49.5/lb
54.6/lb
Revenue
Cost of Sales
US$M US$M US$M
(20)% 329.5
411.5
367.4
6% (332.9)
(355.6)
(304.5)
Impairment – inventory, stores
and consumables
99%
(61.7)
(30.9)
(39.0)
Gross (loss)/profit
(360)% (65.1)
25.0
23.9
Impairments
(9)% (331.7)
(305.0)
(186.0)
Loss after tax attributable to
members of the parent
Other comprehensive income/
(loss) for the period, net of tax
Total comprehensive loss
attributable to the members
of the parent
Loss per share - basic & diluted
(US cents)
20% (338.4)
(420.9)
(172.8)
1.9
(69.2)
(55.2)
31% (336.5)
(490.1)
(228.0)
30%
(34.4)
(49.1)
(20.2)
References below to 2014 and 2013 are to the equivalent year
ended 30 June 2014 and 2013 respectively.
Revenue decreased by 20%, due to a 23% decrease in realised
sales price, partially offset by a 5% increase in sales volume.
Gross Loss in 2014 is a turnaround from a gross profit in 2013 due
to lower prices and a higher impairment of KM inventory, stores and
consumables of US$40.7M (2013: US$30.9M) and LHM inventory
US$21.0M (2013: US$Nil), which has been partially offset by a 5%
increase in sales volume.
Impairments have increased due to the US$323.6M (US$226.5M
after tax) impairment of the Queensland exploration assets,
US$3.8M impairment of the aircraft now classified as held-for-
sale and US$4.3M impairment of available-for-sale financial assets
primarily attributable to a decrease in the share price of DYL.
In 2013, there was an impairment charge of the KM assets of
US$237.9M, a US$62.1M impairment of exploration assets and a
US$5.0M impairment of available-for-sale financial assets.
References below to 2014 and 2013 are to the equivalent three
months ended 30 June 2014 and 2013 respectively.
Loss after Tax Attributable to the Members of the Parent for
2014 is predominantly due to the impairment of the Queensland
exploration assets and lower uranium prices. The loss in 2013 was
predominantly due to the de-recognition of the US$98.2M KM net
deferred tax asset, the US$237.9M impairment of the KM assets
and the US$62.1M impairment of exploration assets.
Segment Information
The Namibian segment profit decreased by US$66.3M due to
lower revenue and the impairment of inventory. The Malawian
segment loss decreased by US$294.2M predominantly as a
result of the impairment of the KM assets and the de-recognition
of the net deferred tax asset in 2013. Exploration activities loss
increased due to the impairment of the Queensland projects. In
the Unallocated portion, the Group reflected the remaining Income
Statement activities, which for 2014 comprise mainly marketing,
corporate, finance and administration costs. The loss in this area
has decreased by US$21.3M.
Three Year Trend
Revenue has decreased since 2012 due to a 31% decrease in
released sales price, partially offset by a 29% increase in sales
volume. Gross loss in 2014 is a turnaround from a gross profit in
2012 due to lower prices and a higher impairment of inventory,
stores and consumables, which has been partially offset by an
increase in sales volume. Impairments have increased due to the
US$323.6M (US$226.5M after tax) impairment of the Queensland
exploration assets, US$3.8M impairment of the aircraft now
classified as held-for-sale and US$4.3M impairment of available-for-
sale financial assets primarily attributable to a decrease in the share
price of DYL. In 2012, there was an impairment charge of the KM
assets of US$178.0M and a US$8.0M impairment of available-for-
sale financial assets.
FOUrTh QUarTEr Financial rEsUlTs
Production volume (Mlb)
Sales volume (Mlb)
Realised sales price (US$/lb)
Revenue
Cost of Sales
Impairment – inventory, stores
and consumables
Gross loss
%
Change
(25)%
(22)%
(17)%
(37)%
24%
(114)%
(9,275)%
2014
1.600
1.812
2013
2.143
2.326
38.2/lb
46.2/lb
US$M
US$M
69.4
(70.1)
(36.8)
(37.5)
109.6
(92.8)
(17.2)
(0.4)
Impairments
98%
(3.8)
(164.2)
Loss after tax attributable to
members of the parent
Other comprehensive income/
(loss) for the period, net of tax
Total comprehensive loss
attributable to the members
of the parent
Loss per share - basic & diluted
(US cents)
63%
(63.5)
(173.3)
13.1
(86.1)
81%
(50.4)
(259.4)
67%
(6.6)
(20.1)
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Revenue decreased by 37%, due to a 17% decrease in realised
sales price and a 22% decrease in sales volume.
Gross Loss in 2014 is higher than in 2013 due to lower prices and
a higher impairment of KM inventory, stores and consumables
of US$15.8M (2013: US$17.2M) and LHM inventory of US$21.0M
(2013: US$Nil), and a 22% decrease in sales volume.
Impairments are lower in 2014. In 2013 there was an impairment
charge of the KM assets of US$97.1M, a US$62.1M impairment of
exploration assets and a US$5.0M impairment of available-for-sale
financial assets. In 2014 the only impairment relates to a US$3.8M
impairment of the aircraft, now classified as held-for-sale.
Loss after Tax Attributable to the Members of the Parent for 2014
is predominantly due to the impairment of the inventory, stores and
consumables, lower uranium prices and lower volume of sales. The
loss in 2013 is predominantly due to the US$97.1M impairment of
the KM assets and the US$62.1M impairment of exploration assets.
analysis OF rEalisEd salEs PricE and salEs &
PrOdUcTiOn vOlUmEs
Year Ended 30 June
%
Change
2014
US$
2013
US$
LHM realised uranium sales price
(17)% US$39.9/lb US$47.8/lb
KM realised uranium sales price
(34)% US$35.0/lb US$52.9/lb
Group realised uranium sales
price
LHM sales volume
KM sales volume
Total sales volume
KM production
Total production
(23)% US$37.9/lb US$49.5/lb
Mlb U3O8 Mlb U3O8
(6)%
28%
5%
6%
(21)%
(4)%
5.190
3.475
8.665
5.592
2.351
7.943
5.548
2.705
8.253
5.292
2.963
8.255
The average realised uranium sales price for the year ended 30
June 2014 was US$37.9/lb U3O8 compared to the average UxC spot
price for the year of US$33.9/lb U3O8.
P a l a d i n E n E r g y l T d A n n u A l r e p o r t 2 0 14
27
Three Months Ended 30 June
LHM production
rEcOnciliaTiOn OF c1 cOsT OF PrOdUcTiOn TO cOsT OF gOOds sOld
Volume Produced (lb)
Cost of Production (C1)
Cost of Production/lb (C1)
Depreciation & amortisation
Production distribution costs
Royalties
Inventory movement
Other
Cost of goods sold
Year Ended 30 June 2014
Year Ended 30 June 2013
LHM
5.592
US$M
161.3
KM
2.351
US$M
84.5
Total
7.943
US$M
245.8
LHM
5.292
US$M
159.5
KM
2.963
US$M
126.2
US$28.8/lb
US$35.9/lb
US$30.0/lb
US$42.6/lb
36.6
6.2
4.3
(15.9)
(0.9)
191.6
6.8
6.6
4.3
32.2
6.9
141.3
43.4
12.8
8.6
16.3
6.0
28.4
6.1
7.4
(1.3)
14.7
332.9
214.8
20.2
7.3
4.2
(18.0)
0.9
140.8
Total
8.255
US$M
285.7
48.6
13.4
11.6
(19.3)
15.6
355.6
The C1 cost of production for the year for LHM decreased by 4% to US$28.8/lb U3O8 (2013: US$30.0/lb U3O8). The C1 cost of production
for the year for KM decreased by 16% to US$35.9/lb U3O8 (2013: US$42.6/lb U3O8). These results provide evidence that the benefits from
the cost optimisation programme are being realised.
analysis OF adminisTraTiOn, marKETing ExPEnsEs &
siTE nOn-PrOdUcTiOn cOsTs
Year Ended 30 June
%
Change
2014
US$M
44%
(22.0)
2013
US$M
(39.5)
Total
Costs for the year ended 30 June 2014 decreased by US$17.5M
primarily due to corporate and marketing cost savings of US$7.3M
that were achieved through a cost rationalisation review, a decrease
of US$3.4M in non-cash share-based payments expense as there
was a reduction in the number of share rights on issue compared
to 2013, a reduction of US$3.9M in non-production mine site costs,
a US$1.5M reduction in research and development expenditure at
KM and a US$0.7M reduction in expenditure on the LHM Stage 4
expansion study.
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The c1 cost of production for the year for lhm decreased
by 4% to Us$28.8/lb U3O8
28
P a l a d i n E n E r g y l T d A n n u A l r e p o r t 2 0 14
sUmmary OF QUarTErly Financial rEsUlTs
LHM
Production U3O8
C1 cost of production
KM
Production U3O8
C1 cost of production
Total revenues
Sales volume
Realised uranium sales price
Impairments
Loss after tax attributable to members
Mlb
US$/lb
Mlb
US$/lb
US$M
Mlb
US$/lb
US$M
US$M
Basic and diluted loss per share
US cents
LHM
Production U3O8
C1 cost of production
KM
Production U3O8
C1 cost of production
Total revenues
Sales volume
Realised uranium sales price
Impairments
Loss after tax attributable to members
Mlb
US$/lb
Mlb
US$/lb
US$M
Mlb
US$/lb
US$M
US$M
Basic and diluted loss per share
US cents
2014
Jun Qtr
2014
Mar Qtr
2013
Dec Qtr
2013
Sep Qtr
1.339
31.2
0.262
44.7
69.4
1.812
38.2
(40.6)
(63.5)
(6.6)
1.393
29.0
0.697
32.9
88.6
2.405
36.8
-
(19.9)
(1.8)
1.431
27.5
0.777
33.1
102.1
2.775
36.7
(337.3)
(215.0)
(22.3)
1.429
28.0
0.615
39.3
69.4
1.673
41.4
(15.5)
(40.0)
(4.3)
2013
Jun Qtr
2013
Mar Qtr
2012
Dec Qtr
2012
Sep Qtr
1.353
29.4
0.790
39.2
109.6
2.326
46.2
(181.4)
(173.3)
(20.1)
1.230
29.8
0.762
39.8
106.4
1.920
55.2
(48.1)
(54.1)
(6.4)
1.419
29.6
0.772
43.5
134.2
2.783
48.1
(62.7)
(147.6)
(17.1)
1.290
31.8
0.639
49.0
61.3
1.224
49.8
(43.7)
(45.9)
(5.5)
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C1 cost of production for LHM increased 6% over the last year, from US$29.4/lb in the June 2013 quarter to US$31.2/lb in the June 2014
quarter. This was due mainly to lower production and higher mining costs in the June 2014 quarter. Prior to the June 2014 quarter, C1 cost
of production for LHM had fallen 3% year-on-year from US$29.8/lb in the March 2013 quarter to US$29.0/lb in the March 2014 quarter. This
was mainly attributable to reductions in soluble loss, reagent usage and the impact of foreign exchange movements.
At KM, C1 cost of production for the June 2014 quarter was affected by the transitioning of the mine towards care and maintenance. Prior
to the June 2014 quarter, C1 cost of production for KM had decreased by 17% year-on-year from US$39.8/lb in the March 2013 quarter to
US$32.9/lb in the March 2014 quarter. This decrease in costs was mainly a result of improvements in resin in pulp (RIP) recovery and ore
blend, a substantial reduction in acid consumption following commissioning of the acid recovery plant (nano-filtration).
Improvements in C1 costs are expected over the next two years due to a number of additional cost saving initiatives. These include
reductions in process reagents and water consumption as well as enhanced process recoveries at LHM.
Total revenues for the quarters ended December 2013, March 2014 and June 2014 were lower than the comparative quarters, because of
lower uranium prices. Total revenue for the quarter ended September 2013 was higher than the equivalent comparative quarter as a result
of higher sales volumes of uranium.
P a l a d i n E n E r g y l T d A n n u A l r e p o r t 2 0 14
29
sUmmarisEd sTaTEmEnT OF Financial POsiTiOn
liQUidiTy and caPiTal rEsOUrcEs
Year Ended 30 June
2014
US$M
88.8
238.3
2013
US$M
78.1
300.2
2012
US$M
112.1
300.7
1,565.7
1,837.7
2,347.7
725.6
677.8
838.5
1,049.1
432.4
1,058.1
648.2
899.0
1,194.8
The Group’s principal source of liquidity as at 30 June 2014 was
cash of US$88.8M (30 June 2013: US$78.1M). 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$76.6M is held in US dollars.
Net Cash Inflow from Operating Activities was US$10.1M in 2014
(2013: US$194.5M), primarily due to receipts from customers
of US$370.3M (2013: US$400.0M), which were largely offset
by payments to suppliers and employees of US$326.3M (2013:
US$364.8M) and net interest paid of US$32.3M (2013: US$41.4M).
In 2013, Net Cash Inflow from Operating Activities also included the
receipt of the long-term off-take agreement funds of US$200.0M.
Cash and cash equivalents
Inventories
Total assets
Interest bearing loans and
borrowings
Total long-term financial
liabilities
Net Assets
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Cash and Cash Equivalents have increased by US$10.7M mainly as
a result of the net proceeds received from the August 2013 share
placement of US$78.2M, the US$110.0M refinancing of the LHM
and KM project finance facilities and the US$20.0M deposit received
from the sale of a 25% interest in LHM, which were largely offset
by a US$9.2M repayment of the new LHM project finance facility
and the full repayment of the previous project finance facilities for
KM of US$68.1M and LHM of US$101.5M. Additionally there were
payments for plant and equipment of US$20.3M and exploration
and evaluation project expenditure of US$7.5M.
Inventories have decreased by US$61.9M predominantly due to
a decrease in the value of inventory held by KM, which is now in
care and maintenance, and the impairments discussed under the
Financial Results section. These decreases were partially offset by
a planned increase in ROM stockpiles at LHM as part of Stage 3
production expansion required to meet the future mine plan ore-
blend requirements. The Group’s sales volumes for the year of
8.665Mlb U3O8 were 0.722Mlb U3O8 higher than production of
7.943Mlb U3O8.
Interest Bearing Loans and Borrowings have increased by US$47.8M
primarily as a result of the reassignment to CNNC of US$96.0M of
an intercompany loan, as part of the LHM sale transaction, and the
US$110.0M refinancing of the LHM and KM project finance facilities.
This was partially offset by a US$9.2M repayment of the new LHM
project finance facility and the full repayment of the previous project
finance facilities for KM of US$68.1M and LHM of US$101.5M, net
of the non-cash accretion of the convertible bonds of US$18.1M
and deferred borrowing amortisation and establishment costs of
US$2.5M. The LHM sale consideration was allocated between
25% of the equity in LHM (US$94M) and 25% reassignment of the
intercompany loans in LHM (US$96M). This portion of the loan is
now external to the Group.
Segment Assets: Namibian assets have decreased predominantly
due to a decrease in trade and other receivables, which was
partially offset by an increase in cash and inventory. Malawian
assets have decreased as a result of a decrease in the value of
inventory held by KM, which is now on care and maintenance, and
the impairments discussed under the Financial Results section. The
Exploration segment assets have decreased due to the impairment
of the Queensland projects discussed under the Financial Results
section. In the Unallocated portion, assets increased primarily
due to an increase in trade and other receivables, which include a
US$170M receivable relating to the outstanding proceeds for the
sale of a 25% equity stake in LHM.
On 23 july 2014, the company announced the
settlement of the sale of a 25% interest in the
langer heinrich uranium mining operation in
namibia to cnnc Overseas Uranium holding limited
Net Cash Outflow from Investing Activities was US$25.3M in
2014 and is due primarily to plant and equipment acquisitions
of US$20.3M, including the new tailings facility at LHM, nano
filtration equipment and the tailings pipeline at KM, and capitalised
exploration expenditure of US$5.8M. The net cash outflow of
US$46.2M in 2013 was due primarily to plant and equipment
acquisitions of US$30.6M, predominantly the new tailings facility at
LHM, and capitalised exploration expenditure of US$16.5M.
Net Cash Inflow from Financing Activities of US$26.3M in 2014 is
mainly attributable to the net proceeds received from the share
placement of US$78.2M and proceeds received from the drawdown
of the new LHM project finance facility of US$110.0M. This has
been partially offset by a US$9.2M repayment of the new LHM
project finance facility and the full repayment of the previous project
finance facilities for KM of US$68.1M and LHM of US$101.5M. The
net outflow in 2013 of US$181.5M was mainly attributable to the
repayment of project financing for KM of US$29.9M and LHM of
US$17.0M, in addition to the U$134.0M repayment of the previous
convertible bond.
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 2014, the Group incurred net
losses after tax attributable to the members of US$338.4M (2013:
US$420.9M) and had net cash inflow of US$11.1M (2013: outflow
US$33.2M). At 30 June 2014, the Group had a net working capital
surplus of US$288.5M (30 June 2013: US$193.0M), including cash
on hand of US$88.8M (30 June 2013: US$78.1M). Included within
this cash on hand is US$13.2M (30 June 2013: US$26.9M), which is
restricted for use in respect of the LHM project finance facility and
supplier guarantees provided by LHM.
The amount outstanding at 30 June 2014 on the project finance
facility was US$100.8M.
Repayment obligations during the next twelve months to 30 June
2015 in respect of interest bearing loans and borrowings are
summarised as follows:
secured bank loan principal repayments of US$39.9M for
syndicated loan facility; and
interest payments of US$31.3M for syndicated loan facility and
convertible bonds.
30
P a l a d i n E n E r g y l T d A n n u A l r e p o r t 2 0 14
Settlement of Sale of Minority Interest in Langer Heinrich
Mine, Namibia
On 23 July 2014, the Company announced that the settlement of
the sale of a 25% interest in the Langer Heinrich uranium mining
operation in Namibia to CNNC Overseas Uranium Holding Limited,
a wholly-owned subsidiary of CNNC, the leading Chinese nuclear
utility, for consideration of US$190M, had been completed. The sale
was subject to a number of conditions precedent, which were met
in full by 30 June 2014 and accordingly the sale has been accounted
for at 30 June 2014.
As at 28 August 2014
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
Refinancing of Langer Heinrich Project Finance Facility
Total
Number
964,367,284
2,079,094
55,524,708
129,919,393
1,151,890,479
On 23 July 2014, the Company announced the refinancing of the
LHM project finance facility, which will reduce debt repayments by
US$32M over the 2014 to 2017 calendar years.
In addition, in arriving at its position in relation to going concern, the
Directors have given consideration to the following:
placing KM on care and maintenance will improve Paladin’s
forecast cash flow position by US$20-25M in calendar year
2015; and
the Group has a history of successful capital raisings and debt
restructuring.
The following is a summary of the Group’s outstanding commitments
as at 30 June 2014:
Payments due by period
Tenements
Operating leases
Mining, transport and
reagents
Oobagooma acquisition costs
Manyingee acquisition costs
Total commitments
Less than
1 yr
US$M
Total
US$M
1 to
5yrs
US$M
5yrs+ or
Unknown
US$M
25.8
2.0
24.2
0.3
0.7
53.0
2.6
1.0
22.1
0.3
-
26.0
6.4
1.0
2.1
-
-
9.5
16.8
-
-
-
0.7
17.5
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.
Financial insTrUmEnTs
At 30 June 2014, 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 or
liabilities apart from Namibian Dollar cash, receivables, payables
and provisions and Australian dollar cash and, payables and
Canadian payables.
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In relation to the Manyingee Uranium Project, the acquisition terms
provide for a payment of A$0.75M (US$0.71M) by the Group to the
vendors when all project development approvals are obtained.
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 has no other material off balance sheet arrangements.
OUTsTanding sharE inFOrmaTiOn
As at 28 August 2014, Paladin had 964,367,284 fully paid ordinary
shares issued. The following table sets out the fully paid ordinary
shares and those issuable under the Group Employee Performance
Share Rights Plan and in relation to the Convertible Bonds:
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.
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.
P a l a d i n E n E r g y l T d A n n u A l r e p o r t 2 0 14
31
OThEr risKs and UncErTainTiEs
changEs in accOUnTing POliciEs
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
The Group has adopted all new and amended Australian Accounting
Standards and AASB Interpretations effective from 1 July 2013.
The nature and impact of each new standard and amendment is
described in Note 3 – Basis of Preparation.
sUBsEQUEnT EvEnTs
TransacTiOns wiTh rElaTEd ParTiEs
During the year ended 30 June 2014, no payments were made to
Director related entities. Directors of the Company receive fees as
outlined in the Company’s management circular forming part of the
Company’s Notice of AGM. The only related party transactions are
with Directors and Key Management Personnel. Refer to Note 26.
Details of material controlled entities are set out in Note 31.
Other than disclosed below, since 30 June 2014, 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 periods with the exception of
the following, the financial effects of which have not been provided
for in the 30 June 2014 Financial Report:
sETTlEmEnT OF salE OF minOriTy inTErEsT in langEr
hEinrich minE, namiBia
On 23 July 2014, the Company announced the settlement of the
sale of 25% interest in its flagship Langer Heinrich mining operation
in Namibia to CNNC Overseas Uranium Holding Limited, a wholly-
owned subsidiary of CNNC, the leading Chinese nuclear utility, for
consideration of US$190M. The sale was subject to a number of
conditions precedent, which were met in full by 30 June 2014 and
accordingly the sale has been accounted for at 30 June 2014.
The offtake component of the agreement allows CNNC to purchase
its pro-rata share of product from Langer Heinrich at the prevailing
market spot price.
disclOsUrE cOnTrOls
The Group has applied its Disclosure Control Policy to the
preparation of the Consolidated Financial Report for year ended 30
June 2014, associated Management Discussion and Analysis and
Report to Shareholders. An evaluation of the Group’s disclosure
controls and procedures used has been undertaken and concluded
that the disclosure controls and procedures were effective.
inTErnal cOnTrOls
The Group has designed appropriate Internal Controls over Financial
Reporting (ICFR) and ensured that these were in place for the year
ended 30 June 2014. An evaluation of the design of ICFR has
concluded that it is adequate to prevent a material misstatement
of the Group’s Consolidated Financial Report as at 30 June 2014.
During the year, the Group continued to have an internal audit
function externally contracted to Deloitte Touche Tohmatsu. Internal
audit reports and follow-up reviews were completed during the
year and the Group continues to address their recommendations.
The resultant changes to the ICFR have improved and will continue
to improve the Group’s framework of internal control in relation to
financial reporting.
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P a l a d i n E n E r g y l T d A n n u A l r e p o r t 2 0 14
sUccEssFUl rEFinancing OF langEr hEinrich FaciliTy
In summary
Facility reduced to US$70M.
US$32M reduction in debt repayments over 2014 to 2017
calendar years.
Langer Heinrich debt repayments reduced by US$9.2M per
annum to 2018.
Additional positive cash flow implications to the January 2014
refinancing.
On 23 July 2014, the Company announced it had entered into
agreements with its existing lenders to refinance the LHM project
finance facility. The facility was drawn down in conjunction with
financial close of the LHM minority sale.
Paladin has refinanced the existing US$110M project finance facility
and US$20M working capital facility into a new US$70M syndicated
loan facility. Proceeds from the LHM minority sale were utilised to
prepay US$30.8M of the existing facility, taking the outstanding
balance to US$70M.
nEw vs ExisTing amOrTisaTiOn schEdUlE
facility will provide significant cash flow benefits
This new
and further strengthens Paladin’s financial position. As shown
below, the annual principal repayments will reduce by US$32.4M
over the first 3.5 years of the facility, from US$18.3M per annum to
US$9.1M per annum, with the first repayment of US$4.6M not due
until December 2014.
The Borrower of the new facility remains Paladin Finance Pty
Ltd (PFPL). The new facility is security light with Langer Heinrich
Mauritius Holdings Limited and LHUPL providing no guarantees or
security over the project assets. The facility will also have a financial
covenant holiday for the first four 6-monthly calculations periods
commencing 31 December 2014.
The new facility is provided by Nedbank Capital, a division of
Nedbank Limited, Nedbank Namibia Limited, along with the
Standard Bank of South Africa Limited and Standard Bank Namibia
Limited. Both banking groups have been involved with Paladin since
the first LH project finance facility was established in 2006.
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Existing LHM Facility
New LHM Facility
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P a l a d i n E n E r g y l T d A n n u A l r e p o r t 2 0 14
33
sUsTainaBlE
dEvElOPmEnT
Paladin is committed to the goal of sustainable
development. This is reflected in its corporate
values, which promote the creation of shared
wealth, becoming a major uranium supplier,
operating at global best practice, safety
and environmental stewardship, employee
welfare and recognition, and contributing and
responding to the attitudes and expectations
of local communities in the countries in which
Paladin operates.
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The Company is cognisant of the extra diligence that is required
for those in the uranium industry. It has therefore established an
in-house team with extensive knowledge about uranium and the
stringent requirements related to the commodity. It also emphasises
acting with integrity, honesty and cultural sensitivity in all dealings.
In support of this commitment, Paladin applies and adheres to
established and recognised international sustainable development
principles for all of its activities across the world.
In implementing its sustainable development programme, Paladin
aims to achieve a balance between economic, environmental
and social needs in all phases of its projects, and takes into
Namib-Naukluft National Park - Namibia
consideration its employees, communities, shareholders and other
key stakeholders. Paladin is ensuring that its high standards are
not compromised despite the difficult economic climate that it is
currently operating in.
to sustainable
the Company’s commitment
To deliver on
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, radiation, environment, social
responsibility and sustainable development, and to offer advice and
recommendations where significant sustainability related issues
arise. The Sustainability Committee comprises three members:
the Chairman of Paladin’s Board, Paladin’s Managing Director/CEO
and a non-executive independent Board member who is also the
Chairman of the Sustainability Committee.
cOrPOraTE sUsTainaBiliTy rEPOrTing
Paladin produced its second Sustainability Report (FY2013), 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 FY2014 Sustainability Report. Data is collected
specifically to meet the reporting guidelines of the Global Reporting
Initiative (GRI) Framework applying G4 parameters that were
released in May 2013. The GRI Sustainability Reporting Guidelines
provide principles for and guidance on defining report content.
Paladin’s focus is on those indicators that are considered material
to the Company. To allow sufficient time for comprehensive data
collection, assessment and reporting for the FY2014 period, the
report is expected to be available on the website towards the end
of CY2014.
The following discussion provides an overview of Paladin’s
environmental management. More detail on environmental
performance, specific management and quantitative data for the
reporting period will be provided in the 2014 Sustainability Report.
34
P a l a d i n E n E r g y l T d A n n u A l r e p o r t 2 0 14
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;
insPEcTiOn and aUdiT PrOgrammE
The Paladin Environmental Audit Standard requires sites to
establish and implement environmental inspection and audit
programmes to ensure that the environmental performance of the
operations is reviewed, audited and reported to the Board. These
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, including
a particular focus on 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 identified
issues. Corporate Environmental Audit Reports are provided to the
Paladin Energy Board Sustainability Committee.
implementing and assigning accountabilities for the standards,
guidelines and procedures;
EnErgy
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.
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.
The EMS for LHM was re-certified in 2012. The development of
an EMS for the operations at KM is continuing. However, due to
the mine being placed on care and maintenance mid-year, further
development and implementation of the EMS has slowed.
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. A care and maintenance EMP was prepared
for KM, which was subject to an independent review as part of care
and maintenance planning. The care and maintenance EMP will be
submitted to the Malawi Government and will be adhered to during
the care and maintenance phase.
EnvirOnmEnT rEgUlaTOry rEPOrTing
Both LHM and KM prepare various environmental reports for
the Namibian and Malawi Governments, respectively. Regulatory
reporting for LHM is conducted monthly, annually for water
aspects and, currently, bi-annually for general environmental
reports. 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.
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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. 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 2014
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. Both LHM and KM have implemented water
management strategies and maintain whole-of-site water balances
to ensure that the Company’s objectives around water usage,
supply and resource protection are achieved.
The reuse and recycling of water is maximised as much as possible
at Paladin’s operations. 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. All water monitoring data are
collated in annual water reports that consolidate and summarise the
key water aspects across all Paladin’s operations.
Water aspects as per the GRI indicator requirements will be
presented in the 2014 Sustainability Report.
land UsE, BiOdivErsiTy and
rEhaBiliTaTiOn
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.
Progressive rehabilitation of disturbed areas is undertaken where
practicable at all of Paladin’s exploration sites and mining operations.
Paladin’s objective
is to conserve biodiversity by obtaining
knowledge of the ecosystems within the regions in which the
Company operates, and to ensure that impacts on biodiversity
are minimised and managed. Data on land use and biodiversity
management aspects is being collated from LHM and KM and will
be presented in the 2014 Sustainability Report.
P a l a d i n E n E r g y l T d A n n u A l r e p o r t 2 0 14
35
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 Annual Environmental Reports and
submitted to the respective Governments.
SOX emissions are generated at the operations by the burning of
fuel for heating and power generation, as well as from the on-site
production of sulphuric acid at KM during operations. The SO2
emissions from the acid plant stack were monitored while the plant
was operational. The ambient ground level concentrations of SO2
are monitored around the site. Monitoring data are analysed and
the results reported in the Annual Environmental Report submitted
to the Malawi 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 emissions relate to the energy purchased
from the Namibian electricity grid to power the LHM operations.
Greenhouse gas emissions data are collected from the operating
sites and will be calculated as Carbon Dioxide (CO2) equivalent
emissions. Paladin’s current Australian activities are confined to
Paladin’s limited exploration activities and the corporate Perth office.
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.
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 of 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. Statistics and information on incidents
occurring during the reporting period will be included in the 2014
Sustainability Report.
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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. Preparation of a
Draft Mine Closure Plan is in progress at KM.
Waste rock is removed and placed in dumps at both LHM and KM
to allow access to the uranium ore. 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 are to be stable, blend in with
the surrounding landscape and be capable of supporting a self-
sustaining ecosystem.
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 considers other factors such
as the physical and geochemical properties of the material placed
in the dumps.
Tailings
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. They
have also 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. Specialists conduct peer reviews of the design,
construction and operations of the TSF’s and continue to provide
an ongoing external review.
