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MAINTAINING
OUR FOCUS
ANNUAL REPORT 2015
Paladin Energy Ltd
Follow Paladin at
Follow Paladin at
www.paladinenergy.com.au
www.paladinenergy.com.au
THE YEAR AT A GLANCE
Deleveraging
balance sheet
Bicarbonate
Recovery Plant
commissioned
World class asset pipeline
expanded and enhanced
Retained key
personnel
to develop next
generation in
uranium mines
Safety
performance
significantly
improved
Operations
further
optimised with
costs reduced
About Paladin ............................................................................ 01
Chairman’s Letter ...................................................................... 04
Insights From The Interim CEO ................................................ 05
Nuclear Power – Getting Back on Track .................................. 06
Management Discussion and Analysis ................................... 08
Review of Operations ................................................................... 09
Health and Safety ....................................................................... 23
Financial Review ......................................................................... 25
Sustainable Development ........................................................ 34
Environment ................................................................................ 34
Corporate Social Responsibility .................................................. 37
Our People .................................................................................. 43
Corporate Governance Statement .......................................... 45
Directors' Report ....................................................................... 46
Remuneration Report .................................................................. 52
Paladin Energy Ltd
ACN 061 681 098
Financial Report ........................................................................ 64
Contents of the Financial Report ................................................. 64
Consolidated Income Statement ................................................. 65
Consolidated Statement of Comprehensive Income ................... 66
Consolidated Statement of Financial Position ............................. 67
Consolidated Statement of Changes in Equity ............................ 68
Consolidated Statement of Cash Flows ....................................... 70
Notes to the Consolidated Financial Statements ..........................71
Directors’ Declaration .................................................................116
Independent Audit Report .......................................................... 117
Additional Information .................................................................119
Corporate Directory ....................................................................124
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
KEY ANNUAL DATA
ALES
S
5.37Mlb U3O8
E
U
N
E
S
ALES R E V
198.6MILLION
R I C H P R ODUCTION
E I N
NGE R H
A
L
5.04Mlb U3O8
TOTAL PRODUCTION
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
LANGER HEINRICH MINE
C1 COST OF PRODUCTION
b
l
/
$
$
U
31.5
31.0
30.5
30.0
29.5
29.0
28.5
28.0
27.5
FY2011
FY2012
FY2013
FY2014
FY2015*
FY2011
FY2012
FY2013
FY2014
FY2015*
* Production reduced in FY2015 mainly due to Kayelekera being on care and maintenance since February 2014.
P A L A D I N E N E R G Y LT D A N N U A L R E P O R T 2 0 1 5
1
OUR ACHIEVEMENTS
WHAT WE SET OUT TO DO IN 2015
Achieved
Ongoing
✕
Not achieved
2015 production guidance for Langer Heinrich
Improve health and safety performance across
in the range of 5.4 to 5.8Mlb U3O8
– Revised guidance 5.0 to 5.2Mlb U3O8
Achieved 5.04Mlb.
the Group.
Increase value through strategic partnerships.
Strengthen balance sheet through continued
Continue to reduce unit production costs
debt reduction.
at Langer Heinrich via:
– Focused cost management
- Optimisation of existing processes
- Ongoing development and introduction
of process innovation.
Maintain Kayelekera Mine in operational
ready status.
Advance approvals process to enable a Field Leach Trial at Manyingee.
WHAT WE PLAN TO DO IN 2016
2016 production guidance for Langer Heinrich in
Strengthen balance sheet through debt reduction.
the range of 5.0Mlb to 5.4Mlb U3O8
.
Focussed cost reduction and optimisation efforts
to achieve group-wide sustainability.
Continue to increase efficiency and productivity
at Langer Heinrich through successful process
innovation.
KEY ACHIEVEMENTS FOR THE YEAR
July 2014
Settlement of sale of 25% minority interest in
Langer Heinrich to subsidiary of China National
Nuclear Corporation for US$190M. Successful
refinancing of Langer Heinrich financing facility.
December 2014
Entitlement offer and institutional placement
raises A$205M. Cornerstone strategic investor –
HOPU Clean Energy (Singapore) Pte. Ltd – on
register with 15% equity.
February 2015
Issue of US$100M senior unsecured convertible
bonds (CB) issued to high quality institutional
investors.
March 2015
Additional US$50M CBs issued to subsidiary
of China Investment Corporation (CIC).
March 2015
Key optimisation success at Langer Heinrich.
Bicarbonate Recovery Plant (BRP) commissioned
and operating above design.
April 2015
Completion of repurchase of US$300M CBs, due
November 2015.
June 2015
Strategic acquisition of Carley Bore uranium deposit
to consolidate and enhance Manyingee project.
June 2015
Historic decision by Canadian government to exempt
Paladin from the Non-Resident Ownership Policy in
relation to the Michelin Project in Newfoundland
and Labrador.
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PALADIN ENERGY LTD ANNUAL REPORT 2015
PALADIN TODAY
OVERVIEW
Paladin’s value is based on five key drivers - production, quality pipeline, proven team, industry
positioning and sustainability of operations.
OPERATIONS
Langer Heinrich Mine
Kayelekera Mine
Focus on process optimisation and cost reduction.
Placed on care and maintenance due to low
Successful process innovation at Langer Heinrich
should provide a pathway to C1 cash costs1
substantially lower than recent experience.
1 Refer to ‘Non IFRS Measure’ in Financial Review section.
INNOVATION
& PROJECT PIPELINE
Proven track record in mining
and processing innovation.
Established in-house
technical strength.
Consolidating a unique,
geographically diversified
asset base.
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).
POSITIONING GOING
FORWARD
Only non-aligned, independent, pure-play
uranium producer.
Long-term business strategy and vision
is to continue to strengthen through
key partnerships.
Maintain Paladin as a partner of choice.
Technical innovation, process optimisation
and cost reduction an ongoing focus.
Project pipeline able to drive organic growth.
OUR 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.
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PALADIN ENERGY LTD ANNUAL REPORT 2015
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CHAIRMAN'S
LETTER RICK CRABB CHAIRMAN
Dear Fellow Shareholder
The further retreat in the uranium price and overall deterioration in global equity
markets during the 2015 financial year presented continued ongoing challenges
for your Company. During 2014 the uranium spot price touched a nine-year
low, but has since recovered and now shows signs of an ongoing upward trend,
notwithstanding some volatility.
During this challenging period, the Paladin Board and
management nevertheless completed a number of
important steps to progress recapitalisation of the
Company, as outlined in this Annual Report.
Although production at the Langer Heinrich Mine was
down 13% during the year, the temporary technical issue
which resulted in the reduction was rectified and a solid
production outlook is expected.
In addition to cost reduction initiatives during FY2015,
in July and August this year the Company announced a
number of further measures aimed at making Paladin cash-
flow positive in the current uranium price environment.
Further work remains to be done in FY2016 particularly to
strengthen the balance sheet and to improve production
at Langer Heinrich whilst reducing costs.
On 10 August 2015, the Company announced that
Mr John Borshoff stepped down as Managing Director
and CEO. It was John’s vision, tenacity and spirit that
created Paladin, which remains uniquely placed to
benefit from an improved uranium market. On behalf of
shareholders I sincerely thank John for his efforts and
sacrifice over some 21 years and wish him all the best
for the future. Recently two other long serving officers
of the Company, non-executive director Sean Llewelyn
and Company Secretary/EGM Corporate Services
Gillian Swaby, stepped down. Their respecting significant
contributions are very much appreciated.
Mr Alexander Molyneux is currently serving as Interim
CEO and with the support of the Board continues to focus
on the goals the Company has set for FY2016.
I am pleased that the Company has continued to maintain
high standards in health and safety and environmental
management. I encourage shareholders to study the
sustainable development reports in this Annual Report
and on the Company’s website.
I wish to thank all employees for their hard work and
dedication during what has been, yet again, a challenging
period for the Company. I remain confident that the
conclusion of FY2016 will see an improved outlook for
Paladin, to the benefit of all stakeholders.
Yours faithfully
Paladin Energy Ltd
RICK CRABB
Chairman
4
PALADIN ENERGY LTD ANNUAL REPORT 2015
INSIGHTS FROM
THE INTERIM CEO ALEXANDER MOLYNEUX Interim CEO
Dear Shareholder
2015 was a year which saw uranium prices touch nine-year and post-Fukushima
incident lows. Despite the challenges presented by the market, we can commend
the Paladin team for safely achieving a number of positive outcomes in the
areas of operating improvements, strategic initiatives and capital management.
Importantly, the company finished the year with cash on hand of US$183.7M,
an increase of US$94.9M. The world class nature of our assets and team led to
the strategic investment and availability of funding to be able to strengthen our
balance sheet during a ‘dire’ period for uranium producers globally.
It seems apparent to me that the uranium market could
be in the early stages of a recovery from the earthquake
and tsunami in Japan in March 2011 and its damaging
effect on Japan’s nuclear power industry. Prior to March
2011, Japan was the world’s second largest consumer
of uranium and since that time Japan has been almost
absent from the market. Certain other major nuclear
power producing nations, such as Germany, have
implemented plans to reduce or eliminate nuclear power.
The TradeTech U3O8 Spot Price at the end of June 2015
was US$36.25/lb, approximately 29% higher than at the
end of June 2014.
Paladin’s belief that a meaningful turnaround for uranium
is underway is predicated on a number of key elements:
• Many countries that eliminated or reduced their
nuclear reliance are now encountering significant
consequences and switching back to nuclear –
Japan, in particular, is a key uranium customer now
switching back to nuclear. In August 2015, Kyushu
Electric Power’s Sendai 1 nuclear reactor became
the first in Japan to restart operation.
• Demand is rapidly accelerating in new markets –
All of the ‘BRICS’ countries (i.e., Brazil, Russia,
India, China and South Africa) are rapidly growing
their nuclear power capacity and increasing their
reliance on nuclear power as a proportion of
overall power generation.
• Current prices will constrain supply – According to
supply cost curves published by industry analysts,
approximately one third of current mine supply is
uneconomic at the current spot price. Low prices
are forcing producers to curtail mining, development
and exploration. According to industry analysts, in
the 2014 calendar year, at least 12 million pounds
of annual U3O8 supply has been eliminated.
the Company’s belief
Despite
that a uranium
industry turnaround is tentatively underway, its current
strategies are focused on optimising actions to maximise
cash flow whilst also prudently enacting capital
management actions.
Yours faithfully
ALEXANDER MOLYNEUX
Interim CEO
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PALADIN ENERGY LTD ANNUAL REPORT 2015
NUCLEAR POWER –
GETTING BACK ON TRACK
The March 2011 Great East Japan earthquake and resultant tsunami severely
damaged the Fukushima-Diiachi reactor complex and set in motion market forces
which continue to negatively impact the global uranium market. While conditions
in Japan are showing noticeable improvement as discussed below, the FY2015
market suffered from the Fukushima after-effects.
While growth
in global commercial nuclear power
remains strong and increasing, the clearly identified shift
from the traditional nuclear power regions/countries
of North America (predominantly the United States),
Western Europe and Japan continues unabated. During
FY2015, installed nuclear capacity rose in China, South
Korea, Russia and Argentina while Japan lost units to
decommissioning as did the United States.
The natural uranium production sector which had
experienced uninterrupted growth since 2006 reported
a decline in output of 9Mlb (6%) as a host of production
problems began to be revealed, supplemented by
existing production centres being placed on care and
maintenance or output curtailed in response to persistent
depressed uranium prices.
Spot Uranium Price Volatility Prevailed
During FY2015, the spot uranium price demonstrated
the year at around
substantial volatility beginning
US$28.00/lb before rising to US$44.00/lb
in mid-
November, an increase of 56% in less than six months.
The near-term price then plunged to US$35.50/lb by the
end of the calendar year, a decline of 20% in less than two
months. Entering CY2015, the spot price rose, once again,
to US$39.50/lb (late March) a gain of over 11% before
dropping to US$35.00/lb by the end of May. Overall,
the uranium spot price ended the year at US$36.75/lb,
showing an increase of 30% for the 12 month period.
The long-term uranium price which tends to reflect market
conditions several years in the future, showed much less
volatility, starting the year at US$44.00/lb then rising
to US$50.00/lb by late November before declining to
US$46.00/lb at the end of May.
Operational Reactors Increased
FY2015 saw the number of operational nuclear reactors
increase by a total of three units as China (+6), South
Korea (+1), Russia (+1), and Argentina (+1) placed new
units in commercial operation while a single reactor was
decommissioned in the United States and Japanese
utilities made the decision to permanently close five older,
smaller reactors in the face of economically unjustified
safety upgrades under the Nuclear Regulatory Authority
post-Fukushima guidelines.
Compared to the global situation immediately preceding
Fukushima, the total number of operational reactors is
down slightly to six reactors in total), a reflection of the
decommissioning initiatives in Japan, Germany and,
to a lesser degree, the United States but, much more
importantly, the number of reactors under construction
now stands at 66 units (compared to 62) and the number
of planned reactors is currently 10 reactors higher than in
March 2011.
China Driving Global Commercial Nuclear Power
Reactors classified as “under construction” declined
during FY2015 as a number of Chinese reactors entered
commercial operations but were yet to be followed
by further new build authorisations, a condition which
changed in March 2015 when the China State Council
approved the construction of two additional units at
the Hongyanhe NPP with further such authorisations
anticipated.
The Chinese government continues to aggressively
pursue the development of a significant commercial
nuclear programme in support of increasing electricity
needs and implementation of climate change goals.
Installed nuclear capacity of 58 Gwe remains the 2020
objective with China planning to eclipse the United States
nuclear programme as the largest in the world by 2025,
having operational reactors totalling 100 Gwe or more.
Japanese Nuclear Power Poised to Restart
Post-Fukushima,
the commercial nuclear power
programme in Japan has been under heightened scrutiny
as the government created the independent Nuclear
Regulatory Authority (NRA) which then developed and
promulgated far-ranging safety guidelines for nuclear
power plants. Japanese utilities have submitted safety
evaluation requests for a total of 24 reactors located
at 13 sites, representing almost 60% of the currently
operational Japanese reactors.
Sendai 1 & 2, (Kyushu Electric Power Company) are now
likely to restart in the September quarter 2015 while NRA
preliminary approvals have been given to Takahama 3 &
4 (Hokuriku Electric Power) and Ikata 3 (Shikoku Electric
Power), with the Takahama units under a temporary court
injunction against their operations.
the Japanese Cabinet approved
In mid-April,
the
“Strategic Energy Plan” calling for nuclear power to
represent 20-22% of total installed generating capacity
by 2030. That target would require not only operating
life extension for a number of units but also new reactor
construction to proceed.
India’s Nuclear Programme Moving Forward
After a period of relative stagnation, the newly-elected
Prime Minister, Narendra Modi, has reinvigorated the
Indian commercial nuclear power programme supporting
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PALADIN ENERGY LTD ANNUAL REPORT 2015
During the first half of CY2015, several nuclear utilities,
located in the United States, Western Europe and Asia/
Pacific (non-China) have either entered the term market
or have indicated plans to pursue additional longer
term uranium coverage with deliveries beginning 2017-
2018 and extending well into the next decade. These
procurement programmes will truly test the availability of
uranium later in this decade and past 2020.
the U.S. Energy
Nowhere is the need for future uranium coverage most
evident than in the United States. The United States
government agency,
Information
Administration, provides comprehensive data regarding
United States nuclear utility nuclear fuel procurement
and forward forecasts. According to its “2014 Uranium
Marketing Annual Report”, the United States nuclear
utilities need to secure deliveries totalling 283Mlb over the
period 2015-2024, representing almost 60% of their ten-
year forward total uranium requirements. Interestingly,
United States utility contractual coverage for a ten year
forward period has declined consistently over the past
seven years.
Uranium Supply Deficits Looming
Paladin continues to revise/update its internal annual
uranium demand, supply and price assessment and
forecasts. That comprehensive analysis of the global
uranium market underscores the absolute imperative for
the development of additional uranium production in the
immediate near future. That conclusion is increasingly
being reached by industry analysts as well as financial
analysts focused on the uranium sector. At this point
in time, the principal question remains the timing of the
market reaction to the fully recognised fundamentals of
uranium demand and supply.
term contracts with Kazakhstan, Uzbekistan and Canada
(Cameco). Additional multi-year purchase commitments
are expected as the country’s meagre nuclear generation
(supplied 3.5% of total electricity in 2014) grows from
the current 21 operating reactors (5.3 Gwe) reaching
14.6 Gwe by 2020 with the 2050 target being nuclear-
generated electricity providing 25% of the nation’s needs.
In order to support its expanding nuclear programme,
India announced in mid-July 2015 that the country will
pursue the creation of a strategic uranium reserve totalling
13Mlb which will increase to 39Mlb as the installed nuclear
capacity rises into the future.
Global Uranium Production Struggling
Global uranium output stumbled during CY2014 declining
from the CY2013 level of 154Mlb down to 145Mlb. A
myriad of factors were in play as operational problems
resulted in significant reductions at both Ranger (Australia)
and Rössing (Namibia) while Areva’s Somaïr operation
(Niger) produced at a reduced rate. Even Canada’s prolific
Athabaska Basin operations reported a 3% decline in
annual uranium production.
In addition to Paladin’s Kayelekera Mine
(Malawi),
UraniumOne’s ISR production facility at Honeymoon
(South Australia) was placed on care and maintenance
while some United States-based
ISR mines held
production at contracted levels.
Looking forward, FY2016 will see increased output from
the Cigar Lake Mine (Canada) and the possible initiating
of mining at the Husab Project (CGNPC) in Namibia.
However, aggregate global uranium production might
not exceed 150-152Mlbs as producers struggle with
unsustainably depressed uranium prices.
Term Uranium Contracting on the Rise
The vast majority of natural uranium concentrates are
delivered to utility end-users under term (multi-year)
purchase agreements. Since 1995, the two largest
uranium consuming regions, the United States and the
European Union, reported total purchases aggregating
1.9Blb U3O8 with 87% of that total being delivered under
term uranium agreements.
During CY2013, global term contracting volume totalled
about 20Mlb for future delivery, a far cry from the annual
average of 155Mlb or more. That term contracting
activity increased in CY2014 to around 80Mlb, a decided
improvement but still far short of the normal term
contracting activity by the world’s nuclear utilities.
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PALADIN ENERGY LTD ANNUAL REPORT 2015
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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 2015.
The effective date of this report is 27 August 2015.
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
including public announcements,
www.paladinenergy.com.au.
relating
to
the Company,
is available at
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”, “with an expectation of”, “is expected”, “are
expected”, 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.
8
PALADIN ENERGY LTD ANNUAL REPORT 2015
REVIEW OF OPERATIONS
PROJECT LOCATIONS AND RESOURCE OVERVIEW
AUSTRALIA
Bigrlyi
Advanced Exploration
Michelin
Advanced Exploration
Postville
Happy Valley - Goose Bay
Oobagooma
Exploration
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
CANADA
0
1000
Kilometres
AUSTRALIA
NSW
Adelaide
Sydney
VIC
Melbourne
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
Swakopmund
Walvis Bay
Windhoek
Botswana
NA M IBI A
Kayelekera
Mine on Care
and Maintenance
Karonga
Zambia
Mzuzu
Lake
Malawi
Lilongwe
Mozambique
M ALA WI
Blantyre
Nigeria
0
300
Kilometres
Atlantic
Ocean
South Africa
0
300
Kilometres
Zimbabwe
0
300
Kilometres
Mali
Niamey
Burkina
Faso
Benin
In addition to the resources illustrated above, the Company has a 16.70% 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 30 June 2015, includes 153,234t U3O8 (337.8Mlb) at 0.07% U3O8 in the
Indicated and Measured categories (including ROM stockpiles) and 70,606t of U3O8 (155.7Mlb) 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.
9
PALADIN ENERGY LTD ANNUAL REPORT 2015
URANIUM PRODUCTION
Project
Overview
*Langer Heinrich Mine
- 75%
(Namibia, Southern
Africa)
The Company’s cornerstone
asset commenced
production in 2007.
The Stage 3 expansion is
complete with production
at 5.2Mlb per annum (pa).
Studies are underway for
a further expansion.
Mining
Method/
Deposit Type
Conventional
open pit;
calcrete
Outlook
Mineral Resources
Project life of
20 years
M&I (inc
stockpiles):
Inferred:
114.6Mt @ 0.051%
(127.5Mlb U3O8)
17.0Mt @ 0.058%
(21.7Mlb U3O8)
*Kayelekera Mine –
85%
(Malawi, Southern
Africa)
Paladin’s second uranium
mine, capable of operating
at nameplate of 3.3Mlb pa.
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)
URANIUM DEVELOPMENT
Project
Overview
*Aurora Project –
100%
(Labrador, Canada)
Paladin’s first entry into
Canada. Resource definition
and additional exploration
has been planned for.
Mining
Method/
Deposit Type
Open pit -
underground;
metasomatic
Outlook
Resources
Resource
definition and
extension drilling
is ongoing
M&I:
Inferred:
**Manyingee Project
– 100%
(Western Pilbara,
Western Australia)
Oobagooma Project
– 100%
(West Kimberley,
Western Australia)
*Valhalla, Skal & Odin
Deposits – 91.04%
(Queensland, Australia)
*Bigrlyi Deposit –
41.71%
(Northern Territory,
Australia)
*Angela Deposit –
100%
(Northern Territory,
Australia)
Resource update has been
completed and planning for a
field leach trial is underway.
In-situ leach;
sandstone
3 year staged
feasibility study
required
M&I:
Inferred:
A key pipeline asset for
Paladin.
In-situ leach;
sandstone
3 year reserve/
resource drilling
required
Exploration
target:
8.0Mt @ 0.12%-
0.14% (U3O8)
Open pit
-underground;
metasomatic
Development
dependent
on market
conditions
M&I:
Inferred:
One of Paladin’s significant
Australian assets.
Metallurgical studies are
progressing towards
developing a comprehensive
processing flowsheet.
Limited work within the JV
tenements. Co-operative
arrangement to assess
nearby regional targets.
Open pit -
underground;
sandstone
Planning has been completed
for resource extension and
development drilling.
Open pit -
underground;
sandstone
M&I:
Inferred:
Inferred:
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)
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)
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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 2015 and June 2014 respectively.
M&I = Measured and Indicated.
10
PALADIN ENERGY LTD ANNUAL REPORT 2015
NAMIBIA
LANGER HEINRICH MINE (LHM)
Paladin through its Namibian subsidiary, Langer Heinrich Uranium (Pty) Ltd 75% and CNNC
Overseas Uranium Holding Limited 25%
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 FY2009. 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 resulting in production
over 5Mlb.
Langer Heinrich is a surficial, calcrete type uranium
deposit containing a Mineral Resource of 57,831t
U3O8 at a grade of 0.050% U3O8 in the Measured and
Indicated categories (including ROM stockpiles) 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.
24000E
28000E
32000E
36000E
40000E
-88000N
-88000N
D7
D2
D1
D5
D3
D6
D4
To Gawib Flats
& Swakopmund
ML 172
Legend
-92000N
ML 140
PLANT
N
Mineral Resources >250ppm U3O8
Delineation Drilling
D7
Detail Grid Area
0
1
2km
-92000N
To Tikos Flats
& Main Road
24000E
28000E
32000E
36000E
40000E
OPERATIONS
Langer Heinrich produced 5.037Mlb (2,284t) U3O8 in
FY2015, down 13% from the previous year’s total of
5.822Mlb (2,641t) U3O8. Recoveries through the plant
decreased by 3% from the previous year to 87.6% with
a decrease in feed grade of 2% to 768ppm. The major
contributor to the lower production was a decrease in plant
throughput of 8.8% from the record of FY2014, due largely
to a major scaling incident that occurred early in the year
and is now resolved. The mine has recently recruited an
experienced production manager and already a positive
impact on the plant can be seen. With the Husab mine
and the aggressive recruitment by surrounding mines in
the Erongo region, staff retention has been a challenge.
Consequently, the mine has embarked on a number of
initiatives to ensure stability returns to staff turnover rates.
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. In this regard, the most notable
is the Bicarbonate Recovery Plant (BRP) which was
commissioned in the June quarter. The BRP has surpassed
all design expectations and at the time of writing was
operating at approximately 148% of design capacity. In
the coming year the Company expects to approximately
double the beneficial impact of this technology at LHM.
Already, a significant reduction in operating cost has been
experienced as a consequence of the project which has
demonstrated a capital pay-back period of less than 6
months. The BRP involves leading edge technology for
which Paladin has developed and owns the intellectual
property. Suitable patent protection has been applied for
to protect this very valuable intellectual property asset
that is expected to have broad application throughout the
uranium processing sector.
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 and the
BRP is a good example of the outcomes being sought.
A focus on cost reduction and efficiency remains at
the forefront going into FY2016 with an expectation of
significant benefits going forward.
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PALADIN ENERGY LTD ANNUAL REPORT 2015
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))
Grade
%
U3O8
t U3O8
0.056
10,912
0.054
34,051
Mlb
U3O8
24.1
75.1
Mt
19.6
62.9
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 of 20 years, based on current processing
feed rates.
EXPLORATION (EPL3500)
82.5
0.055
44,964
99.1
32.1
17.0
0.040
12,867
28.4
0.06
9,842
21.7
EPL3500 previously covered the western extension of the
mineralised Langer Heinrich paleochannel. An application
to convert the EPL to a mining lease has progressed
through the regulatory process and the site has received
notice of the intent to grant the licence application.
Measured
Indicated
Measured +
Indicated
Stockpiles
Inferred
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(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 2015).
ORE RESERVES
Economic analysis on this resource has indicated a
break-even cut-off grade of 250ppm.
ORE RESERVE ESTIMATE 250PPM U3O8 CUT-OFF
Proved
Probable
Stockpiles
Total
Grade
% U3O8
0.057
t U3O8
8,955
0.055
29,273
0.040
12,867
Mlb
U3O8
19.7
64.5
28.4
Mt
15.8
52.8
32.1
100.7
0.051
51,095
112.6
Ore Reserve has been depleted for mining to the end of June 2015.
12
PALADIN ENERGY LTD ANNUAL REPORT 2015
MALAWI
KAYELEKERA MINE (KM)
C&M OPERATIONS
KM completed a full year on C&M, with no production
since May 2014 and no sales revenue since December
2014. The key focus at KM has been ensuring the safety
of C&M personnel and the security of the project assets;
maintaining idled plant and equipment in a fit state
of readiness to facilitate a rapid restart of operations
when a decision is made to do so; maintaining legal
and social obligations encompassing community
relations, environmental and radiological monitoring and
treating and discharging surplus water stocks at KM to
reduce KM’s water balance prior to the onset of the next
rainfall season.
During production, rainfall run-off water captured in the
operational area was stored on site and was recycled for
use in processing of uranium ore. Since the operation went
on C&M, this has no longer been occurring, necessitating
the controlled release of treated water in order to reduce
KM’s water balance prior to the onset of the next rainfall
season. PAL modified a section of the KM processing
plant to treat water to remove contaminants prior to
release to meet internationally recognised standards.
PAL was licensed by the GoM in October 2014 to treat
and release water, with the government setting strict
conditions regulating critical water quality parameters,
including the World Health Organization (WHO) drinking
water guideline for uranium content. Controlled treated
water release commenced in April 2015 and continued
without incident. In late June, discharge was suspended
due to the very low receiving water level in the local river
system. Comprehensive monitoring of samples has
been undertaken at the end of the discharge outlet and
upstream and downstream from KM.
PAL has maintained a strong focus on cost control during
C&M with year-on-year cash costs reducing by 33.3%.
A feasibility study for recommencement of production
at KM is underway, preliminary results show that KM
remains a valuable strategic asset that can be quickly
returned to production when justified by a higher uranium
price environment.
Kayelekera Mine (KM), which is currently on care and
maintenance (C&M), is located in northern Malawi, 600km
north of the country’s capital city, Lilongwe, and 52km
west of the regional administrative and commercial centre
of Karonga.
Kayelekera is a sandstone-hosted uranium deposit,
associated with the Permian Karoo sediments and
hosted by
the North
the Kayelekera member of
Rukuru sedimentary outcrop of the Karoo System. The
mineralisation is associated with seven variably oxidised,
coarse grained arkoses, separated by shales and
mudstones. Uranium mineralisation occurs as lenses,
primarily within the arkose layers and, to a lesser extent,
in the mudstone. The lowest level of known mineralisation
is at a depth of approximately 160m below surface.
Kayelekera is owned 100% by Paladin (Africa) Limited
(PAL), an 85% subsidiary of Paladin. In July 2009, Paladin
issued 15% of the equity in PAL to the Government of
Malawi (GoM) under the terms of the Development
Agreement signed between PAL and the Government
in February 2007, which established the fiscal regime
and development framework for KM. PAL operates
KM under the provisions of Environmental Certificate
27.3.1, granted in March 2007, following approval of the
Kayelekera Project Environmental Impact Assessment
(EIA) and Mining Licence ML152, granted in April 2007.
ML152 covers an area of some 55km² surrounding
the Kayelekera deposit and was granted for a period
of 15 years, renewable for further 10-year periods.
The EIA contained a Social Impact Assessment and
Management Plan, which was implemented during the
construction and operational phases of KM, with certain
components continuing during C&M. Under the terms
of the Development Agreement, PAL has undertaken
various corporate social responsibility (CSR) obligations in
relation to operation of a Social Responsibility Plan, Local
Business Development and Community Consultation.
Construction took place in 2007-9 and KM operated for
five years from 2009-2014, producing a total of 10.7Mlb
U3O8 in that period. As a consequence of sustained
losses due to low prevailing uranium prices in the wake
of the 2011 Fukushima incident, production at KM was
suspended in May 2014. The operation was placed on
C&M until such time as economic conditions improve
sufficiently to enable KM to resume production with
sustained profitability. More than 50% of the project’s total
reserves and resources remain for future development.
This is sufficient to provide for 2.5Mlb pa of production,
with the potential to produce strong cash flows for at least
another six years. Additional regional exploration has the
potential to extend that further.
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PALADIN ENERGY LTD ANNUAL REPORT 2015
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MINERAL RESOURCES AND ORE RESERVES
ESTIMATION
Mineral Resources and Ore Reserves are unchanged from
those reported in 2014. As part of the Kayelekera re-start
study it is expected that an updated Mineral Resource
will be completed which will incorporate previous drilling
undertaken to the west of the current pit. This extensional
drilling only intersected mineralisation at depth and, given
the current and projected uranium prices, this is not
expected to contribute to additional Ore Reserves.
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
ORE RESERVES
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
Probable
Stockpiles
Total Ore Reserve
Grade
ppm
U3O8
1,168
882
756
t U3O8
457
4,709
1,199
Mlb
U3O8
1.0
10.4
2.6
870
6,365
14.0
Mt
0.4
5.3
1.6
7.3
Measured
Indicated
Total Measured &
Indicated
Grade
ppm
U3O8
1,011
t U3O8
753
700
8,901
Mt
0.7
12.7
Mlb
U3O8
1.7
19.6
(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 (when mining ceased).
13.4
717
9,654
21.3
EXPLORATION
Stockpiles
Inferred
1.6
5.4
756
1,199
623
3,334
2.6
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 when mining
ceased).
The Mineral Resource estimate is based on Multi Indicator
Kriging techniques with a specific adjustment based on
parameters derived from the mining process.
The exploration group worked in areas close to the mine
in order to identify any additional targets within easy
access of the processing plant. Whilst mineralised areas
have been identified these are not currently considered
attractive enough to warrant drilling. This activity is
expected to continue until all the Karoo sandstone
outcrop areas within the vicinity have been covered.
The Malawian Government is currently implementing a
new Cadastral system and is in the process of introducing
a new mining act. While this is progressing a moratorium
for accepting and granting Exploration Licences has
been implemented. The process is expected to be
completed by the end of CY2015 and Paladin is preparing
new Exploration Licence Applications for submission
early CY2016.
14
PALADIN ENERGY LTD ANNUAL REPORT 2015
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.
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. 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).
Over the last financial year Aurora carried out geological,
geophysical and geochemical surveys which have
outlined an area 5km east, west and south of the Michelin
deposit named the Michelin Rainbow Trend (MRT) as
being prospective for additional uranium resources.
Detailed geochemical surveys are planned for the
northern summer season commencing July 2015 to
identify drill targets in this zone.
ADDITIONAL POTENTIAL
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 MRT, which are currently being explored and
are expected to contribute to the economic viability of
the project. Mineral Resources for deposits within the
Michelin project are detailed below.
Deposit
Measured Mineral Resources
Indicated Mineral Resources
Inferred Mineral Resources
Cut-off 0.05%
& 0.02% U3O8
Michelin
Jacques Lake
Rainbow
Inda
Nash
Gear
Total
Mt Grade %
15.6
0.9
0.2
0.10
0.09
0.09
t U3O8
15,458
747
193
Mt Grade %
21.9
6.0
0.8
1.2
0.7
0.4
0.10
0.07
0.09
0.07
0.08
0.08
t U3O8
22,702
4,327
655
826
564
270
Mt Grade %
8.8
8.1
0.9
3.3
0.5
0.3
0.12
0.05
0.08
0.07
0.07
0.09
t U3O8
10,378
4,103
739
2,171
367
279
16.6
0.10
16,398
(36.2Mlb)
31.0
0.09
29,343
(64.7Mlb)
21.9
0.08
18,037
(39.8Mlb)
The Mineral Resources for the 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.
K aip o k o k B ay
Gear
Inda
Nash
Alaska
CANADA
United States of America
Jacques Lake
Aurora
Tenements
N
0
Km
10
Scale: 1:200,000
Postville
Michelin
Rainbow
15
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PALADIN ENERGY LTD ANNUAL REPORT 2015
EXEMPTION FROM NON-RESIDENT OWNERSHIP RESTRICTION
On 22 June 2015 Paladin received notification from
the Canadian Government that its submission to be
the majority owner of a uranium mine at the Michelin
Project has been approved. Under the current Non-
Resident Ownership Policy (NROP), non-resident mining
companies can own 100% of an exploration project but,
by the stage of first production, there must be a minimum
level of Canadian resident ownership in individual uranium
mining projects of 51%.
This posed an obvious limitation to the Michelin Project.
Given the Company’s global mining experience and
reputation, it has always considered itself as an owner/
operator of its uranium projects. The granting of an
exemption from NROP allowing Paladin to proceed
eventually to production at the Michelin Project will permit
Paladin to introduce a suitable minority joint venture
partner at the appropriate time should this be desired.
Paladin underwent an extensive and rigorous appraisal
process by the relevant authorities in Canada conducted
over a 5 month period. The decision required the support
of the Minister of Natural Resources, the Hon. Greg Rickford
and ultimately the Prime Minister, Mr Harper. During
the familiarisation and due diligence process that was
conducted to assess the submission for an exemption
from NROP, Paladin was questioned on its achievements,
technical abilities, environmental performance, commodity
knowledge and social responsibility particularly
its
relation to the local communities and its standing with the
Nunatsiavut government which is tasked to manage the
Labrador Inuit Lands.
QUEENSLAND
In early 2015, the Queensland Government reinstated the
previous ban on uranium mining. This decision has caused
Paladin to slow the development of its uranium holdings in
the Mount Isa region of northwest Queensland.
Paladin has an 82.08% majority shareholding in Summit
Resources Limited (Summit) acquired 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).
include 10 deposits containing
The three projects
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.
I
S
N
O
T
A
R
E
P
O
F
O
W
E
V
E
R
I
I
I
S
S
Y
L
A
N
A
D
N
A
N
O
S
S
U
C
S
D
T
N
E
M
E
G
A
N
A
M
I
Deposit
Valhalla*
Skal*
Odin*
Bikini*
Andersons*
Watta
Warwai
Mirrioola
Duke Batman*
Honey Pot
Total
Measured & Indicated
Mineral Resources
Inferred Mineral Resources
Paladin
Attribution
Cut-off
ppm U3O8
230
250
250
250
250
250
250
250
250
250
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
Mt
9.1
1.4
5.8
6.7
0.1
5.6
0.4
2.0
0.3
2.6
64.9
742
48,164
34.0
58.5
743
43,470
(95.8Mlb)
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%
Total Resource
Attributable to Paladin
(Figures may not add due to rounding).
* 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.
16
PALADIN ENERGY LTD ANNUAL REPORT 2015
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 occasionally 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 separate projects,
the locations are shown in the following map and details
are as follows:
320000mE
340000mE
Gunpowder
Honey Pot
Sunshine
X
X
EPM12572
X
X
Duke Batman
Joker
Mount Isa
QLD
Brisbane
Carlton Hills
Watta Hills
X
X
Warwai
X
Rich John
Bikini
X
X
X
X
Skal
Odin
Valhalla
X
X
Mirrioola
New May Downs
Andersons
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
N
m
0
0
0
0
2
7
7
N
0
Km
10
Red Alpha
X
X
X
X
MOUNT ISA
Project
FUSION
EPM12572 Valhalla North
SUMMIT
Isa Uranium Joint Venture
EPM17511 Anderson
EPM17513 Carlton
EPM17514 Valhala
EPM17519 Skall
Mineral development
Licences
Uranium Prospect
Mine
Station
ISA URANIUM JOINT VENTURE (IUJV)
SUMMIT RESOURCES (AUST) PTY LTD (SRA) 50%
AND MANAGER
MOUNT ISA URANIUM PTY LTD (MIU) 50%
The IUJV covers ground containing the Valhalla, Odin and
Skal uranium deposits 40km north of Mount Isa. 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 934km2 held 100%
and managed by SRA and Paladin as outlined in the
map below.
The application to cover the Valhalla and Skal uranium
deposits with Mineral Development Licences (MDLs)
was granted by
in
September 2014. Valhalla is now covered by MDL510
and Skal by MDL517 which also includes the Bikini and
Mirrioola Deposits.
the Queensland Government
MOUNT ISA NORTH PROJECT (MINP)
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 934km2 of granted tenements that are
prospective for uranium, copper and base metals. In early
2015 the Queensland Government extended the licences
for a further three years to 2018. The tenements are
centred on the city of Mount Isa. The project includes the
Bikini, Mirrioola, Watta, Warwai and Anderson uranium
deposits, as well as numerous other uranium prospects.
Mineral Resource estimates are shown in the table on the
previous page.
Summit’s applications to cover the Anderson, Bikini,
Mirrioola, Watta and Warwai deposits with MDLs were
granted in September 2014. The deposits are now
covered by MDLs 509, 511 and 513.
VALHALLA NORTH PROJECT (VNP)
The VNP is located on EPM 12572 totalling 193km2,
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 for
these deposits are listed in the table on the previous page.
Paladin’s application for MDLs over the Honey Pot and
Duke Batman deposits were granted in September 2014.
The deposits are now covered by MDLs 507 and 508.
QUEENSLAND URANIUM POLITICS
The expectation in Queensland is that a conservative
government will strongly support uranium mining while a
Labor government (under current policy) will not permit
it. Until the elections in March 2015, the Conservative
government under Campbell Newman were active in
putting in place the regulatory regime to support the
uranium mining industry. After the Labor government
was elected in March 2015 it indicated that it would
continue to allow exploration for uranium but would not
permit mining.
17
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PALADIN ENERGY LTD ANNUAL REPORT 2015
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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
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.
UPDATED MINERAL RESOURCE ESTIMATE
(250PPM U3O8 AND 0.2M CUT-OFF)
Mineral
Resource
Classification
Tonnes
Mt
Grade
ppm
U3O8
Metal
t U3O8
Metal
Mlb
U3O8
Total
Indicated
Inferred
8.4
5.4
850
15.71
7,127
850
10.17
4,613
Figures may not add due to rounding.
The geology of the deposit is well understood, having
been subject to extensive exploration over a number of
years with the stratigraphic sequence being defined by
the comprehensive dataset of downhole electric logs. A
total of 35 water bores in place since 2012, 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 within a 4-5
year time frame.
Current work on the project is concentrated on compiling
a Field Leach Trial proposal document expected to
be submitted to the WA Department of Mines and
Petroleum in the first half of CY2016. Several specialist
studies have been started for this work and these include
hydrogeological modelling, metallurgical testing and
environmental and radiation approval assistance.
CARLEY BORE
On 1 June 2015 Paladin announced the acquisition of
strategically important tenements containing the Carley
Bore deposit from Energia Minerals Limited (EMX) for
consideration of Paladin shares and A$1.6M in cash.
On 7 August 2015, Paladin issued to EMX 40 million
fully paid shares in addition to the cash payment for the
purchase of EL 08/1645 and EL 08/1646, a 685km2 land
package covering a rich sedimentary basin which hosts
the Carley Bore deposit, in the north west region of
Western Australia.
A further 5 million Paladin fully paid shares were issued
for the purchase of the adjacent northern EMX tenement,
EL 08/1644, following EMX’s application for expenditure
being approved. The acquisition also provides Paladin
with a right of first refusal over the disposal of any interest
in any future tenements granted to EMX that share a
boundary with the existing Carley Bore tenements and
certain specific tenements in the vicinity.
Consisting of three contiguous exploration licences, this
new project area is located 100km south of Paladin’s
Manyingee Uranium Project (Manyingee) as shown in the
location map. The Carley Bore deposit, as estimated by
EMX, contains an Indicated Mineral Resource of 5.0Mlb
U3O8 grading 420ppm and an Inferred Mineral Resource
of 10.6Mlb U3O8 grading 280ppm (JORC (2012)) at a cut-
off grade of 150ppm U3O8.
Manyingee
Manyingee
Perth
E 08/1644
E 08/1645
N
Carley Bore
E 08/1646
0
30 Km
Paladin Tenements
Tenements acquired
North West Coastal Highway
18
PALADIN ENERGY LTD ANNUAL REPORT 2015
This acquisition will increase the Company’s JORC
(2012) Indicated Mineral Resources within the area by
more than 30% to 20.7Mlb U3O8 at a grade of 680ppm,
and the Inferred Mineral Resources by more than 100%
to 20.9Mlb at a grade of 415ppm. Carley Bore remains
open to the north and south and Paladin believes there
is excellent potential within this land package to increase
this resource base by at least a further 15Mlb to 25Mlb.
The large tenement package contains geology similar to
that which hosts the Carley Bore and Manyingee deposits
as well as numerous identified regional drill anomalies
which offer additional
follow-up
investigation. The established resource inventory and
potential upside of the combined tenement portfolio will
ensure that a single ISR facility in the region is able to
operate with a long processing life.
targets warranting
The potential to develop a significant mining operation
with a long mine life extending well beyond 20 years within
a new uranium district is compelling. In-house studies
indicate the acquisition of Carley Bore will be value
accretive independent of the significant resource upside
Paladin considers exploration may deliver.
Exploration drilling is planned to start in September 2015
and will focus on resource drilling at Carley Bore as well as
limited regional exploration to test potential for additional
uranium deposits.
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 more
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 mineralisation were discovered. AFMEX
identified a historic 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.
BIGRLYI JOINT VENTURE (BJV)
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), two granted Exploration Licences
(ELs), and a number of applications all 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, it 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.
Mineral
Resource
Classification
Tonnes
Mt
Grade
ppm
U3O8
Metal
t U3O8
Metal
Mlb U3O8
Indicated
Inferred
4.7
2.8
1,366
6,400
1,144
3,200
14.1
7.1
Additionally, in the Ngalia Basin, Paladin holds, as part of
the BJV, Mineral Lease North (MLN) and Mineral Claim
South (MCS) applications covering the Karins deposit,
together with interests in granted ELRs covering the
Walbiri (58%) and Malawiri (48%) prospects; both in
partnership with EME. Paladin also holds 100% of the Mt
Wedge retention lease applications in the Ngalia Basin. On
1 July 2015 Energy Metals announced an Inferred (JORC
2012) Mineral Resource of 1.5Mlb U3O8 at 0.06% U3O8 for
the Karins deposit. 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.
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.
19
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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 at 0.13% U3O8 located in
the Amadeus Basin of Australia’s Northern Territory,
approximately 25km from Alice Springs.
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.
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 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.
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 and Paladin then assumed
100% ownership.
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.
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 FY2015. The only changes to Mineral
Resource and Ore Reserve information were due to
depletion for mining to 30 June 2015 at Langer Heinrich
as well as minor reductions due to the establishment of in-
pit tailings facilities which have sterilised some mined-out
areas within the resource/reserve. There were no other
material changes to the Company’s Mineral Resources
and Ore Reserves.
20
PALADIN ENERGY LTD ANNUAL REPORT 2015
30 June 2014
30 June 2015
Change
M
tonnes
Grade %
U3O8
Metal
t
M
tonnes
Grade %
U3O8
Metal
t
M
tonnes
Metal
t
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
193
270
826
4,327
22,701
564
655
279
2,171
4,103
10,378
367
739
753
8,901
3,334
1,199
12,410
36,877
10,246
12,500
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
19.60
62.94
16.99
32.09
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
0.056
0.054
0.058
0.040
747
15,458
193
270
826
4,327
22,701
564
655
279
2,171
4,103
10,378
367
739
753
8,901
3,334
1,199
10,912
34,051
9,842
12,867
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
-2.82
-4.04
-0.60
+1.67
-1,498
-2,826
-404
+367
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Mineral
Resources
Canada
Measured
Indicated
Inferred
Jacques Lake
Michelin
Rainbow
Gear
Inda
Jacques Lake
Michelin
Nash
Rainbow
Gear
Inda
Jacques Lake
Michelin
Nash
Rainbow
Malawi
Measured Kayelekera
Indicated
Inferred
Stockpiles
Namibia
Measured
Langer
Heinrich
Indicated
Inferred
Stockpiles
Niger
Inferred
Takardeit
23.21
0.021
4,943
23.21
0.021
4,943
Australia
Measured
Valhalla
Indicated
Bigrlyi
Inferred
Andersons
Bikini
Duke Batman
Odin
Skal
Valhalla
Manyingee
Angela
Bigrlyi
Andersons
Bikini
Duke Batman
Honey Pot
Mirrioola
Odin
Skal
Valhalla
Watta
Warwai
16.02
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
Manyingee
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
16.02
6,400
2,079
2,868
728
4,534
9,177
4.7
1.4
5.77
0.53
8.2
14.3
15,662
18.64
7,127
13,980
3,200
204
3,324
325
1,799
1,132
3,430
708
5,824
2,260
134
4,613
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
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
21
PALADIN ENERGY LTD ANNUAL REPORT 2015
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Ore
Reserves
Malawi
Proven
Probable
Stockpiles
Namibia
Proven
Probable
Stockpiles
Kayelekera
Langer Heinrich
30 June 2014
30 June 2015
Change
M
tonnes
Grade %
U3O8
Metal
t
M
tonnes
Grade %
U3O8
Metal
t
M
tonnes
Metal
t
0.39
5.34
1.59
17.09
56.31
30.42
0.117
0.088
0.076
457
4,709
1,199
0.057
9,653
0.056
31,764
0.041
12,500
0.39
5.34
1.59
15.80
52.83
32.09
0.117
0.088
0.076
457
4,709
1,199
–
–
–
–
–
–
0.057
8,955
0.055
29,273
0.040
12,867
-1.29
-3.48
+1.67
-698
-2,491
+367
Mineral Resources and Ore Reserves quoted on a 100% basis.
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.
The information above relating to exploration, mineral resources and ore reserves is, except where stated, based on information compiled
by David Princep B.Sc and Stephanie Raiseborough B.E., both of whom are members of the AusIMM. Mr Princep and Ms Raiseborough
each have sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity
that he/she 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 Mr Princep and Ms Raiseborough as a Qualified Person as defined in NI
43-101. Mr Princep and Ms Raiseborough 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 16.70%
Deep Yellow Limited (DYL) is an ASX-listed, Namibian-
focussed advanced stage uranium exploration company.
It also has a listing on the Namibian Stock Exchange.
DYL’s operations in Namibia are conducted by its 100%
owned subsidiary Reptile Uranium Namibia (Pty) Ltd
(RUN). RUN holds 100% of two Exclusive Prospecting
Licences (EPLs) covering 1,346km2 and another four
EPLs under two different joint ventures of which RUN is
also the operator. All of these EPLs are situated in the
Namib Naukluft Desert Park inland from Walvis Bay and
south and west of Paladin’s LHM.
The company’s flagship is the higher grade alaskite
Omahola Project on which studies are being conducted
to supplement a recently completed (internal) preliminary
economic analysis. Scoping level metallurgical testwork is
also being planned, which will be required to demonstrate
the technical feasibility of developing Omahola as a heap
leach project.
During the past year DYL attempted to secure a domestic
offtaker
for the Tubas Sand Project but marginal
economics prevented a successful outcome and the
project is now on hold. Subsequently the company
commenced evaluating fast track development options for
its surficial calcrete deposits, similar in nature and some
close to Paladin’s LHM, which appear to be amenable to
various physical beneficiation upgrading techniques that
have been successfully tested over the last four years.