36
P a l a d i n E n E r g y l T d A n n u A l r e p o r t 2 0 14
CorporAte SoCiAl
reSponSibilitY
Paladin’s purpose is to create value for its shareholders.
In pursuit of this goal, the Company recognises that
encompassing economic, environmental and social
values are all important components of corporate
success. Paladin stakeholders expect their Company
to be a good corporate citizen, with fair and beneficial
business practices focused on: 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;
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.
Paladin contributes significantly
those
economies in its countries of operation through a
variety of government taxes. These are detailed
for both Malawi and Namibia, where the Group’s
mines are located.
to
Programmes aligned with host country
Millennium Development Goals;
hUman righTs
Personnel dedicated to achieving CSR objectives;
Compliance with recognised international codes
of conduct;
Acknowledgement of voluntary standards; and,
Reporting
Reporting Initiative.
in accordance with
the Global
to achieve
Paladin seeks
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:
role
instrumental
in
Paladin played an
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.
to
the principles
Paladin has committed
contained in Enduring Value – the Australian
Minerals Industry Framework for Sustainable
Development. This commitment is aligned with
the Ten Sustainable Development Principles of
the International Council on Mining and Metals.
the Extractive
Paladin supports
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
Paladin is committed to 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 member of the Minerals Council
of Australia (MCA), which represents Australia’s
exploration, mining and minerals processing industry,
nationally and internationally, in its contribution to
sustainable development and society. As a member,
Paladin supports the Enduring Value principles as a
framework for sustainable development.
the past year,
During
the Australian Uranium
Association (AUA) was integrated into the MCA and
is now represented specifically through the Uranium
Forum of the MCA. As such, Paladin is committed
to abiding by and implementing the terms of the
Uranium Industry Code of Practice. Along with
the Code, the Group observes the 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.
Senior management across the Group at both board
and committee level are actively involved in a number
of industry and policy making organisations. These
include the MCA, Uranium Council of Australia,
Payments to the
government of
malawi for the year
ended 30 june 2014
Royalties
USD 3,365,330
Withholding tax
USD 835,899
Non-Resident tax
USD 139,979
Payroll Tax
USD 4,569,923
TOTAL
USD 8,911,131
Payments to the
government of
namibia for the
year ended
30 june 2014
Royalties
USD 6,306,685
Payroll Tax
USD 3,179,009
TOTAL
USD 9,485,694
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37
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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 Consul to Malawi. 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.
LHUPL 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 healthcare, environment
management and radiation safety in Namibia.
Suda announced the results from a Phase III trial of ArTiMist™ in
2013, 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 is working with the Medicines for Malaria Venture and
other groups to expand the opportunity for ArTiMist™ by evaluating
the product as an early interventional treatment before patients are
referred to hospital.
The majority of deaths from severe malaria in childhood are caused
by the delayed administration of effective anti-malarial 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.
LHUPL supports both the Namibian Uranium Association (NUA)
and the Namibian Uranium Institute (NUI). The NUA, an advocacy
body that represents the uranium industry exclusively, was officially
launched in November 2013.
Suda believes that ArTiMist™ has the potential to be an effective pre-
referral medication. It has the potential to significantly reduce child
mortality and the adverse effects suffered by children, particularly
within the first 24 hours of infection.
Members of the NUA work co-operatively to ensure the Namibian
uranium exploration, mining and exporting industry is able to
operate, expand and thrive safely and efficiently. The NUA’s Board of
Directors, of which LHUPL’s Managing Director, Simon Solomons, is
a member, also governs the NUI, which is an industry training and
research centre. LHUPL is represented on two of its working groups
– Water Quality and Sustainable Development.
LHM continues to provide strong support to the Namibian Chamber
of Mines, which organised a major Mining Conference in May 2014
under the theme “Mining industry on the growth path to support the
Namibian economy.” This very successful conference was attended
by almost 500 delegates from all over the country and from South
Africa and provided an important forum for interaction between
industry leaders and stakeholders.
malawi dElEgaTiOn TO aUsTralia
A Government of Malawi delegation, comprising senior officials from
the Ministries of Finance, Mines and the Malawi Revenue Authority,
visited Paladin’s Head Office in April 2014. The delegation visited
Australia to study Australia’s mining fiscal regime. The delegation of
11 people was received by the senior management team in Perth,
and were provided with a comprehensive briefing on the subject.
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 provide support to Suda Ltd for Suda’s
development of ArTiMist™, a sub-lingual (under the tongue) spray
for the treatment of severe and complicated malaria in children.
malawi
Paladin has continued to fulfil its Social Development responsibilities
in Malawi under the terms of the Kayelekera Development
Agreement and Environmental Impact Assessment Social Impact
Control Programme. In announcing its decision to place KM on care
and maintenance earlier this year, Paladin undertook to maintain its
community relations presence in Karonga and to sustain its CSR
programmes, albeit at a reduced level of expenditure consistent
with Kayelekera’s non-producing status.
While the most significant project undertaken during the period
was upgrading the Garnet Halliday Karonga Water Supply Project,
Paladin also continued its ongoing community programmes focused
primarily on health and education. Through its corporate CSR
programmes and projects undertaken and funded by the Paladin
staff charity, Friends and Employees for African Children (FEPAC),
the Company social development footprint extends throughout the
Karonga District, so ensuring that villages other than those in the
immediate vicinity of KM benefit from its programmes.
garnET halliday KarOnga waTEr sUPPly PrOjEcT
The Garnet Halliday Karonga Water Project was built at a cost
of more than US$10M and is the centrepiece of Paladin’s Social
Development commitment to Malawi, the objective being to
provide a safe and reliable water supply to the Town of Karonga.
Construction was undertaken in 2009-10. The local water utility, the
Northern Regional Water Board (NRWB) began operating the plant
and supplying water to Karonga’s 40,000 people in March 2010.
Subsequent difficulties were encountered with the plant’s intake
system and, although not obligated to do so, Paladin undertook
a US$350,000 project to install a redesigned eco-friendly intake
strainer system, to reposition the 760m pipeline to the Karonga
Water Plant, and to substantially strengthen its anchoring system.
This project was approved by the NRWB, Paladin and the Ministry
of Irrigation and Water Development in November 2012, and work
commenced in early 2013. The project was completed in early 2014
with the installation of the final 14 blocks to weight the pipeline. The
replacement intake strainer was inspected by professional divers
and found to be in position and completely stable. The plant is now
operating as per design, providing Karonga with a safe and reliable
water supply that will meet the town’s projected needs until 2025.
In February 2014, Paladin arranged for an independent engineering
review of the Karonga Water Plant and the resulting consultant’s
report noted that “overall, the Karonga Water Plant is in good
condition for a plant that has been operating since March 2010,
some 4 years of production” and that “general minor maintenance
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has been well attended to, along with exceptionally good
housekeeping.” Paladin has also assisted the NWRB with technical
support and advice on critical spares and maintenance planning for
the Karonga Water Plant.
cOmmUniTy liaisOn
Engagement with the community locally is formalised through the
District Executive Committee (DEC) stakeholders’ meetings, which
are held monthly and are used as a community information forum
and to address any stakeholder questions or concerns. Paladin
used a DEC meeting in February to brief local stakeholders on the
Company’s decision to suspend production at KM and to explain the
background to this decision and likely impacts on the community.
Weekly meetings are held with the Kayelekera village leadership and,
on a more informal basis, with the Karonga District Commissioner,
the Paramount Chief and traditional authorities and their advisors,
together with the leaders of Kangome (the Karonga peak non-
governmental organization (NGO) association). These forums
ensure open communication between local stakeholders and the
Company. The Company also engages individually with NGOs in the
region. In July, Paladin hosted a visit to KM by the Karonga Diocese
Catholic Commission for Justice and Peace (CCJP) to explore areas
of mutual interest. The CCJP offered to assist the Company in its
endeavours to secure Government approval for the construction of
a Community Health Centre at Kayelekera Village.
In addition to the local community, efforts are also made to liaise
with other operating companies in the area to consult on local
CSR programmes and encourage their involvement in the local
community such as facilitating food purchases from local growers
in the area.
TransiTiOn TO carE and mainTEnancE
To assist in informing the community of the decision to place KM on
care and maintenance, the Company engaged two Malawi national
communication consultants as liaison officers with government,
community and Malawi media to ensure that the Company’s
messaging was clearly communicated and understood. There was
extensive one-on-one consultation with key stakeholders in Karonga
to explain the impact of care and maintenance. In addition, the
Company provided independent counselling to retrenched Malawi
national employees to assist them in the transition from employment
with the Company. This included personal counselling, financial
management advice, help to identify learned transferable skills and
advice on establishing small businesses based on the practical
skills, experiences and resources acquired during employment with
the Company. About 40% of retrenched staff took advantage of
counselling and reported that they found it beneficial.
Paladin also engaged the services of a Malawi national consultancy
firm to carry out a Social Impact Assessment in the Karonga
region in order to gauge the impact of the mining operation on
the community. The study found that there had been significant
employment creation, skills development, business development in
Karonga and economic empowerment of vulnerable groups during
the operational phase at KM.
It noted that Paladin had identified and mobilised certain vulnerable
groups in the community to supply goods such as flour, with the
primary purpose of empowering them economically. Their selection
to supply was based on affirmative action reflecting the Company’s
CSR goals and resulting revenue from supplies constituted between
75% and 100% of their total income. The study noted that, as a
result, previously disadvantaged community groups had been
able to educate their children, construct better housing, purchase
livestock and buy fertiliser to grow food crops. Other benefits noted
in the study included improved housing, greater access to health
services and better educational facilities.
In March 2014, a party of 22 bureaucrats representing the key
government ministries, travelled to the mine to better acquaint
themselves with the concept of care and maintenance, and declared
themselves satisfied with the outcome of the visit.
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cOmmUniTy EdUcaTiOn and hiv/aids awarEnEss
Paladin has a commitment to conduct regular HIV/AIDS awareness
campaigns and to promote good health and hygiene in order to
improve the quality of life of local communities. Paladin continued
its “education-through-storybooks” project, with
to develop
publication of another three books during the year.
The collection now comprises 35 titles, covering a variety of
community-focused subjects, and has been translated into a
number of local languages. They continue to be a very effective
communications medium and remain extremely popular, given the
general lack of reading material in the district, particularly in local
languages.
A further 21,350 books were distributed broadly through the
community during the year, covering KM employees, local schools
and communities and government agencies, bringing the total
number distributed to-date to 153,560.
HIV/AIDS awareness programmes continued through the medium
of the Nyange Nyange drama group and distribution of related story
books. Books are rare and precious in the region. It is not uncommon
in rural areas for school children to be the only family members who
are literate. As a result, local language books distributed by Paladin
are frequently taken home and read to other family members,
thus becoming a very effective means of communicating with the
community at large. Quizzes and poster competitions are also
popular among KM employees and their families.
Paladin continues to support the local Nyange Nyange drama group,
which uses theatre in an effective and popular way to communicate
key social messaging across the community. Through Paladin’s
support, Nyange Nyange reached an audience of approximately
20,000 primary and secondary school children during the year,
presenting on health related topics. Funding also assisted the group
to produce and distribute their second DVD.
lhUPl has collaborated with the namibian institute
of mining and Technology (nimT) since 2007 when
lhUPl approached nimT to offer their mechanical
and electrical artisans the opportunity to undergo
practical training at lhm.
cOmmUniTy hEalTh carE
Paladin continued its support of local health clinics by providing
transport for government medical staff in the region, alleviating the
need for local villagers to travel long distances. Paladin’s Community
Relations team, both being health professionals, provided support
services, including a large number of health talks at rural schools
reaching over 4,500 children; hosting international researchers
and other NGO staff; liaising with the District Health Office on local
programmes; and, assisting with audiology clinics at the School for
the Deaf and Karonga District Hospital.
Discussions are continuing with the Ministry of Health on the
most appropriate form of health centre to be constructed in the
Kayelekera Village. Land has been set aside and construction will
begin once agreement has been reached with all parties.
Paladin also runs a mosquito control programme four times a year
in Kayelekera Village and at Karonga Airport, in addition to the mine
and accommodation areas, as a very effective malaria-control
mechanism.
EdUcaTiOnal sUPPOrT
There is little money available for regular maintenance of school
facilities in the region. Paladin’s Community Relations team
continues to assist in the maintenance of local schools and teacher
housing, including painting, roofing repairs and the provision of solar
lighting in classrooms.
The Company constructed a new footbridge to provide access to
the Kayelekera Secondary School, replacing a badly deteriorated
and unsafe structure previously being used by villagers and
schoolchildren. Paladin also distributed writing materials to 32
schools in the region and provides ongoing financial support for
the employment of nine teachers at local schools in Kayelekera and
Juma Villages.
Paladin continued its practice of delivering a Christmas gift to all
school students in the area, providing school supplies, an individual
personal item and snacks – including 2,250 eggs hard-boiled by
Community Relations’ staff.
cOnsUlar sErvicE
Paladin continues to promote positive bilateral relations between
Australia and Malawi by providing Consular services for the
Department of Foreign Affairs and Trade (DFAT) in Malawi.
The Company’s office in Lilongwe is the designated Australian
Consulate, augmenting services provided by the nearest Australian
diplomatic mission located in Harare, Zimbabwe. The Consulate
provides consular support for Australian expatriates and visitors in
Malawi and Malawians wishing to visit or study in Australia. PAL’s
resident director in Malawi, Mr Greg Walker, recently has been
appointed to a second two-year term as Australia’s Honorary
Consul to Malawi.
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
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.
Pleasingly, all students were successful in their 2013 examinations
and were promoted to the next grade.
naTiOnal maThEmaTics cOngrEss
Sponsorship of the National Mathematics Congress has continued
since 2009. The objective of the Congress is to improve the standard
of mathematics education at primary and secondary levels across
Namibia with teachers, both primary and secondary, participating
to upgrade their mathematical and professional knowledge and
skills. The 9th Congress, held over three days in April 2014, had
close to 300 attendees and is now a key event on the educational
calendar. The positive feedback received from this year’s participants
clearly showed the benefit of supporting this important initiative.
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Mondesa Youth Opportunities - Namibia
maThEmaTics sUPPOrT and EnrichmEnT PrOgrammE
This programme, initiated by Langer Heinrich in 2011 and 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 and provides curriculum support
lessons throughout the year. Various mathematics competitions
were held and a Spring School was conducted in August 2013 with
66 of the 84 students who attended being fully sponsored through
the programme.
The 2013 project yielded excellent results, with many students
achieving above average marks, and all participants passing their
mathematics subject.
ThE aPPrEnTicE PrOgrammE and nimT sUPPOrT
LHUPL has collaborated with the Namibian Institute of Mining and
Technology (NIMT) since 2007 when LHUPL approached NIMT
to offer their mechanical and electrical artisans the opportunity to
undergo practical training at LHM. On average, 45 apprentices per
semester are provided with job attachment exposure at the mine. In
addition, a thickness planer machine was donated during the year
for the carpentry/joinery workshop.
schOOl sUPPOrT PrOjEcT
For the past three years, Langer Heinrich has donated text books
to various Swakopmund state schools. While the first two years of
this programme benefited secondary schools, this year’s donations
went to primary schools on the recommendation from the Ministry of
Education. Text books to the value of N$130,000 were purchased,
labelled and donated. This initiative was highly commended by the
Honourable Regional Governor during the handover ceremony.
gradUaTE Training PrOgrammE
Nine graduates in the geological, administration and metallurgical
disciplines were successfully integrated into their respective
following offers of
departments over the past 12 months,
employment by Langer Heinrich. Four new graduates have joined
the programme since 3 March 2014 in the following disciplines:
radiation, corporate, finance and metallurgy.
EnvirOnmEnTal PrOjEcTs
Given the mine’s location in the Namib-Naukluft National Park,
Langer Heinrich recognises the need to provide support in this area
and has consulted with the Ministry of Environment and Tourism
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(MET) and the Namib Ecological Restoration and Monitoring Unit
(NERMU) to determine appropriate projects to support. It was
agreed to proceed with the following two projects – an upgrade of
a station house for park rangers for the MET and the development
of a training internship programme for environmental graduates for
the NERMU. The latter is expected to run over five years and benefit
four Namibian graduates per year.
hiv/aids and wEllnEss PrOgrammE
Langer Heinrich continues to be active with HIV/AIDS related
activities through its 18 Peer Educators who undergo HIV and
related wellness training and attend pre-shift tool box meetings
allowing them the forum to deliver coaching and mentoring on the
various chosen health related topics. Peer educators meet monthly
with the Occupational Health administrator to discuss World Health
Organisations information on HIV/AIDS and thereafter choose the
relevant HIV/AIDS topics for discussion. A reputable NGO visits
the mine site on an annual basis and conducts voluntary HIV/AIDS
testing and pre-test counselling and, for positive tests, provides
post-test counselling.
OThEr cOmmUniTy iniTiaTivEs
Langer Heinrich continues to support two feeding programmes for
disadvantaged children in Walvis Bay and Swakopmund (catering
for between 600 and 700 children per day). This programme
now extends to pre-school classes. In addition, Langer Heinrich
supports various small scale community projects and sporting
activities during the year, reaffirming its commitment to the
local community.
aUsTralian iniTiaTivEs
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 on medical
research for children.
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Aurora continues to maintain an active presence in the Labrador
communities. Donations focus on education and training, aboriginal
cultural initiatives, youth and sport. During the year, Aurora
contributed to 34 community events and initiatives. Community
activities have included public meetings to inform residents of
Aurora’s activities and to seek their feedback. Regular contact
with Provincial and Nunatsiavut government officials has been
maintained and Aurora continues to enjoy good support from the
governments and local residents.
EmPlOyEE chariTaBlE FOUndaTiOn,
sUPPOrTEd By Paladin
Friends and Employees of Paladin for African Children (FEPAC) is a
charitable foundation established in 2008 by Paladin employees to
fund social projects that are outside the scope of the Company’s
CSR programmes. Paladin supports the
its
employees in FEPAC and donates 25c for every A$1 raised and
also provides administrative support. To date, FEPAC has raised
A$809,972 through employee donations, golf days and quiz nights.
involvement of
The charity supports six projects in Malawi that assist orphaned
children with educational needs and vocational training courses. In
the past, the vocational training courses have included brick laying,
carpentry and tailoring. Currently, 138 teenagers have completed
these courses and have been provided with tools to enable them
to earn money to support their younger siblings. On completion of
the courses, the students also complete a five-day, small business
training course to teach them the basic fundamentals for setting up
their own small businesses.
An audit is currently being conducted to determine how the past
students have fared since completing their courses and, if they have
been successful in continuing their trade or setting up their own
business. So far, 86 past students have been interviewed and out
of these, 44 have set up their own businesses while 32 have moved
out of the area.
Other projects FEPAC supports 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 commenced the small business training
courses referred to above for former students of the vocational
training courses and 110 past students were trained. FEPAC also
paid for two local women to be trained as trainers of that course.
FEPAC also employed former carpentry and tailoring students to
make furniture and school uniforms for a number of local schools.
Many of the former students used the profits made from this work to
help establish their own businesses.
There were numerous small projects funded by FEPAC during the
year such as installing electrical wiring at the school for the deaf so
they could connect to grid power, providing stationery and books to
local schools and continued funding to the Nyange Nyange Drama
Group, who regularly perform dramas covering health and social
issues to primary schools in the Karonga District.
The third annual Charity Golf Day was held in Namibia, organised
by local employees. The event was an outstanding success, raising
N$170,000. The funds were distributed equally between two charity
organisations, focussing on less privileged children in Swakopmund
and Walvis Bay.
our people
Due to the challenging market conditions, the Company has spent
the last year focusing on rationalisation and consolidation across
the Group, while ensuring that, where possible, retention of key
skills and individuals maintained a high priority. Globalisation of our
human resource processes and procedures will remain an ongoing
focus to ensure consistency and collaboration across the Group
where possible.
With the exception of Malawi (Kayelekera Mine), where, due to
the mine moving to care and maintenance, the headcount was
substantially reduced, the remaining Group’s focus on rationalisation
rather than growth saw an overall reduction of headcount. Where
natural attrition occurred, only those roles deemed to be critical
were replaced.
Despite these on-going challenges, significant effort was placed
into ensuring that key talent was retained within the Group with a
number of individuals transferring from both the Perth Head Office
and KM to LHM. This strategy not only succeeded in retaining
key skills and individuals, but stimulated knowledge and skill
transfer across the Group. It also offered career progression and
development opportunities to those individuals involved.
Key employee statistics for the Group are detailed in the following
table (as at 30 June 2014).
Location
Total
Female
%
Local
Nationals
%
Turnover
%**
Australia Corporate,
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51.22%
n/a
26.23%
administration,
financial &
technical services
Exploration
Namibia
LHM
Malawi
KM*
Exploration
Canada
Exploration
11
328
212
16
12
27.27%
n/a
8.82%
17.99% 96.64% 13.22%
8.53% 85.30% 89.42%***
6.25%
100%
22.75%
33.33%
75%
16.00%
Total
620
17.41%
*Care and maintenance announced Feb 2014
**Employee turnover is based on a 12 month rolling average
***Kayelekera ceased production / on care and maintenance
Gender diversity continues to be a focus across the Group with
a number of females being recruited at both sites into skilled and
professional based roles. 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
balanced with availability of appropriate candidates in the region
of operation. Further information on diversity can be found in the
Corporate Governance Statement.
As in previous years, employees were supported to access a variety
of training options including conferences, short training courses,
seminars and professional studies. The continuation of training in
the Company’s Anti-Bribery and Corruption compliance remained
an on-going focus across the Group with the roll out scheduled
to conclude within the coming months, resulting in all employees
having completed the initiative.
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The focus moving forward will continue to be one of consolidation
coupled with retention, ensuring the workforce is stabilised and
engaged on an on-going basis.
aUsTralia (hEad OFFicE & mOUnT isa)
The Australian headcount is currently 52 (including exploration), of
which females represent 46.15%. With the focus on rationalisation,
the organisational structure has been under constant review
resulting in five roles being made redundant throughout the year,
four roles being reduced to part-time and a further four roles in
which incumbents left the organisation through natural attrition
and were not replaced. Additionally, three senior individuals within
the technical projects and finance teams have been transferred
to the Langer Heinrich operations in an effort to retain key skills
and knowledge within the Group. This rationalisation of roles and
consolidation of the organisational structure will be an ongoing focus
in the year to come in a further effort to maximise the Company’s
efficiency aims and reduce costs where possible.
Overall, the 12 month rolling turnover was 28.42%, with voluntary
turnover representing 15.3%. This was significantly lower than the
previous year of overall rolling turnover sitting at 40.38%, of which
23.08% represented voluntary turnover (combined total including
head office and Perth-based exploration team). This reduction in
voluntary turnover can be attributed to a challenging labour market
and an effort to consolidate the Perth structure.
Along with the majority of organisations within the resources
industry, challenging times have dictated alternative thinking in
regards to employee reward and recognition. With salaries frozen
for the period and, in some cases, individuals asked to take a
reduction in salary, further focus in the coming year will be placed
on rewarding employees outside of the Company’s current or
previous cash focused remuneration strategies.
ExPlOraTiOn
The exploration team currently consists of a number of geologists,
geophysicists and database administrators supported by external
contractors and consultants. Exploration teams located at site
remain focused on near mine resource extension and regional
resource development, and the Canadian based team continue
to focus on regional exploration. The small Perth-based team
supports the various exploration projects Group wide, as well as the
continuing development of Australian based projects.
Turnover within the exploration group has remained consistently low
over the period, with any reductions in numbers being involuntary
due to KM going onto care and maintenance and the Perth-based
team consolidated due to cost restraints. The Malawi exploration
team was reduced from 20 (including 10 field personnel) to 16
Exploration Team - Canada
(3 field personnel, including 2 professionals) and the Perth team was
reduced by one role, leaving the team total at 11.
Turnover of the Aurora exploration team based in Canada has
also remained consistently low over the period, with numbers
reducing from 14 permanent employees to the current team of 12,
of which over 83% have more than five and half years tenure with
the Company. In additional to the permanent team, the Michelin
exploration camp is supported by up to 30 seasonal workers who
undertake various roles during the seasonal drilling programmes.
86% of these seasonal workers are sourced from the surrounding
communities of Postville, Makkovik and Rigolet.
Engagement and collaboration is always a focus for the Aurora
exploration team, and the annual three-day workshop held in
June provides an avenue whereby employees are provided the
opportunity for team bonding and collective strategic planning for
upcoming projects.
malawi (KayElEKEra minE)
The decision to place the mine onto care and maintenance obviously
had a significant impact on staff, both Malawi nationals and foreign
expatriate employees alike. Having gone from a producing mine
onto care and maintenance status within a few short months
requires careful planning and change management strategies in
place, as well as engagement with Government. The quality of the
change management strategy, its implementation with regards to
the manner in which staff are engaged, and the way such plans are
executed, will be major factors in determining the ultimate success
of Kayelekera’s change initiatives and their lasting effect.
Kayelekera’s success during the care and maintenance period will
depend heavily on having the right people in the right roles. The
experience, skills and competencies that are required within care
and maintenance are, in themselves, unique and challenging to both
acquire and retain.
in-depth analysis was undertaken of
In direct response to the decision to place KM on care and
maintenance, an
the
organisational structure and the roles which would be required
throughout the period. As a result, the local Malawian workforce
was reduced by 193 in February, and by a further 94 in May upon
completion of the rundown period. Currently there are 180 Malawian
employees on site (excluding exploration), a large number being
involved in security surveillance.
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Of those Malawian employees retrenched, all received generous
severance packages in recognition of their service with the
Company. Additionally, all
to
outplacement and counselling services, which included a financial
planning component as well as a basic small business course, all of
which were provided by the Company at no cost to the individual.
received access
individuals
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The foreign expatriate workforce has similarly been reduced by a
significant number, with headcount being reduced from 92 to 31.
This reduction has been phased over a 12-month time frame, with
the current roles remaining under further review.
Within the current challenging times, the on-going focus on
employee training and development at Kayelekera has continued.
A number of high performing employees are participating in
Personal Development Plans with the aim of recognising and further
developing those individuals identified for future leadership roles
within the Company. The Personal Development Plans combine
internal training and mentoring opportunities with formal study or
training in the employee’s relevant field.
In an effort to retain key individuals and skills within the Group,
three members of the Kayelekera processing team and one from
the finance team have been offered an international assignment to
the Langer Heinrich mine. They will relocate with their families to
Namibia over the coming months. Additional collaborations between
Kayelekera and Langer Heinrich personnel will be explored in the
year ahead, with the intention of allowing select high performing
individuals further exposure to internal training and development
opportunities within the Group.
The focus for the year ahead will be the challenge of continuing to
motivate and engage the workforce within a care and maintenance
context. The planned continuation of implementing a performance
management system across the workforce will play an integral part
in achieving an ongoing and open communication channel between
management and employees, and will contribute to the retention of
the core team, which will be high on the upcoming year’s agenda.
The care and maintenance environment will present an opportunity
for senior team members to plan effective coaching and mentoring
practices for more junior employees, reinforcing the learning culture
at Kayelekera, and leading to a continuous development of talent.
The longstanding relationship between the Namibian Institute of
Mining Technology, the Ministry of Education and LHM has proven
to be beneficial to all involved, allowing for individuals to receive the
practical hands-on component of their training on-site, which, upon
completion of their trade, provides Langer Heinrich with access to a
number of young artisans.
In the eighth year of Langer Heinrich’s existence, a substantial period
of time and effort has gone into realigning job roles in preparation for
the introduction of a new organisation wide performance appraisal
system. Additionally, this project has allowed for the implementation
of a universal job-grading system and, in turn, the ability to conduct a
thorough market analysis with the intent of ensuring the maintenance
of a strategic remuneration position in the local market.
Langer Heinrich 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. LHM is also 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 present
and future workforce, which equitably represents the prevailing
demographic composition of Namibia. The Langer Heinrich
Affirmative Action Report reflects the following demographics:
% Female Employees
% Historically Racially
Disadvantaged Employees*
% Non Namibians
Total Employees
CY2013
21.2%
89.5%
1.7%
402
CY2012
20.7%
88.9%
2.6%
387
namiBia (langEr hEinrich minE)
* As defined in the Affirmative Action (Employment) Act 1998
In direct response to the additional competition in the local labour
market, seen by the construction of the nearby Husab Uranium
Mine, retention of employees has been an ongoing issue over the
last financial year. This is evident in the increased annual voluntary
turnover figure of 11.6% in comparison to 8.55% last year. Involuntary
turnover has, by comparison, remained consistently low throughout
the period, sitting at 1.53%, which is slightly lower again than the
previous year of 1.83%. At the end of the year, contractor numbers
totalled 690 (down from 767 in July 2013). Of these, 438 are long-
term contractors, and of those, 431 are mining related (down from
482 mining contractors July 2013).
During the year, the loss of six members from the senior leadership
team could have proved extremely challenging had there not been
a well-developed pool of internal talent within Langer Heinrich
and the wider Group. As a result, these vacancies were filled via
a combination of internal transfers from within the Paladin Energy
Group and from promotions within Langer Heinrich itself, allowing
for stability and consistency to be retained within the operations.
To combat the additional competition in the local labour market
in attracting skilled individuals, a focus on alternative strategies
has been applied. This includes offering internal and external
bursary schemes for specific roles which allows for formal training
and education opportunities, alongside internal development of
graduates via mentoring partnerships. Currently, Langer Heinrich
employs six graduates within the disciplines of metallurgy, supply
chain, corporate relations, finance, human resources and safety
health and radiation. The previous year’s intake of 11 graduates
across various disciplines resulted in Langer Heinrich extending an
offer of full time employment to the large majority of individuals in
the programme, highlighting the success of the programme itself
and the benefits it can provide to the Langer Heinrich talent pool.
Female employees currently represent approximately 18% of the
Langer Heinrich workforce, of which 34% hold professional or
managerial roles within the Company, with the remaining individuals
falling into support services, artisans and trainee roles.