22
PALADIN ENERGY LTD ANNUAL REPORT 2015
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.
The Company Lost Time Injury Frequency Rate (LTIFR)
decreased from 3.1 to 2.1 over the previous year. For
FY2015, there were six LTIs compared to twelve 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.
Duration Rate:
Average number of workdays lost per injury.
FY2015 COMPANY SAFETY STATISTICS
Langer Heinrich Mine
Kayelekera Mine
Employees
Mine
Contractors
Other
Contractors
Employees
Mine
Contractors
Other
Contractors
Hours Worked
732,993
1,069,165
197,846
659,977
15,344
83,700
Lost Time Injuries
Fatalities
LTIFR
3
0
4.1
2
0
1.9
0
0
0
1
0
1.5
0
0
0
0
0
0
Langer Heinrich Mine Total LTIFR = 2.5
Duration Rate = 10.6
Kayelekera Mine Total LTIFR = 1.3
Duration Rate = 39.0
FY2014 COMPANY SAFETY STATISTICS
Perth
Exploration
Group
Corporate
Office
Employees Contractors
Paladin
Employees
All
Contractors
Hours Worked
86,000
59,657
206
1,538,627
1,366,261
4
0
2.6
2
0
1.5
Paladin Group +
All Contractors
LTIFR = 2.1
Duration Rate = 15.3
Lost Time Injuries
Fatalities
LTIFR
0
0
0
0
0
0
0
0
Perth LTIFR
= 0.0
Duration Rate
= 0.0
Exploration
LTIFR = 0.0
Duration Rate
= 0.0
The Paladin Group’s decreased LTIFR highlights the need
for constant focus in order to maintain a safe and healthy
work environment within 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.
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LANGER HEINRICH MINE
KAYELEKERA MINE
The Kayelekera Mine is currently under care and
maintenance therefore the workforce numbers and thus
man hours have significantly decreased from the previous
financial year.
The site reported one LTI, relating to an employee,
decreasing the annual LTIFR from 2.9 to 1.3. Similar
to LHM, a fresh and increased focus and awareness
programme instigated as a result of last year’s poor
performance has resulted in this reduction in LTIFR.
A NOSA Health, Safety and Environment external audit
was conducted for the period July 2014 to May 2015
resulting in Kayelekera Mine being awarded a 5 Star
Platinum rating – NOSA’s highest standard.
The designated worker mean annual radiation dose was
1.1 mSv for 5 months of operating in CY2014 compared
with the internationally recommended annual dose limit
of 20 mSv.
EXPLORATION
Paladin’s exploration activities
in
Canada and limited ground surveys in remote locations
undertaken for its other projects.
included drilling
No LTI’s were recorded for the year with the LTIFR rate
decreasing from 11.0 to 0.
Exploration continues to maintain and enhance its Safety
and Health Management System particularly in the
aspects of remote area operations.
During the year, LHM reported five LTIs, of which three
were LHM employees and two were contractors. The
site’s annual LTIFR decreased from 3.7 to 2.5 with the
decrease being attributed to an increased focus on safety,
health, and radiation (SHR) management and training.
The mine’s 2014 NOSA grading audit, conducted in March
2015, resulted in the operation attaining a 4 Star Platinum
(health, safety and environment) grade rating, up from
its previous 3 star Platinum grade rating. This increased
performance resulted in an audit score of 82.6% up from
73.1% highlighting the impact of additional resources and
ongoing review of procedures and training on the site’s
comprehensive safety programmes.
LHM has reviewed and strengthened key areas of
the general induction which now covers the revised
procedures such as permit to work, hazard identification,
risk assessments, isolations, working in confined spaces,
working at heights and performing hot work. Mine
personnel have undergone and are undergoing revised
training, further up skilling and broadening of their safety
and health knowledge base to ensure a safer work
environment.
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. The mine participates in the Chamber of Mines
Safety Committee who together with a group of mines
safety managers conduct quarterly peer safety reviews.
The Safety Committee carried out a safety inspection at
the Langer Heinrich Mine during September 2014.
The 2014 Annual Radiation Report was compiled and
delivered to the Namibian Radiation Protection Authority
(NRPA) in March 2015. Radiation doses reported include:
The mean dose to Designated Workers was 3.1 mSv,
compared with 3.7 mSv in 2013;
The dose to Non-Designated Workers was 1.6 mSv
(compared to 1.9mSv in 2013); and
The dose to a hypothetical group living on the site
boundary (Remote Gate) for the entire 2014 year
would have been 1.9 mSv. This compares with the
mean world member of the public dose as reported
by the United Nations Scientific Committee on the
Effects of Atomic Radiation (UNSCEAR) of 2.4 mSv.
In April the NRPA issued LHU with a consolidated
Authorisation to Export Radioactive Material and Licences
for the Possession and Use of Sources. This is the first
time that LHU has been able to obtain a consolidated
authorisation replacing numerous documents that were
previously required to be renewed at various times during
the year.
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PALADIN ENERGY LTD ANNUAL REPORT 2015
FINANCIAL REVIEW
OPERATIONAL OVERVIEW
The Group has two uranium mines in Africa1, 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.
to 3.7Mlb U3O8 pa commenced
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
in
CY2008. LHM reached the Stage 2 design capacity in
December 2009. The plant 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.
the
further
training and
In FY2014, the focus turned to process innovation and
production optimisation. The plant achieved record
annual production totalling 5.822Mlb2 U3O8 for FY2014,
6% higher than FY2013. In FY2015 the production
optimisation strategy continued and focused on the
better utilisation of existing equipment, operator and
supervision
integration of
process control. Process innovation was focused on
the Bicarbonate Recovery Plant (BRP). The BRP was
commissioned in early March 2015 and apart from minor
downtime to complete priority construction punch list
items, the plant has run continuously since, at or above
design throughput. The process performance of the plant
is substantially better than predicted and bicarbonate
recovery levels are much higher than forecast. The high
degree of success from this project also augurs very well
for the ongoing innovation programme and subsequent
expected reductions in C1 costs.
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 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.
The Feasibility Study for recommencement of production
at KM is near completion with a final internal review of
the study underway. The study to date has confirmed that
KM remains a valuable strategic asset. KM can provide
an additional 2.5Mlb pa in production and has clear
potential to produce strong cash flow at uranium prices
of US$75/lb, for at least six years, as more than 50%
of the project’s total reserves and resources remain for
future development. Further regional exploration has the
potential to provide additional upside.
1 Langer Heinrich Mine, Namibia (operating). Kayelekera Mine, Malawi (on care
and maintenance).
2 Langer Heinrich Mine production volumes were restated and include an
adjustment to in-circuit inventory.
25
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PALADIN ENERGY LTD ANNUAL REPORT 2015
NON IFRS MEASURE
C1 cost of production = cost of production excluding
product distribution costs, sales royalties and depreciation
and amortisation before adjustment for impairment. C1
cost, which is a non-IFRS measure, is a widely used
‘industry standard’ term. We use this measure as a
meaningful way to compare our performance from period
to period. We believe that, in addition to conventional
FINANCIAL RESULTS
measures prepared in accordance with IFRS, certain
investors use this information to evaluate our performance.
C1 cost information (unaudited) has been extracted from
the financial statements. For an analysis of total cost of
sales refer to Note 12 to the financial statements. Refer to
page 28 for reconciliation.
Production volume (Mlb)
Sales volume (Mlb)
Realised sales price (US$/lb)
Revenue
Cost of Sales
Impairment – inventory, stores and consumables
Gross (loss)/profit
Impairments
Loss after tax attributable to members of the parent
Other comprehensive income/(loss) for the period, net of tax
Change
from 2014
to 2015
(37)%
(38)%
(2)%
(39)%
43%
87%
103%
27%
21%
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Year Ended 30 June
2015
2014
2013
5.037
5.367
37.0
US$M
199.5
(189.7)
(8.0)
1.8
7.943
8.665
37.9
US$M
329.5
(332.9)
(61.7)
8.255
8.253
49.5
US$M
411.5
(355.6)
(30.9)
(65.1)
25.0
(241.4)
(331.7)
(305.0)
(267.8)
(101.0)
(338.4)
1.9
(420.9)
(69.2)
(490.1)
(49.1)
Total comprehensive loss attributable to the members of the parent
Loss per share - basic and diluted (US cents)
(10)%
42%
(368.8)
(336.5)
(18.9)
(32.7)
References below to 2015 and 2014 are to the equivalent
year ended 30 June 2015 and 2014 respectively.
Revenue decreased by 39%, due to a 2% decrease in
realised sales price and a 94% (3.272Mlb) decrease in
sales volume from KM, which ceased production on 6
May 2014, and is now on care and maintenance. The last
of KM finished goods were sold in December 2014.
Gross Profit in 2015 of US$1.8M is a turnaround from a
US$65.1M gross loss in 2014 due to a lower impairment
of inventory, stores and consumables in 2015 of US$8.0M
(2014: US$61.7M impairment of inventory, stores and
consumables). The gross loss in 2014 included a gross
loss before impairments from KM of US$19.6M and a
gross profit before impairments from LHM of US$15.5M.
Impairments of US$241.4M (2014: US$331.7M) were
recognised in 2015 relating to US$229.1M (US$180.8M
after tax) (2014: US$323.6M (US$226.5M after tax))
impairment of
the Queensland exploration assets,
US$8.4M impairment of the Bigrlyi exploration asset,
US$1.0M (2014: US$3.8M) impairment of the aircraft and
US$2.9M (2014: US$4.3M) impairment of available-for-
sale financial assets predominantly due to the impairment
of the investment in Deep Yellow Ltd (DYL).
Loss after Tax Attributable to the Members of the Parent
for 2015 of US$267.8M is lower than the loss of US$338.4M
in 2014, and is predominantly due to the impairment of
the Queensland exploration assets discussed earlier, a
38% decrease in sales volume, a 2% decrease in realised
sales price and finance costs of US$57.0M. In 2014, the
loss was predominantly due to the impairment of the
Queensland exploration assets.
Segment Information (refer to Note 5)
The Namibian segment loss increased by US$23.7M, due
mainly to the tax expense in 2015, which has arisen as
a result of deferred tax recognised on foreign exchange
temporary differences. The Malawian segment loss
decreased by US$48.2M as a result of KM ceasing
production and being placed on care and maintenance.
Exploration activities loss has decreased by US$59.1M
predominantly due to a lower impairment expense in 2015
discussed earlier. In the Unallocated portion, the Group
reflected the remaining Income Statement activities,
which for 2015 comprise mainly marketing, corporate,
finance and administration costs. The loss (costs) in
this area has decreased by US$5.9M mainly through a
cost rationalisation review and due to the recognition
of an income tax benefit on the issue of the US$150M
convertible bond.
Three Year Trend
Revenue has decreased by 51% since 2013, due to a 25%
decrease in realised sales price and a 35% decrease in
sales volume. Gross profit in 2015 of US$1.8M is lower
than the gross profit in 2013 of US$25.0M, due to lower
sales prices and sales volumes in 2015 being partially
offset, in 2013, by a higher impairment of inventory, stores
and consumables of US$30.9M.
26
PALADIN ENERGY LTD ANNUAL REPORT 2015
FOURTH QUARTER FINANCIAL RESULTS
Production volume (Mlb)
Sales volume (Mlb)
Realised sales price (US$/lb)
Revenue
Cost of Sales
Impairment – inventory, stores and consumables
Gross loss
Impairments
Three Months Ended 30 June
%
Change
2015
2014
2013
(16)%
(3)%
9%
6%
4%
78%
104%
1.336
1.766
41.5
1.600
1.812
38.2
US$M
US$M
73.9
(67.5)
(8.0)
(1.6)
69.4
(70.1)
(36.8)
(37.5)
2.143
2.326
46.2
US$M
109.6
(92.8)
(17.2)
(0.4)
(6,208)%
(239.7)
(3.8)
(164.2)
Loss after tax attributable to members of the parent
(309)%
(195.9)
(63.5)
(173.3)
Other comprehensive income/(loss) for the period, net of tax
3.2
13.1
(86.1)
Total comprehensive loss attributable to the members of the parent
(382)%
Loss per share - basic & diluted (US cents)
(89)%
(192.7)
(11.7)
(50.4)
(6.2)
(259.4)
(19.6)
References below to 2015 and 2014 are to the equivalent
three months ended 30 June 2015 and 2014 respectively.
Revenue increased by 6%, due to a 9% increase in realised
sales price, which was partially offset by a 3% decrease in
sales volume as there were no sales from KM. The last of
KM finished goods were sold in December 2014.
Gross Loss in 2015 of US$1.6M is lower than the gross loss
in 2014 of US$37.5M predominantly due to there being a
lower impairment of inventory, stores and consumables
in 2015 of US$8.0M (2014: US$36.8M). The gross loss in
2014 included a gross loss before impairments from KM
of US$9.2M.
Impairments of US$239.7M
(2014: US$3.8M) were
recognised in 2015 relating to US$229.1M (US$180.8M
after tax) (2014: US$Nil) impairment of the Queensland
exploration assets, US$8.4M (2014: US$Nil) impairment
(2014:
of
US$3.8M) impairment of the aircraft and US$1.2M (2014:
US$Nil) impairment of available-for-sale financial assets
predominantly due to the impairment of the investment in
Deep Yellow Ltd (DYL).
the Bigrlyi exploration asset, US$1.0M
Loss after Tax Attributable to the Members of the Parent
for 2015 of US$195.9M is higher than the loss of US$63.5M
in 2014, and is predominantly due to the impairment of the
Queensland exploration assets discussed earlier.
Three Year Trend
Revenue has decreased by 33% since 2013 due to a 10%
decrease in realised sales price and a 24% decrease in
sales volume. Gross loss in 2015 of US$1.6M is a slight
increase from a US$0.4M gross loss in 2013 predominantly
due to lower sales prices and sales volumes in 2015 being
partially offset by a lower impairment of inventory, stores
and consumables in 2015 of US$8.0M (2013: US$17.2M).
ANALYSIS OF REALISED SALES PRICE AND
SALES AND PRODUCTION VOLUMES
Year Ended 30 June
%
Change
2015
US$
2014
US$
(7)%
US$37.2/lb US$39.9/lb
(6)% US$32.8/lb US$35.0/lb
(2)%
US$37.0/lb US$37.9/lb
-%
(94)%
(38)%
(13)%
(100)%
(38)%
Mlb U3O8 Mlb U3O8
5.190
5.164
0.203
5.367
5.037
–
5.037
3.475
8.665
5.822
2.351
8.173
LHM realised uranium
sales price
KM realised uranium
sales price
Group realised
uranium sales price
LHM sales volume
KM sales volume
Total sales volume
LHM production
KM production
Total production
The average realised uranium sales price for the year
ended 30 June 2015 was US$37.0/lb U3O8 compared to
the TradeTech weekly spot price average for the year of
US$35.8/lb U3O8.
27
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RECONCILIATION OF C1 COST OF PRODUCTION TO COST OF GOODS SOLD
Year Ended 30 June 2015
Year Ended 30 June 2014
Volume Produced (Mlb)
LHM
5.037
Cost of Production/lb (C1)
US$29.0/lb
Cost of Production (C1)
Depreciation and amortisation
Production distribution costs
Royalties
Inventory movement
Other
US$M
146.4
24.0
5.7
5.8
1.7
(0.7)
Cost of goods sold
182.9
KM
-
-
US$M
-
-
-
-
6.8
-
6.8
Total
5.037
LHM
5.822
KM
2.351
Total
8.173
US$27.7/lb
US$35.9/lb
US$M
146.4
24.0
5.7
5.8
8.5
(0.7)
US$M
161.3
36.6
6.2
4.3
(15.9)
(0.9)
US$M
84.5
US$M
245.8
6.8
6.6
4.3
32.2
6.9
43.4
12.8
8.6
16.3
6.0
189.7
191.6
141.3
332.9
The C1 cost of production for the year for LHM increased
by 5% to US$29.0/lb U3O8 (2014: US$27.70/lb U3O8);
however, total C1 cost of production for the year
decreased by 9%, to US$146.4M.
Production ceased at KM on 6 May 2014.
ANALYSIS OF ADMINISTRATION, MARKETING AND
NON-PRODUCTION COSTS
Year Ended 30 June
%
Change
2015
US$M
2014
US$M
Total
12%
(19.3)
(21.9)
Costs for the year ended 30 June 2015 decreased by
US$2.6M, primarily due to a reduction of US$2.9M in
non-production mine site costs as KM has been placed
on care and maintenance.
28
PALADIN ENERGY LTD ANNUAL REPORT 2015
SUMMARY OF QUARTERLY FINANCIAL RESULTS
LHM
Production U3O8*
C1 cost of production*
KM
Production U3O8
C1 cost of production
Total revenues
Sales volume
Realised uranium sales price
Impairments
Loss after tax attributable to members
Mlb
US$/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
2015
Jun Qtr
2015
Mar Qtr
2014
Dec Qtr
2014
Sep Qtr
1.336
26.0
–
–
73.9
1.766
41.5
(247.7)
(195.9)
(11.7)
1.234
29.4
–
–
17.1
0.440
38.0
–
(12.6)
(0.8)
1.377
28.6
–
–
70.4
1.911
36.4
(1.7)
(20.5)
(1.7)
1.090
33.0
–
–
39.3
1.250
31.2
–
(38.8)
(3.8)
2014
Jun Qtr
2014
Mar Qtr
2013
Dec Qtr
2013
Sep Qtr
1.416
29.5
0.262
44.7
69.4
1.812
38.2
(40.6)
(63.5)
(6.2)
1.463
27.6
0.697
32.9
88.6
2.405
36.8
–
(19.9)
(2.0)
1.514
26.0
0.777
33.1
102.1
2.775
36.7
(337.3)
(215.0)
(21.2)
1.429
28.0
0.615
39.3
69.4
1.673
41.4
(15.5)
(40.0)
(3.9)
* LHM production volumes and unit C1 cost of production for the quarters ended December 2014, September 2014,
June 2014, March 2014 and December 2013 include an adjustment to in-circuit inventory relating to leached uranium
within the process circuit.
29
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The unit C1 cost of production for LHM decreased 12%
over the last year, from US$29.5/lb in the June 2014
quarter to US$26.0/lb in the June 2015 quarter, due to
a combination of a weaker Namibian dollar and cost
saving initiatives.
Cash flow optimisation remains an ongoing priority and
further improvements in C1 costs are expected due to a
number of additional initiatives.
Process innovation was focused on the Bicarbonate
Recovery Plant (BRP). The BRP was commissioned in
early March 2015. The process performance of the plant
is substantially better than predicted and bicarbonate
recovery levels are much higher than forecast. The high
degree of success from this project also augurs very well
for the ongoing innovation programme and subsequent
expected reductions in C1 costs.
The BRP operated well throughout the June 2015
quarter, achieving 115% to 120% of design capacity in
terms of both volume processed and sodium bicarbonate
recovered. Significant process optimisation has taken
place during the June 2015 quarter such that, for the
month of June 2015, the plant achieved 147% of its
design capacity, a level of performance that is expected
to be maintained, or exceeded, through the September
quarter. This equates to a potential direct annual saving
of approximately 22,500tpa of sodium bicarbonate and
10,700tpa of caustic soda totalling about US$16M in
reagent cost savings.
Further optimisation is ultimately expected to lift the BRP
performance to higher than 200% of design (in terms of
sodium bicarbonate recycled and caustic savings) by
December 2015 and without the need for the installation of
any additional equipment. Further associated innovations
are either in the implementation or design phase and
scheduled for both FY16 and FY17.
As expected, the BRP has had a significant additional
positive impact on broader process plant performance
and subsequent unit operating cost with:
Soluble loss down approximately 70%;
Resin loadings approximately double previous levels
and consequently planned resin replacement ($0.50/
lb cost) may no longer be required;
Stabilised process operability; and
Stabilised site water balance with greater
discretionary control.
In addition to the direct savings, there are a number of
indirect savings and recovery improvements that were
expected. These too are being realised at a substantially
greater level. One of these indirect benefits is a reduction in
soluble loss that has allowed the recognition of additional
dissolved uranium inventory within Tailings Facility TSF3,
which will now be converted to drummed product in the
normal course of operations. A consequential adjustment
of 509,694lb was required, and has been made, for all
production since TSF3 was commissioned in October
2013 (FY2015: 280,046lb and FY2014: 229,648lb).
In addition, following the commissioning of the BRP,
process improvements have increased product in circuit
by 334,101lb. The impact of the BRP has been to: (i)
concentrate the uranium in the SDU reactors, (ii) increase
the slurry density to improve final product quality, and (iii)
reduce in process water inventory. Additional inventory
has also accumulated in the circuit, due to operational
factors associated with the SDU thickener. It is expected
that this inventory will be processed and drummed in the
normal course of operations.
The high degree of success from the BRP project augurs
well for the ongoing success of Paladin’s innovation
programme. The new technology underpinning this
programme is the key driver of the forecast further
reductions in C1 costs at LHM. It should be noted that at
the end of FY14 the combined sodium bicarbonate and
caustic reagent costs represented approximately 56% of
process operating costs. This is expected to fall to 32% in
FY16 with potential remaining for further reductions.
Total revenue for the quarter ended June 2015 was higher
than the comparative quarter, due to higher realised
uranium prices. Total revenue for the quarter ended
March 2015 was lower than the comparative quarter,
because of lower uranium sales volumes. Total revenues
for the quarters ended September 2014 and December
2014 were lower than the comparative quarters, due to
lower realised uranium prices and lower sales volumes.
Additionally, KM is now in care and maintenance with
production ceasing on 6 May 2014.
CERTAIN BALANCE SHEET ITEMS ARE SET OUT
BELOW:
SUMMARISED STATEMENT OF FINANCIAL POSITION
Year Ended 30 June
2015
US$
183.7
231.6
2014
US$
88.8
238.3
2013
US$
78.1
300.2
1,100.0
1,565.7
1,837.7
534.5
725.6
677.8
859.3
1,049.1
1,058.1
Cash and cash
equivalents
Inventories
Total assets
Interest bearing loans
and borrowings
Total long-term
liabilities
Net Assets
198.3
432.4
648.2
Cash and Cash Equivalents have increased by US$94.9M,
mainly as a result of the final US$170.0M proceeds
received in July 2014 from the sale of a 25% interest in
LHM, US$119.7M from the entitlement offer, US$52.7M
from the share placement to HOPU, and the proceeds
from the issue of a US$150.0M convertible bond at 31
March 2015, which have been partially offset by the
repurchase of the US$300.0M November 2010 convertible
bond, a US$39.9M repayment of the LHM project finance
facility and syndicated loan and costs attributable to
the capital raisings. Additionally, there were payments
for plant and equipment of US$11.5M, exploration and
evaluation project expenditure of US$5.8M and net
interest paid of US$28.8M.
Inventories have decreased by US$6.7M, predominantly
due to a decrease in the number of pounds of finished
goods at 30 June 2015 which has been 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.
Interest Bearing Loans and Borrowings have decreased
by US$191.1M, primarily as a result of the repurchase
of the US$300M November 2010 convertible bond and
US$39.9M repayment of the LHM project finance facility
and syndicated loan, which has been partially offset by
the issue of a US$150M convertible bond on 31 March
2015, establishment costs for the new syndicated loan of
US$1.5M, convertible bond raising costs of US$4.2M less
non-cash accretion of the convertible bonds of US$18.2M.
30
PALADIN ENERGY LTD ANNUAL REPORT 2015
Segment Assets: Namibian assets have
increased
predominantly due to an increase in cash, which was
partially offset by a decrease in inventory and trade and
other receivables. Malawian assets have decreased as
a result of a decrease in the value of inventory held by
KM, as all finished product has now been sold, and a
decrease in cash and trade debtors. KM is on care and
maintenance. The Exploration segment assets have
decreased predominantly due to the impairment of the
Queensland exploration assets discussed under the
Financial Results section and as a result of a decrease
in the US dollar value of exploration assets, which is due
to the decremental foreign exchange movement of the
Australian and Canadian dollar currencies against the
US dollar. In the Unallocated portion, assets decreased
primarily due to a decrease in trade and other receivables,
which in 2014 included a US$170M receivable relating to
the outstanding proceeds for the sale of a 25% equity
stake in LHM, which was partially offset by an increase
in cash from the placement and entitlement offer and the
issue of a US$150M convertible bond.
LIQUIDITY AND CAPITAL RESOURCES
The Group’s principal source of liquidity as at 30 June
2015, was cash of US$183.7M (30 June 2014: US$88.8M).
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$178.6M is
held in US dollars.
Net Cash Outflow from Operating Activities was US$24.7M
in 2015 (2014: inflow US$10.1M), primarily due to receipts
from customers of US$215.4M (2014: US$370.3M), which
were offset by payments to suppliers and employees of
US$210.9M (2014: US$326.3M) and net interest paid of
US$28.8M (2014: US$32.3M).
Net Cash Outflow from Investing Activities was US$15.6M
in 2015 and is due primarily to plant and equipment
acquisitions of US$11.5M, including, at LHM, the BRP
and spiral heat exchangers, as well as capitalised
exploration expenditure of US$4.2M. The net cash
outflow of US$25.3M in 2014 was due primarily to plant
and equipment acquisitions of US$20.3M, predominantly
the new tailings facility at LHM and BRP and tailings
pipeline at KM, as well as capitalised exploration
expenditure of US$5.8M.
Net Cash Inflow from Financing Activities of US$137.6M
in 2015 is attributable to the proceeds received from the
sale of a 25% interest in LHM for US$170M, from the
entitlement offer of US$119.7M, from the share placement
to HOPU of US$52.7M and from the convertible bond
issue of US$150M, and has been partially offset by the
repurchase of the US$300M November 2010 convertible
bond, a US$39.9M repayment of the LHM project finance
and syndicated loan facility, US$1.5M in syndicated loan
facility establishment costs, US$3.0M in costs attributable
to sale of a non-controlling interest in LHM, US$6.2M in
equity capital raising costs and US$4.2M in convertible
bond raising costs. The net inflow in 2014 of US$26.3M
was attributable to the net proceeds received from the
share placement of US$80.7M and from the drawdown of
debt funding of US$110.0M, which was partially offset by
a repayment of project financing of US$178.8M.
GOING CONCERN
As at 30 June 2015, the Group had a net working capital
surplus of US$231.8M (30 June 2014: US$288.5M),
including cash on hand of US$183.7M (30 June 2014:
US$88.8M). Included within this cash on hand is
US$31.2M (30 June 2014: US$13.2M), which is restricted
for use in respect of the LHM syndicated loan facility and
supplier guarantees provided by LHM.
The amount outstanding at 30 June 2015 on the
syndicated loan facility was US$60.9M.
Repayment obligations during the next twelve months
to 30 June 2016 in respect of interest bearing loans and
borrowings are summarised as follows:
secured bank loan principal repayments of US$9.1M
for syndicated loan facility; and
interest payments of US$29.7M for syndicated loan
facility and 2012 (due 2017) and 2015 (due 2020)
unsecured convertible bonds.
In December 2014, the Group successfully completed
an equity capital raising of A$205M (US$172.4M) through
the introduction of a strategic investor, together with
completion of a well-supported entitlement offer.
On 31 March 2015, the Company issued a US$150M
convertible bond with a coupon rate of 7.00% maturing
on 31 March 2020 and a conversion price of US$0.356
for Company shares. US$100M was issued to high
quality institutional investors, whilst US$50M was issued
to Leader Investment Corporation, a controlled subsidiary
of CIC, one of the largest sovereign wealth funds in the
world. The issue was approved by shareholders on
30 March 2015.
The proceeds from the convertible bond issue, along with
the existing cash balance, were used to fund a concurrent
tender offer to acquire the outstanding US$300M
convertible bonds due November 2015, issued by the
Company on 4 November 2010.
At the date of this report, the Directors are satisfied there
are reasonable grounds to believe that, having regard to
the Group’s position and its available financing options,
the Group will be able to meet its obligations as and when
they fall due.
31
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The following is a summary of the Group’s outstanding
commitments as at 30 June 2015:
Payments due
by period
Total
US$M
Less
than 1 yr
US$M
1 to
5yrs
US$M
5yrs+ or
Unknown
US$M
Tenements
Operating leases
Mining, transport
and reagents
Manyingee
acquisition costs
Total
commitments
21.6
0.9
0.6
0.8
17.2
15.3
0.6
-
9.8
0.1
1.9
-
11.2
-
-
0.6
40.3
16.7
11.8
11.8
In relation to the Manyingee Uranium Project, the
acquisition terms provide for a payment of A$0.75M
(US$0.57M) by the Group to the vendors when all project
development approvals are obtained.
The Group has no other material off balance sheet
arrangements.
OUTSTANDING SHARE INFORMATION
As at 27 August 2015, Paladin had 1,711,927,688 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:
As at 28 August 2015
Ordinary shares
Issuable under Employee Performance
Share Rights Plan
Issuable under Share Option Plan
Issuable in relation to the US$274 million
Convertible Bonds
Issuable in relation to the US$150 million
Convertible Bonds
Total
Number
1,711,927,688
788,754
1,000,000
149,726,776
421,348,315
2,284,791,533
CRITICAL ACCOUNTING ESTIMATES
the Financial Report
The preparation of
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 2015, 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.
The Group currently does not engage in any hedging
or derivative transactions to manage uranium price
movements, interest rate or foreign currency risks.
The Group’s credit risk is the risk that a contracting entity
will not complete its obligation under a financial instrument
that will result in a financial loss to the Group. The carrying
amount of financial assets represents the maximum credit
exposure. The Group trades only with recognised, credit
worthy third parties. In addition, receivable balances are
monitored on an ongoing basis with the result that the
Group’s exposure to bad debts is not material.
The Group’s treasury function is responsible for the
Group’s capital management, including management
of the long-term debt and cash as part of the capital
structure. This involves the use of corporate forecasting
models which enable analysis of the Group’s financial
position, including cash flow forecasts, to determine
the future capital management requirements. To ensure
sufficient funding for operational expenditure and growth
activities, a range of assumptions are modelled so as to
provide the flexibility in determining the Group’s optimal
future capital structure.
OTHER RISKS AND UNCERTAINTIES
RISK FACTORS
The Group is subject to other risks that are outlined in the
Annual Information Form 51-102F2, which is available on
SEDAR at sedar.com
TRANSACTIONS WITH RELATED PARTIES
During the year ended 30 June 2015, 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 27. Details of
material controlled entities are set out in Note 32.
DISCLOSURE CONTROLS
The Group has applied its Disclosure Control Policy to the
preparation of the Consolidated Financial Report for year
ended 30 June 2015, 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
(ICFR) and ensured
The Group has designed appropriate Internal Controls
over Financial Reporting
that
these were in place for the year ended 30 June 2015.
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 2015.
32
PALADIN ENERGY LTD ANNUAL REPORT 2015
CHANGE OF CHIEF EXECUTIVE OFFICER
On 30 July 2015, the Company advised that its Board
and Managing Director and CEO Mr John Borshoff had
agreed that Mr Borshoff would step down from his role
with the Company.
A process to identify a suitable new CEO is now
underway. In the interim, Mr Alexander Molyneux has
been appointed Interim CEO. Mr Molyneux joins with
substantial experience in natural resources executive
leadership, including both public mining company CEO
and uranium experience.
Mr Molyneux’s core mandate will be to: (i) to continue
the optimisation of Paladin’s overall cash flow break-
even level with the aim to become cash flow generative
in the current uranium price environment; (ii) focus on
accelerating strategic initiatives that deliver value; and (iii)
to assist the Board in its search for a permanent CEO.
BOARD AND MANAGEMENT RESTRUCTURING
On 21 August 2015, the Company advised of board
and management changes, and a reduction in board
remuneration.
Paladin’s board accepted the resignation of Non-
Executive Director Mr Sean Llewelyn.
Ms Gillian Swaby, Group Company Secretary and EGM
Corporate Services, and the Company agreed Ms
Swaby would step down from her role at the Company.
Mr Ranko Matic was appointed Company Secretary.
Paladin’s board adjusted its remuneration structure with
an effective date of 1 July 2015. The revised structure
will alter the base salary for Non-Executive Directors to
A$65,000 and the Non-Executive Chairman to A$125,000.
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.
CHANGES IN ACCOUNTING POLICIES
The Group has adopted all new and amended Australian
Accounting Standards and AASB Interpretations effective
from 1 July 2014. The nature and impact of each new
standard and amendment is described in Note 3 – Basis
of Preparation.
SUBSEQUENT EVENTS
Other than disclosed below, since 30 June 2015,
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 2015
Financial Report:
MATERIAL REDUCTION IN COSTS
On 30 July 2015, the Company advised of a material
reduction in its cash flow break-even level through a
sustainable reduction in its all-in cash costs (including
capital expenditure, corporate costs and debt servicing).
These measures will reduce Paladin’s total cash costs by
more than US$33M compared to FY2015.
Subsequent to the US$33M in cost reductions announced
on 30 July 2015, Paladin has identified further significant
cash flow optimisation initiatives. Such initiatives include:
LHM operating initiatives – As a consequence of the
BRP, barren solution used for wash in the counter
current decantation section of the LHM plant is
expected to reduce from approximately 50ppm U3O8
to less than 10ppm. This will result in a significant
improvement in wash efficiency. The Company’s
original FY2016 outlook assumed wash efficiency of
93.1%. Paladin now anticipates a wash efficiency in
the range of 95% to 98% for FY2016. The Company
has also revised its FY2016 life of mine plan for LHM
resulting in an average feed-grade of 694ppm U3O8,
i.e., an increase of 11ppm over the guidance provided
in the last Quarterly Activities Report announced on
16 July 2015.
Corporate costs, exploration and KM initiatives –
Paladin has implemented reductions in these areas
to further reduce annualised cash expenditure by
approximately US$8M over the initiatives set out in the
cost reduction announcement of 30 July 2015 (i.e., a
cumulative US$14M less than FY2015). The additional
initiatives include a reduction in approximately 50%
of corporate staff that was undertaken on 21 August
2015 concurrent with the reduction in the number
of directors and reduction in board fees announced
the same day. Exploration has been put on care and
maintenance whereby the Company will undertake
license
the work
expenditures only.
to meet minimum
required
33
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PALADIN ENERGY LTD ANNUAL REPORT 2015
SUSTAINABLE DEVELOPMENT
Paladin is committed to the goal of sustainable development, which is reflected
in its corporate values. The Company’s values include promoting 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.
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. The Company emphasises acting
with integrity, honesty and cultural sensitivity in all of its
dealings. In support of this commitment, Paladin applies
and adheres to established and internationally recognised
principles of sustainable development for all of its
global activities.
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 consideration its employees, communities,
shareholders and other key stakeholders. Paladin ensures
that its high standards are not compromised despite the
difficult economic climate that it is currently operating in.
radiation, environment, social
To deliver on Paladin’s commitment to sustainable
the Company has a Sustainability
development,
Committee whose role is to provide the Board with an
overview of Paladin’s performance in the areas of health,
safety,
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 Director who is also the Chairman of
that Committee.
ENVIRONMENT
OUR COMMITMENT
to ensuring
is committed
Paladin
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:
complying with applicable environmental legislation;
ensuring operations have developed an environmental
management system;
identifying, assessing and managing environmental
risks;
implementing and assigning accountabilities
for
standards, guidelines and procedures;
CORPORATE SUSTAINABILITY REPORTING
Paladin produced its third Sustainability Report (FY2014),
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 FY2015 Sustainability
Report. Data is collected specifically to meet the
reporting guidelines of the Global Reporting Initiative
(GRI) Framework applying the G4 requirements. 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 and have therefore conducted materiality
assessments to define the reporting parameters. To
allow sufficient time for comprehensive data collection,
assessment and reporting for the FY2015 period, the
report is expected to be available on the website towards
the end of CY2015.
following discussion provides an overview of
The
Paladin’s environmental management. More detail on
environmental performance, specific management and
quantitative data for the reporting period will be provided
in the 2015 Sustainability Report.
striving
to achieve continuous
improvement
in
environmental performance;
preventing and mitigating pollution;
communicating environmental
employees and contractors;
responsibility
to
effective
consultation with
stakeholders
on
environmental issues;
inspections and audits of environmental performance;
and
reporting on environmental performance.
established Corporate Sustainable
Paladin
has
Development Standards
its operational
subsidiaries. Operational compliance with Paladin’s
Standards forms part of the Corporate Environmental
Audit Programme.
for all of
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PALADIN ENERGY LTD ANNUAL REPORT 2015
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 April 2015 for a period of three years.
The development and implementation of an EMS at KM is
continuing for the care and maintenance phase.
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 has been
prepared for KM and will be adhered to during the care
and maintenance phase.
ENVIRONMENT REGULATORY REPORTING
Both LHUPL and PAL prepare various environmental
reports for the Namibian and Malawi Governments,
respectively. Regulatory reporting for LHM is conducted
monthly and annually for water aspects, and, annually
for general
reporting. Regulatory
environmental reporting at KM is conducted on a quarterly
basis for data provision and for regulatory compliance, and
on an annual basis for general environmental reporting
environmental
INSPECTION AND AUDIT PROGRAMME
The Paladin Environmental Audit Standard requires
operating 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, particularly those specified for the uranium
industry. During the reporting period, inspections and
audits were undertaken at both LHM and KM, 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.
ENERGY
Energy requirements at Paladin’s operations are principally
in the form of fuel for vehicles and 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 the
care and maintenance activities at KM is 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 LHM as an explosive for blasting.
The volume of the fuels used and the energy purchased
during the reporting period is being collated and will be
reported in the 2015 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.
Reuse and recycling of water is maximised as much as
possible at Paladin’s operations.
A specific care and maintenance water management
strategy has been developed for KM which focuses on
reducing stored water in the water collection ponds to
ensure sufficient capacity remains in the ponds to capture
rainfall runoff from the mining and processing areas of
disturbance. Water from the ponds is being treated in
an on-site water treatment plant to a quality suitable for
discharge. Treated water is discharged into the local river
under licence conditions.
A comprehensive surface and groundwater monitoring
programme is undertaken at LHM and KM. All water
monitoring data are collated in annual water reports that
consolidate and summarise the key water aspects across
Paladin’s operations.
Water aspects as per the GRI indicator requirements will
be presented in the 2015 Sustainability Report.
LAND USE, BIODIVERSITY AND REHABILITATION
Land use and understanding land values are important
to
components of sustainable development. Prior
disturbance for project development or expansions,
studies are conducted to determine land use and land
values including for biodiversity, ecological, social and
cultural heritage. 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 aim 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
2015 Sustainability Report.
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 using water sprays to enable a
safe working environment and to minimise impacts on the
environment and surrounding communities. Fugitive dust
level monitoring is conducted at both the LHM and KM
sites and the results 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,
and vehicle emissions. The sulphuric acid plant at
KM has been mothballed whilst the site is on care and
maintenance. Ambient ground level concentrations of SO2
are monitored around KM. Monitoring data are analysed
and the results reported in the Annual Environmental
Report submitted to the Malawi Government.
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PALADIN ENERGY LTD ANNUAL REPORT 2015
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.
WASTE ROCK
Waste rock is removed to allow access to the uranium
ore in the mine pit and placed in dumps. Waste rock
dump location, design and placement are important to
the Company in terms of environmental considerations
and cost. The main objectives for the final landform of
the dumps 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 and tailings storage facility (TSF) management
continues to be a high priority at the LHM operational
site and also at KM whilst in care and maintenance.
Paladin applies measures to ensure that its TSF are
appropriately designed, operated and managed
according to acceptable standards. Specialist TSF
engineers have designed the TSFs at both LHM and KM.
The specialists have also defined the operational practice
and management to ensure that the tailings and TSFs
any potential
are
environmental impacts from the tailings or the facility are
minimised. Independent experts conduct peer reviews of
the design, construction and operations of the TSFs on
an ongoing basis.
appropriately managed
and
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 collected and taken to
off-site recycling depots whilst the non-recyclables are
delivered 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 categorised and segregated
into their types and directed to appropriate on site waste
disposal sites. Sewerage treatment plants are installed at
both mine sites to treat sewage. Treated sewage from the
plants is directed to the process water pond at LHM, and
at KM to the water pond and TSF. 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
incidents occurring
during the reporting period will be included in the 2015
Sustainability Report.
information on
CLOSURE
Mine closure planning is a key component of Paladin’s
commitment to Sustainable Development. A Closure
Standard is in place for all of Paladin’s developing and
operational sites. The intent of the Standard is to ensure
that Paladin’s sites are left in a safe and stable manner
and that environmental and social impacts are minimised
so that tenements can be relinquished without future
liability to the Company, government or the community.
During the reporting period, the LHM Draft Mine Closure
Plan was being revised and updated to reflect current and
future mine plans. A Closure Strategy has been prepared
for KM and progress continued on the preparation of a
Draft Mine Closure Plan.
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PALADIN ENERGY LTD ANNUAL REPORT 2015
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
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:
to
Top-level support of the Board of Directors and
Managing Director/CEO;
Adherence to principles enunciated in Corporate
Policy and Procedures;
Programmes aligned with host country Millennium
Development Goals;
Personnel dedicated to achieving CSR objectives;
Compliance with recognised international codes of
conduct;
Acknowledgement of voluntary standards; and,
Reporting in accordance with the Global Reporting
Initiative.
Paladin seeks to achieve these objectives by example,
both through its own actions and by its active participation
in industry and community-based organisations that
foster and promote these values and aspirations. Below
is a summary of the organisations in which the Company
participates:
Paladin played an instrumental role in establishing
the Australia-Africa Mining Industry Group (AAMIG)
– an industry body that facilitates the sharing of
knowledge and experience to create better outcomes
on the ground. It partners with Australian and African
governments to promote active engagement and
promotes best practice in CSR among Australian
mining companies active in Africa.
Paladin has committed to the principles contained
in Enduring Value – the Australian Minerals Industry
for Sustainable Development. This
Framework
commitment is aligned with the Ten Sustainable
Development Principles of the International Council
on Mining and Metals.
Paladin
the
supports
Extractive
Industries
Transparency Initiative (EITI) and has registered as an
EITI Supporting Company, endorsing its principles
and criteria. Taxes paid by Paladin to the Malawian
and Namibian governments are presented in the
Company's Sustainability Report.
Paladin supports and
its business
in accordance with
respects a number of
to
international guiding documents and seeks
conduct
the
spirit and intent of them. These include the UN
International Bill of Human Rights, the UN Guiding
Principles on Business and Human Rights, The UN
Global Compact, the ILO Declaration, the Voluntary
Principles on Security and Human Rights, the OECD
Guidelines for Multi-National Enterprises and the
Equator Principles. These are embodied in Paladin’s
governance framework.
Paladin’s CSR programmes are developed, managed
and assessed in compliance with the Group’s
Community Relations Policy.
Paladin contributes significantly to those economies
in its countries of operation through a variety of
government taxes. These are detailed below for both
Malawi and Namibia, where the Group’s mines are
located. It should be noted that the Kayelekera Mine
in Malawi is currently on care and maintenance.
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PALADIN ENERGY LTD ANNUAL REPORT 2015
PAYMENTS TO THE GOVERNMENT OF MALAWI FOR THE YEAR ENDED 30 JUNE 2015
Withholding tax USD 112,898
Non-Resident tax USD 90,551
Royalties USD 164,469
Payroll Tax USD 1,509,525
PAYMENTS TO THE GOVERNMENT OF NAMIBIA FOR THE YEAR ENDED 30 JUNE 2015
NamPower USD 5,723,469
NamPost USD 581
NamWater USD 6,514,310
Namibia Training Authority USD 158,451
Rates, Taxes & Licenses USD 3,095
Payroll Tax USD 2,970,385
Royalties USD 5,382,161
Erongo Regional Electricity Distributor USD 233,374
PAYMENTS TO THE CANADIAN GOVERNMENT FOR THE YEAR ENDED 30 JUNE 2015
Workers Health, Safety & Compensation Commission
(Gov't of Newfoundland & Labrador) USD 12,051
Health & Post Secondary Education Tax
(Gov't of Newfoundland and Labrador) USD 21,755
Employment Insurance (Gov't of Canada) USD 28,376
Income Tax USD 364,656
Canada Pension Plan (Gov't of Canada) USD 61,574
PAYMENTS TO THE AUSTRALIAN GOVERNMENT FOR THE YEAR ENDED 30 JUNE 2015
Deartment Of Mines & Petroleum USD 16,160
Department Of Natural
Resources & Mines USD 8,496
Dept Of Environment & Heritage
Protection USD 1,609
Shire Of Ashburton USD 37,776
Department of Transport
USD 5,166
BAS USD 107,162
Payroll Tax QLD USD 1,282
Payroll Tax WA USD 526,174
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PALADIN ENERGY LTD ANNUAL REPORT 2015
HUMAN RIGHTS
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 Human Rights Policy provides the overarching
framework to assist in achieving Paladin’s commitment
to respect human rights throughout its business. 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.
Training on human rights is conducted across the entire
Paladin Group at all levels. This also extends to key
external stakeholders and suppliers with specific training
tailored for the security contingents at each site.
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.
The Australian Uranium Association (AUA) has been
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, 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 as well as assisting
the Australian Embassy in Harare to promote Australia’s
political and commercial interests in Malawi.
It is pleasing to note that a report issued in 2015 by the
Danish Institute for International Studies titled “Corporate
Engagement in Non-Proliferation along the Nuclear
Supply Chain and Material Stewardship and Traceability
in Uranium Procurement” shows Paladin as an example
…”Paladin can be seen as having one of the most robust
approaches to this issue among all eight leading mining
companies…..; and …” sets the example on Uranium
Stewardship”.
LHUPL was a founding member of the Swakopmund-
based Namibian Uranium Institute (NUI) in 2009. The
NUI provides support and advice for industry members,
operates a Uranium Information Centre, and engages
through
with
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.
the public and scientific community
LHUPL also supports the Namibian Uranium Association
(NUA), an advocacy body that represents the uranium
industry exclusively.
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
four of its working groups – Water Quality, Sustainable
Development, Radiation Safety and Swakop River
Farmers.
LHM continues to provide strong support to the Namibian
Chamber of Mines, which organised a major Mining
Conference in May 2015 under the theme “Mining
Industry - A Catalyst for Vision 2030”. 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
The Minister of Mines and Energy visited Paladin’s Head
Office in September 2014 as part of his attendance at
a mining conference. This provided a useful forum for
interaction and understanding of the Paladin Group.
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:
o Community groups;
o Environmental groups;
o Host nation government ministers and senior civil
servants;
o
Indigenous groups;
o Civil Society Organisations; and
o 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.
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. Suda
and its Clinical Advisory Board are finalising the design
of a pivotal clinical trial of ArTiMist™ in the pre-referral
setting and Suda aims to secure philanthropic funding
from global organisations to support the trial.
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PALADIN ENERGY LTD ANNUAL REPORT 2015
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.
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.
MALAWI
the
terms of
in Malawi under
Paladin has continued to fulfil its Social Development
responsibilities
the
Kayelekera Development Agreement and Environmental
Impact Assessment Social Impact Control Programme.
Following on from its decision to place KM on care
and maintenance last year, Paladin has maintained its
community relations presence in Karonga, albeit at a
reduced level of expenditure consistent with Kayelekera’s
non-producing status.
Paladin has 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.
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. During the
year maintenance support continued to be provided.
COMMUNITY LIAISON
Engagement with the community locally is formalised
through
(DEC)
the District Executive Committee
stakeholders’ meetings, which are held monthly and are
used as a community information forum and to address
any stakeholder questions or concerns that arise.
Weekly meetings are held with the Kayelekera village
leadership and, on a more informal basis, with the
Karonga District Commissioner and her staff together
with traditional authorities and their advisors. Attendance
at
in
the Village Development Committee assists
communicating about current CSR projects. The
Company engages individually with NGOs in the region
and is in regular contact with the District Education
Manager, the District Health Administrator and the District
Ministry of Water and Irrigation.
These forums ensure open communication between local
stakeholders and the Company, particularly with the local
CSR team on the ground and operating in the community
on a daily basis.
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KM also supports the Karonga Youth Entrepreneurs by
providing them with all the shredded office paper from
site as material to assist in their cooking fuel project.
COMMUNITY EDUCATION AND HIV/AIDS
AWARENESS
Paladin continues its commitment in relation to HIV/
AIDS awareness campaigns and to promote good health
and hygiene in order to improve the quality of life of
local communities. This effort includes its ongoing, very
successful “education-through-storybooks” project, with
publication of another seven books during the year. These
covered the topics of bribery in the workplace, Christmas,
dangers of loans and debt, alcohol, obesity, dangerous
situations and communication.
The collection now comprises 36 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 3,226 books were distributed broadly through to
the community during the year, covering KM employees
and local schools and communities and government
agencies, bringing the total number distributed to-date to
over 157,000.