The developing partnership between the representatives of
the Mineworkers Union of Namibia (MUN) and Langer Heinrich
concluded a two-year agreement on increased wages and changed
employee benefits. This agreement has assisted in paving the way
towards formalising the relationship with the MUN by the continuing
development of a Recognition and Procedural Agreement, which
aims to structure the social partnership between the two parties.
Langer Heinrich places significant importance on employee health
and wellness. In addition to private health membership being a
condition of employment, there are currently 18 voluntary peer
educators who deliver coaching and mentoring around HIV and
other health related topics. Additionally, poster campaigns are
carried out around site and all offices and free condoms are self-
dispensed in bathrooms and other private areas. Collaboration
with external health organisations (eg. the Cancer Association of
Namibia) has resulted in 196 employees to date attending a number
of wellness screening and counselling events. Held at the mine site
by the Ministry of Health for awareness of health hazards, these
events are concerned with elevated blood pressure, cholesterol,
excessive weight and diabetes as well as the dangers of smoking.
Additionally, pre-winter flu vaccinations are provided at no cost to
employees.
The year ahead will see a further focus on addressing the challenges
of attracting scarce skills in an ever increasing tight labour market,
and the on-going retention of people in a cash-constrained
environment, therefore moving away from the more traditional
monetary based reward systems and strategies.
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gillian swaB y
CoMpAnY SeCretArY/exeCutive generAl MA nAger - C orporAte S erviCeS
cOrPOraTE gOvErnancE
sTaTEmEnT
The Board of Directors of Paladin Energy Ltd
is responsible for the corporate governance of
the Group.
cOrPOraTE gOvErnancE FramEwOrK
Paladin has adopted systems of control and accountability as the
basis for the administration of corporate governance.
This Corporate Governance Statement, dated 30 June 2014 and
approved by Board on 22 August 2014, outlines the key principles
and practices of the Company which, taken as a whole, represents
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 ASX Listing Rules require the Company to report on the extent to
which it has followed the Corporate Governance Recommendations
contained in the ASX Corporate Governance Council’s (ASX
CGC) 2nd Edition of its Corporate Governance Principles and
Recommendations. For FY2014, Paladin has complied with all
the recommendations and has referenced these throughout this
Corporate Governance Statement.
Further to the release of the ASX CGC’s 3rd Edition of its Corporate
Governance Principles and Recommendations in March 2014,
Paladin carried out a complete review of its corporate policies and
practices and made any revisions necessary to ensure the Company
complies with all recommendations in the 3rd Edition. These
revisions were approved by the Board and adopted with effect from
21 May 2014. 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. Copies or summaries of key corporate
governance policy documents can be found on the Company’s
website www.paladinenergy.com.au
BOard OF dirEcTOrs
rOlE OF ThE BOard and managEmEnT
ASX CGC Recommendation (2nd Edition) 1.1, 1.2, 1.3
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. It is also responsible for CEO succession
planning. The Company Secretary is accountable to the Board,
through the Chairman, on all matters to do with the proper
functioning of the Board.
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.
The Board is responsible for setting the strategic direction and
establishing goals for management and the monitoring of the
achievements against these goals. The Managing Director/CEO
conducts evaluation interviews with all Executive General Managers
and General Managers annually with the Non-Executive Directors
reviewing the performance of the CEO. Open discussion on
management performance takes place at Board level. In the light of
the highly dynamic uranium cycle, remodelling of the performance
appraisal process is being undertaken.
Other than the powers expressly reserved to the Board in the Board
Charter, the Board has delegated responsibility for the management
of the Company’s business and affairs to the Managing Director/
CEO. The Managing Director/CEO is supported in this function by
the Company’s senior leadership team, which comprises the direct
reports to the Managing Director/CEO and the Group Company
Secretary. The Board maintains ultimate responsibility for strategy
and control of the Group.
cOmPOsiTiOn OF ThE BOard
ASX CGC Recommendations (2nd Edition) 2.1, 2.2, 2.3, 2.6
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 is available to oversee the growth of Paladin
to its full potential.
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KnOwlEdgE, sKills and ExPEriEncE
represented at Board
Skill sets
include managerial,
technical, financial, corporate, legal and commercial. Particularly,
members have a broad range of experience and expertise in the
uranium business.
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During the year, the Board developed a skills matrix and undertook
a formal assessment via the Nomination Committee. This confirmed
that all key skills considered to be most relevant to the business
were currently well represented across the Board. The range of
skills includes, amongst other more general business and corporate
related matters, the following key areas:
uranium industry knowledge;
mining and exploration;
strategic planning;
mergers and acquisitions;
legal;
accounting/auditing and corporate finance;
risk management;
environmental; and
health and safety.
To assist Directors in maintaining 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 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.
Directors are also regularly briefed on any changes to legislation
and practices relevant to the business.
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. All material information in the
possession of the Company relevant to a decision on whether or not
to elect or re-elect a Director is included in the Notice of Meeting.
Retiring Directors are eligible for re-election by shareholders.
Sean Llewelyn will seek re-election at the 2014 AGM, following his
retirement by rotation.
dirEcTOr indEPEndEncE
ASX CGC Recommendations (2nd Edition) 2.1, 2.2, 2,6
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.
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P a l a d i n E n E r g y l T d A n n u A l r e p o r t 2 0 14
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 Mr R Crabb (the
Chairman) has served on the Board for 21 years. Notwithstanding
his period of service, the Board concluded that Mr Crabb retains
independence of character and judgement and continues to make
outstanding contributions at Board level. He brings unique skills to
the Board and participates in robust constructive debate. The Board
considers that Mr Crabb’s international resource law experience
remains valuable at Board level.
mEETings OF ThE BOard
The Board meets formally face to face at least four times a year
(each over a two to three day period). Conferencing facilities provide
greater ease of communications and meetings via this medium are
held at six week intervals between face to face meetings. Additional
ad-hoc 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 number of
meetings of the Board during the reporting period and the names
on the attendance record are set out in the Directors’ Report.
Directors are 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 in gaining 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.
The entire Board is required (as stated in their Letters of Appointment)
to attend the AGM of the Company and all attended the 2013 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. Access to
all Perth-based staff is available in a casual setting at each face to
face meeting.
during the year, the Board developed a skills matrix
and undertook a formal assessment via the nomination
committee. This confirmed that all key skills considered
to be most relevant to the business were currently well
represented across the Board.
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, if required,
external consultants are engaged to assist in the selection
process. 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. In
addition to considerable reference checking, appropriate checks
are also made regarding any criminal record or bankruptcy history.
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 must 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;
information on the nuclear industry and market generally;
a comprehensive letter of appointment which sets out the
Company’s expectations on acceptance of the position;
a written statement, which sets out the duties, rights and
responsibilities they undertake on becoming a Director,
together with material detailing the operations, policies and
practices of the Company; and
access to previous Board papers, together with recent Annual
Reports and interim financial statements.
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
ASX CGC Recommendation (2nd Edition) 8.4
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.
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 2014.
In relation to the Non-executive Directors, there are no termination
or retirement benefits other than those contained in statutory
superannuation plans.
EvalUaTiOn OF BOard PErFOrmancE
ASX CGC Recommendations (2nd Edition) 2.5, 2.6
indEPEndEnT advicE
ASX CGC Recommendation (2nd Edition) 2.6
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.
Evaluations of the performance of the Board, individual Directors,
the Chairman of the Board and the Board Committees have
been carried out. This process involved completion of individual
questionnaires focused on process, structure, effectiveness and
contributions. Responses to the questionnaires were collated
and discussed by the Board and Committees in an open forum
improvement considered. These
and
discussions were also enhanced by using an Efficiency,
Effectiveness and Ethics performance review model to promote
frank and meaningful discussion.
recommendations
for
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.
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.
P a l a d i n E n E r g y l T d A n n u A l r e p o r t 2 0 14
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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 by way of individual
questionnaires and Charter on an annual basis. This review took
place in May 2014 and, as a result, the Board is satisfied that the
Committees have performed effectively with reference to their
Charters.
Board approved charters set out the terms of reference and rules
governing these Committees. These committee charters are
available in the Corporate Governance section of Paladin’s website.
aUdiT cOmmiTTEE
ASX CGC Recommendations (2nd Edition) 4.1, 4.2, 4.3, 4.4
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 minor changes were made to the charter
during the financial year.
The role of the Audit Committee is to:
monitor the integrity of the financial statements of the Company,
reviewing significant financial reporting judgments;
review the Company’s internal financial control system and,
unless expressly addressed by a separate risk committee or
by the Board itself, risk management systems;
monitor and review the effectiveness of the Company’s internal
audit function;
monitor and review the external audit function, including matters
concerning appointment and remuneration, independence
and non-audit services; and
perform such other functions as assigned by law, the
Company's constitution, or the Board.
The Audit Committee comprises three members, all of whom are
independent Non-executive Directors. The current members of the
Audit Committee are:
Donald Shumka – Committee Chairman
Non-executive, Independent Director
Sean Llewelyn
Non-executive, Independent Director
Peter Donkin
Non-executive, Independent Director
The relevant qualifications and experience of the members of the
Committee can be found in their biographical information, which is
included in the Directors’ Report.
The Audit Committee meets at least once a quarter and at any other
time requested by a Board member, Company Secretary or external
auditor. The external auditors attend each quarterly meeting and on
other occasions where circumstances warrant. At the discretion of
the Chairman, having regard to the nature of the agenda, relevant
members of management may be invited to attend meetings. The
number of meetings of the Audit Committee during the reporting
period and the names on the attendance record is set out in the
Directors’ Report.
The external auditors are Ernst & 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.
In May 2013, the Audit Committee approved the extension of the
Lead Audit Partner rotation period from five years to seven years
in accordance with section 324DAB of the Corporations Act 2001
and the Corporations Legislation Amendment (Audit Enhancement)
Act 2012.
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.
The internal audit function is carried out by Deloitte Touche
Tohmatsu. A plan is developed on an annual basis to determine
the scope of work across the Group, which is then reviewed and
endorsed by the Audit Committee. Following execution, the findings
and management responses are reported to the Audit Committee
and remedial actions taken are tracked and reviewed on a quarterly
basis at each committee meeting. The Deloitte representative is
present at those meetings to report and advise accordingly.
nOminaTiOn cOmmiTTEE
ASX CGC Recommendations (2nd Edition) 2.4, 2.6
The responsibilities of the Nomination Committee include:
reviewing the size and composition of the Board, taking into
account director independence, outside directorships and time
commitments, and making recommendations to the Board on
any appropriate changes;
developing a board skills matrix to assist in identifying any
gaps in the collective skills of the Board for professional
development, and succession planning purposes;
making recommendations on the appointment and removal of
Directors;
establishing evaluation methods for rating the performance of
the Board on an annual basis; and,
providing new Directors with an induction into the Company
and providing 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.
rEmUnEraTiOn cOmmiTTEE
ASX CGC Recommendations (2nd Edition) 8.1, 8.2, 8.4
The role of the Committee, in accordance with the Remuneration
Committee Charter, is to assist the Board with respect to remuneration
by reviewing and making appropriate recommendations on:
remuneration packages of executive Directors, Non-executive
Directors and senior executives; and,
employee incentive and equity based plans including the
appropriateness of performance hurdles and total payments
proposed.
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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 policies and practices regarding remuneration and the
remuneration paid to Directors and senior executives are shown in
the Remuneration Report, forming part of the Directors’ Report.
The Remuneration Committee comprises three members, all of
whom are independent Directors. Sean Llewelyn is the Chairman of
the Remuneration Committee.
The current members of the Remuneration Committee are:
Sean Llewelyn – Committee Chairman
Non-executive, Independent Director
Rick Crabb
Non-executive, Independent Director, Board Chairman
Donald Shumka
Non-executive, Independent Director
The number of meetings of the Remuneration Committee during the
reporting period and the names on the attendance record are set
out in the Directors’ Report.
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 Sustainability Committee’s Charter, which sets out further
details on the role and duties of the Committee, is available in the
corporate governance section of Paladin’s website.
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 are set
out in the Directors’ Report.
divErsiTy POlicy
ASX CGC Recommendations (2nd Edition) 3.2, 3.3, 3.4, 3.5
The Board has approved a Diversity Policy, which documents the
Company’s commitment to workplace diversity and recognises the
benefits arising from the recruitment, development and retention of
a talented, diverse and motivated workforce.
Diversity within the Company means all the things that make
individuals different to one another, including, but not limited to,
gender, ethnicity, religion, culture, language, disability and age. It
involves a commitment to equality and treating one another with
respect.
Responsibility for review of all matters contained within the Diversity
Policy rests with the Board as a whole and is reflected accordingly
in its Charter.
The ASX Corporate Governance Council’s Principles and
Recommendations requires the Company to set ‘measurable
objectives’ for achieving gender diversity and to report against
them on an annual basis. During May this year, the Board met and
reviewed the measurable objectives set and reported in 2013. Due
to the continuing record low uranium price and group wide cost
cutting initiatives, which, sadly, have resulted in positions being
made redundant and the placing of KM on care and maintenance,
the Board agreed that it would be unrealistic to set any further
measurable objectives for FY2015, given the focus on preserving
cash and limiting further redundancies. As such, the measurable
objectives for FY2015 remain unchanged from the previous year.
In respect to gender diversity specifically, 17% (an increase of 3%
over 2013) 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
at the African operations. The percentage of Australian based
female employees has remained relatively static at 46%, despite
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 42. There are currently no female directors
at the Paladin Energy Ltd level; however, females are represented at
Board level on 26 of the 31 subsidiary companies.
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49
Across the Group, the workforce is split into five levels – senior
management, management, professional, skilled and unskilled
roles. The percentage of females represented in the top three
levels is shown in the table below:
Senior Management
Management
Professional
mEasUraBlE OBjEcTivEs
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OUTcOmE
Review Diversity Policy annually.
Reviewed and remained
unchanged.
Undertake an annual gender pay
audit to ensure equity in remuneration
practices.
This was undertaken as part
of the annual salary review
process.
Report annual data across the Group
on diversity in the workforce.
Commenced in 2012 and
ongoing.
Encourage training and development
to assist in furthering career goals.
Develop and implement flexible
working arrangements to support
employees’ personal or family
commitments whilst continuing in
employment.
137 females participated in
educational initiatives during
the year.
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.
When the Board next recruits for an
independent non-executive director,
at least one woman must be included
in the list of potential candidates.
Ongoing.
Further information on diversity within the Company can be found in
the Our People section of this annual report.
Financial rEPOrTing
ASX CGC Recommendations (2nd Edition) 7.3, 7.4
cEO and cFO cErTiFicaTiOn
In accordance with the Corporations Act 2001, ASX Corporate
Governance Principle 7.3 and Canadian Securities Law, relevant
declarations, statements and certifications are provided by the
Managing Director/CEO and the Chief Financial Officer in relation to
the Company’s financial statements for a financial period.
50
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Perth
LHM
KM
Aurora
Group wide
23.07%
0%
22.22%
25%
Nationals
0%
0%
Expats
12.50%
0%
0%
33.33%
52.38%
29.09%
14.28%
14.20%
37.50%
19.35%
18.18%
30.55%
rElaTiOnshiP wiTh sharEhOldErs
ASX CGC Recommendations (2nd Edition) 5.1, 5.2, 6.1, 6.2
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
information, a
the effective dissemination of
Continuous Disclosure & Communication Policy is in place. This
reinforces the Company’s commitment to its continuous disclosure
obligations imposed by law.
Information will be communicated to shareholders by:
ensuring that published financial and other statutory reports
are prepared in accordance with applicable laws and industry
best practice;
ensuring the disclosure of full and timely information about
the Company’s activities in accordance with the general and
continuous disclosure principles in the ASX Listing Rules,
the Corporations Act in Australia and all relevant legislation in
Canada;
providing detailed reports from the Chairman, 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;
providing quarterly conference calls
together with investor updates; and,
incorporating Q&A
providing an archived webcast of the AGM on the Company’s
website for those shareholders unable to attend the meeting.
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. There are also contact
details if shareholders wish to contact the Company or its security
registry with any queries.
The risk management system is designed and implemented by the
Managing Director/CEO, with assistance from senior executives, and
is subject to review on a quarterly basis by the Board of Directors.
The latest review took place at the May 2014 board meeting. A
report is provided annually to the Board of Directors detailing the
management process in relation to the Group’s material business
risks.
The Company maintains a risk register, which sets out all of the
enterprise risks that have been identified and includes an assessment
of the risk (risks analysed and evaluated), and treatment plans to
mitigate risks. The risk register has been compiled and is reviewed
quarterly 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.
The Company’s risk management processes will be the subject of
an internal audit programme during FY2015.
The Company also commenced formal sustainability reporting
in FY2012 and now publishes its Sustainability Report on an
annual basis.
EnvirOnmEnT
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.
hEalTh and saFETy
The safety, health and wellbeing of employees, contractors and
the community are of core value to Paladin’s operations. A healthy
workforce contributes to business success and the Company’s aim
is for zero injuries. The Company 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.
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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.
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
ASX CGC Recommendations (2nd Edition) 7.1, 7.2, 7.4
The Company does not have a risk committee or separate
committees to oversee risk. Risk is managed at the Board level with
all Board members involved in the process whilst taking into account
the individual Sustainability, Audit and Compliance Committees’
inputs in relation to those matters overseen by those committees.
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.
P a l a d i n E n E r g y l T d A n n u A l r e p o r t 2 0 14
51
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sEcUriTiEs OwnErshiP and dEalings
ASX CGC Recommendation (2nd Edition) 8.4
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 also extended
to all external directors on subsidiary boards and is completed on
a bi-annual basis with new employees completing the training and
assessment as part of the induction process.
acTing EThically and rEsPOnsiBly
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 has adopted various policies to assist in this commitment,
a summary of which can be found below. These policies are also
available on the Company’s website.
cOdEs OF cOndUcT
ASX CGC Recommendations (2nd Edition) 3.1, 3.5
The Board has approved a Code of Conduct for Directors
(incorporating underlying Guidelines for the Interpretation of
Principles) together with a Code of Business Conduct and Ethics,
which applies to all Directors, officers and employees, including
those employed by subsidiaries, in all countries where Paladin
does business. A copy of the Code is available on the Company’s
website.
The principles outlined in this document are intended to:
establish a minimum global standard of conduct by which all
Paladin employees are expected to abide;
protect the business interests of Paladin, its employees and
customers;
maintain Paladin’s reputation for integrity; and,
facilitate compliance by Paladin employees with applicable
legal and regulatory obligations.
The Code of Business Conduct and Ethics addresses honesty
and integrity, following the law, conflicts of interest, confidentiality,
protection of Company assets, dealing with public officials,
responsibility for international operations, employment practices,
record keeping and community relations.
The Board has appointed the Company Secretary as the Company’s
compliance officer in the case of employees, and the Chairman of
the Audit Committee in the case of Directors and officers, as the
person responsible for receiving reports of breaches of the Code.
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 that it 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 and has
adopted a Community Relations Policy, which is available on the
Company’s website.
hUman righTs POlicy
Paladin is committed to respecting 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 upholding 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
These Codes demonstrate and codify Paladin’s commitment to
appropriate and ethical corporate practices. Compliance with the
Codes will also assist the Company in effectively managing its
operating risks and meeting its legal and compliance obligations, as
well as enhancing Paladin’s corporate reputation.
The Board has also approved a Whistleblower Policy, which
documents commitment
to maintaining an open working
environment in which employees and contractors are able to report
instances of unethical, unlawful or undesirable conduct without fear
of intimidation or reprisal.
52
P a l a d i n E n E r g y l T d A n n u A l r e p o r t 2 0 14
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, six local site-based employees were dismissed
for fraudulent activities involving receipt of gifts from suppliers and
interference in legal processes.
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.
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.
Any changes to the above Codes and Policies are considered by the
Board for approval.
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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, 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 proved effective in presenting the message.
The roll-out of unified anti-bribery and corruption
training across the group began during 2012, with
substantially all employees across the group trained
by the end of Fy2014.
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 both rank 9th (out of 177 countries surveyed); Namibia is in
the second quartile and ranks 57th and Malawi and Niger are in the
third quartile, ranked 91st and 106th respectively.
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 which
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 2012, with substantially all employees
across the Group trained by the end of FY2014. All employees also
received a personal copy of the localised guide to the ABC regime.
Given educational and cultural challenges, local mine site workers
at KM operating below the supervisor level received training
through a number of media – 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 local 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
P a l a d i n E n E r g y l T d A n n u A l r e p o r t 2 0 14
53
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 2014.
dirEcTOrs
tHe Following perSonS were DireCtorS oF pAlADin energY ltD AnD were in oFFiCe For tHiS entire perioD:
mr ric K wayn E cra BB
special responsibilities
B. Juris (Hons), LLB, MBA, FAICD
Member of Remuneration Committee from 1 June 2005
non-executive chairman
Member of Nomination Committee from 1 June 2005
Age 57
Member of Sustainability Committee from 25 November 2010
Mr Crabb holds degrees of Bachelor of Jurisprudence (Honours), Bachelor of
Laws and Master of Business Administration from the University of Western
Australia. He practised as a solicitor from 1980 to 2004 specialising in mining,
corporate and commercial law 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 in a number of successful public companies. He is
also the non-executive chairman of Platypus Minerals Ltd (formerly 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.
Mr Crabb was appointed to the Paladin Board on 8 February 1994 and as
Chairman on 27 March 2003.
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mr jOhn BOrshOFF
special responsibilities
B.Sc., F.AusIMM, FAICD
Member of Nomination Committee from 1 June 2005
managing director/chief Executive Officer
Member of Sustainability Committee from 25 November 2010
Age 69
Mr Borshoff is a geologist who has been involved in the Australian and
African exploration and mining industry for over 30 years. Mr Borshoff worked
for International Nickel and Canadian Superior Mining before joining a German
mining group, Uranerz from 1976 to 1991. He became Chief Geologist/
Exploration Manager during the period 1981-1986 and served as its chief
executive from 1987 to mid-1991, when the German parent of Uranerz made
the decision to close its Australian operations.
The primary focus of the Uranerz Group was the search for and development
of uranium with the company operating extensively throughout Australia, North
America and Africa.
Mr Borshoff has extensive knowledge of the uranium industry and experience
in company management and strategic planning. He serves on the Board of
the Minerals Council of Australia.
Mr Borshoff founded Paladin and was appointed to the Paladin Board on 24
September 1993.
mr sEan rEvEillE l lEwElyn
special responsibilities
LL.B, MAICD
non-executive director
Age 66
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.
Member of Audit Committee from 12 April 2005
Chairman of Remuneration Committee from 26 November 2008 (member
from 1 June 2005)
Chairman of Nomination Committee from 26 November 2008 (member
from 1 June 2005)
Mr 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.
54
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mr dOnald s hUmK a
special responsibilities
B.A., MBA
Chairman of Audit Committee from 9 July 2007
non-executive director
Member of Remuneration Committee from 10 August 2007
Age 72
Member of Nomination Committee from 9 July 2007
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) and Odin Mining and Exploration Ltd (since
July 2014).
Mr Shumka was appointed to the Paladin Board on 9 July 2007.
mr PETEr m arK dO nKin
special responsibilities
BEc, LLB., F Fin, MAICD
Member of Audit Committee from 25 November 2010
non-executive director
Member of Nomination Committee from 1 July 2010
Age 57
Mr Donkin has over 30 years’ experience in finance, including 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.
mr PhiliP Baily
special responsibilities
BSc, MSc
Chairman of Sustainability Committee from 25 November 2010
non-executive director
Member of Nomination Committee from 1 October 2010
Age 70
Mr Baily is a metallurgist with more than 40 years’ experience in the mining
industry, including some 11 years in the uranium sector. Throughout his
career, he has been involved in the design, construction, commissioning and
operation of mineral processing plants, including two uranium plants. Project
locations have varied from the deserts of Australia to the tropics of Papua
New Guinea and the high altitudes of Argentina. He has extensive experience,
at senior management level, in the evaluation of projects from grass roots
development to the acquisition of advanced projects and operating
companies. These projects have been located throughout the world, many
in developing countries and environmentally sensitive areas. Mr Baily holds a
Bachelor of Science and a Master of Science degree in Metallurgy from the
University of NSW.
Mr Baily was appointed to the Paladin Board on 1 October 2010.
cOmPany sEcrETary and ExEcUTivE gEnEral managEr - cOrPOraTE sErvicEs
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ms g illian swaB y
B.Bus, FCIS, FAICD
Age 54
Ms Swaby has been involved in financial and corporate administration for listed
companies, as both Director and Company Secretary, covering a broad range
of industry sectors, for over 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.
Ms Swaby is past Chair of the Western Australian Council of Chartered
Secretaries of Australia, a former Director on their National Board and a lecturer
for the Securities Institute of Australia. Ms Swaby is the principal of a corporate
consulting company and was a member of the Paladin Board for a period of
10 years. She is a director of Australia-Africa Mining Industry Group (AAMIG).
P a l a d i n E n E r g y l T d A n n u A l r e p o r t 2 0 14
55
BOard and cOmmiTTEE mEETings
The number of Directors’ meetings and meetings of committees
held in the period each Director held office during the financial year,
and the number of meetings attended by each Director were:
Board of Directors
Audit Committee
Remuneration
Committee
Nomination
Committee
Sustainability
Committee
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
Number
attended
Number
eligible
to attend
15
16
16
16
16
16
16
16
16
16
16
16
-
-
5
5
5
-
-
-
5
5
5
-
2
-
2
2
-
-
2
-
2
2
-
-
2
2
2
2
2
2
2
2
2
2
2
2
3
3
-
-
-
3
3
3
-
-
-
3
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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.
16 Board meetings were held. By way of reference, an independent
survey by CRA Plan Manager Pty Ltd states the average number
of board and committee meetings is 17 for small companies and
around 23 for larger companies.
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:
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.
rEviEw and rEsUlTs OF OPEraTiOns
A detailed operational and financial review of the Group is set out on
pages 10 to 33 of this report under the section entitled Management
Discussion and Analysis.
loss after
The Group’s
is US$338.4M
(2013: US$420.9M) representing a decrease of 20% from the
previous year.
the year
tax
for
Director
Paladin Shares
Mr John Borshoff
Mr Rick Crabb
Mr Sean Llewelyn
Mr Donald Shumka
Mr Peter Donkin
Mr Philip Baily
16,081,794
5,181,528
100,000
200,000
15,000
12,000
Share rights (issued
under the Paladin
Employee Plan)
250,000*
Nil
Nil
Nil
Nil
Nil
*Due to vest on 5 November 2014 subject to performance conditions
rEsignaTiOn, ElEcTiOn and cOnTinUaTiOn
in OFFicE OF dirEcTOrs
In accordance with
the Company,
Mr Sean Llewelyn will seek re-election at the 2014 Annual General
Meeting, following his retirement by rotation.
the Constitution of
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
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 2014 Financial Report:
56
P a l a d i n E n E r g y l T d A n n u A l r e p o r t 2 0 14
sETTlEmEnT OF salE OF minOriTy inTErEsT in langEr
hEinrich minE, namiBia
On 23 July 2014, the Company announced the settlement of the sale
of a 25% interest in its flagship Langer Heinrich mining operation
in Namibia to CNNC Overseas Uranium Holding Limited, a wholly-
owned subsidiary of CNNC, the leading Chinese nuclear utility, for
consideration of US$190M. The sale was subject to a number of
conditions precedent which were met in full by 30 June 2014 and
accordingly the sale has been accounted for at 30 June 2014.
The offtake component of the agreement allows CNNC to purchase
its pro-rata share of product from Langer Heinrich at the prevailing
market spot price.
sUccEssFUl rEFinancing OF langEr hEinrich FaciliTy
In summary:
• Facility reduced to US$70M;
• US$32M reduction in debt repayments over 2014 to 2017
calendar years;
• Langer Heinrich debt repayments reduced by US$9.2M per
annum to 2018; and,
• Additional positive cash flow implications to the January 2014
refinancing.
On 23 July 2014, the Company announced it had entered into
agreements with its existing lenders to refinance the LHM project
finance facility. The facility was drawn-down in conjunction with the
financial close of the LHM minority sale.
Paladin has refinanced the existing US$110M project finance facility
and US$20M working capital facility into a new US$70M syndicated
loan facility. Proceeds from the LHM minority sale were utilised to
prepay US$30.8M of the existing facility, taking the outstanding
balance to US$70M.
This new facility will provide significant cash flow benefits and
further strengthens Paladin’s financial position. As shown below, the
annual principal repayments will be reduced by US$32.4M over the
first 3.5 years of the facility, from US$18.3M per annum to US$9.1M
per annum, with the first repayment of US$4.6M not due until
December 2014.
The Borrower of the new facility remains PFPL. The new facility is
security light, with Langer Heinrich Mauritius Holdings Limited and
LHUPL providing no guarantees or security over the project assets.
The facility will also have a financial covenant holiday for the first four
six-monthly calculations periods commencing 31 December 2014.
The new facility is provided by Nedbank Capital, a division of
Nedbank Limited, Nedbank Namibia Limited, the Standard Bank
of South Africa Limited and Standard Bank Namibia Limited. Both
banking groups have been involved with Paladin since the first LH
project finance facility was established in 2006.
nEw vs ExisTing amOrTisaTiOn schEdUlE
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10.00
8.00
6.00
4.00
2.00
0
1H14
2H14
1H15
2H15
1H16
2H16
1H17
2H17
1H18
2H18
1H19
2H19
Calendar year
Existing LHM Facility
New LHM Facility
liKEly dEvElOPmEnTs
Likely developments in the operations of the Group constituted by
the Company and the entities it controls from time to time are set out
under the section entitled Management, Discussion and Analysis.
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 (placed on care
and maintenance in February 2014), as well as exploration projects
in Australia, Niger and Labrador, Canada. The Group’s Policy is
to ensure compliance 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 required to conduct
the activities at each site. In addition, many other international
and industry standards are also applied to the Group’s activities,
including
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 global uranium
those specified
for
The Directors are not aware of any environmental matters which
would have a significant adverse effect on the Group.