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. In an
effort to make learning fun and to increase awareness
of potentially damaging lifestyle issues, the storybooks
are distributed to employees and then followed by a quiz
with small prizes awarded. This has become very popular
amongst the local population.
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 has used the funds earned by performing
in schools for Paladin to produce several DVDs on HIV
prevention. These have been purchased by Paladin for
distribution as quiz prizes providing a very effective and
popular medium for the message.
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, and facilitating an under-fives clinic.
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.
In relation to Paladin’s commitment to construction
of a local clinic, the assigned land has been cleared
and graded. The building design and budget has been
agreed with the village leadership and construction is
scheduled to commence in early FY2016 with Paladin’s
funding commitment.
PALADIN ENERGY LTD ANNUAL REPORT 2015
Paladin also runs a mosquito control programme in
Kayelekera Village and at Karonga Airport, in addition to
the mine and accommodation areas, as a very effective
malaria-control mechanism.
EDUCATIONAL SUPPORT
team continues
Paladin’s Community Relations
to
assist in the maintenance of local schools and teacher
housing, assistance with teacher wages and provision of
a variety of educational supplies. The local primary school
was fully renovated during the long school holiday with
maintenance also undertaken on the secondary school.
Schools in the area are regularly visited to present
interactive lessons on health issues with small tokens
relevant to the lesson given to the children such as soap
or colouring projects to assist with their learning.
Paladin continued its practice of delivering a Christmas
gift to over 2000 school students in the area, providing
school supplies, an individual personal item and snacks.
This included cloth shoulder bags made by graduates of
the FEPAC sponsored tailoring classes thereby extending
the benefit.
An annual donation from a Paladin board member pays
for the school fees for 105 girls who would otherwise not
be able to finish their education to a secondary level.
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 serves
as Australia’s Honorary Consul to Malawi.
NAMIBIA
In line with Paladin Energy’s policies and procedures,
LHUPL continues to play a significant role in improving
the living conditions of the people of the Erongo region.
Its focus is on education, sports and youth development,
feeding programmes and environmental projects.
EDUCATION
MONDESA YOUTH OPPORTUNITIES (MYO)
A five year agreement reached between LHUPL and MYO
in April 2015 will ensure the long term sustainability of
the centre. A donation of N$1.2M was made during the
year towards the annual running costs of the centre and
LHUPL has been the major supporter since 2010. The
non-profit organisation was established in 2003 as an
after-school programme for youth from the Mondesa and
DRC Township. The centre offers these underprivileged
yet academically able performers with after school
classes in mathematics, English, music and computer
skills. Redundant computer equipment was also donated
to the centre.
10TH NATIONAL MATHEMATICS CONGRESS
LHUPL sponsored
the 10th National Mathematics
Congress held in April 2015. The three day meeting,
attended by close to 300 mathematics teachers from
across the country, discussed factors hampering the
teaching of mathematics in Namibia. LHUPL has been
the main sponsor of the Annual National Mathematics
Congress since 2009.
SCHOOL SUPPORT PROJECTS
Text Book Donations
The Coastal High and Swakopmund Secondary Schools
became the beneficiaries of LHUPL’s 4th textbook
donation initiative. The donation was made on the
recommendation of the Ministry of Education as these
schools took in the bulk of grade eight learners in 2015.
Mathematics Enrichment Programme
LHUPL has been supporting this programme for the past
four years, focused on the development of secondary
school learners who have the potential to excel in more
advanced levels of mathematics than that offered at
schools. The programme benefits on average 200 learners
annually through several activities such as after-school
learning, spring schools, mathematics competitions and
others. In the past academic year, all learners on this
programme achieved above average to average results,
whilst no learners achieved below average marks or
were ungraded.
Laptop Donation to Polytechnic of Namibia Students
LHUPL sponsored laptops to Environmental Health
Sciences Programme students at the Polytechnic of
Namibia.to assist in their studies.
Book Vouchers
In the past year book vouchers have been donated to
three government schools from the Erongo Region.
These awards, aimed at grade or specific best in school
performers, encourage learners to work hard during their
school careers and achieve high marks. This programme
has been supported for the past six years.
ENVIRONMENT
GOBABEB TRAINING AND RESEARCH INTERNSHIP
PROGRAMME (GRTIP)
LHUPL and the Gobabeb Research and Training Centre
signed a five year agreement in December 2014 to assist
the centre in running its Internship programme aimed
at training 20 Namibian students studying towards
becoming environmental scientists. The GRTIP is a five-
month field course presented to students who are tasked
with designing and implementing original, independent
research projects
focused on management and
restoration of degraded ecosystems.
RENOVATION OF THE PARK RANGER’S
STATION HOUSE
In 2014, LHUPL made a commitment to renovate the
Ministry of Environment and Tourism’s Park Ranger’s
Station House located in the Namib Naukluft Park,
approximately 80km from the Langer Heinrich Mine. The
house will be utilised by the park rangers who monitor
park activities within the national park.
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COMMUNITY
CANADA
BLUE WATERS SPORTS CLUB
Sponsorship of the Blue Waters Sports Club’s youth
development programme continued. As principal sponsor,
LHUPL provides equipment, transport and financial
backing to ensure a continued flow of young sports stars
are developed through the youth development structures
of both the cricket and football teams.
4TH ANNUAL CHARITY GOLF TOURNAMENT
The Langer Heinrich Uranium 4th Annual Charity Golf
Tournament took place at the Rossmund Golf Course in
March 2015, and raised N$150,000 which was divided
between
from
Swakopmund. The Swakopmund Football Club, the
Namibian Association for Children with Disabilities and
the House of Safety each received N$50 000.
three children-centred organisations
ANNUAL CAREER AWARENESS DAY
Held in June 2015, the one day event was a success
with 230 Grade 10 learners from various Swakopmund
schools attending. The event, in its second year, is aimed
at exposing the learners to a variety of career fields
within LHUPL. Departmental presentations pointing out
the qualifications/skills needed for certain careers were
given to around 230 Grade 10 students to help motivate
them to work hard toward a goal or career they are
passionate about.
LHUPL also hosted a stand at the annual Mining Expo
in Windhoek and participated in the mining conference
hosted by the Chamber of Mines during the same period.
FOOD ASSISTANCE PROGRAMME
Support continued during the year
feeding
organisations, Promiseland Trust and Eagle Christian
Centre which cater for disadvantaged children in Walvis
Bay and Swakopmund.
for 2
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 focusses on mentoring
interpretation
new generations of geoscientists
of
in
fieldwork and structural geophysics and
applying this understanding to mineral systems and
exploration targeting.
in
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.
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 21 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. Aurora’s
contribution to the economic well-being of Labrador
continues through extensive use of local contractors for
camp support and by hiring up to 25 local staff per field
season, a practice that has been widely appreciated by
Nunatsiavut officials and 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 involvement of 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.
The charity supports six projects in Malawi that assist
orphaned children with educational needs and vocational
training courses. These include two projects that support
kindergarten aged children where they receive porridge
for breakfast, which for many may be their only meal of
the day, and age appropriate lessons.
Two vocational training projects are also supported where
courses such as brick laying, carpentry and tailoring are
provided. Currently, 158 teenagers have completed these
courses and have been given the tools of their trade 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.
FEPAC also supports a school for the visually impaired
and a school for deaf children. Over the years FEPAC has
helped fund the construction of classrooms, dormitories
and teacher’s houses for these schools as well as
assisting with their monthly running costs.
During the year FEPAC funded the construction of four
classrooms in the Chiteka village in a remote part of
Kayelekera where no schooling infrastructure previously
existed. This was a very successful project in collaboration
with the local community despite extremely difficult
access conditions.
There were numerous small projects funded by FEPAC
during the year such as providing stationery, books,
furniture and school uniforms to local schools. FEPAC
employs former carpentry and tailoring students to make
the furniture and school uniforms and many of the former
students use the profits from this work to help establish
their own businesses.
The 4th annual Charity Golf Day was held in Namibia,
organised by local employees. The event was an
outstanding success, raising N$150,000. The funds were
divided between three organisations focussed on children
– the Swakopmund Football Club, Namibian Association
for Children with Disabilities and the House of Safety.
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PALADIN ENERGY LTD ANNUAL REPORT 2015
OUR PEOPLE
retaining
its workforce
The Company has spent the past year focussing on
stabilising and
throughout
all projects. Following on from the previous period,
consolidation and
rationalisation of organisational
structures have been ongoing and contributed to the
decrease
in total employee numbers seen across
the Group.
Turnover for the Group is detailed in the following table.
Location
Australia
Corporate, administration, financial & marketing
Technical Services
Exploration
Namibia
Malawi
LHM
KM*
Exploration
Canada
Exploration
Total
* Employee turnover is based on a 12 month rolling average.
** High turnover seen due to internal transfers within Group.
*** Due to exploration retrenchments at 30 June
A Group-wide analysis of HR policies and procedures was
undertaken with the intention of ensuring an appropriate
suite in place at each location with an effort made to
standardise processes where possible with collaboration
identifying and tracking
across sites. A
employee metrics saw the introduction of a Group-wide
data collection process allowing the tracking of numerous
employee aspects such as turnover, retention, training
and development, recruitment, workforce demographics
and employee relations consistently across the Group.
focus on
Total
27
9
10
344
215
2
11
618
Female
%
51.85%
33.33%
20.00%
17.44%
9.30%
Local
Nationals
%
n/a
n/a
n/a
94.47%
88.37%
Turnover
%*
10.81%
53.57%**
9.60%
19.53%
20.19%
0%
100%
101.12%***
27.27%
72.72%
8.89%
16.50%
Diversity overall, and gender diversity specifically, remains
a focus and, despite the overall headcount decreasing
over the period, the percentage of female representation
within the workforce has remained reasonably steady.
Supporting a diverse workforce remains one of the
cornerstones of Paladin’s strategy with a commitment to
equitable gender representation 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
available on Paladin’s website.
AUSTRALIA (HEAD OFFICE AND
MOUNT ISA)
The Perth head office currently has 46 employees,
a reduction from 52 at the same time last year.
Females within the head office represent 41.3% of
employees and 47.3% of all females employed hold
roles within the professional, managerial or senior
management categories.
During the period, the 12 month rolling total turnover was
24.27% in comparison to 30.43% at the same time last
year. In light of the continued focus on consolidating the
organisational structure two roles were made redundant
and an additional two roles were restructured to part time.
In instances of natural attrition only those roles that were
deemed essential were replaced, resulting in a reduction
of a further seven roles.
In line with the continued focus on rationalising costs, only
a small number of salary increases were awarded for the
period and only in instances where there were significant
market parity discrepancies. For the second consecutive
year the senior management team maintained a 10%
salary reduction.
As part of a senior management review all executive
managers undertook a 360 degree performance
evaluation in an effort to reinforce both a culture of
continuous improvement and provide an element to
measure performance within the leadership team. This
process will be cascaded to the next level of senior
management and to some key technical roles across the
Group within the upcoming year.
The year ahead will see a continued focus on retaining key
skills in an environment of cost rationalisation. In addition,
a review of succession plans that are currently in place for
key roles will be undertaken ensuring a robust strategy to
address concerns should they arise.
EXPLORATION
Group-wide the exploration team totals 23 spread
across projects based in Australia, Malawi and Canada.
Paladin places a large focus on the development of its
geoscience capabilities and has the benefit of exposing its
professionals to a number of different geological terrains
and environments within the global project portfolio.
Additionally, a number of senior technical individuals
within the Group are consistently invited to present
papers at industry conferences, providing yet another
opportunity to transfer expert knowledge amongst the
Group and aid in the development of junior professionals.
The Perth based exploration team is a small group
technical roles
predominantly comprised of senior
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PALADIN ENERGY LTD ANNUAL REPORT 2015
focussed on providing support and guidance across the
Group. This small group consistently has minimal turnover
and currently has an average tenure of 8.8 years of service
within the team.
Unfortunately, as a result of the Malawian government
not renewing Paladin’s exploration licences, at the end of
June 2015 14 employees within the Kayelekera exploration
team were retrenched resulting in only two members
of the original team being retained. Those individuals
retrenched all received generous severance packages in
recognition of their service with the Company.
The Aurora exploration team based in Canada have again
had low turnover for the period with only one individual
leaving. The Aurora team have been together now for a
number of years with the average tenure growing to 6.7
years. In addition to the permanent team the project
employs approximately 30 seasonal staff for each field
season. Of these individuals currently 80% are employed
from the surrounding communities of Postville, Makkovik
and Rigolet and 73% of the seasonal staff has consistently
been re-employed for the past three field seasons.
MALAWI (KAYELEKERA MINE)
With KM now on C&M, the focus has been on adapting the
workforce and operations to this significant change. As
the operation has moved into a more settled state within
C&M, the organisational structure was again reviewed
resulting in further decreases to both the national and
expatriate employee numbers throughout the year. At
year end there were 192 national employees, of which
95 are within the site security team, and an additional
24 expatriates. Turnover has slowly started to steady
with the rolling 12 month total turnover for national
employees sitting at 15.42%, and the expectation that this
will reduce further.
The focus at KM will remain one of consolidation whereby
all HR processes, procedures and policies are under
review to ensure a solid foundation for restart. This
process will also include a training element to ensure
that all new processes and procedures are understood
by the senior leadership team and cascaded throughout
the workforce.
A relationship with the Miracle Technical School in
Karonga has proved beneficial whereby hospitality
students are rotated for practical experience through the
site services department to gain hands-on experience in
areas of cooking, cleaning and general service. In turn,
KM has access to high performing and experienced
individuals after they graduate, should a vacancy arise.
Although cost reduction is a priority, a conscious effort
has been made to ensure that the opportunity to develop
high performing employees has been retained via ongoing
study assistance programmes. A number of employees
are currently undergoing further education relevant to their
roles, with KM both paying the fees and providing paid
leave for study and examination purposes. Additionally,
mentoring and one-on-one career development remains
a focus and KPI for the leadership team.
Cross-development opportunities are also made
available where possible in order to provide exposure to
other operations within the Paladin portfolio for key roles
and individuals.
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NAMIBIA (LANGER HEINRICH MINE)
response
In
to Swakop Uranium’s ongoing and
aggressive recruitment campaign for its Husab Mine,
LHM has struggled with the retention of skilled roles
resulting in a 12 month rolling total turnover of 19.53%.
Hardest hit has been the processing department with
the highest level of employee turnover. With such a large
number of experienced operators departing, and the
availability of replacements within the local area limited, a
number of operators who previously worked at KM have
been recruited into Namibia. This strategy has provided
the benefit of recruiting individuals who are familiar with
Paladin’s operations, whilst providing employment to
individuals who Paladin had to unfortunately retrench
when the mine went onto C&M in February 2014.
With further turnover likely to be experienced when
Husab moves to the engineering phase of its recruitment
campaign, LHU has renewed its focus on training and
development programmes. Currently the internal training
modules are being updated and a competency based
training programme implemented to allow recruitment
of individuals with less experience. This strategy allows
for a sustainable solution to the shortage of skilled labour
currently being experienced. The Namibian government
has recently introduced a Vocational Educational &
Training Levy which is set at 1% of a company’s total
annual payroll. In the past 12 months LHU has invested
N$3.8M
its
training and development of
employees, representing 2.3% of total annual payroll.
into
the
future skilled
As in previous years LHU places a focus on attracting
graduates and trainees allowing development of a
pipeline of
individuals and potential
leaders. To enable this, LHU offers a number of bursary
opportunities within the year, both internal and external,
allowing for formal training and education opportunities
to be coupled with internal development and mentoring.
There are currently 12 graduates within the disciplines of
engineering, metallurgy, supply chain, human resources,
finance, corporate relations and radiation management,
and LHU places a large focus on transitioning those
graduates into permanent roles within the organisation
which has been consistently successful. LHU’s long
standing relationship with the Namibian Institute of Mining
Technology creates an opportunity to provide the hands-
on training components of the skilled trade and, in turn,
LHU has access to a number of skilled artisans upon
completion of their studies. With the current shortage of
local artisans, this relationship will play a significant and
ongoing role in the ability to attract skilled individuals.
During the year the relationship between the Mineworkers
Union of Namibia (MUN) and LHU has been positive with
both parties agreeing in principle to the Recognition
and Procedural Agreement (RPA), which has been in
development for a number of years, and it is anticipated
that in the coming months the final agreement will be
signed. The RPA details the partnership between LHU and
MUN and sets out the standards by which the two parties
will deal with all relevant matters pertaining to employee
concerns. Additionally, both parties have recently agreed
to a three year Remuneration Agreement, which sets out
the bargaining unit’s annual salary increases for the next
three year period, allowing employees the assurance of
clear expectations in this area.
During the year LHU undertook a job-grading project to
align all roles into the Patterson Grading System. This
was a lengthy process, yet the benefits it has provided
have been numerous. With a solid basis for comparison
now in place, a remuneration review of all roles measured
against peers within the Namibian mining industry was
undertaken, allowing LHU to ensure that competitive
PALADIN ENERGY LTD ANNUAL REPORT 2015
remuneration packages are offered. In addition, a Senior
Employee Retention Scheme has been introduced with
benefits awarded based on the performance of both the
individual and the Company, coupled with a long-term
retention hook, to assist in retention of key individuals and
top performers.
LHU is compliant with all requirements of the Affirmative
Action Act and has a consultative forum which is an
integral part of its affirmative action strategy. Furthermore,
it is committed to, and fully supports, the policy of equal
opportunity employment and non-discrimination through
its measurable Affirmative Action Plan. The LHU Affirmative
Action Report reflects the following demographics based
on the calendar year reporting cycle:
LHU places significant importance on employee health
and wellness and collaborates with external health
organisations (e.g. The Cancer Association of Namibia
and Namibian Blood Transfusion Service), who provide
employee wellness screenings and counselling events on
site. Membership to private health insurance is a condition
of employment at LHU and the Medical Aid providers
counsel employees on healthy lifestyle choices and in
identifying the risks associated with unhealthy practices
resulting in issues such as high blood pressure, elevated
cholesterol, HIV and other themes common to Namibia.
The year ahead will see a continued focus on the internal
training and development in response to the current
tight labour market, coupled with retention measures to
attempt to stabilise the turnover rate.
% Female Employees
% Historically Racially Disadvantaged
Employees*
% Non Namibians
Total Employees
CY2013
CY2014
21.2%
18.7%
89.5%
89.3%
1.7%
402
1.7%
363
* As defined in the Affirmative Action (Employment) Act 1998.
CORPORATE GOVERNANCE
STATEMENT
The Board of Directors of Paladin Energy Ltd is responsible
for the corporate governance of the Group.
Paladin has adopted systems of control and
accountability as the basis for the administration of
corporate governance.
This Corporate Governance Statement, dated 30
June 2015 and approved by the Board on 20 August
2015, 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
the
ASX Corporate Governance Council’s (ASX CGC) 3rd
Edition of its Corporate Governance Principles and
in
Recommendations. For FY2015, Paladin has complied
with all the recommendations and has referenced these
throughout
this Corporate Governance Statement.
Further, the Company also complies with the Ontario
Securities
governance
requirements as set out in National Instrument 58-101.
Commission’s
corporate
Paladin’s Corporate Governance Statement can be found
in the Corporate Governance section of the Investor
Centre on its website at www.paladinenergy.com.au,
along with the ASX Appendix 4G, a checklist cross-
referencing the ASX Principles and Recommendations to
disclosures in this statement, the current Annual Report
and the Company website. The Corporate Governance
Statement, together with the 4G, have been lodged with
the ASX on 27 August 2015.
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).
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DIRECTORS' REPORT
DIRECTORS
The following persons were Directors of Paladin Energy Ltd and were in office
for this entire period unless otherwise stated:
MR RICK WAYNE CRABB B. Juris (Hons), LLB, MBA, FAICD
(Non-executive Chairman) Age 58
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.
Special
Responsibilities
• Chairman of the Board • Member of Remuneration Committee from 1 June 2005 • Member of Nomination
Committee from 1 June 2005 • Member of Sustainability Committee from 25 November 2010
MR JOHN BORSHOFF B.SC., F.AusIMM, FAICD (resigned 10 August 2015)
(Managing Director/Chief Executive Officer) Age 70
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.
Special
Responsibilities
• Managing Director/Chief Executive Officer • Member of Nomination Committee from 1 June 2005
• Member of Sustainability Committee from 25 November 2010
MR SEAN REVEILLE LLEWELYN LL.B, MAICD (resigned 21 August 2015)
(Non-executive Director) Age 67
Mr Llewelyn originally qualified, and practised, as a solicitor in Australia and then re-qualified
in England. He has subsequently worked in the finance and merchant banking industries for
more than 20 years in Australia, the UK, the United States and South Africa. His considerable
finance experience has been in derivatives (a founder, President and CEO of Capital Market
Technology Inc.), structured finance and early stage investment relating to the metal markets.
He has been involved with the uranium industry for many years and has a comprehensive
understanding of the uranium market.
Mr Llewelyn was the instigator and driving a force in the formation of Nufcor International Ltd,
a major uranium marketing company, initially jointly owned between Anglo Gold and First Rand
International.
Mr Llewelyn was appointed to the Paladin Board on 12 April 2005.
Special
Responsibilities
• Member of Audit Committee from 12 April 2005 • Chairman of Remuneration Committee from 26
November 2008 (member from 1 June 2005) • Chairman of Nomination Committee from 26 November 2008
(member from 1 June 2005)
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MR DONALD SHUMKA B.A., MBA
(Non-executive Director) Age 73
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.
Special
Responsibilities
• Chairman of Audit Committee from 9 July 2007 • Member of Remuneration Committee from 10 August 2007
• Member of Nomination Committee from 9 July 2007
MR PETER MARK DONKIN BEC, LLB., F FIN, MAICD
(Non-executive Director) Age 58
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.
Special
Responsibilities
• Member of Audit Committee from 25 November 2010 • Member of Nomination Committee from 1 July 2010
MR PHILIP BAILY BSC, MSC
(Non-executive Director) Age 71
Mr Baily is a metallurgist with more than 40 years’ experience in the mining industry, including some 11
years in the uranium sector. Throughout his career, he has been involved in the design, construction,
commissioning and operation of mineral processing plants, including two uranium plants. Project
locations have varied from the deserts of Australia to the tropics of Papua New Guinea and the high
altitudes of Argentina. He has extensive experience, at senior management level, in the evaluation
of projects from grass roots development to the acquisition of advanced projects and operating
companies. These projects have been located throughout the world, many in developing countries
and environmentally sensitive areas. Mr Baily holds a Bachelor of Science and a Master of Science
degree in Metallurgy from the University of NSW.
Mr Baily was appointed to the Paladin Board on 1 October 2010.
Special
Responsibilities
• Chairman of Sustainability Committee from 25 November 2010 • Member of Nomination Committee from
1 October 2010
MR WENDONG ZHANG BA
(Non-executive Director) Age 45
Mr Zhang has over 23 years’ experience in financial services and international capital markets and
was among the first generation Chinese bankers on Wall Street working with Morgan Stanley, UBS
and Citi across New York, Hong Kong and Beijing. He also co-founded two boutique investment
advisory firms focusing on China opportunities. He has completed a number of advisory, financing
and investment transactions and established relationships with leading players in various sectors
including conventional energy, nuclear utilities and natural resources. Mr Zhang graduated from
Dartmouth College, New Hampshire USA, in 1991 with a B.A. in Engineering and Economics.
Mr Zhang was appointed to the Paladin Board on 25 November 2014.
Special
Responsibilities
• Member of Remuneration Committee from 12 February 2015
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Directors' continued)
COMPANY SECRETARY AND EXECUTIVE GENERAL MANAGER - CORPORATE SERVICES
MS GILLIAN SWABY B.Bus, FCIS, FAICD (resigned 21 August 2015)
Age 55
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).
BOARD AND COMMITTEE MEETINGS
The number of Directors’ meetings and meetings of committees held in the period each Director held office during
the financial year, and the number of meetings attended by each Director were:
Board of Directors Audit Committee
Remuneration
Committee
Nomination
Committee
Sustainability
Committee
Number
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
Number
attended
13
13
13
13
13
13
7
13
13
13
13
13
13
7
-
-
5
5
5
-
-
-
-
5
5
5
-
-
4
-
4
4
-
-
2
4
-
4
4
-
-
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
3
3
-
-
-
3
3
3
3
-
-
-
3
3
Name
Mr Rick Crabb
Mr John Borshoff
Mr Sean Llewelyn
Mr Donald Shumka
Mr Peter Donkin
Mr Philip Baily
Mr Wendong Zhang
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.
INTERESTS IN THE SECURITIES
OF THE COMPANY
RESIGNATION, ELECTION AND
CONTINUATION IN OFFICE OF DIRECTORS
As at the date of this report, the interests of the Directors
in the securities of Paladin Energy Ltd were:
Director
Mr Rick Crabb
Mr Donald Shumka
Mr Peter Donkin
Mr Philip Baily
Paladin
Shares
5,981,528
200,000
22,500
18,000
Mr Wendong Zhang
1,180,000
Share rights (issued
under the Paladin
Employee Plan)
Nil
Nil
Nil
Nil
Nil
In accordance with the Constitution of the Company,
Mr Donald Shumka and Mr Peter Donkin will seek re-
election at the 2015 Annual General Meeting, following
their retirement by rotation. Mr Wendong Zhang was
appointed as a Non-executive Director by the Board
effective 25 November 2014. Mr Zhang will seek election
by shareholders at the 2015 Annual General Meeting.
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 9 to 33 of this report under the section
entitled Management Discussion and Analysis.
The Group’s loss after tax for the year is US$267.8M
(2014: US$338.4M) representing a decrease of 21% from
the previous year.
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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 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 2015
Financial Report:
MATERIAL REDUCTION IN COSTS
On 30 July 2015, the Company advised of a material
reduction in its cash flow break-even level through a
sustainable reduction in its all-in cash costs (including
capital expenditure, corporate costs and debt servicing).
These measures will reduce Paladin’s total cash costs by
more than US$33M compared to FY2015.
Subsequent to the US$33M in cost reductions announced
on 30 July 2015, Paladin has identified further significant
cash flow optimisation initiatives. Such initiatives include:
LHM operating initiatives – As a consequence of the
BRP, barren solution used for wash in the counter
current decantation section of the LHM plant is
expected to reduce from approximately 50ppm U3O8
to less than 10ppm. This will result in a significant
improvement in wash efficiency. The Company’s
original FY2016 outlook assumed wash efficiency of
93.1%. Paladin now anticipates a wash efficiency in
the range of 95% to 98% for FY2016. The Company
has also revised its FY2016 life of mine plan for LHM
resulting in an average head-grade of 694ppm U3O8,
i.e., an increase of 11ppm over the guidance provided
in the last Quarterly Activities Report announced on
16 July 2015.
Corporate costs, exploration and KM initiatives –
Paladin has implemented reductions in these areas
to further reduce annualised cash expenditure by
approximately US$8M over the initiatives set out in the
cost reduction announcement of 30 July 2015 (i.e., a
cumulative US$14M less than FY2015). The additional
initiatives include a reduction in approximately 50%
of corporate staff that was undertaken on 21 August
2015 concurrent with the reduction in the number
of directors and reduction in board fees announced
the same day. Exploration has been put on care and
maintenance whereby the Company will undertake
the work
license
expenditures only.
to meet minimum
required
CHANGE OF CHIEF EXECUTIVE OFFICER
On 30 July 2015, the Company advised that its Board
and Managing Director and CEO Mr John Borshoff had
agreed that Mr Borshoff would step down from his role
with the Company.
A process to identify a suitable new CEO is now
underway. In the interim, Mr Alexander Molyneux has
been appointed Interim CEO. Mr Molyneux joins with
substantial experience in natural resources executive
leadership, including both public mining company CEO
and uranium experience.
Mr Molyneux’s core mandate will be to: (i) to continue
the optimisation of Paladin’s overall cash flow break-
even level with the aim to become cash flow generative
in the current uranium price environment; (ii) focus on
accelerating strategic initiatives that deliver value; and (iii)
to assist the Board in its search for a permanent CEO.
BOARD AND MANAGEMENT RESTRUCTURING
On 21 August 2015, the Company advised of board
and management changes, and a reduction in board
remuneration.
Paladin’s board accepted the resignation of Non-
Executive Director Mr Sean Llewelyn.
Ms Gillian Swaby, Group Company Secretary and
EGM Corporate Services, and the Company agreed
Ms Swaby would step down from her role at the Company.
Mr Ranko Matic was appointed Company Secretary.
Paladin’s board adjusted its remuneration structure with
an effective date of 1 July 2015. The revised structure
will alter the base salary for Non-Executive Directors to
A$65,000 and the Non-Executive Chairman to A$125,000.
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
those specified for the global uranium industry. These
environmental laws, regulations and standards relate
to environmental
factors such as radiation, water,
flora, fauna, air quality, noise, waste management and
pollution control.
The Directors are not aware of any environmental
matters which would have a significant adverse effect on
the Group.
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EXECUTIVE REMUNERATION – CASH VALUE OF
EARNINGS REALISED (UNAUDITED)
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 2015 and 2014 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 and service 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.
The Company believes that this additional information is
useful to investors as recognised by the 2009 Productivity
Commission Inquiry Report ‘Executive Remuneration
in Australia’. The Commission
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.
recommended
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 2015
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 of the Company. The detailed schedules
of remuneration presented later in this report are
presented in US$.
REMUNERATION FOR THE YEAR
AT A GLANCE
Details of
the Key
the remuneration received by
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 extend a 10% reduction in salary with a non-cash
compensation option to offset the reduction, tailored to
individual circumstances to assist in retention.
The Managing Director/CEO agreed to extend the
voluntary 10% reduction in salary setting the tone
for the cost rationalisation programme to continue
across the Group.
An extension of the 10% reduction in directors’ fees
and management personnel base salaries during
the year. At a management level, this affected 21
individuals and resulted in further overall cash savings
of approximately A$1 million. This reduction in fees
and salaries will remain in place until certain market
conditions are met, at which point they will return to
their pre-adjusted rates. To compensate, individuals
(other than directors) were offered a choice of an
issue of share rights, additional leave or an option of
reduced working hours, to the value of the 12 months
of their reduction in salary.
No cash bonuses were paid across the Group
this year.
Given the salary freeze, the Company absorbed
the superannuation increase of 0.25% legislated
in Australia.
A focus on rationalisation and consolidation of the
workforce continued with a reduction in overall
headcount across the Group and certain roles made
redundant over the period. Additionally, where natural
attrition occurred, only those roles deemed to be
critical were replaced.
Certain positions within the Group moved from full
time to part time to reflect the business needs.
1,791,992 share rights were granted during the year
as an allocation to those employees affected by the
10% reduction in management personnel salaries.
A total of 2,388,072 share rights vested during the
year (0.14% of issued capital).
Long-term incentives on issue at balance date
comprise 788,754 share rights representing 0.05%
of the issued capital. All were issued as an offset to
salary reductions.
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2015 (A$’000) / (US$’000)
Name
Base Salary &
Superannuation
LTI(1)
Bonus
Other
Total
Cash
A$
US$
A$
US$
A$
US$
A$
US$
Mr John Borshoff(5)
1,382
1,151
Mr Dustin Garrow(7)
591
492
Ms Gillian Swaby(8)
Mr Mark Chalmers
Mr Craig Barnes
–
465
410
–
387
342
–
–
–
–
–
–
210(6)
175(6) 1,592
1,326
–
–
510(9)
425(9)
591
510
513
427
25(10)
21(10) 1,003
–
–
–
–
410
492
425
835
342
LTIP
5 Nov
2010(2)
A$
48
–
–
–
–
US$
40
–
–
–
–
Total
2,848 2,372
513
427
745
621
4,106 3,420
48
40
LTIP
15 Feb
2012(3)
A$
US$
–
8
7
29
–
44
–
7
6
24
–
37
LTIP
2 Apr
2013(4)
Total
A$
–
63
52
26
–
US$
A$ US$
–
52
43
22
–
1,640 1,366
662
551
569
474
1,058
881
410
342
141
117
4,339 3,614
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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$1.20149.
(1)
(2)
(3)
(4)
Payment of LTI retention bonus granted 1 January 2012. Refer to page 57.
Value of share rights granted on 5 November 2010 and vesting on 14 November 2014 at a market price of A$0.38.
Value of share rights granted on 2 April 2012 and vesting on 1 September 2014 and 8 September 2014 at a market price of A$0.38.
Value of share rights granted on 15 November 2013 that either vested immediately and were held in escrow to 14 November 2014 or vested on 14 November 2014 at a market price
of A$0.38.
Mr John Borshoff resigned effective 10 August 2015.
(5)
(6) Represents 40 days accrued annual leave paid out.
(7) Mr Dustin Garrow resigned effective 21 August 2015.
(8) Ms Gillian Swaby resigned effective 21 August 2015.
(9) Fees for services paid to a company of which Ms Gillian Swaby is a director and shareholder.
(10) Mark Chalmers resigned on 30 June 2015. Represents accrued annual leave paid out at 30 June 2015.
2014 (A$’000) / (US$’000)
Name
Base Salary &
Superannuation
LTI(1)
Bonus
Other
Total
Cash
LTIP
5 Nov
2010(2)
LTIP
15 Feb
2012(3)
LTIP
2 Apr
2013(4)
Total
A$
US$
Mr John Borshoff
1,433
1,314
Mr Dustin Garrow
606
556
Ms Gillian Swaby
Mr Mark Chalmers
Mr Alan Rule(7)
Mr Craig Barnes(8)
-
482
468
64
-
443
430
57
A$
-
729
547
-
-
-
US$
A$
US$
A$
US$
-
668
502
-
-
-
-
-
-
-
1,433
1,314
1,335
1,224
529(5)
485(5) 1,076
39(6)
36(6)
-
-
-
-
521
468
64
987
479
430
57
A$
-
11
8
-
-
-
US$
A$
US$
A$
US$
A$
US$
-
11
8
-
-
-
-
-
-
-
53
48
-
-
-
-
-
-
-
5
5
7
-
-
-
5
4
6
-
-
1,433 1,314
1,351 1,240
1,142 1,047
528
468
485
430
64
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) Payment of LTI retention bonus granted 1 July 2010. Refer to page 57.
(2) Value of share rights granted on 5 November 2010 and vesting on 1 September 2013 at a market price of A$0.58.
(3) Value of share rights granted on 15 February 2011 and vesting on 15 February 2014 at a market price of A$0.485.
(4) Value of share rights granted on 2 April 2012 and vesting on 1 September 2013 at a market price of A$0.58.
(5) Fees for services paid to a company of which Ms Gillian Swaby is a director and shareholder.
(6) Living away from home allowance.
(7) Mr Alan Rule resigned effective 30 June 2014.
(8) Mr Craig Barnes commenced on 5 May 2014. Appointment as Chief Financial Officer effective on 1 July 2014.
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REMUNERATION REPORT (Audited)
This Remuneration Report outlines the Director and executive remuneration arrangements of the Company and the
Group in accordance with the requirements of the Corporations Act 2001 (Cth) and its Regulations. For the purposes of
this report, Key Management Personnel of the Group are defined as those persons having authority and responsibility
for planning, directing and controlling the major activities of the Group, directly or indirectly, including any Director,
whether executive or otherwise, of the parent company.
Key Management Personnel comprise:
Mr Dustin Garrow, Executive General Manager -
Mr Rick Crabb, Non-executive Chairman
Mr John Borshoff, Managing Director/CEO (resigned
10 August 2015)
Mr Alexander Molyneux, Interim CEO (appointed 10
August 2015)
Mr Sean Llewelyn, Non-executive Director (resigned
21 August 2015)
Mr Donald Shumka, Non-executive Director
Mr Philip Baily, Non-executive Director
Mr Peter Donkin, Non-executive Director
Mr Wendong Zhang, Non-executive Director
(appointed 25 November 2014)
Ms Gillian Swaby, Group Company Secretary and
Executive General Manager – Corporate Services
(resigned 21 August 2015)
Marketing (resigned 21 August 2015)
Mr Mark Chalmers, Executive General Manager –
Production (resigned 30 June 2015)
Mr Craig Barnes, Chief Financial Officer
Following the resignation of Mr Mark Chalmers, effective
30 June 2015, the ultimate responsibility for planning,
directing and controlling production has been transferred
to Mr John Borshoff
(10 August 2015, Alexander
Molyneux was appointed Interim CEO). This reflects the
fact that the Company now has only one operating mine
being Langer Heinrich, with Kayelekera on care and
maintenance. There were no other changes to KMP after
the reporting date and before the date the financial report
was authorised for issue.
For the purposes of this report, the term ‘Executive’
encompasses
the Managing Director/CEO, senior
executives, managers and company secretary of the
Parent and the Group.
REMUNERATION REPORT APPROVAL AT FY2014 ANNUAL GENERAL MEETING (AGM)
The FY2014 remuneration report received a 69% vote for approval at the FY2014 AGM.
The 31% proxy vote against represented just 5.08% of Paladin’s total issued capital. Proxies representing 17% of
Paladin’s total issued capital were received for this resolution. This is a particularly low voting turnout compared to past
years, as reflected in the table below:
Year
2014
2013
2012
Issued Capital
Total Votes Received % of Issued Capital
Total No Vote
% of Votes Received
965,752,118
964,118,567
836,825,651
160,202,690
303,547,579
347,577,412
16.588
31.484
41.535
49,050,562
48,947,968
27,206,523
30.618
16.125
7.827
The number of proxies tendered against the Remuneration Report was in line with voting at the 2013 AGM. Due to
significantly higher shareholder participation in 2013 (which reflected previous years), some 83% of voting shareholders,
representing 26% of the Company’s total issued capital, voted in favour of the Remuneration Report and the resolution
was carried.
Paladin believes it has worked hard to improve the transparency of its Remuneration Report and ensure remuneration
across the business reflects the challenging conditions being experienced by uranium producers since the incident at
Fukushima in 2011.
In 2014, Paladin implemented a 10% reduction in directors’ fees and the base salaries of senior management.
This reduction also applied to Managing Director and CEO John Borshoff, whose salary has fallen by 32.5% since
June 2012.
REMUNERATION APPROVAL PROCESS
The Remuneration Committee is charged with assisting
reviewing and making appropriate
the Board by
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
individual’s and the
Company’s performance.
into account both the
The
by
Mr Sean Llewelyn, held four meetings during the year.
Remuneration
Committee,
chaired
Messrs Crabb, Shumka and Zhang 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
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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.
KEY ELEMENTS OF KEY MANAGEMENT
PERSONNEL/EXECUTIVE REMUNERATION
STRATEGY
The overall focus of Paladin’s remuneration strategy is to:
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.
This strategy applies group wide for all employees.
the compensation of
to
Information
relation
this
later
is detailed
Non-executive Directors
Remuneration Report.
in
in
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 performance conditions will be
reviewed to determine the appropriateness to the business
prior to any further issues. Since April 2012, the only share
rights issued were those issued pursuant to the 10%
reduction
in management personnel base salaries
and accordingly have no performance conditions. The
remaining share rights currently outstanding (totalling
788,754; 0.05% of issued capital) will all vest on 1
December 2015. 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.
30 June 2011
30 June 2012
30 June 2013
30 June 2014
30 June 2015
EPS
Share Price
US$(0.11)
A$2.52
US$(0.21)
A$1.25
US$(0.49)
A$0.88
US$(0.34)
A$0.29
US$(18.9)
A$0.245
The remuneration structure for the Key Management Personnel/Executives has three elements:
fixed remuneration;
short-term variable remuneration; and,
long-term incentives.
COMPONENTS OF KEY MANAGEMENT PERSONNEL/EXECUTIVE REMUNERATION
These are detailed as follows:
Remuneration
Component
Fixed Remuneration
Elements
Details
Annual base salary
determined as at 1 January
each year
Statutory superannuation
contributions
Expatriate benefits
The ‘not at risk’ cash component which may include certain salary
sacrifice packaging.
Statutory % of base salary.
Executives who fulfil their roles as an expatriate may receive benefits
including
insurance, housing and car
allowances, educational fees and tax advisory services.
relocation costs, health
Foreign assignment
allowance
An additional % of base salary is payable in relation to foreign
assignments being 15% for Malawi and 10% for Namibia.
Variable Performance
Linked Remuneration
("at risk" remuneration)
Short-term incentive, paid as
a cash bonus
Long-term incentive, granted
under the Rights Plan
Rewards Executives for performance over a short period, being the year
ending 31 December. Bonuses are awarded at the same time as the
salary reviews. Assessment is based on the individual’s performance
and contribution to team and Company performance.
Award determined in the September quarter of each year, based
on individual performance and contribution to team and Company
performance. Vesting dependent on creation of shareholder value over
a three year period, together with a retention element.
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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), 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$1,276,415), with a
further 10% reduction to A$1,382,000 (US$1,150,238),
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.
In addition, his contract provides for 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 mines. This benefit reflects 22
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. 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.
Given the priority of cost reduction and cash conservation
with the uranium industry continuing to experience difficult
times, no cash bonuses were paid across the Group this
year (CY2014 US$32,000).
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
2014 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 CY2015 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
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.
Indicative
Weighting
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 2015 calendar year, would be paid out in CY2016.
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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.
The Rights Plans are long-term incentive plans aimed
at advancing the interests of the Company by creating
a stronger link between employee performance and
reward and increasing shareholder value by enabling
participants to have a greater involvement with, and share
in, the future growth and profitability of the Company.
They are an important tool in assisting to attract and retain
talented people.
the plan
Share rights are granted under
for no
consideration. Share rights are rights to receive fully
paid ordinary shares in the capital of the Company
(Shares) in the future if certain individual and/or corporate
performance metrics (Performance Conditions) are met in
the measurement period.
The number of share rights able to be issued under
the Plans is limited to 5% of the issued capital. The 5%
limit includes incentive grants under all plans made in
the previous 5 years (with certain exclusions under the
Australian corporate legislation). This percentage now
stands at 0.05%.
CLAWBACK
A clawback policy will be put in place prior to any general
grant of long-term incentives across the Group.
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.
SHARE RIGHTS PLAN
VESTING AND PERFORMANCE CONDITIONS
The following vesting and performance conditions applied
to share rights that vested during the year. These were
originally issued on 2 April 2012 and there are no more
share rights on issue with these conditions.
Proportion of
share rights to
which performance
hurdle applies
10%
15%
25%
20%
30%
Vesting and Performance
Conditions
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
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 Borshoff during the years ended 30 June 2014 and
2015. During the year ended 30 June 2015, 125,000 share
rights vested in accordance with their vesting conditions
(the TSR measure, as detailed later in this report). (2014:
no share rights vested).
The performance conditions of those share rights granted
to Managing Director/CEO which vested during the
year were:
Proportion of share
rights to which
performance hurdle
applies
50%
50%
Performance measure
Total Shareholder Return (TSR)
relative to mining companies in ASX
S&P 200 Index*
Earnings Per Share (EPS)
Measuring the increase in earnings
over the period
Following the vesting as outlined above, Mr Borshoff
holds no share rights.
*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.
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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:
Time-based Vesting
50% of the share rights will vest based on the participant continuing to be employed with the Group. These are not subject to a
performance condition and 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
Percentage of share rights that may vest if the relative TSR performance
condition is met
Less than 50th percentile
0% of the share rights subject to the TSR condition
at 50th percentile
50% of the share rights subject to the TSR condition
Greater than the 50th percentile but less
than the 75th percentile
Pro-rated vesting between 51% and 99% of the share rights subject to the TSR condition
At 75th percentile or greater
100% of the share rights subject to the TSR condition
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
Percentage of share rights that may vest if the EPS hurdle 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
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SHARES ACQUIRED UNDER THE RIGHTS PLAN
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.
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 (0.05%) and thus
are not considered a disincentive to a potential bidder.
OTHER RIGHTS AT 30 JUNE 2015
Date rights granted
Vesting date
Vesting performance conditions
1 December 2014
1 December 2015
Time based
Total
Number
788,754(!)
788,754
(1) Issued pursuant to 10% reduction in management personnel base salaries.
Issue of Share Rights - A number of management personnel agreed to extend 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 an issue of 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. 506,647 share rights were granted to KMPs.
In summary, this balance represents 0.05% of the issued capital.
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.
RETENTION PROGRAMME
The remaining balance/second grant of the programme
was paid on 1 January 2015. No further grants have been
made and no balance is outstanding/payable.
As a component of the strategy for retention of key
personnel, certain executives and staff participated in
a retention bonus programme. Participation extended
to a limited number of selected individuals that were
identified as possessing the requisite skills, expertise and
experience in the uranium sector and those with specialist
corporate and commercial skills that the Company
required to achieve its aggressive goals. This initiative was
driven by a desire to retain the intellectual property pool
considered necessary to ensure the continued success
of the Company. The programme entitled the participants
to receive a cash award at the end of the three year
retention period. In the event employment terminated
for any of retirement, disablement, redundancy or death,
after the first anniversary one third became payable and
after the second anniversary two thirds became payable.
The cash award varied between 50% and 100% of the
average annual salary over the 3 year period. The second
grant under this programme was on 1 January 2012
with a payment date on 1 January 2015. US$1,655,088/
A$1,988,572 of this 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 2015 (first grant paid 1 July 2013: US$7,352,574/
A$8,014,077).
A Senior Employee Retention Scheme has been introduced
with benefits awarded based on the performance of both
the individual and the Company, coupled with a long-term
retention hook, to assist in retention of key individuals and
top performers.
This Scheme encourages, tracks and rewards performance
based on the achievement of set performance targets
and distributes benefits at predetermined times and upon
achieving certain conditions, one of which is continued
employment with LHU.
The Scheme applies to all permanent LHU employees
who are appointed in a role, which is graded at a D3
level (Paterson grading) and higher. In addition to the
designated group of employees, Line Managers may
motivate for the further inclusion of a select number of
employees from grade C3 to D2.
In addition, from time to time, the Board may make specific
grants of share rights subject only to time vesting as part
of the Company’s strategy for attracting key individuals.
This has proved to be an important tool when seeking to
fill senior management roles.
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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.
for
expenses
reasonable
to be
Non-executive Directors are also entitled
reimbursed
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 Donald Shumka and Mr Peter Donkin will seek re-
election at the 2015 Annual General Meeting, following
their retirement by rotation. Mr Wendong Zhang was
appointed as a Non-executive Director by the Board
effective 25 November 2014. Mr Zhang will seek election
by shareholders at the 2015 Annual General Meeting.
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$1.0M) as approved by
shareholders at the 2008 AGM. Fees paid for the year
to 30 June 2015 total A$924,000 (US$769,000). The
Directors agreed to extend a 10% reduction in salary.
Remuneration
Component
Base Fee
Committee
Fees*
Superannuation
Elements
Must be
contained
within aggregate
limit
Paid to the
Chairman
of the Audit
Committee
Statutory
contributions
are included in
the fees set out
above
Details
(per annum)
Chairman
A$306,472 (US$255,077)
Non-executive Director
A$150,447 (US$125,217)
A$18,033 (US$15,009)
Statutory % of fees
* This is the only fee paid to any committee member. All other duties are
remunerated as part of the base fee.
The following graph is provided to give a clearer
understanding
the Non-executive Directors’
remuneration.
of
1200 Maximum Fee Cap A$1.2M
0
0
0
,
$
A
m
u
n
n
a
r
e
p
1000
800
600
400
200
0
166
166
166
187
338
156
156
156
175
317
150
150
150
168
307
P Baily
P Donkin
S Llewelyn
D Shumka*
Chairman
2013
2014
2015
* Includes A$18K in relation to Audit Committee Chair fees
58
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SHARE RIGHTS HOLDINGS OF KEY MANAGEMENT PERSONNEL (GROUP)
01 Jul 14
number
Granted as
remuneration(1)
number
Fair value at
grant date(2)
US$
Vested as
shares
number
Lapsed (3)
number
30 Jun 15
number
30 June 2015
Directors
Mr John Borshoff
250,000
-
-
(125,000)
(125,000)(4)
-
Executives
Ms Gillian Swaby
Mr Dustin Garrow
Mr Mark Chalmers
Total
41,250
209,979
174,373
675,602
174,529
245,582
86,536
506,647
50,435
70,967
25,007
(193,779)
(22,000)(5)
-
(185,979)
(24,000)(5)
245,582
(144,373)
(30,000)(5)
86,536(6)
146,409
(649,131)
(201,000)
332,118
No other Key Management Personnel held share rights during the year ended 30 June 2015.
(1) Allocation of share rights to offset 10% reduction in salary/fees.
(2) Fair value per right at grant date was US$0.32.
(3) Lapsed as performance conditions were not met.
(4) Granted 5 November 2010.
(5) Granted 2 April 2012.
(6) Rights vested but cannot be exercised until 1 December 2015.