P a l a d i n E n E r g y l T d A n n u A l r e p o r t 2 0 14
57
rEmUnEraTiOn FOr ThE yEar aT a glancE
Details of the remuneration received by the Key Management
Personnel are prepared in accordance with statutory requirements
and accounting standards, and 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. Given the economic conditions
associated with the continuing poor uranium price, and resulting
cash constraints that the Company faced during the past year,
with the exception of a small number of employees who received
adjustments for parity issues seen within local labour markets,
there were no general salary increases granted across the Group.
A significant number of management personnel agreed to a 10%
reduction in salary and the focus was then on offering a one-time
non-cash compensation option to offset the reduction, tailored to
individual circumstances to assist in retention.
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 (KMP) for 2014 and 2013 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 may
be 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 actually vest and result
in shares issued to a KMP. The intrinsic value is the Company’s
closing share price on the date of vesting.
a 10% reduction in directors’ fees and management
personnel base salaries during the year. at a management
level, this affected 23 individuals and resulted in overall
cash savings of approximately a$1 million.
The Company believes that this additional information is useful
to investors as recognised by the 2009 Productivity Commission
Inquiry Report
in Australia’. The
Commission recommended that remuneration reports should
include actual levels of remuneration received by the individuals
named in the report in order to increase its usefulness to investors.
‘Executive Remuneration
The cash value of earnings realised include cash salary and fees,
superannuation, cash bonuses and other benefits received in cash
during the year and the intrinsic value of long-term incentives vesting
during the 2014 year. The tables do not include the accounting
value for share rights granted in the current and prior years, as this
value may or may not be realised as they are dependent on the
achievement of certain performance hurdles. The accounting value
of other long-term benefits which were not received in cash during
the year have also been excluded.
All cash remuneration is paid in Australian dollars to those parties
listed below (with the exception of Mr D Garrow, who is paid in US$),
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$.
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The Managing Director/CEO signed a new contract on
27 November 2013 voluntarily reducing his salary by a further
10% bringing the total reduction to 32.5% setting the tone for
the cost rationalisation programme being undertaken across
the Group.
A 10% reduction in directors’ fees and management personnel
base salaries during the year. At a management level, this
affected 23 individuals and resulted in overall cash savings of
approximately A$1 million. This reduction in fees and salaries
will remain in place until certain market conditions are met,
at which point they will return to their pre-adjusted rates. To
compensate, individuals (other than directors) were offered a
choice of a one-time issue of shares, share rights, additional
leave or an option of reduced working hours, to the value of the
12 months of their reduction in salary.
Cash bonuses totalling only US$32,000 were paid across
the Group this year in recognition of significant individual
contributions.
the salary
the Company absorbed
Given
superannuation increase of 0.25% legislated in Australia.
freeze,
the
With a focus on rationalisation and consolidation of the
workforce, coupled with the Kayelekera Mine moving to care
and maintenance, there was a significant reduction in overall
headcount across the Group with numerous roles made
redundant over the period. Additionally, where natural attrition
occurred, only those roles deemed to be critical were replaced.
1,621,104 share rights were granted during the year as a
one-time allocation to those employees affected by the 10%
reduction in management personnel salaries.
A total of 1,643,805 share rights vested during the year (0.17
of issued capital).
incentives on
issue at balance sheet date
Long-term
comprise 2,079,094 share rights representing 0.22% of the
issued capital.
58
P a l a d i n E n E r g y l T d A n n u A l r e p o r t 2 0 14
2014 (a$’000) / (Us$’000)
Name
Base Salary &
Superannuation
LTI(8)
Bonus
Other
Total
Cash
LTIP
5 Nov
2010(1)
LTIP
15 Feb
2011(2)
LTIP
2 Apr
2012(3)
Total
A$
US$
A$
US$
A$
US$
A$
US$
A$
US$
A$
US$
A$
US$
A$
US$
Mr John Borshoff
1,433
1,314
Mr Dustin Garrow
606
556
Ms Gillian Swaby
Mr Mark Chalmers
Mr Alan Rule(6)
Mr Craig Barnes(7)
-
482
468
64
-
443
430
57
-
729
547
-
-
-
-
668
502
-
-
-
-
-
-
-
1,433
1,314
1,335
1,224
529(4)
485(4) 1,076
39(5)
36(5)
-
-
-
-
521
468
64
987
479
430
57
-
11
8
-
-
-
-
-
-
-
53
48
-
-
-
-
-
-
11
8
-
-
-
-
5
5
7
-
-
-
5
4
6
-
-
1,433
1,314
1,351 1,240
1,142
1,047
528
468
64
485
430
57
Total
3,053 2,800
1,276
1,170
568
521 4,897 4,491
19
19
53
48
17
15
4,986 4,573
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$1.09006.
(1) Value of share rights granted on 5 November 2010 and vesting on 1 September 2013 at a market price of A$0.58.
(2) Value of share rights granted on 15 February 2011 and vesting on 15 February 2014 at a market price of A$0.485.
(3) Value of share rights granted on 2 April 2012 and vesting on 1 September 2013 at a market price of A$0.58.
(4) Fees for services paid to a company of which Ms Gillian Swaby is a director and shareholder.
(5) Living away from home allowance.
(6) Mr Alan Rule resigned effective 30 June 2014.
(7) Mr Craig Barnes commenced on 5 May 2014. Appointment as Chief Financial Officer effective on 1 July 2014.
(8) Payment of LTI retention bonus granted 1 July 2010. Refer to page 65.
2013 (a$’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
Mr Alan Rule(8)
517
471
530
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
582
586
484
65(2)
58(2)
-
-
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
Exchange rate used is average for year US$1 = A$0.97471.
(1)
(2)
(3)
(4)
(5)
(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
Value of share rights granted on 26 March 2010 and vesting on 26 March 2013 at a market price of A$0.985.
Value of share rights granted on 26 March 2010 and vesting on 1 September 2012 at a market price of A$1.295.
Value of share rights granted on 5 November 2010 and vesting on 1 September 2012 at a market price of A$1.295.
Value of share rights granted on 15 February 2011 and vesting on 15 February 2013 at a market price of A$1.21.
Value of share rights granted on 2 April 2012 and vesting on 1 September 2012 at a market price of A$1.295.
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.
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P a l a d i n E n E r g y l T d A n n u A l r e p o r t 2 0 14
59
reMunerAtion report
(Audited)
This Remuneration Report outlines the Director and executive
remuneration arrangements of the Company and the Group
in accordance with the requirements of the Corporations Act
2001 (Cth) and its Regulations. For the purposes of this report,
Key Management Personnel of the Group are defined as those
persons having authority and responsibility for planning, directing
and controlling the major activities of the Group, directly or indirectly,
including any Director, whether executive or otherwise, of the
parent company.
Key Management Personnel comprise:
Mr Rick Crabb, Non-executive Chairman
Mr John Borshoff, Managing Director/CEO
Mr Sean Llewelyn, Non-executive Director
Mr Donald Shumka, Non-executive Director
Mr Philip Baily, Non-executive Director
Mr Peter Donkin, Non-executive Director
Ms Gillian Swaby, Group Company Secretary and Executive
General Manager – Corporate Services
Mr Alan Rule, Chief Financial Officer (Resigned effective 30
June 2014)
Mr Dustin Garrow, Executive General Manager - Marketing
Mr Mark Chalmers, Executive General Manager – Production
Mr Craig Barnes, Chief Financial Officer (Commenced on 5
May 2014. Appointment as Chief Financial Officer effective on
1 July 2014.)
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.
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rEmUnEraTiOn aPPrOval PrOcEss
The Remuneration Committee is charged with assisting the
Board by reviewing and making appropriate recommendations
on remuneration packages for the Managing Director/CEO, Non-
executive Directors and senior executives. In addition, it makes
recommendations on long-term incentive plans and associated
performance hurdles together with the quantum of grants made,
taking into account both the individual’s and the Company’s
performance.
The Remuneration Committee, chaired by Mr Sean Llewelyn, held
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.
Having regard to the recommendations made by the Managing
Director/CEO, the Committee approves the quantum of any
short-term incentive bonus pool and the total number of any 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.
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 but must also reflect current economic conditions.
KEy ElEmEnTs OF KEy managEmEnT
PErsOnnEl/ExEcUTivE rEmUnEraTiOn
sTraTEgy
The overall focus of Paladin’s remuneration strategy is to:
attract and retain talented, qualified and effective Executives;
motivate short and long-term performance and reward past
performance;
provide competitive and fair reward;
be flexible and responsive in line with market expectations;
align Executive interests with those of the Company’s
shareholders; and,
comply with applicable legal requirements and appropriate
standards of governance.
The above strategies also need to recognise the economic situation
of the Group given the prevailing uranium prices.
60
P a l a d i n E n E r g y l T d A n n u A l r e p o r t 2 0 14
This strategy applies group wide for all employees. Information in
relation to the compensation of 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 but must also reflect current
economic conditions. Consideration of the Company’s earnings will
be more relevant as the Company matures from its development
and consolidation phase to profitability which is of course highly
dependent on prevailing uranium prices.
Whilst the market capitalisation of the Company has dropped
significantly due to continued poor uranium prices, the Remuneration
Committee considers the level of remuneration for Key Management
Personnel/Executives is appropriate given the complexity of
the uranium business and its markets; and the geographic spread
of assets.
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
remaining share rights currently outstanding (totalling 2,079,094;
0.22% of issued capital) will all vest/be tested for vesting by mid
November 2014. At that point, no share rights will remain on issue
under current plans.
The table below compares the earnings per share to the
closing share price for the Company's five most recently completed
financial years.
The remuneration structure for the Key Management Personnel/
Executives has three elements:
fixed remuneration;
short-term variable remuneration; and,
long-term incentives.
These are detailed as follows:
Remuneration
Component
Fixed
Remuneration
Elements
Details
Annual base salary
determined as at 1
January each year
The ‘not at risk’ cash component
which may include certain salary
sacrifice packaging.
Statutory
superannuation
contributions
Expatriate benefits
Foreign
assignment
allowance
Short-term
incentive, paid as a
cash bonus
Variable
Performance
Linked
Remuneration
("at risk"
remuneration)
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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.
30 June
2010
30 June
2011
30 June
2012
30 June
2013
30 June
2014
EPS
US$(0.08) US$(0.11) US$(0.21) US$(0.49) US$(0.34)
Share Price
A$3.59
A$2.52
A$1.25
A$0.88
A$0.29
Long-term
incentive, granted
under the Rights
Plan
P a l a d i n E n E r g y l T d A n n u A l r e p o r t 2 0 14
61
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FixEd rEmUnEraTiOn
This is reviewed annually with consideration given to both the
Company and the individual’s performance and effectiveness.
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 Top 500 Report (CRA Plan Managers Pty Ltd) and
AUSREM. The Company also takes into consideration the annual
publication, Executive and Board Remuneration Report produced
by Ernst & Young.
Despite the challenging economic times, local reviews against
industry salary benchmarks were undertaken and in instances
where there were parity issues, adjustments were made accordingly
as part of the effort to maintain a competitive remuneration structure.
Mr John Borshoff is referred to as both Managing Director/CEO to
clarify the understanding of his position in both North America and
Australia, given Paladin’s stock exchange listings in each jurisdiction.
managing dirEcTOr/cEO
The current contract for the period 27 November 2013 to 31
December 2014, with an option for the parties to agree for a further 1
or 2 years to 31 December 2015 or 2016 respectively was extended
on 26 August 2014 until 31 December 2016 on the same terms
and conditions. Base salary was voluntarily reduced by 25% at 1
December 2011 to A$1,533,600 (US$1,406,895), with a further 10%
reduction to A$1,382,000 (US$1,267,820), effective 27 November
2013. If at any time during the term the month-end U3O8 spot price
as published by UxC equals or exceeds US$45/lb for a period of 3
consecutive months, and Mr Borshoff achieves other key strategic
objectives as agreed between Mr Borshoff and the Board, Mr
Borshoff’s base salary will be reinstated to $1,533,600 (including
superannuation), with effect from the day after the end of the said 3
consecutive months. The payment of a benefit on retirement or early
termination by the Company, other than for gross misconduct, is
equal to one year’s average base salary for the 3 years immediately
preceding the termination date. 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 year’s average base
salary, over the three 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.
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. Given the priority of cost reduction and cash
conservation with the uranium industry continuing to experience
difficult times, cash bonuses totalling only US$32,000 were paid
across the Group this year in recognition of significant individual
contributions (CY2013 US$Nil).
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;
(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 and
preservation of cash.
The expectation is that short-term incentives will not be reinstated
until such time as the operating environment improves and, at
that time, a more structured incentive programme linked both to
individual and corporate performance will be implemented.
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 2013 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 CY2014
when considering payment of a bonus to J Borshoff fall within the
following parameters which the Board considers best capture the
essential elements for increasing shareholder returns:
Factor
Indicative
Weighting
1
2
3
4
Production and financial performance meeting or
exceeding expectations.
Successful outcome of strategic initiatives in
accordance with strategy.
Economic sustainability of business achieved/
substantially progressed.
Sustainability matters achieving expectations.
5 Other factors at the discretion of the Remuneration
Committee.
30%
30%
20%
10%
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 2014 calendar
year, would be paid out in CY2015.
62
P a l a d i n E n E r g y l T d A n n u A l r e p o r t 2 0 14
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 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.
long-term
The Rights Plans are
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 in assisting to attract
and retain talented people.
Share rights are granted under the plan for no consideration. Share
rights are rights to receive fully paid ordinary shares in the capital
of the Company (Shares) in the future if certain individual and/or
corporate performance metrics (Performance Conditions) are met
in the measurement period.
The number of share rights able to be issued under the Plans is
limited to 5% of the issued capital. The 5% limit includes incentive
grants under all plans made in the previous 5 years (with certain
legislation). This
the Australian corporate
exclusions under
percentage now stands at 0.033%.
The company believes that encouraging its employees
to become shareholders is the best way of aligning their
interests with those of its shareholders.
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 2013 and
2014. During the year ended 30 June 2014 no share rights vested
(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 250,000 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.
The performance conditions of all share rights granted to Managing
Director/CEO are
clawBacK
A clawback policy will be put in place prior to any general grant of
long-term incentives across the Group.
Proportion of share rights to
which performance hurdle
applies
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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. Future
performance conditions are likely to more closely address alignment
between remuneration and the strategic objectives of the Company
together with internal financial and operational measures.
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
50%
50%
Performance measure
Total Shareholder Return (TSR) relative to
mining companies in ASX S&P 200 Index*
Earnings Per Share (EPS) Measuring the
increase in earnings over the period
*The initial measurement date of the share rights subject to the
relative TSR condition is at the end of year three, calculated from the
date of grant. At the end of year three, Mr John Borshoff can either:
accept the vesting outcome achieved; or,
elect to have his share rights retested at the end of year four (in
which case the same vesting schedule applies, but the retest
period covers the entire four year period from the date the
share rights were granted).
He is not permitted to “double dip”, so by electing to have his share
rights retested at the end of year four, he forfeits any entitlement to
share rights, which otherwise would have vested at the end of year
three. All share rights subject to the relative TSR condition will expire
at the end of year four.
The Remuneration Committee allows one retest to reflect the
volatile nature of the industry. The way in which the retest is applied
maintains alignment with shareholder interests.
P a l a d i n E n E r g y l T d A n n u A l r e p o r t 2 0 14
63
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 will
be undertaken prior to any future issues to determine more
appropriate hurdles.
Details of the various vesting and performance conditions for the
Employee and Contractor Performance Share Rights Plan 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 growth. 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
64
P a l a d i n E n E r g y l T d A n n u A l r e p o r t 2 0 14
BalancE OF sharE righTs aT 30 jUnE 2014
Date rights granted
Vesting date
Vesting performance conditions
5 November 2010
2 April 2012
2 April 2012
2 April 2012
5 November 2014
1 September 2014
1 September 2014
1 September 2014
TSR
Time based
TSR
Market price (base price A$1.94)
15 November 2013
14 November 2014
Time based
Total
Number
250,000(1)
398,850
279,080
418,620
732,544(2)
2,079,094
(1) Managing Director/CEO grant
(2) Issued pursuant to 10% reduction in management personnel base salaries.
One-Time Issue of Share Rights - A number of management personnel agreed to a 10% reduction in salary and fees. This reduction in fees and salaries will remain in place until
certain market conditions are met, at which point they will return to their pre-adjusted rates. To compensate, individuals (other than directors) were offered a choice of a one-time
issue of shares (to be held in escrow to 14 November 2014), share rights, additional leave or an option of reduced working hours, to the value of the 12 months of their reduction in
salary. Accordingly, this award has no performance conditions.
In summary, this balance represents 0.22% of the issued capital whilst the proportion of time based share rights represents 0.12%.
sharEs acQUirEd UndEr ThE righTs Plan
rETEnTiOn PrOgrammE
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
(0.22%) 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.
As a component of the strategy for retention of key personnel, certain
executives and staff participate in a retention bonus programme.
Participation extends to a limited number of selected individuals
that have been identified as possessing the requisite skills, expertise
and experience in the uranium sector and those with specialist
corporate and commercial skills that the Company requires to
achieve its aggressive goals over coming years. This initiative is
driven by a desire to retain the intellectual property 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). US$7,352,574/A$8,014,077 of
the first grant vested to key personnel employed across the Group
at head office, Namibia and Malawi, and was paid in the financial
year ended 30 June 2014 (30 June 2013: US$Nil).
The remaining balance/second grant of the programme of US$1.8M/
A$2.0M will be paid on 1 January 2015.
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.
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65
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
2014 total A$960,000 (US$880,000). There was a 10% reduction to
directors’ fees during the year. A number of independent surveys
looking at companies from a number of employees, (1,000 – 3,000)
perspective show Non-executive Director’s fees from A$134,000
(62.5th percentile) to A$208,000 (90th percentile). In relation to
Non-executive Chairman, the analysis ranges from A$247,000
(50th percentile) to A$424,000 (90th percentile). The median Audit
Committee Chair fee is A$40,000.
Remuneration
Component
Elements
Base Fee
Must be contained
within aggregate limit
Details
(per annum)
Chairman
A$305,977 (US$280,697)
Non-executive Director
A$150,103 (US$137,702)
Committee Fees* Paid to the Chairman of
A$18,377 (US$16,859)
Superannuation
the Audit Committee
Statutory contributions
are included in the fees
set out above
Statutory % of fees
* This is the only fee paid to any committee member. All other duties are remunerated as
part of the base fee.
There was a 10% reduction to directors’ fees during
the year
The following graph is provided to give a clearer understanding of
the Non-executive Directors’ remuneration.
1200 Maximum Fee Cap A$1.2M
0
0
0
,
$
A
m
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a
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p
1000
800
600
400
200
0
166
166
166
187
338
166
166
166
187
338
156
156
175
187
317
P Baily
P Donkin
S Llewelyn
D Shumka*
Chairman
2012
2013
2014
* Includes A$19K in relation to Audit Committee Chair fees
OThEr FEEs/BEnEFiTs
In addition, the Company’s Constitution provides for additional
compensation to be paid if any of the Directors are called upon
to perform extra services or make any special exertions on behalf
of the Company or the business of the Company. The Company
may compensate such Director in accordance with such services
or exertions, and such compensation may be either in addition
to or in substitution for the Directors’ fees referred to above. No
additional fees were paid during the year, other than the Directors’
fees disclosed.
Non-executive Directors are also entitled to be reimbursed for
reasonable expenses incurred whilst engaged on Company
business. There is no entitlement to compensation on termination
of non-executive directorships. Non-executive Directors do not earn
retirement benefits (other than the statutory superannuation) and
are not entitled to any form of performance linked remuneration.
rOTaTiOn OF dirEcTOrs
Mr Sean Llewelyn will retire by rotation and seek re-election at the
2014 Annual General Meeting.
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P a l a d i n E n E r g y l T d A n n u A l r e p o r t 2 0 14
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cOmPEnsaTiOn OF KEy managEmEnT PErsOnnEl FOr ThE yEar EndEd 30 jUnE 2014 OF ThE grOUP
Short-Term Benefits
Post Employment
Long-Term Benefits
Share-
Based
Payment*
Total
Total
Total
Performance
Related
Total
Performance
Related
Salary
& fees
Cash bonus
Other
Company
Benefits
Other
Super-
annuation
Retirement
Benefits
Long-Term
Incentive
Plan
Long Service
Leave
Share
Rights
US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 A$’000
US$’000
%
Directors
Mr Rick Crabb
Mr John Borshoff
Mr Sean Llewelyn
Mr Donald Shumka
Mr Philip Baily
Mr Peter Donkin
Subtotal
Key Management Personnel
Ms Gillian Swaby
Mr Alan Rule(3)
Mr Dustin Garrow
Mr Mark Chalmers
Mr Craig Barnes(6)
Subtotal
Total
274
1,297
131
160
131
131
2,124
-.
413
556
426
54
1,449
3,573
-.
-.
-.
-.
-.
-.
-.
-.
-.
-.
-.
-.
-.
-.
-.
-.
-.
-.
-.
-.
-.
-.
-.
-.
36.(5)
-.
36
36
-.
-.
-.
-.
-.
-.
-.
485.(2)
-.
-.
-.
485
485
17
17
12
-.
12
12
-.
(118).(1)
-.
-.
-.
-.
70
(118)
-.
17
-.
17
3
37
-.
-.
-.
-.
-.
-.
107
(118)
-.
-.
-.
-.
-.
-.
-
(214)(4)
-
197
-
(17)
(17)
-.
18
-.
-.
-.
-.
-.
291
317
-.
366
1,580
1,723
366
-.
-.
-.
-.
143
160
143
143
156
175
156
156
-.
-.
-.
-.
18
366
2,460
2,683
366
-.
-.
83
-.
-.
195
44
97
90
-.
680
260
736
766
57
741
283
802
835
63
83
426
2,499
2,724
101
792
4,959
5,407
17
-
19
16
-
52
418
-.
23.2
-.
-.
-.
-.
2.4
-
2.6
2.1
-
Notes to the Compensation Table
Presentation Currency
The compensation table has been presented in US$, 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 2013 more than 86% 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$1.09006
(1) This is the amount required to be accrued in 2014 for the payment at a future date (as yet undetermined) of a retirement benefit to Mr Borshoff under the terms of his Services
Contract. The credit has arisen due to the reduction in Mr Borshoff's base salary.
(2) Other represents fees paid for services to a company of which Ms Gillian Swaby is a director and shareholder.
(3) Mr Alan Rule resigned on 30 June 2014.
(4) The credit has arisen due to Mr Alan Rule’s resignation on 30 June 2014.
(5) Living away from home allowance.
(6) Mr Craig Barnes – commenced on 5 May 2014. Appointment as Chief Financial Officer effective on 1 July 2014.
* A reconciliation of this figure in A$ follows to enable a clearer understanding of how this number is calculated.
rEcOnciliaTiOn OF sharE-BasEd PaymEnT cOmPEnsaTiOn OF KEy managEmEnT PErsOnnEl
FOr ThE yEar EndEd 30 jUnE 2014 OF ThE grOUP
Share Rights
granted 26 March 2010
(vesting 2010 to 2014)
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)
Share Rights
granted 15 November 2013(1)
(vesting 2013 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
74
74
68
68
325
325
298
298
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
9
-
12
-
21
74
68
346
8
-
11
-
19
317
123(2)
113(2)
25
-
-
-
-
-
-
123
123
113
113
-
27
71.(3)
123
123
-
-
23
-
25
65.(3)
113
113
-
-
-
-
399
399
55
47
67
28
197
197
51
44
61
25
181
181
212
47
106
99
464
863
366
366
195
44
97
90
426
792
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$1.09006
(1) Share rights granted as a one-off allocation to offset 10% reduction in salaries and fees.
(2) Issued pursuant to retention programme, vesting time based only in order to retain quality personnel.
(3) Includes A$37,000/US$34,000 relating to 50,000 time-based shares negotiated as a sign-on bonus to assist in attracting quality personnel.
P a l a d i n E n E r g y l T d A n n u A l r e p o r t 2 0 14
67
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cOmPEnsaTiOn OF KEy managEmEnT PErsOnnEl FOr ThE yEar EndEd 30 jUnE 2013 OF ThE grOUP
Short-Term Benefits
Post Employment
Long-Term Benefits
Share-
Based
Payment*
Total
Total
Total
Performance
Related
Total
Performance
Related
Salary
& fees
Cash bonus
Other
Company
Benefits
Other
Super-
annuation
Retirement
Benefits
Long-Term
Incentive
Plan
Long Service
Leave
Share
Rights
US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 A$’000
US$’000
%
Directors
Mr Rick Crabb
Mr John Borshoff
Mr Sean Llewelyn
Mr Donald Shumka
Mr Philip Baily
Mr Peter Donkin
Subtotal
Key Management Personnel
Ms Gillian Swaby
Mr Alan Rule(3)
Mr Dustin Garrow
Mr Mark Chalmers
Subtotal
Total
330
1556
157
192
157
157
2,549
-
467
683
513
1,663
4,212
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
56 (4)
-
-
-
-
-
-
-
-
-
17
17
14
-
14
14
76
582(2)
-
-
-
-
17
-
17
34
-
59 (1)
-
-
-
-
59
-
-
-
-
-
204
214
242
139
799
-
-
-
-
-
516
1,302
1,269
-
698
680
153
91
760
1,078
1,050
816
795
3,894
3,794
61
-
75
18
154
988
56
582
56
582
110
59
799
104
1,594
7,516
7,322
-
-
-
-
-
-
-
-
-
347
338
-
104
834
2,570
2,505
834
-
-
-
-
-
-
-
-
171
192
171
171
166
187
166
166
-
-
-
-
104
834
3,622
3,528
894
-
32.5
-
-
-
-
4.7
-
6.9
2.2
Notes to the Compensation Table
Presentation Currency
The compensation table has been presented in US$, 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 86% 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.
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
directors
Mr John Borshoff
Subtotal
Executives
Ms Gillian Swaby
Mr Dustin Garrow
Mr Mark Chalmers
Subtotal
Total
242
242
27
30
-
57
249
249
28
31
-
59
299
308
570
570
59
79
-
138
708
585
585
61
80
-
141
726
-
-
-
-
379 (1)
389.(1)
-
-
379
379
-
-
389
389
-
-
37
41
88.(2)
166
166
-
-
38
42
91.(2)
171
171
812
812
502
150
88
740
834
834
516
153
91
760
1,552
1,594
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$37,000 relating to 50,000 time-based shares negotiated as a sign-on bonus to assist in attracting quality personnel.
68
P a l a d i n E n E r g y l T d A n n u A l r e p o r t 2 0 14
sharE righTs hOldings OF KEy managEmEnT PErsOnnEl (grOUP)
30 June 2014
Directors
Mr John Borshoff
Executives
Ms Gillian Swaby
Mr Dustin Garrow
Mr Mark Chalmers
Mr Alan Rule
Total
01 Jul 13
number
Granted as
remuneration(1)
number
Fair value at
grant date(4)
US$
Vested as
shares
number
Lapsed (3)
number
30 Jun 14
Number -
unvested
650,000
-
-
-
(400,000)
250,000
202,834
114,000
117,500
136,882
164,979
68,123
-
166,416(2)
50,857
61,296
25,310
61,830
(268,466)
(30,000)
41,250
(29,000)
(40,000)
209,979
(11,250)
-
174,373
(116,416)
(50,000)
-
1,084,334
536,400
199,293
(425,132)
(520,000)
675,602
No other Key Management Personnel held share rights during the year ended 30 June 2014.
(1) One-time allocation of share rights to offset 10% reduction in salary/fees.
(2) Includes 50,000 time-based shares negotiated as a sign-on bonus to assist in attracting quality personnel.
(3) Lapsed as performance conditions were not met.
(4) Fair value per right at grant date was US$0.37.
ShareS held in Paladin energy ltd (number)
cOnTracTs FOr sErvicEs
30 June 2014
Directors
Balance
01 Jul 13
On
Vesting
of Rights
Net
Change
Other
Balance
30 June 14
Remuneration and other terms of employment for the Key
Management Personnel are normally formalised in contracts for
services.
Mr Rick Crabb
5,181,528
Mr John Borshoff
16,081,794
Mr Sean Llewelyn
100,000
Mr Donald Shumka
200,000
Mr Peter Donkin
Mr Philip Baily
15,000
12,000
-
-
-
-
-
-
Executives
Ms Gillian Swaby
286,166
268,466(1)
Mr Mark Chalmers
7,500
11,250
-
-
-
-
-
-
-
-
5,181,528
16,081,794
100,000
200,000
15,000
12,000
554,632
18,750
15,000
Mr Dustin Garrow
Mr Alan Rule
Total
-
-
29,000
(14,000)
116,416(1)
-
116,416
21,883,988
425,132
(14,000)
22,295,120
No other Key Management Personnel held shares during the year ended 30 June 2014.
(1) Includes 136,882 share rights issued to offset 10% reduction in salary or fees.
Vested immediately, to be held in escrow to 14 November 2014.
All equity transactions with Key Management Personnel have been
entered into under terms and conditions no more favourable than
those the Group would have adopted if dealing at arm’s length.
OThEr TransacTiOns and BalancEs wiTh KEy
managEmEnT PErsOnnEl
Fees paid in the normal course of business in 2014 for corporate
services totalling US$485,000 (2013: US$582,000) were paid/
payable (balance outstanding at 30 June 2014 and included in
trade creditors US$Nil (2013: US$Nil)) to a company of which
Ms Gillian Swaby is a director and shareholder. All amounts are
excluding GST.
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All contracts with Key Management Personnel may be terminated
early by either party providing between three to six 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 – 27 November 2013 to 31 December 2014,
extended for a further 2 years to 31 December 2016 on the same
terms and in accordance with the original agreement.
Base salary, inclusive of superannuation, A$1,533,600. Further
10% reduction in salary to A$1,382,000. If at any time during the
term the month-end U3O8 spot price as published by UxC equals
or exceeds US$45/lb for a period of three consecutive months, and
Mr Borshoff achieves other key strategic objectives as agreed
between Mr Borshoff and the Board, Mr Borshoff’s base salary will
be reinstated to $1,533,600 (including superannuation), with effect
from the day after the end of the said three consecutive months.