SHARES HELD IN PALADIN ENERGY LTD (number)
30 June 2015
Directors
Mr Rick Crabb
Mr John Borshoff
Mr Sean Llewelyn
Mr Donald Shumka
Mr Peter Donkin
Mr Philip Baily
Mr Wendong Zhang
Executives
Ms Gillian Swaby
Mr Mark Chalmers
Mr Dustin Garrow
Total
Balance
01 Jul 14
On Vesting
of Rights Net Change Other
Balance
30 June 15
5,181,528
16,081,794
100,000
200,000
15,000
12,000
–
554,632
18,750
15,000
22,178,704
–
125,000
–
–
–
–
–
800,000
6,488,111
50,000
–
7,500
6,000
5,981,528
22,694,905
150,000
200,000
22,500
18,000
1,180,000
1,180,000
193,779(1)
144,373(2)
185,979(2)
649,131
–
81,562
(79,979)
748,411
244,685
121,000
8,533,194
31,361,029
No other Key Management Personnel held shares during the year ended 30 June 2015.
(1) Includes 174,529 share rights issued on 1 December 2014 to offset 10% reduction in fees. Vested immediately, to be held in escrow
to 1 December 2015.
(2) Includes 233,102 share rights issued on 14 November 2013 to offset 10% reduction in fees. Vested on 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 2015 for corporate services totalling US$425,000 (2014: US$485,000)
were paid/payable (balance outstanding at 30 June 2015 and included in trade creditors US$Nil (2014: US$Nil)) to a
company of which Ms Gillian Swaby is a director and shareholder. All amounts are excluding GST.
61
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COMPENSATION OF KEY MANAGEMENT PERSONNEL FOR THE YEAR ENDED 30 JUNE 2014 OF THE GROUP
Short-Term Benefits
Post Employment
Long-Term Benefits
Share-
Based
Payment*
Total
Total
Total
Performance
Related
Total Performance
Related
Salary
& fees
Cash bonus
Other
Company
Benefits
Other
Super-
annuation
Retirement
Benefits
Long-Term
Incentive
Plan
Long Service
Leave
Share
Rights
US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000
A$’000
US$’000
%
Directors
Mr Rick Crabb
Mr John Borshoff
Mr Sean Llewelyn
Mr Donald Shumka
Mr Philip Baily
Mr Peter Donkin
Subtotal
Key Management Personnel
Ms Gillian Swaby
Mr Alan Rule(3)
Mr Dustin Garrow
Mr Mark Chalmers
Mr Craig Barnes(6)
Subtotal
Total
274
1,297
131
160
131
131
2,124
413
556
426
54
1,449
3,573
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
36(5)
-
36
36
-
-
-
-
-
-
-
485(2)
-
-
-
485
485
-
(118)(1)
-
-
-
-
(118)
-
-
-
-
-
17
17
12
-
12
12
70
-
17
-
17
3
37
107
(118)
-
-
-
-
-
-
-
-
214(4)
-
197
-
(17)
(17)
-
18
-
-
-
-
18
-
-
83
-
-
83
101
-
291
317
366
1,580
1,723
-
366
-
-
-
-
143
160
143
143
156
175
156
156
-
-
-
-
366
2,460
2,683
366
195
44
97
90
-
426
792
680
260
736
766
57
741
283
802
835
63
2,499
2,724
17
-
19
16
-
52
4,959
5,407
418
-
23.2
-
-
-
-
2.4
-
2.6
2.1
-
Notes to the Compensation Table
Presentation Currency
The compensation table has been presented in US$, 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 2014 more than 89% 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 CY2010
to CY2014
Share Rights
granted 5 November 2010
(vesting CY2011
to CY2014)
Share Rights
granted 15 February 2011
(vesting CY2012
to CY2014)
Share Rights
granted 2 April 2012
(vesting CY2012
to CY2014)
Share Rights
granted 15 November
2013(1) (vesting CY2013
to CY2014)
Total
Share-Based
Payment
A$’000
US$’000
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
9
–
12
–
21
298
298
8
–
11
–
19
74
68
346
317
–
–
–
–
123 (2)
113 (2)
–
–
123
123
–
–
113
113
–
–
25
–
27
–
–
23
–
25
71(3)
65(3)
123
123
113
113
55
47
67
28
197
197
51
44
61
25
181
181
399
399
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$34,000 relating to 50,000 time-based shares negotiated as a sign-on bonus to assist in attracting quality personnel.
60
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SHARE RIGHTS HOLDINGS OF KEY MANAGEMENT PERSONNEL (GROUP)
01 Jul 14
number
Granted as
remuneration(1)
number
Fair value at
grant date(2)
US$
Vested as
shares
number
Lapsed (3)
number
30 Jun 15
Number -
30 June 2015
Directors
Mr John Borshoff
250,000
-
(125,000)
(125,000)(4)
Executives
Ms Gillian Swaby
Mr Dustin Garrow
Mr Mark Chalmers
Total
41,250
209,979
174,373
675,602
174,529
245,582
86,536
506,647
50,435
70,967
25,007
(193,779)
(22,000)(5)
-
(185,979)
(24,000)(5)
245,582
(144,373)
(30,000)(5)
86,536(6)
146,409
(649,131)
(201,000)
332,118
No other Key Management Personnel held share rights during the year ended 30 June 2015.
(1) Allocation of share rights to offset 10% reduction in salary/fees.
(2) Fair value per right at grant date was US$0.32.
(3) Lapsed as performance conditions were not met.
(4) Granted 5 November 2010.
(5) Granted 2 April 2012.
(6) Rights vested but cannot be exercised until 1 December 2015.
SHARES HELD IN PALADIN ENERGY LTD (number)
30 June 2015
Directors
Mr Rick Crabb
Mr John Borshoff
Mr Sean Llewelyn
Mr Donald Shumka
Mr Peter Donkin
Mr Philip Baily
Mr Wendong Zhang
Executives
Ms Gillian Swaby
Mr Mark Chalmers
Mr Dustin Garrow
Total
Balance
01 Jul 14
On Vesting
of Rights Net Change Other
Balance
30 June 15
5,181,528
16,081,794
100,000
200,000
15,000
12,000
–
554,632
18,750
15,000
22,178,704
–
125,000
–
–
–
–
–
800,000
6,488,111
50,000
–
7,500
6,000
5,981,528
22,694,905
150,000
200,000
22,500
18,000
1,180,000
1,180,000
193,779(1)
144,373(2)
185,979(2)
649,131
–
81,562
(79,979)
748,411
244,685
121,000
8,533,194
31,361,029
No other Key Management Personnel held shares during the year ended 30 June 2015.
(1) Includes 174,529 share rights issued on 1 December 2014 to offset 10% reduction in fees. Vested immediately, to be held in escrow
to 1 December 2015.
(2) Includes 233,102 share rights issued on 14 November 2013 to offset 10% reduction in fees. Vested on 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 2015 for corporate services totalling US$425,000 (2014: US$485,000)
were paid/payable (balance outstanding at 30 June 2015 and included in trade creditors US$Nil (2014: US$Nil)) to a
company of which Ms Gillian Swaby is a director and shareholder. All amounts are excluding GST.
61
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CONTRACTS FOR SERVICES
Remuneration and other terms of employment for the Key Management Personnel are normally formalised in contracts
for services.
All contracts with Key Management Personnel may be terminated early by either party providing between three to twelve
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
(Resigned effective 10 August 2015)
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.
MR MARK CHALMERS
EXECUTIVE GENERAL MANAGER – PRODUCTION
(Resigned effective 30 June 2015)
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 an
allocation of 86,536 share rights.
No termination benefit is specified.
Notice period three months.
MR CRAIG BARNES
CHIEF FINANCIAL OFFICER
Term of agreement – no fixed term.
Base salary, inclusive of superannuation of A$410,000.
Three months
continual service.
long service
leave after five years
No termination benefit is specified in the agreement.
Payment of a benefit on retirement or early termination
by the Company, other than for gross misconduct, equal
to 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 (Resigned effective 21 August 2015)
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 an allocation of 174,529 share rights.
Notice period twelve months.
No termination benefit is specified in the agreement.
Notice period six months.
Remuneration for all parties referred to above includes
provision of an annual discretionary bonus and initial and
ongoing discretionary participation in the Company’s
long-term incentive plans.
SHARE RIGHTS VESTED AS SHARES -
KEY MANAGEMENT PERSONNEL )GROUP)
30 June 2015
Directors
Mr John Borshoff
Executives
Ms Gillian Swaby
Mr Dustin Garrow
Mr Mark Chalmers
Total
Vested as shares
125,000
193,779(1)
185,979(2)
144,373(2)
649,131(3)
MR DUSTIN GARROW
EXECUTIVE GENERAL MANAGER - MARKETING
(Resigned effective 21 August 2015)
Term of agreement – no fixed term.
(1) Includes 174,529 share rights issued on 1 December 2014 to offset
10% reduction in fees. Vested immediately, to be held in escrow to 1
December 2015.
(2) Includes 233,102 share rights issued on 14 November 2013 to offset 10%
reduction in salary. Vested on 14 November 2014.
(3) All shares issued for nil consideration.
Base salary, of US$683,385. 10% reduction in salary
and 20% reduction in time to US$492,037 offset with an
allocation of 245,582 share rights.
No termination benefit is specified in the agreement.
Notice period six months.
End of audited Remuneration Report
62
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SHARE RIGHTS
The outstanding balance of share rights at the date of this
report are as follows:
Date rights
granted
Vesting date
Vesting
performance
conditions
Number
1 December 2014
1 December 2015
Time based
788,754(1)
Total
788,754
(1) Issued pursuant to 10% reduction in management personnel base salaries.
2,388,072 shares were issued on the vesting of share
rights during the year ended 30 June 2015.
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 2015, 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.
DIRECTORS’ INDEMNITIES
Ernst & Young
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$100,000 (where rounding is
applicable) under the option available to the Company
under ASIC Class Order 98/0100. The Company is an
entity to which the Class Order applies.
AUDITOR
Ernst & Young were appointed auditors for the Company
on 21 June 2005, which was approved by shareholders at
the 2005 Annual General Meeting on 9 November 2005.
AUDITOR INDEPENDENCE AND NON-AUDIT
SERVICES
The Directors received the following declaration from the
auditor of Paladin Energy Ltd.
G H Meyerowitz
Partner
27 August 2015
NON-AUDIT SERVICES
The following non-audit and assurance services were
provided by the Company’s auditor, Ernst & Young. The
Directors are satisfied that the provision of non-audit
and assurance services is compatible with the general
standard of independence for auditors imposed by the
Corporations Act. The nature and scope of each type
of non-audit and assurance service provided means that
auditor independence was not compromised.
Ernst & Young received or are due to receive the following
amounts for the provision of non-audit services:
Other services
Tax compliance services
International tax consulting
Other tax advice
Total
US$’000
99
154
44
23
320
Signed in accordance with a resolution of the Directors.
Rick Crabb
Chairman
Perth, Western Australia
27 August 2015
63
PALADIN ENERGY LTD ANNUAL REPORT 2015
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
BASIS OF PREPARATION
NOTE 1.
CORPORATE INFORMATION
NOTE 2.
STRUCTURE OF THE FINANCIAL REPORT
NOTE 3.
BASIS OF PREPARATION
NOTE 4.
GOING CONCERN
SEGMENT INFORMATION
NOTE 5.
SEGMENT INFORMATION
CAPITAL STRUCTURE
NOTE 6.
CASH AND CASH EQUIVALENTS
NOTE 7.
INTEREST BEARING LOANS AND BORROWINGS
NOTE 8.
OTHER INTEREST BEARING LOANS - CNNC
NOTE 9.
CONTRIBUTED EQUITY AND RESERVES
NOTE 10.
FINANCIAL RISK MANAGEMENT
PERFORMANCE FOR THE YEAR
NOTE 11.
REVENUE
NOTE 12.
OTHER INCOME AND EXPENSES
NOTE 13.
INCOME AND OTHER TAXES
NOTE 14.
EARNINGS PER SHARE
NOTE 15.
RECONCILIATION OF EARNINGS AFTER INCOME TAX TO NET
CASH FLOW FROM OPERATING ACTVITIES
OPERATING ASSETS AND LIABILITIES
NOTE 16.
TRADE AND OTHER RECEIVABLES
NOTE 17.
INVENTORIES
NOTE 18.
ASSETS CLASSIFIED AS HELD FOR SALE
NOTE 19.
OTHER FINANCIAL ASSETS
NOTE 20.
PROPERTY, PLANT AND EQUIPMENT
NOTE 21.
MINE DEVELOPMENT
NOTE 22.
EXPLORATION AND EVALUATION EXPENDITURE
NOTE 23.
INTANGIBLE ASSETS
NOTE 24.
TRADE AND OTHER PAYABLES
NOTE 25.
PROVISIONS
NOTE 26.
UNEARNED REVENUE
OTHER NOTES
NOTE 27.
KEY MANAGEMENT PERSONNEL
NOTE 28.
AUDITORS’ REMUNERATION
NOTE 29.
COMMITMENTS AND CONTINGENCIES
NOTE 30.
RELATED PARTIES
NOTE 31.
SHARE-BASED PAYMENT PLANS
NOTE 32.
GROUP INFORMATION
NOTE 33.
EVENTS AFTER THE BALANCE DATE
NOTE 34.
NEW ACCOUNTING STANDARDS AND INTERPRETATIONS
65
66
67
68
70
71
71
71
71
71
74
75
75
77
77
77
79
80
82
87
87
87
89
91
92
93
93
94
95
95
96
98
99
101
102
102
103
104
104
105
106
107
107
108
112
113
T
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E
R
L
A
C
N
A
N
F
I
I
E
H
T
F
O
S
T
N
E
T
N
O
C
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PALADIN ENERGY LTD ANNUAL REPORT 2015
CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 30 JUNE 2015
Revenue
Revenue
Cost of sales
Impairment – inventories
Gross profit/(loss)
Other income
Exploration and evaluation expenses
Administration, marketing and non-production costs
Other expenses
Loss before interest and tax
Finance costs
Net loss before income tax
Income tax benefit
Net loss after tax
Attributable to:
Non-controlling interests
Members of the parent
Net loss after tax
NOTES
2015
US$M
2014
US$M
11
12
17
12
22
12
12
12
13
199.5
(189.7)
(8.0)
1.8
5.5
(1.6)
(19.3)
329.5
(332.9)
(61.7)
(65.1)
0.4
(1.7)
(21.9)
(267.6)
(337.6)
(281.2)
(425.9)
(57.0)
(59.7)
(338.2)
(485.6)
38.1
96.0
(300.1)
(389.6)
(32.3)
(267.8)
(300.1)
(51.2)
(338.4)
(389.6)
Loss per share (US cents) (1)
Loss after tax from operations attributable to ordinary equity holders of the Company
– basic and diluted (US cents)
14
(18.9)
(32.7)
The above Consolidated Income Statement should be read in conjunction with the accompanying notes.
(1) The loss per share calculations for all periods prior to 31 March 2015 have been adjusted by factors of 1.03 and 1.02 to reflect the bonus element of the institutional and retail
entitlement offers.
65
FINANCIAL REPORTPALADIN ENERGY LTD ANNUAL REPORT 2015 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2015
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
2015
US$M
2014
US$M
(300.1)
(389.6)
(3.7)
(0.4)
2.9
(99.2)
(0.6)
(5.6)
(106.6)
(3.4)
(0.3)
4.3
1.3
-
(0.2)
1.7
(406.7)
(387.9)
(37.9)
(368.8)
(51.4)
(336.5)
(406.7)
(387.9)
The above Consolidated Statement of Comprehensive Income should be read in conjunction with the accompanying notes.
66
FINANCIAL REPORTPALADIN ENERGY LTD ANNUAL REPORT 2015 CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2015
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
Other Interest bearing loans - CNNC
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
2015
US$M
2014
US$M
6
16
17
18
16
17
19
20
21
22
23
24
7
25
7
8
13
25
26
9
9
32
183.7
9.5
2.9
75.3
2.8
274.2
0.6
156.3
2.6
273.7
43.0
337.9
11.7
88.8
198.7
3.3
78.1
3.8
372.7
1.0
160.2
6.6
281.8
43.9
687.3
12.2
825.8
1,193.0
1,100.0
1,565.7
30.4
8.5
3.5
42.4
427.3
98.7
47.9
85.4
200.0
39.3
39.4
5.5
84.2
590.2
96.0
90.2
72.7
200.0
859.3
1,049.1
901.7
1,133.3
198.3
432.4
2,094.9
61.1
(1,901.7)
254.3
(56.0)
1,926.9
161.9
(1,633.9)
454.9
(22.5)
198.3
432.4
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
67
FINANCIAL REPORTPALADIN ENERGY LTD ANNUAL REPORT 2015 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2015
CONTRIBUTED
EQUITY
US$M
AVAILABLE
-FOR-SALE
RESERVE
US$M
SHARE-
BASED
PAYMENTS
RESERVE
US$M
CONVERTIBLE
BOND NON-
DISTRIB-
UTABLE
RESERVE
US$M
Balance at 1 July 2013
1,845.7
(4.2)
50.2
85.5
(0.2)
(1,295.5)
656.8
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
-
Balance at 30 June 2014
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
Convertible bond, equity component – net of transaction costs
Convertible bond, buy back
Allotment of interest in Paladin (Africa) to Govt of Malawi to maintain
15% shareholding
Sale of 25% interest in Langer Heinrich to CNNC
-
-
-
-
3.1
78.1
-
1,926.9
-
-
-
-
1.8
166.2
-
-
-
-
-
0.6
0.6
-
-
-
-
-
(3.6)
-
(1.8)
(1.8)
-
-
-
-
-
-
-
-
-
-
0.5
(3.1)
-
-
-
47.6
-
-
-
0.6
(1.8)
-
-
-
-
-
-
-
-
-
-
-
-
-
85.5
-
-
-
-
-
-
16.0
(7.2)
-
-
FOREIGN
CURRENCY
REVALUATION
RESERVE
PREMIUM ON
ACQUISITION
RESERVE
OPTION
APPLICATION
RESERVE
CONSOL-
IDATION
RESERVE
US$M
ACCUMU-
LATED
LOSSES
US$M
ATTRIBUTABLE
TO OWNERS
NON-
OF THE
PARENT
CONTROLLING
INTERESTS
US$M
US$M
US$M
14.9
US$M
0.1
US$M
(39.7)
1.3
1.3
(99.2)
(99.2)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(38.4)
14.9
0.1
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(6.7)
62.7
55.8
(4.4)
(3.0)
(338.4)
(338.4)
(1,633.9)
(267.8)
(267.8)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(338.4)
1.9
(336.5)
0.5
-
78.1
(6.7)
62.7
454.9
(267.8)
(101.0)
(368.8)
0.6
-
166.2
16.0
(7.2)
(4.4)
(3.0)
TOTAL
US$M
648.2
(389.6)
(387.9)
1.7
0.5
78.1
-
-
93.5
432.4
(300.1)
(106.6)
(406.7)
0.6
-
166.2
16.0
(7.2)
-
(3.0)
(8.6)
(51.2)
(0.2)
(51.4)
6.7
30.8
(22.5)
(32.3)
(5.6)
(37.9)
-
-
-
-
-
-
-
-
-
4.4
Balance at 30 June 2015
2,094.9
(5.4)
46.4
94.3
(137.6)
14.9
0.1
48.4
(1,901.7)
254.3
(56.0)
198.3
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
68
FINANCIAL REPORTPALADIN ENERGY LTD ANNUAL REPORT 2015
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2015
AVAILABLE
-FOR-SALE
RESERVE
SHARE-
BASED
PAYMENTS
RESERVE
US$M
US$M
CONVERTIBLE
BOND NON-
DISTRIB-
UTABLE
RESERVE
US$M
CONTRIBUTED
EQUITY
US$M
FOREIGN
CURRENCY
REVALUATION
RESERVE
US$M
PREMIUM ON
ACQUISITION
RESERVE
US$M
OPTION
APPLICATION
RESERVE
US$M
CONSOL-
IDATION
RESERVE
US$M
ACCUMU-
LATED
LOSSES
US$M
ATTRIBUTABLE
TO OWNERS
OF THE
PARENT
US$M
NON-
CONTROLLING
INTERESTS
US$M
TOTAL
US$M
Balance at 1 July 2013
1,845.7
(4.2)
50.2
85.5
(39.7)
14.9
0.1
(0.2)
(1,295.5)
656.8
(8.6)
648.2
Balance at 30 June 2014
1,926.9
(3.6)
47.6
85.5
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
-
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
Convertible bond, equity component – net of transaction costs
Convertible bond, buy back
Allotment of interest in Paladin (Africa) to Govt of Malawi to maintain
15% shareholding
Sale of 25% interest in Langer Heinrich to CNNC
3.1
78.1
-
-
-
-
-
-
-
-
-
-
-
-
-
1.8
166.2
0.6
0.6
(1.8)
(1.8)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
0.5
(3.1)
0.6
(1.8)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
16.0
(7.2)
-
1.3
1.3
-
-
-
-
-
(38.4)
-
(99.2)
(99.2)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
14.9
0.1
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(6.7)
62.7
55.8
-
-
-
-
-
-
-
-
(4.4)
(3.0)
(338.4)
-
(338.4)
-
-
-
-
-
(1,633.9)
(267.8)
-
(267.8)
-
-
-
-
-
-
-
(338.4)
1.9
(336.5)
0.5
-
78.1
(6.7)
62.7
454.9
(267.8)
(101.0)
(368.8)
0.6
-
166.2
16.0
(7.2)
(4.4)
(3.0)
(51.2)
(0.2)
(51.4)
-
-
-
6.7
30.8
(22.5)
(32.3)
(5.6)
(37.9)
-
-
-
-
-
4.4
-
(389.6)
1.7
(387.9)
0.5
-
78.1
-
93.5
432.4
(300.1)
(106.6)
(406.7)
0.6
-
166.2
16.0
(7.2)
-
(3.0)
Balance at 30 June 2015
2,094.9
(5.4)
46.4
94.3
(137.6)
14.9
0.1
48.4
(1,901.7)
254.3
(56.0)
198.3
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
69
FINANCIAL REPORTPALADIN ENERGY LTD ANNUAL REPORT 2015
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2015
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers
Payments to suppliers and employees
Interest received
Interest paid
Exploration and evaluation expenditure
Other income
NOTES
2015
US$M
2014
US$M
215.4
(210.9)
0.9
(29.7)
(1.6)
1.2
370.3
(326.3)
0.7
(33.0)
(1.7)
0.1
NET CASH (OUTFLOW)/INFLOW FROM OPERATING ACTIVITIES
15
(24.7)
10.1
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
Proceeds from convertible bonds
Convertible bond finance costs
Share placement
Proceeds from entitlement issue
Equity fundraising costs
Project finance facility establishment costs
Repayment of borrowings
Proceeds from borrowings
Costs from sale of non-controlling interest
Proceeds from sale of non-controlling interest
NET CASH INFLOW FROM FINANCING ACTIVITIES
NET INCREASE IN CASH AND CASH EQUIVALENTS
Cash and cash equivalents at the beginning of the financial year
Effects of exchange rate changes on cash and cash equivalents
(4.2)
(11.5)
(0.2)
-
0.3
(15.6)
(300.0)
150.0
(4.2)
52.7
119.7
(6.2)
(1.5)
(39.9)
-
(3.0)
170.0
137.6
97.3
88.8
(2.4)
CASH AND CASH EQUIVALENTS AT THE END OF THE FINANCIAL YEAR
6
183.7
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
(5.8)
(20.3)
-
0.4
0.4
(25.3)
-
-
-
80.7
-
(2.5)
(3.1)
(178.8)
110.0
-
20.0
26.3
11.1
78.1
(0.4)
88.8
70
FINANCIAL REPORTPALADIN ENERGY LTD ANNUAL REPORT 2015 BASIS OF PREPARATION
NOTE 1. CORPORATE INFORMATION
The Financial Report of Paladin for the year ended 30 June 2015 was authorised for issue in accordance with a resolution of the
Directors on 27 August 2015.
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 Group’s principal place of business is Hay Street, Subiaco, Western Australia. The nature of the operations and principal activities
of the Group are described in the Management Discussion and Analysis (unaudited) on pages 9 to 33.
NOTE 2. STRUCTURE OF THE FINANCIAL REPORT
The Notes to the Consolidated Financial Statements have been grouped into six key categories, which are summarised as follows:
Basis of Presentation
This section sets out the group’s significant 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. Accounting policies determined non-significant are
not included in the financial statements. There have been no changes to the Group’s accounting policies that are no longer disclosed
in the financial statements.
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 2015 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 2014.