Three months long service leave after five 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 over the three years immediately preceding the
termination date.
Notice period three months.
Ms Gillian Swaby, Group 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. 10% reduction in fees to A$510,300 offset
with a one-time allocation of 136,882 share rights.
Notice period three months.
No termination benefit is specified in the agreement.
P a l a d i n E n E r g y l T d A n n u A l r e p o r t 2 0 14
69
Mr Alan Rule, Chief Financial Officer (Resigned effective 30
June 2014)
Term of agreement – no fixed term.
Mr Craig Barnes, Chief Financial Officer (Commenced on 5
May 2014. Appointment as Chief Financial Officer effective
1 July 2014)
Base salary, inclusive of superannuation of A$500,000. 10%
reduction in salary to A$451,778 offset with a one-time allocation of
116,416 share rights.
No termination benefit is specified in the agreement.
Term of agreement – no fixed term.
Base salary, inclusive of superannuation of A$410,000.
No termination benefit is specified in the agreement.
Notice period six months.
Notice period six 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.
Mr Dustin Garrow, Executive General Manager - Marketing
Term of agreement – no fixed term.
sharE righTs vEsTEd as sharEs -
KEy managEmEnT PErsOnnEl (grOUP)
Base salary, of US$683,385. 10% reduction in salary and 20%
reduction in time to US$492,037 offset with a one-time allocation
of 164,979 share rights.
No termination benefit is specified in the agreement.
Notice period six months.
Mr Mark Chalmers, Executive General Manager –
Production
Term of Agreement – no fixed term.
Base salary, inclusive of superannuation of A$514,500. 10%
reduction in salary to A$464,827 offset with a one-time allocation
of 68,123 share rights.
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30 June 2014
Executives
Ms Gillian Swaby
Mr Dustin Garrow
Mr Mark Chalmers
Mr Alan Rule
Total
Vested as shares
268,466(1)
29,000
11,250
116,416(2)
425,132
(1) Includes 136,882 share rights issued to offset 10% reduction in fees. Vested
immediately, to be held in escrow to 14 November 2014.
(2) Share rights issued to offset 10% reduction in fees. Vested immediately, to be held in
escrow to 14 November 2014.
No termination benefit is specified.
Notice period three months.
Retention bonus – 100%.
End OF aUdiTEd rEmUnEraTiOn rEPOrT
70
P a l a d i n E n E r g y l T d A n n u A l r e p o r t 2 0 14
sharE righTs
The outstanding balance of share rights at the date of this report
are as follows:
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 2014, 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.
Date rights granted Vesting date
Vesting
performance
conditions
5 November 2010
5 November 2014
TSR
2 April 2012
2 April 2012
2 April 2012
1 September 2014 Time based
1 September 2014 TSR
Number
250,000(1)
398,850
279,080
1 September 2014 Market price
418,620
(base price
A$1.94)
Ernst & Young
15 November 2013
14 November 2014 Time based
732,544(2)
Total
2,079,094
(1) Managing Director/CEO grant
(2) Issued pursuant to 10% reduction in management personnel base salaries.
1,643,805 shares were issued on the vesting of share rights during
the year ended 30 June 2014.
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.
indEminiFicaTiOn OF aUdiTOrs
To the extent permitted by law, the Company has agreed to
indemnify its auditors, Ernst & Young, as part of the terms of its
audit engagement agreement against claims by third parties arising
from the audit (for an unspecified amount). No payment has been
made to indemnify Ernst & Young during or since the financial year.
rOUnding
The amounts contained in this report, the Financial Report and
the Management, Discussion and Analysis have been rounded to
the nearest US$100,000 (where rounding is applicable) under the
option available to the Company under ASIC Class Order 98/0100.
The Company is an entity to which the Class Order applies.
aUdiTOr
Ernst & Young were appointed auditors for the Company on 21 June
2005, which was approved by shareholders at the 2005 Annual
General Meeting on 9 November 2005.
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G H Meyerowitz
Partner
28 August 2014
nOn-aUdiT sErvicEs
The following non-audit and assurance services were provided by
the Company’s auditor, Ernst & Young. The Directors are satisfied
that the provision of non-audit and assurance services is compatible
with the general standard of independence for auditors imposed
by the Corporations Act. The nature and scope of each type of
non-audit and assurance service provided means that auditor
independence was not compromised.
Ernst & Young received or are due to receive the following amounts
for the provision of non-audit services:
Other services
Tax compliance services
International tax consulting
Other tax advice
Total
US$’000
52
89
35
14
190
aUdiTOr indEPEndEncE and nOn-aUdiT
sErvicEs
The Directors received the following declaration from the auditor of
Paladin Energy Ltd.
Mr John Borshoff
Managing Director/CEO
Perth, Western Australia
28 August 2014
P a l a d i n E n E r g y l T d A n n u A l r e p o r t 2 0 14
71
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
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
BASIS OF PREPARATION
note 1.
note 2.
note 3.
note 4.
CorporAte inForMAtion
StruCture oF tHe FinAnCiAl report
bASiS oF prepArAtion
going ConCern
SEGMENT INFORMATION
note 5.
SegMent inForMAtion
CAPITAL STRUCTURE
note 6.
note 7.
note 8.
note 9.
CASH AnD CASH eQuivAlentS
intereSt beAring loAnS AnD borrowingS
ContributeD eQuitY AnD reServeS
FinAnCiAl riSK MAnAgeMent
PERFORMANCE FOR THE YEAR
note 10.
revenue
note 11.
otHer inCoMe AnD expenSeS
note 12.
inCoMe AnD otHer tAxeS
note 13.
eArningS per SHAre
note 14.
reConCiliAtion oF eArningS AFter inCoMe tAx to net
CASH Flow FroM operAting ACtvitieS
OPERATING ASSETS AND LIABILITIES
note 15.
trADe AnD otHer reCeivAbleS
note 16.
inventorieS
note 17.
ASSetS ClASSiFieD AS HelD For SAle
note 18.
otHer FinAnCiAl ASSetS
note 19.
propertY, plAnt AnD eQuipMent
note 20.
Mine DevelopMent
note 21.
explorAtion AnD evAluAtion expenDiture
note 22.
intAngible ASSetS
note 23.
trADe AnD otHer pAYAbleS
note 24.
proviSionS
note 25.
uneArneD revenue
OTHER NOTES
note 26.
KeY MAnAgeMent perSonnel
note 27.
AuDitorS’ reMunerAtion
note 28.
CoMMitMentS AnD ContingenCieS
note 29.
relAteD pArtieS
note 30.
SHAre-bASeD pAYMent plAnS
note 31.
group inForMAtion
note 32.
eventS AFter tHe bAlAnCe DAte
note 33.
new ACCounting StAnDArDS AnD interpretAtionS
72
P a l a d i n E n E r g y l T d A n n u A l r e p o r t 2 0 14
73
74
75
76
78
79
79
79
79
79
82
83
83
85
85
85
87
90
95
95
95
97
99
100
100
100
101
102
102
103
104
106
107
108
109
110
111
111
112
112
113
114
116
119
121
COnSOlidaTEd inCOME STaTEMEnT
For the yeAr ended 30 June 2014
Revenue
Revenue
Cost of sales
Impairment – inventories
Gross (loss)/profit
Other income
Exploration and evaluation expenses
notes
2014
US$M
2013
US$M
10
11
16
11
21
329.5
(332.9)
(61.7)
(65.1)
0.4
(1.7)
411.5
(355.6)
(30.9)
25.0
3.0
(1.4)
Administration, marketing and non-production costs
11
(21.9)
(39.5)
Other expenses
Loss before interest and tax
Finance costs
Net loss before income tax
Income tax benefit/(expense)
Net loss after tax
Attributable to:
Non-controlling interests
Members of the parent
Net loss after tax
Loss per share (US cents)
Loss after tax from operations attributable to ordinary equity holders of the Company
– basic and diluted (US cents)
11
(337.6)
(308.9)
(425.9)
(321.8)
11
(59.7)
(63.8)
(485.6)
(385.6)
12
96.0
(88.4)
(389.6)
(474.0)
(51.2)
(338.4)
(389.6)
(53.1)
(420.9)
(474.0)
13
(34.4)
(49.1)
The above Consolidated Income Statement should be read in conjunction with the accompanying notes.
P a l a d i n E n E r g y l T d A n n u A l r e p o r t 2 0 14
73
Financial RepoRt
COnSOlidaTEd STaTEMEnT Of COMPrEhEnSivE inCOME
For the yeAr ended 30 June 2014
Net loss after tax from operations
Other comprehensive income
Items that may be subsequently reclassified to profit or loss:
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
Items that will not be subsequently reclassified to profit or loss:
Foreign currency translation attributable to non-controlling interests
Other comprehensive income/(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
notes
2014
US$M
2013
US$M
(389.6)
(474.0)
(3.4)
(0.3)
4.3
(5.3)
(1.2)
5.0
1.3
(67.8)
-
0.1
(0.2)
(7.9)
1.7
(77.1)
(387.9)
(551.1)
(51.4)
(336.5)
(61.0)
(490.1)
(387.9)
(551.1)
The above Consolidated Statement of Comprehensive Income should be read in conjunction with the accompanying notes.
74
P a l a d i n E n E r g y l T d A n n u A l r e p o r t 2 0 14
Financial RepoRt
COnSOlidaTEd STaTEMEnT Of finanCial POSiTiOn
As At 30 June 2014
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Prepayments
Inventories
Assets classified as held for sale
TOTAL CURRENT ASSETS
Non current assets
Trade and other receivables
Inventories
Other financial assets
Property, plant and equipment
Mine development
Exploration and evaluation expenditure
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
2014
US$M
2013
US$M
6
15
16
17
15
16
18
19
20
21
22
23
7
24
7
12
24
25
88.8
198.7
3.3
78.1
3.8
78.1
78.3
9.2
158.8
-
372.7
324.4
1.0
160.2
6.6
281.8
43.9
687.3
12.2
0.1
141.4
10.3
301.0
42.8
1,004.9
12.8
1,193.0
1,513.3
1,565.7
1,837.7
39.3
39.4
5.5
57.9
63.6
9.9
84.2
131.4
686.2
90.2
72.7
200.0
614.2
186.9
57.0
200.0
1,049.1
1,058.1
1,133.3
1,189.5
432.4
648.2
8
8
31
1,926.9
161.9
(1,633.9)
454.9
(22.5)
1,845.7
106.6
(1,295.5)
656.8
(8.6)
432.4
648.2
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
P a l a d i n E n E r g y l T d A n n u A l r e p o r t 2 0 14
75
Financial RepoRt
COnSOlidaTEd STaTEMEnT Of ChangES in EquiTy
For the yeAr ended 30 June 2014
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 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
Balance at 30 June 2013
Balance at 1 July 2013
Loss for the period
Other comprehensive income/(loss)
Total comprehensive income/(loss) for the year
net of tax
Share-based payment
Vesting performance rights
Contributions of equity, net of transaction
costs
Allotment of interest in Paladin (Africa) to Govt
of Malawi to maintain 15% shareholding
Sale of 25% interest in Langer Heinrich to
CNNC
-
-
-
-
-
6.5
1,845.7
1,845.7
-
-
-
-
3.1
78.1
-
(2.8)
-
(1.4)
(1.4)
-
-
(4.2)
(4.2)
-
0.6
0.6
-
-
-
-
-
52.2
85.5
-
-
-
4.5
(6.5)
-
-
-
-
-
50.2
85.5
50.2
85.5
-
-
-
0.5
(3.1)
-
-
-
-
-
-
-
-
-
-
-
US$M
28.1
-
(67.8)
(67.8)
-
-
(39.7)
(39.7)
-
1.3
1.3
-
-
-
-
-
Balance at 30 June 2014
1,926.9
(3.6)
47.6
85.5
(38.4)
14.9
0.1
55.8
(1,633.9)
454.9
(22.5)
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
premium on
ACquisition
reserve
US$M
option
reserve
US$M
reserve
US$M
AppliCAtion
ConsolidAtion
ACCumulAted
AttributAble
to owners oF
the pArent
non-
Controlling
interests
US$M
US$M
losses
US$M
14.9
0.1
(0.2)
(874.6)
1,142.4
52.4
1,194.8
14.9
14.9
0.1
0.1
(0.2)
(0.2)
(1,295.5)
656.8
(1,295.5)
656.8
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(420.9)
(69.2)
(490.1)
4.5
-
(338.4)
1.9
0.5
-
78.1
(53.1)
(7.9)
(61.0)
(8.6)
(8.6)
(51.2)
(0.2)
(51.4)
-
-
-
-
-
(338.4)
(336.5)
(420.9)
(420.9)
(338.4)
-
-
-
-
-
-
-
-
-
(6.7)
62.7
(6.7)
6.7
62.7
30.8
-
-
-
-
-
-
-
-
-
-
-
-
-
totAl
US$M
(474.0)
(77.1)
(551.1)
4.5
-
648.2
648.2
(389.6)
1.7
(387.9)
0.5
78.1
-
-
93.5
432.4
76
P a l a d i n E n E r g y l T d A n n u A l r e p o r t 2 0 14
Financial RepoRt
COnSOlidaTEd STaTEMEnT Of ChangES in EquiTy
For the yeAr ended 30 June 2014
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 2012
1,839.2
(2.8)
52.2
85.5
14.9
0.1
-
-
-
-
-
-
-
-
-
-
14.9
14.9
0.1
0.1
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Total comprehensive loss for the year net of
Loss for the period
Other comprehensive loss
tax
Share-based payment
Vesting performance rights
Balance at 30 June 2013
Balance at 1 July 2013
Loss for the period
Other comprehensive income/(loss)
Total comprehensive income/(loss) for the year
net of tax
Share-based payment
Vesting performance rights
Contributions of equity, net of transaction
costs
CNNC
Allotment of interest in Paladin (Africa) to Govt
of Malawi to maintain 15% shareholding
Sale of 25% interest in Langer Heinrich to
-
-
-
-
-
-
-
-
-
-
6.5
1,845.7
1,845.7
3.1
78.1
(1.4)
(1.4)
(4.2)
(4.2)
0.6
0.6
-
-
-
-
-
-
-
-
-
4.5
(6.5)
0.5
(3.1)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
50.2
85.5
50.2
85.5
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
US$M
28.1
(67.8)
(67.8)
(39.7)
(39.7)
-
1.3
1.3
-
-
-
-
-
-
-
-
ConsolidAtion
reserve
ACCumulAted
losses
AttributAble
to owners oF
the pArent
non-
Controlling
interests
US$M
US$M
US$M
(874.6)
1,142.4
52.4
1,194.8
US$M
(0.2)
-
-
-
-
-
(0.2)
(0.2)
-
-
-
-
-
-
(6.7)
62.7
(420.9)
-
(420.9)
-
-
(420.9)
(69.2)
(490.1)
4.5
-
(1,295.5)
656.8
(1,295.5)
656.8
(338.4)
1.9
(336.5)
0.5
-
78.1
(338.4)
-
(338.4)
-
-
-
-
-
(53.1)
(7.9)
(61.0)
-
-
(8.6)
(8.6)
(51.2)
(0.2)
(51.4)
-
-
-
(6.7)
6.7
62.7
30.8
totAl
US$M
(474.0)
(77.1)
(551.1)
4.5
-
648.2
648.2
(389.6)
1.7
(387.9)
0.5
-
78.1
-
93.5
432.4
Balance at 30 June 2014
1,926.9
(3.6)
47.6
85.5
(38.4)
14.9
0.1
55.8
(1,633.9)
454.9
(22.5)
P a l a d i n E n E r g y l T d A n n u A l r e p o r t 2 0 14
77
Financial RepoRt
COnSOlidaTEd STaTEMEnT Of CaSh flOwS
For the yeAr ended 30 June 2014
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
2014
US$M
2013
US$M
370.3
(326.3)
0.7
-
(33.0)
(1.7)
0.1
400.0
(364.8)
1.0
200.0
(42.4)
(1.4)
2.1
NET CASH INFLOW FROM OPERATING ACTIVITIES
14
10.1
194.5
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 available-for-sale investments
NET CASH OUTFLOW FROM INVESTING ACTIVITIES
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of convertible bonds
Convertible bond finance costs
Share placement
Equity fundraising costs
Project finance facility establishment costs
Repayment of borrowings
Proceeds from borrowings
Proceeds from Sale of Non-Controlling Interest
NET CASH INFLOW/(OUTFLOW) FROM FINANCING ACTIVITIES
NET INCREASE/(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
(5.8)
(20.3)
-
0.4
0.4
(25.3)
-
-
80.7
(2.5)
(3.1)
(178.8)
110.0
20.0
(16.5)
(30.6)
(1.4)
0.4
1.9
(46.2)
(134.0)
(0.4)
-
-
(0.2)
(46.9)
-
-
26.3
(181.5)
11.1
(33.2)
78.1
(0.4)
112.1
(0.8)
CASH AND CASH EQUIVALENTS AT THE END OF THE FINANCIAL YEAR
6
88.8
78.1
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
78
P a l a d i n E n E r g y l T d A n n u A l r e p o r t 2 0 14
Financial RepoRt
bAsis oF prepArAtion
nOTE 1.
COrPOraTE infOrMaTiOn
The Financial Report of Paladin for the year ended 30 June 2014 was authorised for issue in accordance with a resolution of the
Directors on 28 August 2014.
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 (unaudited)
on pages 10 to 33.
nOTE 2.
STruCTurE Of ThE finanCial rEPOrT
The Notes to the Consolidated Financial Statements have been divided into six sections, which are summarised as follows:
Basis of Preparation
This section sets out the group’s accounting policies that relate to the financial statements as a whole. Where an accounting policy is
specific to one note, the policy is described in the note to which it relates.
Segment Information
This section compares performance across operating segments.
Capital Structure
This section outlines how the group manages its capital and related financing costs.
Performance for the Year
This section focuses on the results and performance of the group. This covers both profitability and the resultant return to shareholders
via earnings per share combined with cash generation.
Operating Assets and Liabilities
This section shows the assets used to generate the group’s trading performance and the liabilities incurred as a result. Liabilities
relating to the group’s financing activities are addressed in the Capital Structure section.
Other Notes
This section deals with the remaining notes that do not fall into any of the other categories.
nOTE 3.
BaSiS Of PrEParaTiOn
Introduction 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 2014 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.
Changes in Accounting Policies
Apart from the 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 2013.
P a l a d i n E n E r g y l T d A n n u A l r e p o r t 2 0 14
79
Notes to the CoNsolidated FiNaNCial statemeNtsFor the year ended 30 June 2014FiNaNCial RepoRt
nOTE 3.
BaSiS Of PrEParaTiOn (COnTinuEd)
New Accounting Standards and Interpretations
The Group has adopted all new and amended Australian Accounting Standards and AASB Interpretations effective from 1 July 2013.
The nature and impact of each new standard and amendment is described below:
reFerenCe
title
impACt
The Group has reviewed its investments in other
entities to assess whether the consolidation
conclusion in relation to these entities is different
under AASB 10 than under AASB 127. No differences
were found and therefore no adjustments to any of
the carrying amounts in the financial statements were
required as a result of the adoption of AASB 10.
The Group’s accounting policy has been updated to
reflect the requirements of AASB 10.
No adjustments to any of the carrying amounts in the
financial statements were required as a result of the
adoption of AASB 11.
Paladin needs to disclose additional information
relating to subsidiaries with material non-controlling
interests, including summarised financial information.
Refer to Note 31 – Group Information.
Additional disclosure requirements for Paladin’s
assets and liabilities carried at fair value or where a
fair value measurement is disclosed.
AASB 10
Consolidated Financial Statements
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.
AASB 11
Joint Arrangements
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.
AASB 12
Disclosure of Interests in Other Entities
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
Fair Value Measurement
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.
AASB 119
Employee Benefits
There was no material impact on the Annual Report.
(Revised 2011)
The revised standard changes the definition of short-term
employee benefits. The distinction between short-term
and other long-term employee benefits is now based on
whether the benefits are expected to be settled wholly
within 12 months after the reporting date.
80
P a l a d i n E n E r g y l T d A n n u A l r e p o r t 2 0 14
Notes to the CoNsolidated FiNaNCial statemeNtsFor the year ended 30 June 2014FiNaNCial RepoRt
nOTE 3.
BaSiS Of PrEParaTiOn (COnTinuEd)
New accounting Standards and Interpretations (continued)
reFerenCe
title
impACt
Interpretation
20
Stripping Costs in the Production Phase of a Surface
Mine
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.
The Group has assessed that the useful lives of the
individual identifiable components of the relative ore
bodies are short and that the strip ratio over the life of
component is relatively uniform.
Accordingly, the Group accounts for production
stripping costs as a production cost.
The adoption of Interpretation 20 has had no impact
on the financial position or performance of the Group.
AASB 2011-4
Amendments to Australian Accounting Standards
to Remove Individual Key Management Personnel
Disclosure Requirements [AASB 124]
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.
This reduces the disclosures relating to Key
Management Personnel holding options, share rights
and shares that are required in the Key Management
Personnel Note in the financial statements.
These disclosures are included in the Directors
Remuneration Report.
Basis of Consolidation
The consolidated financial statements comprise the financial statements of Paladin Energy Ltd and its subsidiaries as at 30 June 2014
(the Group).
Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the
ability to affect those returns through its power over the investee. Specifically, the Group controls an investee if and only if the Group
has:
Power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee);
Exposure, or rights, to variable returns from its involvement with the investee; and
The ability to use its power over the investee to affect its returns.
When the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and
circumstances in assessing whether it has power over an investee, including:
The contractual arrangement with the other vote holders of the investee
Rights arising from other contractual arrangements
The Group’s voting rights and potential voting rights
The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or
more of the three elements of control. Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and
ceases when the Group loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of
during the year are included in the statement of comprehensive income from the date the Group gains control until the date the Group
ceases to control the subsidiary.
Profit or loss and each component of other comprehensive income (OCI) are attributed to the equity holders of the parent of the
Group and to the non-controlling interests, even if this results in the noncontrolling interests having a deficit balance. When necessary,
adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the Group’s accounting
policies. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the
Group are eliminated in full on consolidation.
P a l a d i n E n E r g y l T d A n n u A l r e p o r t 2 0 14
81
Notes to the CoNsolidated FiNaNCial statemeNtsFor the year ended 30 June 2014FiNaNCial RepoRt
nOTE 3.
BaSiS Of PrEParaTiOn (COnTinuEd)
Basis of Consolidation (continued)
A change in the ownership interest of a subsidiary, without a loss
of control, is accounted for as an equity transaction. If the Group
loses control over a subsidiary, it:
De-recognises the assets (including goodwill) and liabilities of
the subsidiary
De-recognises the carrying amount of any non-controlling
interests
De-recognises 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
Reclassifies the parent’s share of components previously
recognised in OCI to profit or loss or retained earnings, as
appropriate, as would be required if the Group had directly
disposed of the related assets or liabilities
Business combinations are accounted for using the acquisition
method.
Foreign Currency Translation
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.
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.
Group Companies
Some Group entities have a functional currency of US dollars
which is consistent with the Company’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 Functional Currency
Translation Reserve (FCTR) attributable to the parent is recycled
to the Income Statement.
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
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
Significant Accounting Judgements, Estimates and
Assumptions
The preparation of the Group’s consolidated financial statements
requires management to make judgements, estimates and
assumptions that affect the reported amounts of revenues,
expenses, assets and liabilities, and the accompanying
disclosures, and the disclosure of contingent liabilities.
Uncertainty about these assumptions and estimates could result
in outcomes that require a material adjustment to the carrying
amount of assets or liabilities affected in future periods.
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 dealt with elsewhere in the notes.
nOTE 4.
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 2014, the Group incurred net
losses after tax attributable to the members of US$338.4M
(2013: US$420.9M) and had net cash inflow of US$11.1M
(2013: outflow US$33.2M). At 30 June 2014, the Group had
a net working capital surplus of US$288.5M (30 June 2013:
US$193.0M) including cash on hand of US$88.8M (30 June
2013: US$78.1M). Included within this cash on hand is US$13.2M
(30 June 2013: US$26.9M) which is restricted for use in respect
of the LHM project finance facility and supplier guarantees
provided by LHM.
Repayment obligations, during the next twelve months to 30
June 2015, in respect of interest bearing loans and borrowings
are summarised as follows:
secured bank loan principal repayments of US$39.9M for
syndicated loan facility; and
interest payments of US$31.3M for syndicated loan facility
and convertible bonds.
Settlement of sale of minority interest in Langer Heinrich
Mine, Namibia
On 23 July 2014, the Company announced the settlement to
sell a 25% equity stake in the Langer Heinrich uranium mining
operation in Namibia to CNNC Overseas Uranium Holding
Limited, a wholly-owned subsidiary of CNNC, the leading
Chinese nuclear utility, for consideration of US$190M had been
completed.
Refinancing of Langer Heinrich project finance facility
On 23 July 2014, the Company announced the refinancing of the
LHM project finance facility, which will reduce debt repayments
by US$32M over 2014 to 2017 calendar years.
In addition, in arriving at its position in relation to going concern,
the Directors have given consideration to the following:
placing KM on care and maintenance will improve Paladin’s
forecast cash flow position by US$20-25M in CY2015; and
the Group has a history of successful capital raisings and
debt restructuring.
82
P a l a d i n E n E r g y l T d A n n u A l r e p o r t 2 0 14
Notes to the CoNsolidated FiNaNCial statemeNtsFor the year ended 30 June 2014FiNaNCial RepoRt segment inFormAtion
nOTE 5.
SEgMEnT infOrMaTiOn
Identification of Reportable Segments
The Company has identified its operating segments to be Exploration, Namibia and Malawi, on the basis of the nature of the activity
and geographical location and different regulatory environments. The main segment activity in Namibia and Malawi is the production
and sale of uranium from the mines located in these geographic regions. The Exploration segment is focused on developing
exploration and evaluation projects in Australia, Niger and Canada. Unallocated portion covers the Company’s sales and marketing,
treasury, corporate and administration.
Discrete financial information about each of these operating segments is reported to the Group’s executive management team (chief
operating decision makers) on at least a monthly basis.
The accounting policies used by the Group in reporting segments internally are the same as those contained in the accounts and in
the prior period.
Inter-entity sales are priced with reference to the spot rate.
Corporate charges comprise non-segmental expenses such as corporate office expenses. A proportion of the corporate charges are
allocated to Namibia and Malawi on the basis of timesheet allocations with the balance remaining in Unallocated.
The Group’s customers are major utilities and other entities located mainly in USA, Australia, China, Taiwan and UK. These revenues
are attributed to the geographic location of the mines being the reporting segments Namibia and Malawi.
The following tables present revenue, expenditure and asset information regarding operating segments for the years ended 30 June
2014 and 30 June 2013.
explorAtion
US$M
nAmibiA
US$M
mAlAwi
unAlloCAted ConsolidAted
US$M
US$M
US$M
Year ended 30 June 2014
Sales to external customers
Other revenue
Total consolidated revenue
Cost of goods sold
Impairment of inventory
Gross (Loss)/Profit
Other expenses
Impairment of asset
Segment (loss)/profit before income
tax and finance costs
Finance costs
Loss before income tax
Income tax benefit/(expense)
Loss after income tax
At 30 June 2014
-
-
-
-
-
-
(1.2)
(323.6)
(324.8)
-
(324.8)
97.4
207.0
-
207.0
(191.5)
(21.0)
(5.5)
(21.9)
-
(27.4)
(8.8)
(36.2)
10.7
121.8
-
121.8
(141.4)
(40.7)
(60.3)
(8.4)
-
(68.7)
(5.4)
(74.1)
-
-
0.7
0.7
-
-
0.7
2.4
(8.1)
(5.0)
(45.5)
(50.5)
(12.1)
328.8
0.7
329.5
(332.9)
(61.7)
(65.1)
(29.1)
(331.7)
(425.9)
(59.7)
(485.6)
96.0
(227.4)
(25.5)
(74.1)
(62.6)
(389.6)
Segment assets/total assets
691.3
615.9
47.0
211.5(1)
1,565.7
AustrAliA
US$M
CAnAdA
US$M
nAmibiA
US$M
other ConsolidAted
US$M
US$M
Non current assets (excluding financial
instruments) by country
429.3
264.3
492.8
-
1,186.4
In 2014, the three most significant customers equated on a proportionate basis to 20% (US$66.8M Namibia, Malawi), 18% (US$57.7M
Namibia, Malawi) and 10% (US$33.4M Namibia, Malawi) of the Group’s total sales revenue.
(1) Includes US$170.0M LHM purchase consideration receivable (refer to Note 15) and US$6.6M available-for-sale financials assets (refer
to Note 18).
P a l a d i n E n E r g y l T d A n n u A l r e p o r t 2 0 14
83
Notes to the CoNsolidated FiNaNCial statemeNtsFor the year ended 30 June 2014FiNaNCial RepoRt
nOTE 5.
SEgMEnT infOrMaTiOn (COnTinuEd)
explorAtion
US$M
nAmibiA
US$M
mAlAwi
unAlloCAted ConsolidAted
US$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
-
-
-
-
-
-
-
-
-
(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)
-
49.3
(7.1)
42.2
(1.4)
40.8
(30.9)
(26.8)
(12.2)
(237.9)
(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)
Segment assets/total assets
1,009.3
639.1
140.2
49.1
1,837.7
AustrAliA
US$M
CAnAdA
US$M
nAmibiA
US$M
other ConsolidAted
US$M
US$M
Non current assets (excluding
financial instruments) 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$71.5M Namibia) of the Group’s total sales revenue.
84
P a l a d i n E n E r g y l T d A n n u A l r e p o r t 2 0 14
Notes to the CoNsolidated FiNaNCial statemeNtsFor the year ended 30 June 2014FiNaNCial RepoRt CApitAl struCture
The group’s objectives when managing capital are to safeguard its ability to continue as a going concern, so that it can continue to
provide returns to shareholders and benefits for other stakeholders and to maintain an efficient capital structure to reduce the cost of
capital.
In order to maintain or adjust the capital structure, the group may issue new shares or sell assets to reduce debt.
The group monitors capital on the basis of the level of return on capital and also the level of net cash/debt and compliance with bank
covenants, including the gearing ratio calculated as a net debt / (net debt + equity). The group manages funds on a group basis with
all funds being drawn by the parent entity.
nOTE 6.
CaSh and CaSh EquivalEnTS
Cash at bank and on hand
Short-term bank deposits
Total cash and cash equivalents
2014
US$M
10.3
78.5
88.8
2013
US$M
9.8
68.3
78.1
Total cash and cash equivalents includes US$13.2M (2013: US$26.9M) restricted for use in respect of the project finance facilities (refer
to Note 7) and supplier guarantees provided by LHM.
Recognition and measurement
Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid
investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are
subject to an insignificant risk of changes in value, and bank overdrafts. Cash at bank earns interest at floating rates based on daily
bank deposit rates. Short-term deposits are made for varying periods depending on the immediate cash requirements of the Group,
and earn interest at the respective short-term deposit rates.
nOTE 7.
inTErEST BEaring lOanS and BOrrOwingS
Current
Secured bank loans
Total current interest bearing loans and borrowings
Non Current
Unsecured convertible bonds(1)
Unsecured convertible bonds(2)
Secured bank loan
Secured bank loan
Secured bank loan
CNNC loan
mAturity
2014
US$M
2013
US$M
39.4
39.4
285.8
245.0
-
-
59.4
96.0
63.6
63.6
276.0
236.6
37.0
64.6
-
-
2015
2017
amortised to 2015
amortised to 2017
amortised to 2019
2016 to 2021
Total non current interest bearing loans and borrowings
686.2
614.2
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 9.
Unsecured convertible bonds
(1)
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.
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.
(2)
P a l a d i n E n E r g y l T d A n n u A l r e p o r t 2 0 14
85
Notes to the CoNsolidated FiNaNCial statemeNtsFor the year ended 30 June 2014FiNaNCial RepoRt
nOTE 7.
inTErEST BEaring lOanS and BOrrOwingS (COnTinuEd)
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)
Secured bank loans
On 17 January 2014, the Group entered into a project financing facility of US$110.0M for the refinancing of the previous LHM and
KM project financing facilities. The facility consists of a six-year US$110.0M project financing facility and a US$20.0M working capital
facility. The facility was provided by Nedbank Capital (a division of Nedbank Limited), Nedbank Namibia Limited, the Standard Bank of
South Africa Limited and Standard Bank Namibia Limited. The initial refinancing facility was fully drawn down during the March 2014
quarter. The facility bears interest at the LIBOR plus 4.75%. The project finance facility of US$110.0M is repayable on a semi-annual
basis over the term of the loan. The facilities are secured with fixed and floating charges over the assets of Langer Heinrich Uranium
(Pty) Ltd and its immediate holding companies.
At 30 June 2014, US$100.8M (30 June 2013: US$169.6M) was outstanding under the project finance facilities.
Borrowing costs capitalised during the year as part of debt funding totalled US$3.1M (2013: US$0.1M).
CNNC loan
As part of the 25% sale of Langer Heinrich Mauritius, US$96M of an intercompany loan has been reassigned to CNNC under the same
interest rate (LIBOR plus a margin between 2% and 4.25%) and conditions as those presently existing. Repayment dates range from
2016 to 2021. This portion of the loan is now external to the Group.
Recognition and measurement
Bank loan borrowings are initially recognised at fair value, net of transaction costs incurred. Bank loan borrowings are subsequently
measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised
in the Income Statement over the period of the borrowings using the effective interest method.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least
12 months after the balance sheet date.
The component of convertible bonds that exhibits characteristics of debt is recognised as a liability in the Statement of Financial
Position, net of transaction costs. On issue of convertible bonds, the fair value of the liability component is determined using a market
rate for an equivalent non-convertible bond and this amount is carried as a liability on the amortised cost basis until extinguished
on conversion or redemption. The increase in the liability due to the passage of time is recognised as a finance cost. The remainder
of the proceeds is allocated to the equity component and is recognised in shareholders’ equity. The carrying amount of the equity
component is not remeasured in subsequent years.
Financing facilities available
At reporting date, the following financing facilities had been negotiated and were available:
2014
US$M
574.0
130.0
2013
US$M
574.0
169.6
704.0
743.6
574.0
110.0
574.0
169.6
684.0
743.6
-
20.0
-
-
Total facilities:
Unsecured convertible bonds
Secured bank loans
Facilities used at reporting date:
Unsecured convertible bonds
Secured bank loans
Facilities unused at reporting date:
Unsecured convertible bonds
Secured bank loans
86
P a l a d i n E n E r g y l T d A n n u A l r e p o r t 2 0 14
Notes to the CoNsolidated FiNaNCial statemeNtsFor the year ended 30 June 2014FiNaNCial RepoRt
nOTE 7.
inTErEST BEaring lOanS and BOrrOwingS (COnTinuEd)
Financing facilities available (continued)
The carrying amounts of assets pledged as security for current and non current interest bearing liabilities (secured bank loans) are:
Current
Floating charge
Cash and cash equivalents
Trade and other receivables
Inventories
Total current assets pledged as security
Non Current
Inventories
Property, plant and equipment
Mine development
Intangible assets
Total non current assets pledged as security
Total assets pledged as security
nOTE 8.
COnTriBuTEd EquiTy and rESErvES
Issued and Paid Up Capital
Ordinary shares
Issued and fully paid
2014
US$M
2013
US$M
28.0
19.7
68.7
116.4
160.2
279.6
43.9
12.2
53.3
76.1
158.8
288.2
141.4
289.6
42.8
12.8
495.9
486.6
612.3
774.8
number oF shAres
2013
2014
2014
US$M
2013
US$M
964,367,284
837,187,808
1,926.9
1,845.7
Fully paid ordinary shares carry one vote per share and carry the right to dividends.
Recognition and measurement
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares are shown in equity as a
deduction, net of tax, from the proceeds.
P a l a d i n E n E r g y l T d A n n u A l r e p o r t 2 0 14
87
Notes to the CoNsolidated FiNaNCial statemeNtsFor the year ended 30 June 2014FiNaNCial RepoRt
nOTE 8.
COnTriBuTEd EquiTy and rESErvES (COnTinuEd)
Movements in Ordinary Shares on Issue
dAte
number oF shAres
issue priCe
Balance 30 June 2012
September 2012
February 2012
March 2013
Rights vested
Rights vested
Rights vested
Transfer from share-based
payments reserves
835,645,290
1,180,361
143,635
218,522
A$
-
-
-
exChAnge
rAte
US$: A$
-
-
-
Balance 30 June 2013
(1) Includes 43,134 shares held by Paladin Employee Plan Pty Ltd.
837,187,808(1)
August 2013
September 2013
November 2013
December 2013
January 2014
February 2014
Share placement
Rights vested
Rights vested
Rights vested
Rights vested
Rights vested
125,578,171
566,095
786,493
85,437
37,630
125,650
0.70
-
-
-
-
-
1.08998
-
-
-
-
-
Transfer from share-based
payments reserve
Transaction costs
Balance 30 June 2014
(2) Includes 1,084 shares held by Paladin Employee Plan Pty Ltd.
964,367,284(2)
totAl
US$M
1,839.2
-
-
-
6.5
1,845.7
80.6
-
-
-
-
-
3.1
(2.5)
1,926.9
88
P a l a d i n E n E r g y l T d A n n u A l r e p o r t 2 0 14
Notes to the CoNsolidated FiNaNCial statemeNtsFor the year ended 30 June 2014FiNaNCial RepoRt
nOTE 8.
COnTriBuTEd EquiTy and rESErvES (COnTinuEd)
Reserves
Consol-
idAtion
reserve
listed
option
Appli-
CAtion
reserve
shAre-
bAsed
pAyments
reserve
AvAilAble
-For-sAle
reserve
Foreign
CurrenCy
trAns-
lAtion
reserve
Convertible
bond non-
distrib-
utAble
reserve
premium on
ACquisition
reserve
totAl
US$M
US$M
US$M
US$M
US$M
US$M
US$M
US$M
(0.2)
0.1
52.2
(2.8)
28.1
85.5
14.9
177.8
-
-
-
-
-
-
-
-
-
-
-
-
-
(2.0)
-
-
-
-
(5.3)
-
-
0.1
5.0
(1.2)
-
-
(67.8)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(5.3)
(2.0)
(67.8)
0.1
5.0
(1.2)
(0.2)
0.1
50.2
(4.2)
(39.7)
85.5
14.9
106.6
-
-
-
-
-
(6.7)
62.7
55.8
-
-
-
-
-
-
-
-
(2.6)
-
-
-
-
-
(3.4)
-
-
4.3
(0.3)
-
-
-
-
1.3
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(3.4)
(2.6)
1.3
4.3
(0.3)
(6.7)
62.7
0.1
47.6
(3.6)
(38.4)
85.5
14.9
161.9
At 1 July 2012
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
At 30 June 2013
Net unrealised movement
on available-for-sale
investments
Share-based payments
Foreign currency translation
Transfer of impairment loss
to Income Statement
Transfer realised gains to
other income
Allotment of interest in
Paladin (Africa) to Govt of
Malawi to maintain 15%
shareholding
Sale of 25% interest in
Langer Heinrich to CNNC
At 30 June 2014
P a l a d i n E n E r g y l T d A n n u A l r e p o r t 2 0 14
89
Notes to the CoNsolidated FiNaNCial statemeNtsFor the year ended 30 June 2014FiNaNCial RepoRt
nOTE 8.
COnTriBuTEd EquiTy and rESErvES (COnTinuEd)
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 in the net assets of PAL. It also recognises the excess of the proceeds received over the 25% interest in net
assets of Langer Heinrich Mauritius Holdings limited and Langer Heinrich Uranium (Pty) Ltd disposed of to China Uranium Corporation
Limited, a subsidiary of China National Nuclear Corporation, on 28 June 2014 under the Share Sale Agreement dated 18 January 2014.
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 30 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 18.
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.
Convertible bond non-distributable reserve
This reserve records the equity portion of the convertible bonds issued as described in Note 7.
Acquisition reserve
This reserve represents the premium paid on the acquisition of a non-controlling interest in Summit.
nOTE 9.
finanCial riSK ManagEMEnT
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.
Market Risk
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 Namibian dollar are as follows:
Financial assets
Cash and cash equivalents
Trade and other receivables
Financial liabilities
Trade and other payables
Net exposure
2014
US$M
6.5
9.3
15.8
(23.7)
(7.9)
2013
US$M
1.0
15.1
16.1
(23.0)
(6.9)
Based on the Group’s net exposure at the Balance Sheet date, a reasonably possible change in the exchange rate would not have a
material impact on profit or equity.
90
P a l a d i n E n E r g y l T d A n n u A l r e p o r t 2 0 14
Notes to the CoNsolidated FiNaNCial statemeNtsFor the year ended 30 June 2014FiNaNCial RepoRt
nOTE 9.
finanCial riSK ManagEMEnT (COnTinuEd)
Market Risk (continued)
Interest Rate Risk
Interest rate risk is the risk that the Group’s financial position will be adversely affected by movements in interest rates that will increase
the cost of floating rate debt or opportunity losses that may arise on fixed rate borrowings in a falling interest rate environment.
Interest rate risk on cash and short-term deposits is not considered to be a material risk due to the short-term nature of these financial
instruments.
The Group’s main interest rate risk arises from long-term debt. Floating rate debt exposes the Group to cash flow interest rate risk
and fixed rate debt exposes the Group to fair value interest rate risk. All other financial assets and liabilities in the form of receivables,
investments in shares, payables and provisions, are non-interest bearing.
The Group currently does not engage in any hedging or derivative transactions to manage interest rate risk.
The floating rate financial instruments exposed to interest rates movements are as follows:
2014
US$M
2013
US$M
Financial assets
Cash and cash equivalents – short-term deposits
78.5
68.3
Financial liabilities
Interest-bearing liabilities
Net exposure
(196.8)
(169.6)
(118.3)
(101.3)
Based on the Group’s net exposure at the Balance Sheet date, a reasonably possible change in LIBOR would not have a material
impact on profit or equity.
Liquidity Risk
The liquidity position of the Group is managed to ensure sufficient liquid funds are available to meet the Group’s financial commitments
in a timely and cost effective manner.
The Group treasury function continually reviews the Group’s liquidity position including cash flow forecasts to determine the
forecast liquidity position and maintain appropriate liquidity levels. Sensitivity analysis is conducted on a range of pricing and market
assumptions to ensure the Group has the ability to meet repayment commitments. This enables the Group to manage cash flows
on a long-term basis and provides the flexibility to pursue a range of funding alternatives if necessary. Note 7 details the repayment
obligations in respect of the amount of the facilities.
The maturity analysis of payables at the reporting date was as follows:
2014
Trade and other payables
Loans and borrowings
Interest payable
Total payables
2013
Trade and other payables
Loans and borrowings
Interest payable
Total payables
pAyAbles mAturity AnAlysis
totAl
US$M
<1 yeAr
US$M
1-2 yeArs
US$M
2-3 yeArs
US$M
>3 yeArs
US$M
39.3
770.8
100.7
910.8
57.9
743.6
103.7
905.2
39.3
39.9
34.2
113.4
57.9
65.7
31.7
155.3
-
312.9
28.3
341.2
-
62.0
30.7
92.7
-
283.1
22.4
305.5
-
323.8
23.8
347.6
-
134.9
15.8
150.7
-
292.1
17.5
309.6
P a l a d i n E n E r g y l T d A n n u A l r e p o r t 2 0 14
91
Notes to the CoNsolidated FiNaNCial statemeNtsFor the year ended 30 June 2014FiNaNCial RepoRt
nOTE 9.
finanCial riSK ManagEMEnT (COnTinuEd)
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 a total of US$288.5M (2013 US$156.4M), comprising cash and
receivables.
Current
Cash and cash equivalents*
Trade receivables
Other receivables – other entities
Non Current
Other receivables – other entities
Total
2014
US$M
88.8
18.9
179.8
2013
US$M
78.1
60.3
17.9
287.5
156.3
1.0
0.1
288.5
156.4
* The Group’s maximum deposit with a single financial institution represents 53% (2013: 57%) of cash and cash equivalents.
reCeivAbles Ageing AnAlysis
<1 yeAr
US$M
Current
US$M
totAl
US$M
2014
Trade receivables
Other receivables
Total receivables
2013
Trade receivables
Other receivables
Total receivables
No receivables are past due or impaired.
18.9
180.8
199.7
60.3
18.0
78.3
18.9
179.8
198.7
60.3
17.9
78.2
-
1.0
1.0
-
0.1
0.1
92
P a l a d i n E n E r g y l T d A n n u A l r e p o r t 2 0 14
Notes to the CoNsolidated FiNaNCial statemeNtsFor the year ended 30 June 2014FiNaNCial RepoRt
nOTE 9.
finanCial riSK ManagEMEnT (COnTinuEd)
Fair Values
Set out below is a comparison by class of the carrying amounts and fair value of the Group’s financial instruments, other than those
with carrying amounts that are reasonable approximations of fair values as at 30 June 2014:
Financial liabilities
Interest bearing loans and borrowings:
- Secured bank loan
Total current
Interest bearing loans and borrowings
- Secured bank loan
- Unsecured convertible bonds
Total non-current
2014
2013
Carrying
aMOunT
US$M
fair valuE
US$M
CArrying
Amount
US$M
FAir vAlue
US$M
39.4
39.4
59.4
530.8(1)
590.2
39.9
39.9
60.9
491.7
552.6
63.6
63.6
101.6
512.6(1)
614.2
65.7
65.7
103.9
499.7
603.6
Total
(1) This figure includes transaction costs which offset the balance in accordance with the requirements of Accounting Standards.
629.6
592.5
677.8
669.3
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:
quoted
mArket
priCe
(level 1)
yeAr ended 30 June 2014
vAluAtion
teChnique-
mArket
observAble
inputs
(level 2)
vAluAtion
teChnique-
non mArket
observAble
inputs
(level 3)
totAl
quoted
mArket
priCe
(level 1)
yeAr ended 30 June 2013
vAluAtion
teChnique-
mArket
observAble
inputs
(level 2)
vAluAtion
teChnique-
non mArket
observAble
inputs
(level 3)
totAl
US$M
US$M
US$M
US$M
US$M
US$M
US$M
US$M
Financial assets
measured at fair
value
Available-for-sale
investments
Listed investments
Financial liabilities
for which fair values
are disclosed
Interest bearing loans
and borrowings
Floating rate
borrowings(1)
Convertible bonds(2)
6.6
6.6
-
-
-
-
-
100.8
491.7
592.5
-
-
-
-
-
6.6
6.6
10.3
10.3
-
-
100.8
491.7
592.5
-
-
-
169.6
499.7
669.3
-
-
-
-
-
10.3
10.3
169.6
499.7
669.3
(1) The fair value has been determined by discounting the future cash flows using rates currently available for debt on similar terms,
credit risk and remaining maturities.
(2) The fair value has been determined using a valuation technique based on the quoted market price of the bonds less the equity
component attributable to the conversion feature, which was valued using an option pricing model.
P a l a d i n E n E r g y l T d A n n u A l r e p o r t 2 0 14
93
Notes to the CoNsolidated FiNaNCial statemeNtsFor the year ended 30 June 2014FiNaNCial RepoRt
nOTE 9.
finanCial riSK ManagEMEnT (COnTinuEd)
Fair Values (continued)
Quoted market price represents the fair value determined based on quoted prices on active markets as at the reporting date without
any deduction for transaction costs. The fair value of the listed equity investments are based on quoted market prices.
For financial instruments not quoted in active markets, the Group uses valuation techniques such as present value techniques,
comparison to similar instruments for which market observable prices exist and other relevant models used by market participants.
These valuation techniques use both observable and unobservable market inputs.
For financial instruments that are recognised at fair value on a recurring basis, the Group determines whether transfers have occurred
between Levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value
measurement as a whole) at the end of each reporting period.
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
2014
US$M
725.6
(88.8)
2013
US$M
677.8
(78.1)
636.8
599.7
432.4
648.2
1,069.2
1,247.9
60%
48%
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 2014 to 2024.
Contracted selling prices are determined by a range of mechanisms including base-escalated pricing and formulas which reference
common industry published prices. Contracts may be subject to escalating floor and ceiling prices.
94
P a l a d i n E n E r g y l T d A n n u A l r e p o r t 2 0 14
Notes to the CoNsolidated FiNaNCial statemeNtsFor the year ended 30 June 2014FiNaNCial RepoRt
perFormAnCe For the yeAr
nOTE 10.
rEvEnuE
Sale of uranium
Interest income from non-related parties
Other revenue
Total
2014
US$M
328.8
0.7
-
329.5
2013
US$M
408.4
0.9
2.2
411.5
Recognition and measurement
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:
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
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.
nOTE 11. OThEr inCOME and EXPEnSES
Cost of Sales
Production costs before depreciation and amortisation
Depreciation and amortisation
Impairment loss reversed on sale of inventory
Product distribution costs
Royalties
Total
Other Income
Foreign exchange gain (net)
Gain on disposal of available-for-sale investments
Total
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
2014
US$M
(300.9)
(49.4)
41.9
(16.5)
(8.0)
(332.9)
-
0.4
0.4
(14.5)
(0.1)
(4.6)
(0.2)
(0.5)
(1.6)
(0.4)
-
(21.9)
2013
US$M
(305.8)
(56.7)
32.2
(12.9)
(12.4)
(355.6)
1.4
1.6
3.0
(21.9)
(0.3)
(8.5)
(0.4)
(3.9)
(1.9)
(1.1)
(1.5)
(39.5)
P a l a d i n E n E r g y l T d A n n u A l r e p o r t 2 0 14
95
Notes to the CoNsolidated FiNaNCial statemeNtsFor the year ended 30 June 2014FiNaNCial RepoRt
nOTE 11. OThEr inCOME and EXPEnSES (COnTinuEd)
Other Expenses
Impairment of exploration assets(1)
Impairment of aircraft
Impairment for available for sale financial assets
KM fixed costs during plant shutdown
Impairment of asset (2)
KM slope remediation
Foreign Exchange Loss (net)
2014
US$M
(323.6)
(3.8)
(4.3)
(4.6)
-
(0.1)
(1.2)
2013
US$M
(62.1)
-
(5.0)
(3.7)
(237.9)
(0.2)
-
Total
(337.6)
(308.9)
(1) At 31 December 2013, due to the continuing depressed uranium price, an impairment charge of US$323.6M (US$226.5M after tax)
was recognised to reduce the carrying value of the Queensland exploration assets. The estimated recoverable amount of the project
of US$404.3M (US$344.9M net of deferred tax liability) was determined on the basis of fair value less costs to dispose, using a
valuation range provided by recent comparable market transactions and other market indicators.
(2) 2013 - The continued deterioration of the uranium price has resulted in a reduction of the carrying value to the recoverable amount
of US$Nil of the KM assets from US$237.9M resulting in an impairment charge in 2013 of US$237.9M (2014: US$Nil).
Finance Costs
Interest expense
Accretion relating to convertible bonds (non-cash)
Mine closure provision discount interest expense
Facility costs
Total
Total depreciation and amortisation expense
Employee Benefits Expense
Wages and salaries
Defined contribution superannuation
Share-based payments
Other employee benefits
Total employee benefits expense
Recognition and measurement
2014
US$M
2013
US$M
(34.1)
(18.1)
(1.9)
(5.6)
(59.7)
51.0
(56.5)
(2.9)
(0.7)
(3.1)
(63.2)
(40.7)
(17.7)
(2.1)
(3.3)
(63.8)
58.6
(68.1)
(3.4)
(5.0)
(4.6)
(81.1)
Superannuation
The Company contributes to employees’ superannuation plans in accordance with the requirements of Occupational Superannuation
Legislation. Contributions by the Company represent a defined percentage of each employee’s salary. Employee contributions are
voluntary.
Employee Performance Share Rights Plan
Details of the Employee Performance Share Rights Plan for the Company are disclosed in Note 30.
Depreciation – refer to Note 19.
Employee benefits – refer to Note 24.
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.
96
P a l a d i n E n E r g y l T d A n n u A l r e p o r t 2 0 14
Notes to the CoNsolidated FiNaNCial statemeNtsFor the year ended 30 June 2014FiNaNCial RepoRt
nOTE 12. inCOME and OThEr TaXES
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
Amounts Charged or Credited Directly to Equity
Deferred income tax related to items charged or credited directly to equity:
Foreign currency translation reserve movement
Other and prior period
Income tax benefit reported in equity
Numerical Reconciliation of Income Tax Benefit to Prima Facie Tax Payable
Loss before income tax expense
Tax at the Australian tax rate of 30% (2013 – 30%)
Difference in overseas tax rates
Non - deductible items
Under/over prior year adjustment
Losses not recognised
Other foreign exchange differences
Other
2014
US$M
2013
US$M
-
1.3
96.0
-
-
-
(7.2)
(82.3)
0.2
(0.4)
96.0
(88.4)
0.4
0.3
0.7
17.7
2.3
20.0
485.6
385.6
145.7
115.7
(3.4)
25.0
-
(73.6)
41.7
(39.4)
(6.6)
(0.9)
5.8
(105.4)
(119.0)
22.0
Income tax (expense)/benefit reported in the Income Statement
96.0
(88.4)
Tax Losses
Australian unused tax losses for which no deferred tax asset has been recognised
(309.6)
(278.8)
Other unused tax losses for which no deferred tax asset has been recognised
(381.1)
(253.0)
Total unused tax losses for which no deferred tax asset has been recognised
(690.7)
(531.8)
Potential tax benefit at the Australian tax rate of 30%
(207.2)
(159.6)
P a l a d i n E n E r g y l T d A n n u A l r e p o r t 2 0 14
97
Notes to the CoNsolidated FiNaNCial statemeNtsFor the year ended 30 June 2014FiNaNCial RepoRt
nOTE 12.
inCOME and OThEr TaXES (COnTinuEd)
Deferred Income Tax
Deferred tax liabilities
Accelerated prepayment deduction for tax purposes
Accelerated depreciation for tax purposes
Exploration expenditure
Recognition of acquired exploration expenditure
Convertible bond
Other
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
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
2014
US$M
2013
US$M
0.8
109.2
16.5
59.4
9.7
1.3
0.6
116.6
22.2
157.5
15.1
1.3
196.9
(106.7)
313.3
(126.4)
90.2
186.9
(42.5)
(9.0)
-
(48.2)
(1.2)
(5.8)
(67.8)
(11.6)
(11.5)
(32.3)
(3.0)
(0.2)
(106.7)
106.7
(126.4)
126.4
-
-
Paladin and all its wholly-owned Australian resident entities are part of a tax-consolidated group under Australian tax law.
The net deferred tax assets recognised are in respect of revenue losses expected to be offset against future taxable income.
This benefit for tax losses will only be obtained if:
(1) 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;
(2) the Consolidated Entities continue to comply with the conditions for deductibility imposed by tax legislation; and
(3) no changes in tax legislation adversely affect the Consolidated Entities in realising the benefit from the deductions for the losses.
Recognition and measurement
Current income tax assets and liabilities for the current period are measured at the amount expected to be recovered from or paid to
the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantially enacted,
at the reporting date in the countries where the Group operates and generates taxable income.
Current income tax relating to items recognised directly in equity is recognised in equity and not in the statement of profit or loss.
Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are
subject to integration and establishes provisions where appropriate.
Deferred tax assets and liabilities are recognised using the full liability method 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.
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.
98
P a l a d i n E n E r g y l T d A n n u A l r e p o r t 2 0 14
Notes to the CoNsolidated FiNaNCial statemeNtsFor the year ended 30 June 2014FiNaNCial RepoRt
nOTE 12.
inCOME and OThEr TaXES (COnTinuEd)
Significant Accounting Estimates and Assumptions
Deferred Tax Assets and Liabilities
The Group is subject to income taxes in Australia and jurisdictions where it has foreign operations. Significant judgement is required in
determining deferred tax assets and liabilities. There are many transactions and calculations for which the ultimate tax determination is
uncertain during the ordinary course of business.
The carrying amount of deferred income tax assets is reviewed at each reporting date and reduced to the extent that it is no longer
probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised.
Unrecognised deferred income tax assets are reassessed at each reporting date and are recognised to the extent that it has become
probable that future taxable profit will allow the deferred tax asset to be recovered.
nOTE 13.
EarningS PEr SharE
The following reflects the income and share data used in the basic and diluted earnings per share computations:
Net loss attributable to ordinary equity holders of the Parent
from continuing operations
2014
US$M
2013
US$M
(338.4)
(420.9)
2014
nuMBEr
Of SharES
2013
number
oF shAres
Weighted average number of ordinary sharesfor basic and diluted earnings
per share
982,535,396
858,113,521
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
180,688,256
181,968,119
The earnings per share calculations have been adjusted to reflect the bonus element of the private share placement completed on 2
August 2013. The adjustment factor applied was 1.04 to the current period prior to 2 August 2013 and the comparative period.
Recognition and measurement
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.
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 2014 and 2013 as the Group is in a loss position.
P a l a d i n E n E r g y l T d A n n u A l r e p o r t 2 0 14
99
Notes to the CoNsolidated FiNaNCial statemeNtsFor the year ended 30 June 2014FiNaNCial RepoRt
nOTE 14.
rECOnCiliaTiOn Of EarningS afTEr inCOME TaX TO nET CaSh flOw frOM OPEraTing aCTviTiES
Reconciliation of Net Loss After Tax to Net Cash Flows Used
in Operating Activities
Net loss
Adjustments for
Depreciation and amortisation
Gain on disposal or property, plant and equipment
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
Exploration impairment
Changes in assets and liabilities
Decrease in prepayments
Decrease/(increase) in trade and other receivables
(Decrease)/increase in trade and other payables
Increase/(decrease) in provisions
Increase in unearned revenues
Decrease/(increase) in inventories
Increase/(decrease) in deferred tax liabilities
Decrease in deferred tax assets
2014
US$M
2013
US$M
(389.6)
(474.0)
44.8
(0.1)
(0.4)
1.2
0.4
26.6
61.7
3.8
4.3
323.6
5.9
48.7
(19.7)
(5.8)
-
0.3
(95.6)
-
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
Net cash flows provided by operating activities
10.1
194.5
operAting Assets And liAbilities
nOTE 15.
TradE and OThEr rECEivaBlES
Current
Trade receivables
GST and VAT
LHM purchase consideration – receivable
Sundry debtors
Total current receivables
notes
2014
US$M
2013
US$M
(a)
(b)
(c)
18.9
7.5
170.0
2.3
198.7
60.4
13.5
-
4.4
78.3
(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.
(c) On 23 July 2014, the Company received US$170M from CNNC, being the balance of the consideration receivable on the sale of its
25% interest in the Langer Heinrich Mine.
100
P a l a d i n E n E r g y l T d A n n u A l r e p o r t 2 0 14
Notes to the CoNsolidated FiNaNCial statemeNtsFor the year ended 30 June 2014FiNaNCial RepoRt
nOTE 15.
TradE and OThEr rECEivaBlES (COnTinuEd)
Non Current
Sundry debtors
Total non current receivables
2014
US$M
2013
US$M
1.0
1.0
0.1
0.1
Recognition and measurement
Loans and Receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market.
They arise when the Group provides money, goods or services directly to a debtor with no intention of selling the receivable. They are
included in current assets, except for those with maturities greater than 12 months after the balance sheet date which are classified as
non current assets.
Collectability of trade receivables is reviewed on an ongoing basis. Debts that are known to be uncollectible are written off when
identified. An allowance for doubtful debts is raised when there is objective evidence that the group will not be able to collect the
debt. Financial difficulties of the debtor, default payments or debts more than 60 days overdue are considered objective evidence of
impairment.
nOTE 16.
invEnTOriES
Current
Stores and consumables (at cost)
Stockpiles (at cost)
Work in progress (at cost)
Work in progress (at net realisable value)
Finished goods (at cost)
Finished goods (at net realisable value)
2014
US$M
2013
US$M
10.3
7.1
-
5.1
-
55.6
33.5
2.0
2.3
11.4
57.5
52.1
Total current inventories at the lower of cost and net realisable value
78.1
158.8
Non Current
Stockpiles (at cost)
Total non current inventories at the lower of cost and net realisable value
160.2
141.4
160.2
141.4
Stockpiles at LHM that are unlikely to be processed within 12 months of the balance date.
Inventory Expense
Inventories sold recognised as an expense for the year ended 30 June 2014 totalled US$332.9M (2013: US$355.6M) for the Group.
Impairment of Inventories
During 2014, finished goods held at LHM and KM were reduced to net realisable value resulting in an impairment loss of US$35.7M
(2013: US$12.0M) for the year, recognised in cost of sales.
During 2014, stockpiles held at KM were reduced to net realisable value resulting in an impairment loss of US$8.2M (2013: US$18.9M)
for the year, recognised in cost of sales.
During 2014, stores and consumables held at KM were reduced by US$17.8M (2013: US$Nil) due to obsolescence. This resulted in an
obsolescence expense recognised in cost of sales.
Recognition and measurement
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.
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.
P a l a d i n E n E r g y l T d A n n u A l r e p o r t 2 0 14 101
Notes to the CoNsolidated FiNaNCial statemeNtsFor the year ended 30 June 2014FiNaNCial RepoRt
nOTE 16.
invEnTOriES (COnTinuEd)
Significant Estimates and Assumptions
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.
nOTE 17.
aSSETS ClaSSifiEd aS hEld fOr SalE
Plant and equipment
Total assets classified as held for sale
2014
US$M
3.8
3.8
2013
US$M
-
-
As a result of KM being placed on care and maintenance, the Company has made a decision to sell its aircraft and on 3 July 2014 a
brokering agreement was signed for the sale of the aircraft. It is highly probable that the sale will be completed within the next twelve
months. An impairment expense of US$3.8M has been recorded in the ‘Unallocated’ portion of the segment information.
nOTE 18. OThEr finanCial aSSETS
Non Current
Available-for-sale financial assets
Total non current other financial assets
2014
US$M
2013
US$M
6.6
6.6
10.3
10.3
The Group has an investment in DYL and at 30 June 2014 held 304,400,275 (2013: 304,400,275) fully paid ordinary shares. The
holding of these fully paid ordinary shares represents an 18.9% interest at 30 June 2014 (2013: 19.5%) of the ordinary shares of DYL,
a uranium explorer listed on ASX. The market value of the shares in DYL at 30 June 2014 is A$5.8M (US$5.5M) (2013: A$10.0M /
US$9.2M) based on a share price of 1.9 Australian cents per share (2013: 3.3 Australian cents).
The Group also holds minor investments in other companies.
Recognition and measurement
Available-for-sale financial assets, comprising principally marketable equity securities, are non-derivatives that are either designated in
this category or not classified in any of the other categories. They are included in non current assets unless management intends to
dispose of the investment within 12 months of the balance sheet date.
Purchases and sales of investments are recognised on trade-date which is the date on which the Group commits to purchase or sell
the asset. Investments are initially recognised at fair value plus transaction costs. Financial assets are de-recognised when the rights to
receive cash flows from the financial assets have expired or have been transferred and the Group has transferred substantially all the
risks and rewards of ownership.
Available-for-sale financial assets are subsequently carried at fair value. Unrealised gains and losses which arise from changes in the
fair value of non monetary securities classified as available-for-sale are recognised in other comprehensive income. When securities
classified as available-for-sale are sold or impaired, the accumulated fair value adjustments are included in the Income Statement as
gains and losses from investment securities.
Fair value of Financial Instruments
The fair values of quoted investments are based on current bid prices.
Impairment of Financial Instruments
The Group assesses at each balance sheet 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.
102
P a l a d i n E n E r g y l T d A n n u A l r e p o r t 2 0 14
Notes to the CoNsolidated FiNaNCial statemeNtsFor the year ended 30 June 2014FiNaNCial RepoRt
nOTE 19. 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
2014
US$M
706.6
(436.1)
2013
US$M
704.8
(414.5)
270.5
290.3
11.2
(2.5)
8.7
5.8
(3.2)
2.6
11.4
(2.2)
9.2
4.3
(2.8)
1.5
Net carrying value property, plant and equipment
281.8
301.0
Property, Plant and Equipment Pledged as Security for Liabilities
Refer to Note 7 for information on property, plant and equipment pledged as security.
Reconciliations
Reconciliations of the carrying amounts of each class of property, plant and equipment at the beginning and end of the year are set
out below:
totAl
US$M
plAnt And
equipment
lAnd And
buildings
ConstruCtion
work in
progress
US$M
US$M
US$M
2014
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
Reclassification to assets held for sale
301.0
16.7
(24.8)
(4.2)
-
(0.8)
(2.4)
0.1
(3.8)
290.3
4.9
(24.0)
(3.8)
9.0
-
(2.1)
-
(3.8)
Net carrying value at end of year
281.8
270.5
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)
-
Net carrying value at end of year
301.0
290.3
9.2
-
(0.4)
(0.4)
0.5
-
(0.3)
0.1
-
8.7
9.6
-
(0.4)
-
0.8
-
(0.4)
(0.4)
9.2
1.5
11.8
(0.4)
-
(9.5)
(0.8)
-
-
-
2.6
4.6
9.5
-
(2.1)
(9.6)
(0.9)
-
-
1.5
P a l a d i n E n E r g y l T d A n n u A l r e p o r t 2 0 14 103
Notes to the CoNsolidated FiNaNCial statemeNtsFor the year ended 30 June 2014FiNaNCial RepoRt
nOTE 19.
PrOPErTy, PlanT and EquiPMEnT (COnTinuEd)
Recognition and measurement
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
period of lease
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.
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).
Significant Estimates and Assumptions
Impairment of Property, Plant and Equipment; Mine Development and Intangibles
Property, plant and equipment; mine development and intangibles are tested for impairment whenever events or changes in
circumstances indicate that the carrying value may not be recoverable.
The Group conducts an 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).
nOTE 20. 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 property, plant and equipment
Impairment
Disposals
2014
US$M
206.5
(162.6)
2013
US$M
185.1
(142.3)
43.9
42.8
42.8
19.9
(19.9)
0.5
0.8
-
(0.2)
88.3
13.9
(14.9)
2.3
0.8
(47.6)
-
Net carrying value at end of year
43.9
42.8
(1) Refer to Note 11 for details of impairment.
104
P a l a d i n E n E r g y l T d A n n u A l r e p o r t 2 0 14
Notes to the CoNsolidated FiNaNCial statemeNtsFor the year ended 30 June 2014FiNaNCial RepoRt
nOTE 20. MinE dEvElOPMEnT (COnTinuEd)
Recognition and measurement
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 and depreciated on a units of production basis. Post-production costs are recognised as a cost of
production.
Stripping (waste removal) costs
As part of its mining operations, the Group incurs stripping (waste removal) costs both during the development phase and production
phase of its operations. Stripping costs incurred in the development phase of a mine, before the production phase commences
(development stripping), are capitalised as part of the cost of constructing the mine and subsequently amortised over its useful
life using a units-of-production method. The capitalisation of development stripping costs ceases when the mine/component is
commissioned and ready for use as intended by management.
Stripping activities undertaken during the production phase of a surface mine (production stripping) are accounted for as set out below.
After the commencement of production, further development of the mine may require a phase of stripping that is similar in nature to
development phase stripping. The costs of such stripping are accounted for in the same way as development stripping (as outlined
above).
Stripping costs incurred during the production phase are generally considered to create two benefits, being either the production of
inventory or improved access to the ore to be mined in the future. Where the benefits are realised in the form of inventory produced in
the period, the production stripping costs are accounted for as part of the cost of producing those inventories. Where the benefits are
realised in the form of improved access to ore to be mined in the future, the costs are recognised as a non-current asset, referred to
as a stripping activity asset, if the following criteria are met:
a) Future economic benefits (being improved access to the ore body) are probable;
b) The component of the ore body for which access will be improved can be accurately identified; and
c) The costs associated with the improved access can be reliably measured.
If all of the criteria are not met, the production stripping costs are charged to the statement of profit or loss as operating costs as they
are incurred.
In identifying components of the ore body, the Group works closely with the mining operations personnel for each mining operation
to analyse each of the mine plans. Generally, a component will be a subset of the total ore body, and a mine may have several
components. The mine plans, and therefore the identification of components, can vary between mines for a number of reasons. These
include, but are not limited to: the geological characteristics of the ore body, the geographical location, and/or financial considerations.
The stripping activity asset is initially measured at cost, which is the accumulation of costs directly incurred to perform the stripping
activity that improves access to the identified component of ore, plus an allocation of directly attributable overhead costs. If incidental
operations are occurring at the same time as the production stripping activity, but are not necessary for the production stripping
activity to continue as planned, these costs are not included in the cost of the stripping activity asset.
If the costs of the inventory produced and the stripping activity asset are not separately identifiable, a relevant production measure
is used to allocate the production stripping costs between the inventory produced and the stripping activity asset. This production
measure is calculated for the identified component of the ore body and is used as a benchmark to identify the extent to which the
additional activity of creating a future benefit has taken place. The Group uses the expected volume of waste extracted compared with
the actual volume for a given volume of ore production of each component.
The stripping activity asset is accounted for as an addition to, or an enhancement of, an existing asset, being the mine asset, and is
presented as part of ’Mine Development’ in the statement of financial position.
The stripping activity asset is subsequently depreciated using the units-of-production method over the life of the identified component
of the ore body that became more accessible as a result of the stripping activity. Economically recoverable reserves, which comprise
proven and probable reserves, are used to determine the expected useful life of the identified component of the ore body. The stripping
activity asset is then carried at cost less depreciation and any impairment losses.
Key judgements
The Group has assessed that the useful lives of the individual identifiable components of the relative ore bodies are short and that the
strip ratio over the life of component is relatively uniform. Accordingly, the Group has accounted for production stripping costs as a
production cost in the years ended 30 June 2013 and 2014.
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.
P a l a d i n E n E r g y l T d A n n u A l r e p o r t 2 0 14 105
Notes to the CoNsolidated FiNaNCial statemeNtsFor the year ended 30 June 2014FiNaNCial RepoRt
nOTE 21.
EXPlOraTiOn and EvaluaTiOn EXPEndiTurE
The following table details the expenditures on interests in mineral properties by area of interest for the year ended 30 June 2014:
vAlhAllA
/skAl
isA
north
Fusion
AngelA
pAmelA
bigrlyi niger
km
lhm CAnAdA
other
urAnium
proJeCts
totAl
US$M
US$M
US$M
US$M
US$M US$M US$M US$M
US$M
US$M
US$M
Balance 30 June 2014
332.5
60.5
11.3
Areas of interest
Balance 30 June 2013
Project exploration and
evaluation expenditure
Labour
Outside services
Other expenses
Total expenditure
Expenditure expensed
Expenditure capitalised
Foreign exchange
differences
Impairment of exploration
and evaluation
Areas of interest
Balance 30 June 2012
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
576.1
137.7
10.9
-
10.0
-
-
0.1
-
0.3
0.4
-
0.4
2.7
0.1
-
0.2
0.3
(0.3)
-
(0.3)
-
-
0.1
0.1
-
0.1
0.3
(246.7)
(76.9)
-
0.1
-
0.2
0.3
(0.3)
-
-
-
-
-
-
-
-
-
-
0.3
-
10.3
0.1
-
0.1
0.2
0.2
0.1
0.2
(0.2)
0.5
(0.5)
-
-
-
-
639.4
152.5
11.9
7.4
30.7
36.8
-
-
-
-
-
-
0.5
0.1
0.5
1.1
-
1.1
0.4
-
0.3
0.7
-
0.7
0.1
-
-
0.1
-
0.1
0.1
-
0.1
0.2
(0.1)
0.1
0.1
0.1
0.3
-
0.3
-
0.3
0.6
-
0.2
0.1
0.3
0.6
(0.6)
0.1
0.3
0.6
(64.4)
(15.5)
(1.1)
(0.7)
(3.1)
-
-
-
-
(6.8)
(17.9)
(37.4)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
261.7
8.5
1,004.9
2.3
0.9
2.0
5.2
-
5.2
(3.6)
0.5
0.1
0.5
1.1
(0.4)
0.7
0.2
3.4
1.2
3.5
8.1
(1.7)
6.4
(0.4)
-
-
(323.6)
263.3
9.4
687.3
259.7
4.8
1,143.2
-
0.4
0.4
3.6
2.0
3.6
9.2
-
9.2
1.3
2.4
1.3
5.0
(0.7)
6.6
4.7
6.5
17.8
(1.4)
4.3
16.4
(7.2)
(1.0)
(93.0)
-
-
(62.1)
261.7
8.5
1,004.9
Balance 30 June 2013
576.1
137.7
10.9
-
10.0
-
106
P a l a d i n E n E r g y l T d A n n u A l r e p o r t 2 0 14
Notes to the CoNsolidated FiNaNCial statemeNtsFor the year ended 30 June 2014FiNaNCial RepoRt
nOTE 21. EXPlOraTiOn and EvaluaTiOn EXPEndiTurE (COnTinuEd)
Recognition and measurement
Exploration and evaluation expenditure related to areas of interest is capitalised and carried forward to the extent that:
1. rights to tenure of the area of interest are current; and
2. 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 their recoverable amount if the area of interest’s carrying amount is
greater than their estimated recoverable amount.
Significant Estimates and Assumptions
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.
nOTE 22.
inTangiBlE aSSETS
At 30 June
Intangible assets – at cost
Less accumulated depreciation and impairment(1)
Net carrying value – intangible assets
2014
US$M
2013
US$M
27.8
(15.6)
27.8
(15.0)
12.2
12.8
(1) Refer to Note 11 for details of impairment.
Amortisation of US$NIL (2013: US$1.1M) is included in cost of sales in the Income Statement.
Movements in Intangible Assets
Movements in each group of intangible asset during the financial year are set out below:
right to
supply oF
power
right to
supply oF
wAter
US$M
US$M
kAyelekerA
mining
leAse
US$M
totAl
US$M
2014
Net carrying value at 1 July 2013
Amortisation expense
Impairment
Net carrying value at 30 June 2014
2013
Net carrying value at 1 July 2012
Amortisation expense
Impairment
3.8
(0.2)
-
9.0
(0.4)
-
3.6
8.6
-
-
-
-
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
-
12.8
(0.6)
-
12.2
18.1
(1.1)
(4.2)
12.8
P a l a d i n E n E r g y l T d A n n u A l r e p o r t 2 0 14 107
Notes to the CoNsolidated FiNaNCial statemeNtsFor the year ended 30 June 2014FiNaNCial RepoRt
nOTE 22.
inTangiBlE aSSETS (COnTinuEd)
Description of the Group’s Intangible Assets
1. 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.
2. 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.
Recognition and measurement
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.
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.
nOTE 23.
TradE and OThEr PayaBlES
Current
Trade and other payables
Total current payables
2014
US$M
2013
US$M
39.3
39.3
57.9
57.9
Trade payables are non-interest bearing and are normally settled on 30 day terms.
Recognition and measurement
Trade and other payables are carried at amortised cost and represent liabilities for goods and services provided to the Group prior to
the end of the financial year that are unpaid and arise when the Group becomes obliged to make future payments in respect of the
purchase of these goods and services. The amounts are unsecured and are usually paid within 30 days of recognition.
108
P a l a d i n E n E r g y l T d A n n u A l r e p o r t 2 0 14
Notes to the CoNsolidated FiNaNCial statemeNtsFor the year ended 30 June 2014FiNaNCial RepoRt
nOTE 24.
PrOviSiOnS
Current
Employee benefits
Total current provisions
Non Current
Employee benefits
Rehabilitation provision
Demobilisation provision
Total non current provisions
notes
2014
US$M
2013
US$M
11
11
5.5
5.5
2.0
68.9
1.8
72.7
9.9
9.9
3.0
52.3
1.7
57.0
Movements in Provisions
Movements in each class of provision during the financial year, excluding provisions relating to employee benefits, are set out below:
At 1 July 2013
Arising during the year
Effects of changes in discount rates
Foreign currency movements
At 30 June 2014
2014
Current
Non current
2013
Current
Non current
demobilisAtion rehAbilitAtion
US$M
US$M
1.7
0.1
0.1
(0.1)
1.8
-
1.8
1.8
-
1.7
1.7
52.3
16.9
0.4
(0.7)
68.9
-
68.9
68.9
-
52.3
52.3
totAl
US$M
54.0
17.0
0.5
(0.8)
70.7
-
70.7
70.7
-
54.0
54.0
Nature and Timing of Provisions
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.
Demobilisation
A provision for demobilisation has been recorded in relation to LHM for the costs of demobilising the mining contractor.
P a l a d i n E n E r g y l T d A n n u A l r e p o r t 2 0 14 109
Notes to the CoNsolidated FiNaNCial statemeNtsFor the year ended 30 June 2014FiNaNCial RepoRt
nOTE 24. PrOviSiOnS (COnTinuEd)
Recognition and measurement
Provisions
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.
Employee benefits
Short-term benefits
Liabilities for short-term benefits, including wages and salaries, and accumulating sick leave expected to be settled within 12 months
of the reporting date are recognised as a current liability in respect of employees’ services up to the reporting date and are measured
at the amounts expected to be paid when the liabilities are settled. Liabilities for non-accumulating sick leave are recognised when the
leave is taken and measured at the rates paid or payable.
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.
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.
Significant Accounting Judgements, Estimates and Assumptions
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.
nOTE 25. unEarnEd rEvEnuE
Non Current
Unearned revenue
Total unearned revenue
2014
US$M
2013
US$M
200.0
200.0
200.0
200.0
Recognition and measurement
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.
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.
110
P a l a d i n E n E r g y l T d A n n u A l r e p o r t 2 0 14
Notes to the CoNsolidated FiNaNCial statemeNtsFor the year ended 30 June 2014FiNaNCial RepoRt
other notes
nOTE 26. KEy ManagEMEnT PErSOnnEl
Details of Key Management Personnel
(i) Directors
Mr Rick Crabb
Mr John Borshoff
Mr Sean Llewelyn
Chairman (Non-executive)
Managing Director/CEO
Director (Non-executive)
Mr Donald Shumka
Director (Non-executive)
Mr Peter Donkin
Mr Philip Baily
Director (Non-executive)
Director (Non-executive)
(ii) Executives
Ms Gillian Swaby
Mr Dustin Garrow
Company Secretary and Executive General Manager – Corporate Services
Executive General Manager – Marketing
Mr Mark Chalmers
Executive General Manager – Production
Mr Alan Rule
Mr Craig Barnes
Chief Financial Officer (resigned effective 30 June 2014)
Chief Financial Officer (commenced on 5 May 2014. Appointment as Chief
Financial Officer effective 1 July 2014)
Compensation of Key Management Personnel: Compensation by Category
Short-term employee benefits
Post employment benefits
Long-term benefits
Share-based payment
2014
US$000
2013
US$000
4,094
(11)
84
792
4,959
4,850
169
903
1,594
7,516
The average exchange rate used for the year to 30 June 2014 to translate the Australian dollar remuneration to Key Management
Personnel was, US$1 = A$1.09006 (2013: US$1 = A$0.97471).
P a l a d i n E n E r g y l T d A n n u A l r e p o r t 2 0 14 111
Notes to the CoNsolidated FiNaNCial statemeNtsFor the year ended 30 June 2014FiNaNCial RepoRt
nOTE 27. 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
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
2014
US$000
2013
US$000
527
52
53
30
-
10
672
143
36
5
4
188
563
23
101
40
48
139
914
188
13
140
30
371
The level of non-audit related fees was driven by the tax compliance requirements of multiple jurisdictions and by the specialist advice
requirements of potential acquisitions and group restructures.
Whilst always striving to meet the highest corporate governance standards, Paladin is also cognisant of the need to retain the value
of the best available specialist advice. Paladin engaged Ernst & Young because of their specialised experience in both Africa and the
mining sector and Ernst & Young’s detailed understanding of the Paladin Group.
In terms of the Company’s Corporate Governance Policy all non-audit services are reviewed and approved by the Audit Committee
prior to commencement to ensure that they do not adversely affect the integrity and objectivity of the auditor and that the nature of
the services provided does not compromise the Code of Ethics for Professional Accountants APES 110 issued by the Accounting
Professional and Ethical Standards Board.
All non-audit services provided by Ernst & Young were allowable services that received the sign off of the audit partner confirming that,
in his professional opinion, they do not in any way impair the independence of the firm. Where any service might be perceived to be
subjective, Ernst & Young policy requires approval by the Oceania Independence and Conflicts Leader.
nOTE 28.
COMMiTMEnTS and COnTingEnCiES
There were no outstanding commitments or contingencies, which are not disclosed in the Financial Report of the Group as at 30 June
2014 other than:
Tenements
Commitments for tenements contracted for at the reporting date but not recognised as
liabilities, payable:
Within one year
Later than one year but not later than 5 years
More than 5 years
Total tenements commitment
2014
US$M
2013
US$M
2.6
6.4
16.8
25.8
1.0
6.0
24.6
31.6
These include commitments relating to tenement lease rentals and the minimum expenditure requirements of the Namibian, Malawian,
Canadian, Western Australian, South Australian, Northern Territorian and Queensland Mines Departments attaching to the tenements
and are subject to re-negotiation upon expiry of the exploration leases or when application for a mining licence is made.
These are necessary in order to maintain the tenements in which the Group and other parties are involved. All parties are committed
to meet the conditions under which the tenements were granted in accordance with the relevant mining legislation in Namibia, Malawi,
Australia and Canada.
112
P a l a d i n E n E r g y l T d A n n u A l r e p o r t 2 0 14
Notes to the CoNsolidated FiNaNCial statemeNtsFor the year ended 30 June 2014FiNaNCial RepoRt
nOTE 28.
COMMiTMEnTS and COnTingEnCiES (COnTinuEd)
Operating Lease Commitments
The Group has entered into various property leases relating to rental of offices and residential accommodation.
These non-cancellable leases have remaining terms of between 1 month and 5 years. All leases include a clause to enable upward
revision of rental charge on an annual basis according to prevailing market conditions.
Future minimum rentals payable under non-cancellable operating leases as at 30 June are as follows:
Within one year
Later than one year but not later than 5 years
More than 5 years
Total operating lease commitment
2014
US$M
1.0
1.0
-
2.0
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
2014
US$M
22.2
2.1
-
24.3
2013
US$M
1.4
2.2
-
3.6
2013
US$M
50.5
2.0
-
52.5
In relation to the Oobagooma Uranium Project, the Group holds a first ranking application for an exploration licence. The Group will pay
AREVA Australia A$0.37M (US$0.35M) on final grant of the tenement. This payment was made in July 2014.
In relation to the Manyingee Uranium Project, the re-negotiated acquisition terms provide for a payment of A$0.75M (US$0.71M) (2013:
A$0.75M (US$0.68M)) by the Group to the vendors when all project development approvals are obtained.
Bank Guarantees
As at 30 June 2014, the Group has outstanding US$679,877 (A$721,792) (2013: US$959,302 / A$1,050,387) as a current guarantee
provided by a bank for the corporate office lease; a US$248,199 (A$263,500) (2013: US$219,193 / A$240,005) guarantee for tenements;
a US$103,612 (A$110,000) (2013: Nil) guarantee for corporate credit cards, and a US$10M (2013: US$10M) KM environmental
performance guarantee.
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 ZAR276M (US$26.0M). The Group denies the claim and will vigorously defend it.
The Group is also counterclaiming damages from the contractor and cross-claiming from another contractor. The precise quantum of
the counter-claim and cross claim has not yet been established, but is expected to exceed the contractor’s claim.
nOTE 29. rElaTEd ParTiES
Key Management Personnel
The only related party transactions are with Directors and Key Management Personnel. Refer to Note 26. Details of material controlled
entities are set out in Note 31.
P a l a d i n E n E r g y l T d A n n u A l r e p o r t 2 0 14 113
Notes to the CoNsolidated FiNaNCial statemeNtsFor the year ended 30 June 2014FiNaNCial RepoRt
nOTE 30.
SharE-BaSEd PayMEnT PlanS
Share-based payment expense
The share-based payment plans are described below.
2014
US$M
2013
US$M
0.5
3.9
Types of Share-Based Payment Plans
Employee Performance Share Rights Plan
The Employee Performance Share Rights Plan (Rights Plan) was approved by shareholders on 25 November 2009.
The Rights Plan is a long-term incentive plan aimed at advancing the interests of the Company by creating a stronger link between
employee performance and reward and increasing shareholder value by enabling participants to have a greater involvement with, and
share in the future growth and profitability of the Company. It is an important tool to assist in attracting and retaining talented people.
Share Rights are granted under the plan for no consideration. Share Rights are rights to receive fully paid ordinary shares in the capital
of the Company (Shares) in the future if certain individual and/or corporate performance metrics (Performance Conditions) are met in
the measurement period.
The Board is cognisant of general shareholder concern that long-term equity based reward for staff should be linked to the
achievement by the Company of a performance condition. Share Rights granted under the Rights Plan are subject to performance
conditions as determined by the Board from time to time.
The Share Rights issued are subject to a combination of Performance Conditions:-
Time-based Performance conditions which prescribe a period of time that the employee must stay employed by the Company
prior to automatic vesting.
The Total Shareholder Return (TSR) measure which represents the change in the Company’s Share price over the relevant period,
plus dividends (if any) notionally reinvested in the Company’s Shares, expressed as a percentage of the opening value.
The TSR of the Company from the date of the offer to the measurement date will be compared with the TSR of all mining
companies in the ASX S&P 200 Index for the same period excluding, for such time as Paladin does not pay a dividend, all
companies that paid a dividend during any year of the measurement period.
The number of Share Rights that vest depends on the TSR percentile ranking of the Company, as set out below:
Relative TSR Percentile Ranking
Percentage of share rights that may vest if the relative TSR
performance condition is met
Less than 50th percentile
0% of the Share Rights subject to the TSR condition
at 50th percentile
50% of the Share Rights subject to the TSR condition
Greater than the 50th percentile but less
Pro-rated vesting between 51% and 99% of the
than the 75th percentile
Share Rights subject to the TSR condition
At 75th percentile or greater
100% of the Share Rights subject to the TSR condition
The Market Price Performance condition measures the increase in share price of the Company. Share Rights subject to the
Market Price Performance Condition will vest if, at the end of the measurement period, the Share price of the Company is 25%
above the market price as at the date of the offer.
The vesting schedule of the Share Rights subject to the EPS conditions is as follows:
Average compound growth EPS over
the performance period
Percentage of share rights that may vest if the EPS
condition is met
Less than 10% pa
0% of the Share Rights subject to the EPS condition
At 10% pa
50% of the Share Rights subject to the EPS condition
More than 10% pa but less than 20% pa
Pro-rated vesting between 51% and 99% of the Share Rights
subject to the EPS condition
At 20% pa or greater
100% of the Share Rights subject to the EPS condition
When a participant ceases employment prior to the vesting of their Share Rights, the Share Rights lapse unless cessation of
employment is due to retirement, total and permanent disablement, redundancy or death. In the event of a change of control all the
Share Rights will vest.
Contractor Performance Share Rights Plan
The Company has also implemented a plan to reward a small number of key individual contractors, who provide similar services to
employees. This plan and the Rights Plan applicable to employees, as detailed above, differ only in respect of the class of individuals
who are eligible for participation. This Plan was approved by shareholders on 25 November 2009.
114
P a l a d i n E n E r g y l T d A n n u A l r e p o r t 2 0 14
Notes to the CoNsolidated FiNaNCial statemeNtsFor the year ended 30 June 2014FiNaNCial RepoRt
nOTE 30.
SharE BaSEd PayMEnT PlanS (COnTinuEd)
Types of Share-Based Payment Plans (continued)
One-Time Issue of Share Rights
A number of management personnel agreed to a 10% reduction in salary and fees. This reduction in fees and salaries will remain in
place until certain market conditions are met, at which point they will return to their pre-adjusted rates. To compensate, individuals
(other than directors) were offered a choice of a one-time issue of shares, share rights, additional leave or an option of reduced working
hours, to the value of the 12 months of their reduction in salary.
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)
2014
NO.
3,358,957
1,671,104
(1,307,162)
(1,643,805)
2013
NO.
6,885,882
-
(1,809,075)
(1,717,850)
Outstanding at the end of the year
2,079,094
3,358,957
(1) 240,690 rights were granted under the Contractor Performance Share Rights Plan (2013: nil).
(2) The weighted average share price at the vesting date is A$0.48 (2013: A$1.21).
The outstanding balance as at 30 June 2014 is represented by:
dAte rights grAnted
5 November 2010
2 April 2012
2 April 2012
2 April 2012
15 November 2013
Total
vesting dAte
5 November 2014
1 September 2014
1 September 2014
1 September 2014
14 November 2014
vesting perFormAnCe Conditions
Relative total shareholder return
Time based
Relative total shareholder return
Market price
Time based
number
250,000
398,850
279,080
418,620
732,544
2,079,094
Please refer to Outstanding Share Information table in the Management Discussion & Analysis for movements since the year end.
Weighted Average Remaining Contractual Life
The weighted average remaining contractual life for the share rights outstanding as at 30 June 2014 is 0.3 years (2013: 0.7 years).
Weighted Average Fair Value
The weighted average fair value of share rights granted during the year was A$0.41 (2013: N/A).
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).
Recognition and measurement
Share-based compensation benefits are provided to employees via the Employee Performance Share Rights Plan and the Contractor
Performance Share Rights Plan (Rights Plans).
The fair value of rights granted under the Rights Plans is 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 rights.
The fair value of 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 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 right. 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 rights.
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 rights that are expected to become exercisable or
granted. At each balance date, the entity revises its estimate of the number of rights that are expected to become exercisable. The
employee benefit expense recognised each period takes into account the most recent estimate.
P a l a d i n E n E r g y l T d A n n u A l r e p o r t 2 0 14 115
Notes to the CoNsolidated FiNaNCial statemeNtsFor the year ended 30 June 2014FiNaNCial RepoRt
nOTE 30.
SharE BaSEd PayMEnT PlanS (COnTinuEd)
Types of Share-Based Payment Plans (continued)
Upon the conversion of rights, the balance of the share-based payments reserve relating to those rights is transferred to share capital.
Significant Estimates and Assumptions
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.
nOTE 31.
grOuP infOrMaTiOn
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
2014
US$M
2013
US$M
205.6
1160.8
85.1
1,388.5
9.5
765.4
11.8
755.1
1,926.9
(1,665.3)
0.1
47.6
0.6
85.5
1,845.7
(1,348.1)
0.1
50.2
-
85.5
395.4
633.4
(317.2)
(316.6)
(440.0)
(440.5)
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.
Details of Any Contingent Liabilities of the Parent Entity
Paladin has provided the following guarantees:
i. Guarantee of US$35.9M for the LHM Environmental Trust Fund.
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.
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.
116
P a l a d i n E n E r g y l T d A n n u A l r e p o r t 2 0 14
Notes to the CoNsolidated FiNaNCial statemeNtsFor the year ended 30 June 2014FiNaNCial RepoRt
nOTE 31.
grOuP infOrMaTiOn (COnTinuEd)
Investments in Material Controlled Entities
nAme
Paladin Finance Pty Ltd
Paladin Energy Minerals NL
PEM Malawi Pty Ltd
Eden Creek Pty Ltd
Paladin Asset Management 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
Country oF
inCorporAtion
perCentAge interest
held
2013
%
2014
%
Australia
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
100
85
100
100
100
75
75
100
100
100
100
82
82
82
100
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.
Financial information of subsidiaries that have material non-controlling interests is provided below:
Proportion of equity interest held by non-controlling interests
nAme
Paladin (Africa) Limited (PAL)
Summit Resources Ltd (SRL)
Langer Heinrich Mauritius (LHM)
Country oF
operAtion
Malawi
Australia
Mauritius
2014
2013
%
%
15
18
25
15
18
-
P a l a d i n E n E r g y l T d A n n u A l r e p o r t 2 0 14 117
Notes to the CoNsolidated FiNaNCial statemeNtsFor the year ended 30 June 2014FiNaNCial RepoRt
nOTE 31.
grOuP infOrMaTiOn (COnTinuEd)
On 28 June 2014, the Group disposed of 25% of the ownership interests of Langer Heinrich Mauritius Holdings Limited (LHM).
Following the disposal, the Group still controls LHM and retains 75% of the ownership interests. The transaction has been accounted
for as an equity transaction with non-controlling interests (NCI), resulting in the following:
Proceeds from sale of 25% ownership interest
Net assets attributable to NCI
Loan attributable to NCI
Increase in equity attributable to parent
Represented by:
Increase in Consolidation Reserve
Accumulated balances of material non-controlling interest
Paladin (Africa) Limited
Summit Resources Ltd
Langer Heinrich Mauritius
Profit/(loss) allocated to material non-controlling interest
Paladin (Africa) Ltd
Summit Resources Ltd
Langer Heinrich Mauritius
2014
US$M
(83.9)
30.6
30.8
(10.6)
(40.7)
-
The summarised financial information of these subsidiaries is provided below. This information is based on amounts before
intercompany eliminations.
Summarised income statement for the year ended 30 June 2014
Revenue
Cost of Sales
Impairment of assets/exploration
Finance costs
Other expenses
Profit before tax
Income tax
Profit after tax
Total comprehensive income
Attributable to non-controlling interests
Dividends paid to non-controlling interests
Summarised income statement for the year ended 30 June 2013
Revenue
Cost of Sales
Impairment of assets/exploration
Finance costs
Other expenses
Profit before tax
Income tax
Profit after tax
Total comprehensive income
Attributable to non-controlling interests
Dividends paid to non-controlling interests
118
P a l a d i n E n E r g y l T d A n n u A l r e p o r t 2 0 14
lhm
US$M
207.2
(212.5)
-
(13.0)
(7.8)
(26.1)
10.7
(15.4)
(15.4)
-
-
pAl
US$M
121.9
(182.0)
-
(8.2)
(5.8)
(74.1)
-
(74.1)
(74.1)
(10.6)
-
pAl
US$M
145.7
(169.3)
(237.9)
(19.2)
(9.7)
(290.4)
(85.0)
(375.4)
(375.4)
(52.9)
-
US$M
190.0
(31.3)
(96.0)
62.7
62.7
2013
US$M
(80.1)
71.5
-
(52.9)
(0.1)
-
srl
US$M
0.2
-
(323.6)
-
(0.9)
(324.3)
97.1
(227.2)
(228.1)
(40.9)
-
srl
US$M
0.2
-
-
-
(0.9)
(0.7)
-
(0.7)
(45.1)
(8.1)
-
Notes to the CoNsolidated FiNaNCial statemeNtsFor the year ended 30 June 2014FiNaNCial RepoRt
nOTE 31.
grOuP infOrMaTiOn (COnTinuEd)
Summarised statement of financial position as at 30 June 2014
Current assets
Non current assets
Current liabilities
Non current liabilities
Total equity
Attributable to:
-Equity holders of parent
-Non-controlling interest
Summarised statement of financial position as at 30 June 2013
Current assets
Non current assets
Current liabilities
Non current liabilities
Total equity
Attributable to:
-Equity holders of parent
-Non-controlling interest
Summarised statement of cash flow for the year ended 30 June 2014
Operating
Investing
Financing
Net decrease in cash and cash equivalents
Summarised statement of cash flow for the year ended 30 June 2013
Operating
Investing
Financing
Net decrease in cash and cash equivalents
lhm
US$M
112.0
579.3
(45.4)
(522.9)
123.0
pAl
US$M
47.0
127.2
(126.6)
(606.7)
(559.1)
92.2
30.8
(475.2)
(83.9)
pAl
US$M
140.2
196.4
(156.3)
(669.3)
(489.0)
(408.9)
(80.1)
pAl
US$M
25.1
(6.8)
(26.1)
(7.8)
srl
US$M
2.5
236.7
(0.1)
(71.8)
167.3
136.7
30.6
srl
US$M
3.3
562.5
(0.4)
(169.4)
396.0
324.5
71.5
srl
US$M
(0.4)
(0.2)
-
(0.6)
pAl
US$M
srl
US$M
1.4
(8.4)
6.2
(0.8)
(0.5)
(0.9)
-
(1.4)
nOTE 32.
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 2014 Financial Report:
Settlement of Sale of Minority Interest in Langer Heinrich Mine, Namibia
On 23 July 2014, the Company announced the settlement of the sale of 25% interest in its flagship Langer Heinrich mining operation
in Namibia to CNNC Overseas Uranium Holding Limited, a wholly- owned subsidiary of CNNC, the leading Chinese nuclear utility, for
consideration of US$190M. The sale was subject to a number of conditions precedent, which were met in full by 30 June 2014, and
accordingly the sale has been accounted for at 30 June 2014.
The offtake component of the agreement allows CNNC to purchase its pro-rata share of product from Langer Heinrich at the prevailing
market spot price.
P a l a d i n E n E r g y l T d A n n u A l r e p o r t 2 0 14 119
Notes to the CoNsolidated FiNaNCial statemeNtsFor the year ended 30 June 2014FiNaNCial RepoRt
nOTE 32.
EvEnTS afTEr ThE BalanCE daTE (COnTinuEd)
Successful Refinancing of Langer Heinrich Facility
In summary
Facility reduced to US$70M.
US$32M reduction in debt repayments over 2014 to 2017 calendar years.
Langer Heinrich debt repayments reduced by US$9.2M per annum to 2018.
Additional positive cash flow implications to the January 2014 refinancing.
On 23 July 2014, the Company announced it had entered into agreements with its existing lenders to refinance the LHM project finance
facility. The facility was drawn down in conjunction with financial close of the LHM minority sale.
Paladin has refinanced the existing US$110M project finance facility and US$20M working capital facility into a new US$70M
syndicated loan facility. Proceeds from the LHM minority sale were utilised to prepay US$30.8M of the existing facility, taking the
outstanding balance to US$70M.
This new facility will provide significant cash flow benefits and further strengthens Paladin’s financial position. As shown below, the
annual principal repayments will reduce by US$32.4M over the first 3.5 years of the facility, from US$18.3M per annum to US$9.1M per
annum, with the first repayment of US$4.6M not due until December 2014.
nEw vs EXiSTing aMOrTiSaTiOn SChEdulE
n
o
i
l
l
i
M
D
S
U
12.00
10.00
8.00
6.00
4.00
2.00
0
1H14
2H14
1H15
2H15
1H16
2H16
1H17
2H17
1H18
2H18
1H19
2H19
Calendar year
Existing LHM Facility
New LHM Facility
The Borrower of the new facility remains PFPL. The new facility is security light with Langer Heinrich Mauritius Holdings Limited and
LHUPL providing no guarantees or security over the project assets. The facility will also have a financial covenant holiday for the first
four 6-monthly calculations periods commencing 31 December 2014.
The new facility is provided by Nedbank Capital, a division of Nedbank Limited, Nedbank Namibia Limited, along with the Standard
Bank of South Africa Limited and Standard Bank Namibia Limited. Both banking groups have been involved with Paladin since the first
LH project finance facility was established in 2006.
120
P a l a d i n E n E r g y l T d A n n u A l r e p o r t 2 0 14
Notes to the CoNsolidated FiNaNCial statemeNtsFor the year ended 30 June 2014FiNaNCial RepoRt
nOTE 33.
nEw aCCOunTing STandardS and inTErPrETaTiOnS
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 are relevant to the
Group but have not been applied by the Group for the annual reporting period ending 30 June 2014:
reFerenCe
title
summAry
AASB 9/
IFRS 9
Financial Instruments On 24 July 2014 The IASB issued the final version of IFRS
9 which replaces IAS 39 and includes a logical model for
classification and measurement, a single, forward-looking
‘expected loss’ impairment model and a substantially-reformed
approach to hedge accounting.
AppliCAtion
dAte oF
stAndArd*
AppliCAtion
dAte For
group*
1 January
2018
1 July 2018
IFRS 9 is effective for annual periods beginning on or after
1 January 2018. However, the Standard is available for early
application. The own credit changes can be early applied
in isolation without otherwise changing the accounting for
financial instruments.
The final version of IFRS 9 introduces a new expected-loss
impairment model that will require more timely recognition of
expected credit losses. Specifically, the new Standard requires
entities to account for expected credit losses from when
financial instruments are first recognised and to recognise full
lifetime expected losses on a more timely basis.
The AASB is yet to issue the final version of AASB 9. A revised
version of AASB 9 (AASB 2013-9) was issued in December
2013 which included the new hedge accounting requirements,
including changes to hedge effectiveness testing, treatment
of hedging costs, risk components that can be hedged and
disclosures.
AASB 9 includes requirements for a simplified 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
AASB 9 also removes the volatility in profit or loss that was
caused by changes in the credit risk of liabilities elected to be
measured at fair value. This change in accounting means that
gains caused by the deterioration of an entity’s own credit risk
on such liabilities are no longer recognised in profit or loss.
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, AASB 2010-10 and AASB
2014-1 – Part E.
P a l a d i n E n E r g y l T d A n n u A l r e p o r t 2 0 14 121
Notes to the CoNsolidated FiNaNCial statemeNtsFor the year ended 30 June 2014FiNaNCial RepoRt
nOTE 33.
nEw aCCOunTing STandardS and inTErPrETaTiOnS (COnTinuEd)
Accounting Standards and Interpretations issued but not yet effective (continued)
reFerenCe
title
summAry
AASB 2014-1
Part A
-Annual
Improvements
2010–2012
Cycle
Amendments to
Australian Accounting
Standards - Part A
Annual Improvements
to IFRSs 2010–2012
Cycle
AASB
2013-3
Amendments
to AASB136 –
Recoverable
AmountDisclosures
for Non-Financial
Assets
AASB 2013-9 Amendments to
Australian Accounting
Standards –
Conceptual
Framework,
Materiality and
Financial Instruments
AASB 2014-1 Part A: This standard sets out amendments to
Australian Accounting Standards arising from the issuance
by the International Accounting Standards Board (IASB) of
International Financial Reporting Standards (IFRSs) Annual
Improvements to IFRSs 2010–2012 Cycle and Annual
Improvements to IFRSs 2011–2013 Cycle.
Annual Improvements to IFRSs 2010–2012 Cycle addresses
the following items:
▶ AASB 2 - Clarifies the definition of ‘vesting conditions’
and ‘market condition’ and introduces the definition of
‘performance condition’ and ‘service condition’.
▶ AASB 3 - Clarifies the classification requirements for
contingent consideration in a business combination by
removing all references to AASB 137.
▶ AASB 8 - Requires entities to disclose factors used to
identify the entity’s reportable segments when operating
segments have been aggregated. An entity is also required
to provide a reconciliation of total reportable segments’
asset to the entity’s total assets.
▶ AASB 116 & AASB 138 - Clarifies that the determination
of accumulated depreciation does not depend on the
selection of the valuation technique and that it is calculated
as the difference between the gross and net carrying
amounts.
▶ AASB 124 - Defines a management entity providing
KMP services as a related party of the reporting entity.
The amendments added an exemption from the detailed
disclosure requirements in paragraph 17 of AASB 124 for
KMP services provided by a management entity. Payments
made to a management entity in respect of KMP services
should be separately disclosed.
AASB 2013-3 amends the disclosure requirements in AASB
136 Impairment of Assets. The amendments include the
requirement to disclose additional information about the
fair value measurement when the recoverable amount of
impaired assets is based on fair value less costs of disposal.
The Standard contains three main parts and makes
amendments to a number Standards and Interpretations.
Part A of AASB 2013-9 makes consequential amendments
arising from the issuance of AASB CF 2013-1.
Part B makes amendments to particular Australian Accounting
Standards to delete references to AASB 1031 and also makes
minor editorial amendments to various other standards.
Part C makes amendments to a number of Australian
Accounting Standards, including incorporating Chapter 6
Hedge Accounting into AASB 9 Financial Instruments.
AppliCAtion
dAte oF
stAndArd*
AppliCAtion
dAte For
group*
1 July 2014
1 July 2014
1 January
2014
1 July 2014
^
^
122
P a l a d i n E n E r g y l T d A n n u A l r e p o r t 2 0 14
Notes to the CoNsolidated FiNaNCial statemeNtsFor the year ended 30 June 2014FiNaNCial RepoRt nOTE 33.
nEw aCCOunTing STandardS and inTErPrETaTiOnS (COnTinuEd)
Accounting Standards and Interpretations issued but not yet effective (continued)
reFerenCe
title
summAry
AppliCAtion
dAte oF
stAndArd*
AppliCAtion
dAte For
group*
Amendments
to IAS 16 and
IAS 38
Clarification of
Acceptable Methods
of Depreciation
and Amortisation
(Amendments to
IAS 16 and IAS 38)
IFRS 15
Revenue from
Contracts with
Customers
IAS 16 and IAS 38 both establish the principle for the basis of
depreciation and amortisation as being the expected pattern
of consumption of the future economic benefits of an asset.
1 January
2016
1 July 2016
1 January
2017
1 July 2017
The IASB has clarified that the use of revenue-based methods
to calculate the depreciation of an asset is not appropriate
because revenue generated by an activity that includes
the use of an asset generally reflects factors other than the
consumption of the economic benefits embodied in the asset.
The IASB also clarified that revenue is generally presumed
to be an inappropriate basis for measuring the consumption
of the economic benefits embodied in an intangible asset.
This presumption, however, can be rebutted in certain limited
circumstances.
In May 2014, the IASB issued IFRS 15 Revenue from Contracts
with Customers, which replaces IAS 11 Construction
Contracts, IAS 18 Revenue and related Interpretations (IFRIC
13 Customer Loyalty Programmes, IFRIC 15 Agreements for
the Construction of Real Estate, IFRIC 18 Transfers of Assets
from Customers and SIC-31 Revenue—Barter Transactions
Involving Advertising Services)
The core principle of IFRS 15 is that an entity recognises
revenue to depict the transfer of promised goods or services
to customers in an amount that reflects the consideration
to which the entity expects to be entitled in exchange for
those goods or services. An entity recognises revenue in
accordance with that core principle by applying the following
steps:
(a) Step 1: Identify the contract(s) with a customer
(b) Step 2: Identify the performance obligations in the contract
(c) Step 3: Determine the transaction price
(d) Step 4: Allocate the transaction price to the performance
obligations in the contract
(e) Step 5: Recognise revenue when (or as) the entity satisfies
a performance obligation
Early application of this standard is permitted.
*
^
Designates the beginning of the applicable annual reporting period unless otherwise stated.
The application dates of AASB 2013-9 are as follows:
Part A –periods ending on or after 20 Dec 2013
Application date for the Group: period ending 30 June 2014
Part B - periods beginning on or after 1 January 2014
Application date for the Group: period beginning 1 July 2014
Part C - reporting periods beginning on or after 1 January 2015
Application date for the Group: period beginning 1 July 2015
The potential effect of these Standards is yet to be fully determined. For Standards and Interpretations effective from 1 July 2014, it is
not expected that the new Standards and Interpretations will significantly affect the Group’s financial performance.
P a l a d i n E n E r g y l T d A n n u A l r e p o r t 2 0 14 123
Notes to the CoNsolidated FiNaNCial statemeNtsFor the year ended 30 June 2014FiNaNCial RepoRt
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)
(ii)
giving a true and fair view of the consolidated entity’s financial position as at 30 June 2014 and of its performance for the
year ended on that date; and
complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations
Regulations 2001;
the financial statements and notes also comply with International Financial Reporting Standards as disclosed in note 3;
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
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 2014.
(b)
(c)
(d)
On behalf of the Board
Mr John Borshoff
Managing Director/CEO
Perth, Western Australia
28 August 2014
124
P a l a d i n E n E r g y l T d A n n u A l r e p o r t 2 0 14
Financial RepoRt
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 2014 and 30 June 2013, the consolidated income statement, consolidated statement of comprehensive income,
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 1, 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 and International 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
P a l a d i n E n E r g y l T d A n n u A l r e p o r t 2 0 14 125
Financial RepoRt
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 2014 and 30 June 2013 and of its
performance for each of the years ended on those dates; and
ii) complying with Australian Accounting Standards and the Corporations Regulations 2001; and
b)
the financial report also complies with International Financial Reporting Standards as disclosed in Note 1.
rEPOrT On ThE rEMunEraTiOn rEPOrT
We have audited the Remuneration Report included in the directors’ report for the year ended 30 June 2014. 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 2014 complies with section 300A of the
Corporations Act 2001.
Ernst & Young
G H Meyerowitz
Partner
Perth
28 August 2014
126
P a l a d i n E n E r g y l T d A n n u A l r e p o r t 2 0 14
Financial RepoRt
totAl holders
no. oF shAres
addiTiOnal infOrMaTiOn
Pursuant to the Listing Requirements of ASX as at 22 August 2014:
(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
9,349
10,265
3,659
4,945
580
28,798
4,850,583
27,595,625
29,203,084
153,999,174
748,718,818
964,367,284
%
17.10
12.75
9.89
6.03
3.78
2.60
1.67
1.66
0.72
0.72
0.64
0.54
0.51
0.50
0.35
0.31
0.31
0.31
0.28
0.24
60.91
n
O
i
T
a
M
r
O
f
n
i
l
a
n
O
i
T
i
d
d
a
10,580 shareholders hold less than a marketable parcel of shares.
(B) ThE TwEnTy largEST SharEhOldErS hOld 60.91% Of ThE TOTal SharES iSSuEd.
holder
no. oF shAres
CDS & Co
Citicorp Nominees Pty Limited
HSBC Custody Nominees (Australia) Limited
JP Morgan Nominees Australia Limited
CEDE & Co
National Nominees Limited
Mr J Borshoff*
HSBC Custody Nominees (Australia) Limited - A/C 3
BNP Paribas Noms Pty Ltd
ABN AMRO Clearing Sydney Nominees Pty Ltd
UBS Wealth Management Australia Nominees Pty Ltd
Mr R Crabb*
Brispot Nominees Pty Ltd
Ms Seng Bee Teoh + Mr Sin Mong Wong
QIC Limited
Comsec Nominees Pty Limited
Zero Nominees Pty Ltd
Grandor Pty Ltd
Bainpro Nominees Pty Limited
CS Fourth Nominees Pty Ltd
164,880,916
123,001,661
95,342,436
58,154,384
36,472,984
25,079,968
16,081,794
16,030,178
6,949,768
6,921,731
6,186,415
5,181,528
4,896,785
4,815,881
3,384,682
3,023,704
3,000,000
2,994,772
2,653,456
2,354,225
587,407,268
* Aggregates all associated holdings
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”)
UBS AG and its related bodies corporate
(C) vOTing righTS
74,281,934
61,887,621
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) SECuriTiES SuBjECT TO vOlunTary ESCrOw
There are 888,560 ordinary fully paid shares subject to voluntary escrow with a release date of 14 November 2014.
(E) unquOTEd SECuriTiES
Unlisted Share Rights
The Company has 2,079,094 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 106.
P a l a d i n E n E r g y l T d A n n u A l r e p o r t 2 0 14 127
n
O
i
T
a
M
r
O
f
n
i
l
a
n
O
i
T
i
d
d
a
addiTiOnal infOrMaTiOn
TEnEMEnTS hEld
uraniuM PrOjECTS
proJeCt
tenements
interest %
Jv pArtner/s
operAtor
note
NAMIBIA – AFRICA
Langer Heinrich
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
MLI
MLI
EPL
EPL
EPL
EPL
MLI
EPL
EPL
EPL
EPL
EPL
100.00%
100.00%
(A)
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
(A)
(A)
(A)
(A)
(A)
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
4
1
2
1
1
12
11
2
1
1
12
1
1
3
1
1
1
1
EPMs
MDLs (A)
EPM
MDLs (A)
(A)
(A)
(A)
(A)
(A)
(A)
(A)
EL
EL
ELRs
MCs
MLs
ELR
ELR
ELRs
EL
EL
MLs
EL
EL
EL
EL
82.08%
82.08%
100.00%
100.00%
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%
(see Note 4)
(see Note 4)
-
-
-
-
) 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
1
1
2
2
2
2
2
2
3,4
3,4
LHU
LHU
IEL
IEL
IEL
IEL
PAL
PAL
PAL
PAL
PAL
PAL
AUR
SRA
SRA
FSN
FSN
PDN
PDN
EME
EME
EME
EME
EME
NTU
Afmeco
Afmeco
PEM
PEM
PEM
Quasar
Quasar
128
P a l a d i n E n E r g y l T d A n n u A l r e p o r t 2 0 14
addiTiOnal infOrMaTiOn
TEnEMEnTS hEld (COnTinuEd)
nOn-uraniuM PrOjECTS
proJeCt
tenements
interest %
Jv pArtner/s
operAtor
note
Aeon Metals Limited
Aeon Metals Limited
Centaurus Metals Limited
Aeon Metals Limited
Aeon Metals Limited
Aeon Metals Limited
EPMs 20.00%
EPM 20.00%
EPMs 20.00%
EL
7.50%
Perilya Limited
Signature Resources NL
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
Afmeco Mining and Exploration Pty Ltd
Aeon Metals Limited
Aurora Energy Ltd
Energy Metals Limited
Fusion Resources Pty Ltd
Indo Energy Ltd
Langer Heinrich Uranium (Pty) Ltd
Mount Isa Uranium Pty Ltd
Northern Territory Uranium Pty Ltd
Pacific Mines Pty Ltd
Paladin (Africa) Ltd
Paladin Energy Minerals NL
Quasar Resources Pty Ltd
Summit Resources (Aust) Pty Ltd
Paladin Energy Ltd
Perilya Limited
AFMECO
AML
AUR
EME
FSN
IEL
LHU
MIU
NTU
PAC
PAL
PEM
QUASAR
SRA
PDN
PERILYA
nOTES
pAlAdin equity
(direCt And indireCt)
0%
0%
100%
0%
100%
100%
75%
100%
100%
100%
85%
100%
0%
82.08%
0%
note
1
2
3
5
5
5
5
5
AML
AML
AML
AML
AML
Perilya
n
O
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T
a
M
r
O
f
n
i
l
a
n
O
i
T
i
d
d
a
1. Paladin holds an ultimate 75% interest in LHUPL with 25% held by CNNC.
2. Paladin holds 85% equity in PAL with 15% equity having been issued to the Government of Malawi pursuant to the terms of the
Development Agreement for KM between the Government of Malawi, PAL and Paladin Energy Minerals NL.
3. 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.
4. The Valhalla 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%).
5. Aeon Metals 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.
Aeon Metals Limited were formally known as Aston Metals (Qld) Limited.
TEnEMEnT TyPES
EL
EPL
EPM
ELR
MC
ML
MLI
Exploration Licence (Australia)
Exclusive Prospecting Licence (Africa)
Exploration Permit for Minerals (Australia)
Exploration Licence in Retention (Australia)
Mineral Claim (Australia)
Mining Lease (Australia)
Mining Licence (Africa)
MLC
Mineral Licence (Newfoundland/Labrador)
(A)
Pending Application
P a l a d i n E n E r g y l T d A n n u A l r e p o r t 2 0 14 129
SharEhOldEr rEPOrTing TiMETaBlE
Please note the lodgement dates are deadlines
and reports may be released early.
iMPOrTanT daTES
2014
31 October 2014
September Quarterly Activities Report
(ASX)
13 November 2014
September Quarterly Financial Statements
including MD&A (TSX)
14 November 2014
20 November 2014
Conference Call and Investor Update
(proposed date)
Annual General Meeting to be held in
Perth, Western Australia
2015
30 January 2015
12 February 2015
13 February 2015
30 April 2015
14 May 2015
15 May 2015
December Quarterly Activities Report
(ASX)
Half Yearly Financial Statements
incorporating December Quarter and
MD&A (Appendix 4D - ASX)
Conference Call and Investor Update
(proposed date)
March Quarterly Activities Report (ASX)
March Quarterly Financial Statements
including MD&A (TSX)
Conference Call and Investor Update
(proposed date)
31 July 2015
June Quarterly Activities Report (ASX)
27 August 2015
28 August 2015
Audited Annual Financial Statements for
the year ended 30 June 2015 including
MD&A (ASX/TSX) & (Appendix 4E - ASX)
Conference Call and Investor Update
(proposed date)
25 September 2015 Annual Information Form (TSX)
30 October 2015
September Quarterly Activities Report
(ASX)
12 November 2015
September Quarterly Financial Statements
including MD&A (TSX)
13 November 2015
19 November 2015
Conference Call and Investor Update
(proposed date)
Annual General Meeting to be held in
Perth, Western Australia
n
O
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T
a
M
r
O
f
n
i
l
a
n
O
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T
i
d
d
a
addiTiOnal infOrMaTiOn
liST Of aBBrEviaTiOnS
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 43-101
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 43-101 – Standards of
Disclosure for Mineral Projects of the Canadian
Securities Administrators
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
130
P a l a d i n E n E r g y l T d A n n u A l r e p o r t 2 0 14
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
(+61 8) 9381 4366
Telephone:
(+61 8) 9381 4978
Facsimile:
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:
1300 850 505 (within Australia) or
(+61 3) 9415 4000 (outside Australia)
(+61 3) 9473 2500
Facsimile:
Canada
Computershare Investor Services Inc.
100 University Avenue, 8th Floor
Toronto, Ontario M5J 2Y1
Telephone: 1 800 564 6253 (within North America) or
Facsimile:
(+1) 514 982 7555
(+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.
invESTOr rElaTiOnS
Australia – Corporate Office
Mr Andrew Mirco
Level 4, 502 Hay Street
Subiaco Western Australia 6008
(PO Box 201, Subiaco, 6904)
Telephone:
Facsimile:
Email: andrew.mirco@paladinenergy.com.au
(+61 8) 9381 4366
(+61 8) 9381 4978
North America
Mr Greg Taylor
Oakville, ON Canada
Telephone:
Mobile:
Facsimile:
Email: greg.taylor@paladinenergy.com.au
(+1) 905 337 7673
(+1) 416 605 5120
(+1) 905 844 6532
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
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P a l a d i n E n E r g y l T d A n n u A l r e p o r t 2 0 14 131
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 42 of this report, alternatively please visit the FEPAC
pages at www.paladinenergy.com.au or email
joanne.mcdonald@paladinenergy.com.au.
132
P a l a d i n E n E r g y l T d A n n u A l r e p o r t 2 0 14
About Paladin
Chairman’s Letter
Insights From The Managing Director/CEO
Nuclear Power – Demand Growing But Supply
Stagnating
Management Discussion and Analysis
Review of Operations
Health & Safety
Financial Review
Sustainable Development
Environment
Corporate Social Responsibility
Our People
Coporate Governance Statement
01
05
06
08
10
11
24
26
34
35
37
42
45
Directors' Report
Remuneration Report
Financial Report
Contents of The Financial Report
Consolidated Income Statement
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes In Equity
Consolidated Statement of Cash Flows
Notes To The Consolidated Financial Statements
Directors’ Declaration
Independent Audit Report
Additional Information
Corporate Directory
54
60
72
72
73
74
75
76
78
79
124
125
127
131
Corporate
Values
create shareholder wealth by developing the considerable opportunities Paladin has and continues to generate.
Become a major player in the global uranium supply market.
Operate at global best practice with particular emphasis on safety and the environment.
Reward employee performance and provide a fulfilling work environment.
contribute to the growth and prosperity of the countries in which Paladin operates by conducting operations in an efficient
and effective manner and by seeking out opportunities for expansion.
Respond to the attitudes and expectations of the communities in which it operates as part of its commitment to corporate
social responsibility.
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:
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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BuiLding
BusinEss
REsiLiEncE
AnnuAl RepoRt 2014
Paladin Energy Ltd
Follow Paladin at
Follow Paladin at
www.paladinenergy.com.au
www.paladinenergy.com.au