71
FINANCIAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015PALADIN ENERGY LTD ANNUAL REPORT 2015 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 2014.
The nature and impact of each new standard and amendment is described below:
REFERENCE
TITLE
IMPACT
AASB 2013-3
Amendments to AASB 136 – Recoverable Amount Disclosures for Non-
Financial Assets
There was no material impact on the
Annual Report.
AASB 2013-3 amends t he 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.
AASB 1031
Materiality
The revised AASB 1031 is an interim standard that cross-references to
other Standards and the Framework (issued December 2013) that contain
guidance on materiality.
AASB 1031 will be withdrawn when references to AASB 1031 in all
Standards and Interpretations have been removed.
AASB 2014-1 Part C issued in June 2014 makes amendments to eight
Australian Accounting Standards to delete their references to AASB 1031.
The amendments are effective from 1 July 2014.
No adjustments to any of the carrying
amounts in the financial statements
were required as a result of the
adoption of AASB 1031.
AASB 2014-1
Part A -Annual
Improvements
2010–2012 Cycle
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.
There was no material impact on the
Annual Report.
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 segment assets 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 Related Party Disclosures for KMP services provided by a
management entity. Payments made to a management entity in respect
of KMP services should be separately disclosed.
72
FINANCIAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015PALADIN ENERGY LTD ANNUAL REPORT 2015 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 functional and
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 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
NOTE 3. BASIS OF PREPARATION (CONTINUED)
Basis of Consolidation
The consolidated financial statements comprise the financial
statements of Paladin Energy Ltd and its subsidiaries as at 30
June 2015 (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 non-controlling 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.
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.
73
FINANCIAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015PALADIN ENERGY LTD ANNUAL REPORT 2015 NOTE 3. BASIS OF PREPARATION (CONTINUED)
NOTE 4. GOING CONCERN
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.
As at 30 June 2015, the Group had a net working capital surplus
of US$231.8M (30 June 2014: US$288.5M), including cash on
hand of US$183.7M (30 June 2014: US$88.8M). Included within
this cash on hand is US$31.2M (30 June 2014: US$13.2M),
which is restricted for use in respect of the LHM syndicated loan
facility and supplier guarantees provided by LHM.
The amount outstanding at 30 June 2015 on the syndicated loan
facility was US$60.9M.
Repayment obligations during the next twelve months to 30 June
2016 in respect of interest bearing loans and borrowings are
summarised as follows:
secured bank loan principal repayments of US$9.1M for
syndicated loan facility; and
interest payments of US$29.7M for syndicated loan facility
and 2012 (due 2017) and 2015 (due 2020) unsecured
convertible bonds.
In December 2014, the Group successfully completed an equity
capital raising of A$205M (US$172.4M) through the introduction
of a strategic investor, together with completion of a well-
supported entitlement offer.
On 31 March 2015, the Company issued a US$150M convertible
bond with a coupon rate of 7.00% maturing on 31 March 2020
and a conversion price of US$0.356 for Company shares.
US$100M was issued to high quality institutional investors,
whilst US$50M was issued to Leader Investment Corporation, a
controlled subsidiary of CIC, one of the largest sovereign wealth
funds in the world. The issue was approved by shareholders on
30 March 2015.
The proceeds from the convertible bond issue, along with the
existing cash balance, were used to fund a concurrent tender
offer to acquire the outstanding US$300M convertible bonds
due November 2015, issued by the Company on 4 November
2010.
At the date of this report, the Directors are satisfied there are
reasonable grounds to believe that, having regard to the Group’s
position and its available financing options, the Group will be
able to meet its obligations as and when they fall due.
74
FINANCIAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015PALADIN ENERGY LTD ANNUAL REPORT 2015 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(1) 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.
(1)Currently on care and maintenance due to low uranium price. Production ceased on 6 May 2014.
The following tables present revenue, expenditure and asset information regarding operating segments for the years ended 30 June
2015 and 30 June 2014.
Year ended 30 June 2015
Sales to external customers
Other revenue
Total consolidated revenue
Cost of goods sold
Impairment of Inventory
Gross profit
Other expenses
Impairment of asset
Write off of Exploration and evaluation
Segment (loss)/profit before income tax
and finance costs
Finance costs
(Loss)/profit before income tax
Income tax benefit/(expense)
Loss after income tax
At 30 June 2015
Segment assets/total assets
EXPLORATION
US$M
NAMIBIA
US$M
MALAWI
US$M
UNALLOCATED CONSOLIDATED
US$M
US$M
-
-
-
-
-
-
(1.5)
(237.5)
(1.4)
(240.4)
-
(240.4)
72.1
(168.3)
191.9
-
191.9
(182.9)
(8.0)
1.0
(2.2)
-
-
(1.2)
(10.2)
(11.4)
(17.0)
(28.4)
6.7
-
6.7
(6.8)
-
(0.1)
(23.6)
-
-
(23.7)
(2.2)
(25.9)
-
(25.9)
-
0.9
0.9
-
-
0.9
(12.9)
(3.9)
-
(15.9)
(44.6)
(60.5)
(17.0)
(77.5)
198.6
0.9
199.5
(189.7)
(8.0)
1.8
(40.2)
(241.4)
(1.4)
(281.2)
(57.0)
(338.2)
38.1
(300.1)
340.9
622.8
12.6
123.7(1)
1,100.0
AUSTRALIA
US$M
CANADA
US$M
NAMIBIA
US$M
OTHER CONSOLIDATED
US$M
US$M
Non current assets (excluding financial
instruments) by country
111.1
231.1
481.0
-
823.2
In 2015, the three most significant customers equated on a proportionate basis to 25% (US$50.2M Namibia), 22% (US$44.6M
Namibia) and 14% (US$27.5M Namibia, Malawi) of the Group’s total sales revenue.
(1)Includes US$116.0 M in cash and cash equivalents and US$2.6M available-for-sale financials assets (refer to Note 19).
75
FINANCIAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015PALADIN ENERGY LTD ANNUAL REPORT 2015 NOTE 5. SEGMENT INFORMATION (CONTINUED)
EXPLORATION
US$M
NAMIBIA
US$M
MALAWI
US$M
UNALLOCATED CONSOLIDATED
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
Segment assets/total assets
-
-
-
-
-
-
(1.2)
(323.6)
(324.8)
-
(324.8)
97.4
(227.4)
207.0
-
207.0
121.8
-
121.8
(191.5)
(141.4)
(21.0)
(5.5)
(1.1)
-
(6.6)
(8.8)
(15.4)
10.7
(4.7)
(40.7)
(60.3)
(8.4)
-
(68.7)
(5.4)
(74.1)
-
(74.1)
-
0.7
0.7
-
-
0.7
(18.4)
(8.1)
(25.8)
(45.5)
(71.3)
(12.1)
(83.4)
328.8
0.7
329.5
(332.9)
(61.7)
(65.1)
(29.1)
(331.7)
(425.9)
(59.7)
(485.6)
96.0
(389.6)
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 16) and US$6.6M available-for-sale financials assets (refer to Note 19).
76
FINANCIAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015PALADIN ENERGY LTD ANNUAL REPORT 2015 CAPITAL STRUCTURE
The group’s objectives when managing capital are to safeguard its ability to continue as a going concern, so that it can continue to
provide returns to shareholders and benefits for other stakeholders and to maintain an efficient capital structure to reduce the cost of
capital. Capital includes issued capital and all other equity reserves attributable to the equity holders of the parent.
In order to maintain or adjust the capital structure, the group may issue new shares or sell assets to reduce debt.
The group monitors capital on the basis of the level of return on capital and also the level of net cash/debt and compliance with bank
covenants, including the gearing ratio calculated as a net debt / (net debt + equity). The group manages funds on a group basis with
all funds being drawn by the parent entity.
NOTE 6. CASH AND CASH EQUIVALENTS
Cash at bank and on hand
Short-term bank deposits
Total cash and cash equivalents
2015
US$M
3.1
180.6
183.7
2014
US$M
10.3
78.5
88.8
Total cash and cash equivalents includes US$31.2M (2014: US$13.2M) restricted for use in respect of the project finance facilities (refer
to Note 7) and supplier guarantees provided by LHM.
Recognition and measurement
Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid
investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are
subject to an insignificant risk of changes in value, and bank overdrafts. Cash at bank earns interest at floating rates based on daily
bank deposit rates. Short-term deposits are made for varying periods depending on the immediate cash requirements of the Group,
and earn interest at the respective short-term deposit rates.
NOTE 7. INTEREST BEARING LOANS AND BORROWINGS
Current
Secured bank loans
Total current interest bearing loans and borrowings
Non Current
Unsecured convertible bonds(1)
Unsecured convertible bonds(2)
Unsecured convertible bonds(3)
Secured bank loan
Total non current interest bearing loans and borrowings
MATURITY
2015
US$M
2014
US$M
2015
2017
2020
amortised to 2019
8.5
8.5
-
254.3
123.4
49.6
427.3
39.4
39.4
285.8
245.0
-
59.4
590.2
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 10.
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$4.688, for Company shares. On 2 April 2015,
US$289.25M bonds were repurchased pursuant to a tender offer concurrent with the issue of US$150M 7.00% convertible bonds
due 2020. The US$10.75M bonds, which remained outstanding following settlement of the tender offer, were redeemed through the
exercise of the Company’s optional redemption right on 18 May 2015.
(2) 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$1.83 for Company shares.
(3) On 31 March 2015, the Company issued US$150M in convertible bonds with a coupon rate of 7% (underlying effective interest rate of
12.37%) maturing on 31 March 2020 with a conversion price of US$0.356 for Company shares.
77
FINANCIAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015PALADIN ENERGY LTD ANNUAL REPORT 2015 NOTE 7. INTEREST BEARING LOANS AND BORROWINGS (CONTINUED)
Unsecured convertible bonds (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 Institutional Entitlement offer on 4 December 2014 and the
Retail Entitlement offer on 17 December 2014, the Conversion Price has been adjusted as follows:
Convertible bonds due 2017: US$1.83 (previously US$2.109)
Secured bank loans
On 23 July 2014, the Company entered into agreements with its existing lenders to refinance the existing US$110M LHM project
finance facility and US$20M working capital facility into a new US$70M Syndicated Facility Agreement. Proceeds from the LHM
minority sale were utilised to repay US$30.8M of the existing facility, taking the outstanding balance to US$70M. The Borrower of the
new facility remains Paladin Finance Pty Ltd (“PFPL”). The new facility has less security with neither Langer Heinrich Mauritius Holdings
Limited (“LHMHL”) nor Langer Heinrich Uranium (Pty) Ltd (“LHU”) granting any security or providing any guarantees to support the
new facility. The new facility is secured by a Share Pledge Agreement from PFPL over its 75% interest in LHMHL. The facility has a
financial covenant holiday for the first four 6-monthly calculations periods commencing 31 December 2014. The first debt covenant
ratios calculation date is 31 December 2016. 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. The facility is repayable
on a semi-annual basis over the term of the loan (five and a half years) commencing 31 December 2014 with seven instalments of
US$4.454M and 3 instalments of US$9.545M and one of US$9.550M and bears interest at the LIBOR plus 5.50%. Under the terms of
the facility, 50% of any distributions from LHU to PFPL are repayable to the financiers.
At 30 June 2015, US$60.9M (30 June 2014: US$100.8M) was outstanding under the syndicated loan facility.
Transaction costs relating to the establishment of the facility totalled US$1.5M (2014: US$3.1M), and have been included as part of
interest bearing loans and borrowings.
Recognition and measurement
Bank loan borrowings are initially recognised at fair value, net of transaction costs incurred. Bank loan borrowings are subsequently
measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised
in the Income Statement over the period of the borrowings using the effective interest method.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least
12 months after the balance date.
The component of convertible bonds that exhibits characteristics of debt is recognised as a liability in the Statement of Financial
Position, net of transaction costs. On issue of convertible bonds, the fair value of the liability component is determined using a market
rate for an equivalent non-convertible bond and this amount is carried as a liability on the amortised cost basis until extinguished
on conversion or redemption. The increase in the liability due to the passage of time is recognised as a finance cost. The remainder
of the proceeds is allocated to the equity component and is recognised in shareholders’ equity. The carrying amount of the equity
component is not remeasured in subsequent years.
Financing facilities available
At reporting date, the following financing facilities had been negotiated and were available:
2015
US$M
424.0
60.9
484.9
424.0
60.9
484.9
-
-
2014
US$M
574.0
130.0
704.0
574.0
110.0
684.0
-
20.0
Total facilities:
Unsecured convertible bonds
Secured bank loans
Facilities used at reporting date:
Unsecured convertible bonds
Secured bank loans
Facilities unused at reporting date:
Unsecured convertible bonds
Secured bank loans
78
FINANCIAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015PALADIN ENERGY LTD ANNUAL REPORT 2015
NOTE 7. INTEREST BEARING LOANS AND BORROWINGS (CONTINUED)
Financing facilities available (continued)
The carrying amounts of assets pledged as security for current and non current interest bearing liabilities (secured bank loans) are:
Current
Floating charge
Cash and cash equivalents
Trade and other receivables
Inventories
Total current assets pledged as security
Non Current
Inventories
Property, plant and equipment
Mine development
Intangible assets
Total non current assets pledged as security
Total assets pledged as security
2015
US$M
2014
US$M
-
-
-
-
-
-
-
-
-
-
28.0
19.7
68.7
116.4
160.2
279.6
43.9
12.2
495.9
612.3
The syndicated loan facility holds no security over project assets. The new facility is secured by a Share Pledge Agreement from PFPL
over its 75% interest in LHMHL.
NOTE 8. OTHER INTEREST BEARING LOANS - CNNC
Non Current
Intercompany loan assigned to CNNC
MATURITY
2016 to 2021
30 JUNE
2015
US$M
30 JUNE
2014
US$M
98.7
98.7
96.0
96.0
As part of the sale of a 25% interest in the Langer Heinrich mining operation, US$96M (representing 25%) of the intercompany
shareholder loans owing by LHU to PFPL were assigned to CNNC under the same interest rate (LIBOR plus a margin between 2% and
4.25%) and conditions as those presently existing.
Pursuant to the intercompany shareholder loan agreements, repayment dates range from 2016 to 2021, however, repayment is
dependent on LHU generating sufficient free cash flows to repay the loans and the loans have not been guaranteed by Paladin Energy
Ltd (Paladin). If LHU does not have sufficient funds to repay the intercompany shareholder loans, neither CNNC nor PFPL can demand
repayment and repayment of the loans will be deferred.
All loan repayments from LHU will be paid on a pro rata basis against the outstanding balances, (i.e. 75% to PFPL and 25% to CNNC).
On consolidation, PFPL’s 75% share of the LHU intercompany shareholder loans are eliminated against the intercompany shareholder
loans receivable recorded in PFPL and therefore, they do not appear on Paladin’s consolidated statement of financial position. As
a result of the consolidation of 100% of LHU’s assets and liabilities, LHU’s liability of US$98.0M to CNNC is recognised on the
consolidated statement of financial position.
79
FINANCIAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015PALADIN ENERGY LTD ANNUAL REPORT 2015 NOTE 9. CONTRIBUTED EQUITY AND RESERVES
Issued and Paid Up Capital
NUMBER OF SHARES
2014
2015
2015
US$M
2014
US$M
Ordinary shares
Issued and fully paid
1,666,927,668
964,367,284
2,094.9
1,926.9
Fully paid ordinary shares carry one vote per share and carry the right to dividends.
Recognition and measurement
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares are shown in equity as a
deduction, net of tax, from the proceeds.
Movements in Ordinary Shares on Issue
DATE
NUMBER OF SHARES
Balance 30 June 2013
August 2013
September 2013
November 2013
December 2013
January 2014
February 2014
Share placement
Rights vested
Rights vested
Rights vested
Rights vested
Rights vested
Transfer from share-based
payments reserve
Transaction costs
837,187,808
125,578,171
566,095
786,493
85,437
37,630
125,650
ISSUE PRICE
A$
EXCHANGE
RATE
US$: A$
0.70
1.08998
TOTAL
US$M
1,845.7
80.6
-
-
-
-
-
3.1
(2.5)
Balance 30 June 2014
964,367,284(1)
1,926.9
September 2014
September 2014
November 2014
November 2014
December 2014
December 2014
December 2014
Rights vested
Rights vested
Rights vested
Share placement
Rights vested
Institutional entitlement offer
Retail entitlement offer
Transfer from share-based
payments reserves
Transaction costs
390,950
136,340
857,544
144,862,817
1,003,238
191,530,053
363,779,442
-
-
-
0.42
0.26
0.26
-
-
-
1.15423
1.18827
1.21563
-
-
-
52.7
41.9
77.8
1.8
(6.2)
Balance 30 June 2015
1,666,927,668(2)
2,094.9
(1)Includes 1,084 shares held by Paladin Employee Plan Pty Ltd.
(2)Includes 184 shares held by Paladin Employee Plan Pty Ltd.
80
FINANCIAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015PALADIN ENERGY LTD ANNUAL REPORT 2015 NOTE 9. CONTRIBUTED EQUITY AND RESERVES (CONTINUED)
Reserves
CONSOL-
IDATION
RESERVE
US$M
LISTED
OPTION
APPLICATION
RESERVE
SHARE-BASED
PAYMENTS
RESERVE
AVAILABLE
-FOR-SALE
RESERVE
FOREIGN
CURRENCY
TRANSLATION
RESERVE
CONVERTIBLE
BOND NON-
DISTRIBUTABLE
RESERVE
PREMIUM ON
ACQUISITION
RESERVE
US$M
US$M
US$M
US$M
US$M
US$M
TOTAL
US$M
(0.2)
0.1
50.2
At 1 July 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
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
Income Tax
Convertible bond, equity
component – net of
transaction costs
Convertible bond, buy back
Allotment of interest in Paladin
(Africa) to Govt of Malawi to
maintain 15% shareholding
Sale of 25% interest in Langer
Heinrich to CNNC
-
-
-
-
-
(6.7)
62.7
55.8
-
-
-
-
-
-
-
-
(4.4)
(3.0)
-
-
-
-
-
-
-
-
(2.6)
-
-
-
-
-
(4.2)
(3.4)
-
-
4.3
(0.3)
-
-
(39.7)
85.5
14.9
106.6
-
-
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
-
-
-
-
-
-
-
-
-
-
-
(1.2)
-
-
-
-
-
-
-
-
(3.7)
-
-
2.9
(0.4)
(0.6)
-
-
-
-
-
-
(99.2)
-
-
-
-
-
-
-
-
-
-
-
-
-
16.0
(7.2)
-
-
-
-
-
-
-
-
-
-
-
-
(3.7)
(1.2)
(99.2)
2.9
(0.4)
(0.6)
16.0
(7.2)
(4.4)
(3.0)
At 30 June 2015
48.4
0.1
46.4
(5.4)
(137.6)
94.3
14.9
61.1
81
FINANCIAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015PALADIN ENERGY LTD ANNUAL REPORT 2015 NOTE 9. 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 31 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 19.
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 10. 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
2015
US$M
2.0
7.0
9.0
(20.5)
(11.5)
2014
US$M
6.5
9.3
15.8
(23.7)
(7.9)
Based on the Group’s net exposure at the balance date, a reasonably possible change in the exchange rate would not have a material
impact on profit or equity.
82
FINANCIAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015PALADIN ENERGY LTD ANNUAL REPORT 2015 NOTE 10. FINANCIAL RISK MANAGEMENT (CONTINUED)
Market Risk (continued)
Interest Rate Risk
Interest rate risk is the risk that the Group’s financial position will be adversely affected by movements in interest rates that will increase
the cost of floating rate debt or opportunity losses that may arise on fixed rate borrowings in a falling interest rate environment.
Interest rate risk on cash and short-term deposits is not considered to be a material risk due to the short-term nature of these financial
instruments.
The Group’s main interest rate risk arises from long-term debt. Floating rate debt exposes the Group to cash flow interest rate risk
and fixed rate debt exposes the Group to fair value interest rate risk. All other financial assets and liabilities in the form of receivables,
investments in shares, payables and provisions, are non-interest bearing.
The Group currently does not engage in any hedging or derivative transactions to manage interest rate risk.
The floating rate financial instruments exposed to interest rates movements are as follows:
Financial assets
Cash and cash equivalents – short-term deposits
Financial liabilities
Interest-bearing liabilities
Net exposure
2015
US$M
2014
US$M
183.7
78.5
(159.7)
(196.8)
24.0
(118.3)
Based on the Group’s net exposure at the balance date, a reasonably possible change in LIBOR would not have a material impact on
profit or equity.
Liquidity Risk
The liquidity position of the Group is managed to ensure sufficient liquid funds are available to meet the Group’s financial commitments
in a timely and cost effective manner.
The Group treasury function continually reviews the Group’s liquidity position including cash flow forecasts to determine the
forecast liquidity position and maintain appropriate liquidity levels. Sensitivity analysis is conducted on a range of pricing and market
assumptions to ensure the Group has the ability to meet repayment commitments. This enables the Group to manage cash flows
on a long-term basis and provides the flexibility to pursue a range of funding alternatives if necessary. Note 7 details the repayment
obligations in respect of the amount of the facilities.
The maturity analysis of payables at the reporting date was as follows:
2015
Trade and other payables
Loans and borrowings
Interest payable
Total payables
2014
Trade and other payables
Loans and borrowings
Interest payable
Total payables
PAYABLES MATURITY ANALYSIS
TOTAL
US$M
<1 YEAR
US$M
1-2 YEARS
US$M
2-3 YEARS
US$M
>3 YEARS
US$M
30.4
580.9
113.6
724.9
39.3
770.8
100.7
910.8
30.4
12.9
33.4
76.7
39.3
39.9
34.2
113.4
-
283.1
32.9
316.0
-
312.9
28.3
341.2
-
14.1
16.0
30.1
-
283.1
22.4
305.5
-
270.8
31.3
302.1
-
134.9
15.8
150.7
83
FINANCIAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015PALADIN ENERGY LTD ANNUAL REPORT 2015 NOTE 10. 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, creditworthy 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$193.8M (2014 US$288.5M), comprising cash and
receivables.
Current
Cash and cash equivalents*
Trade receivables
Other receivables – other entities
Non Current
Other receivables – other entities
Total
2015
US$M
183.7
2.1
7.4
193.2
2014
US$M
88.8
18.9
179.8
287.5
0.6
1.0
193.8
288.5
* The Group’s maximum deposit with a single financial institution represents 57% (2014: 53%) of cash and cash equivalents. Any cash
available to be invested is held with Australian banks with a minimum AA- Standard & Poor’s credit rating.
RECEIVABLES AGEING ANALYSIS
<1 YEAR
US$M
CURRENT
US$M
TOTAL
US$M
2015
Trade receivables
Other receivables
Total receivables
2014
Trade receivables
Other receivables
Total receivables
No receivables are past due or impaired.
2.1
8.0
10.1
18.9
180.8
199.7
2.1
7.4
9.5
18.9
179.8
198.7
-
0.6
0.6
-
1.0
1.0
84
FINANCIAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015PALADIN ENERGY LTD ANNUAL REPORT 2015 NOTE 10. 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 2015:
Financial liabilities
Interest bearing loans and borrowings:
-Secured bank loan
Total current
Interest bearing loans and borrowings
-Secured bank loan
-Debt component of Unsecured convertible bonds
Total non-current
Total
2015
2014
CARRYING
AMOUNT
US$M
FAIR VALUE
US$M
CARRYING
AMOUNT
US$M
FAIR VALUE
US$M
8.5
8.5
49.6
377.7(1)
427.3
435.8
9.1
9.1
51.8
401.1
452.9
462.0
39.4
39.4
59.4
530.8(1)
590.2
39.9
39.9
60.9
491.7
552.6
629.6
592.5
(1) This figure includes transaction costs which offset the balance in accordance with the requirements of Accounting Standards.
The Group uses various methods in estimating the fair value of a financial instrument. The methods comprise:
Level 1 – the fair value is calculated using quoted prices in active markets.
Level 2 – the fair value is estimated using inputs other than quoted prices included in Level 1 that are observable for the asset or
liability, either directly (as prices) or indirectly (derived from prices).
Level 3 – the fair value is estimated using inputs for the asset or liability that are not based on observable market data.
The fair value of the financial instruments as well as the methods used to estimate the fair value are summarised in the table below:
YEAR ENDED 30 JUNE 2015
VALUATION
TECHNIQUE-
MARKET
OBSERVABLE
INPUTS
(LEVEL 2)
VALUATION
TECHNIQUE-
NON MARKET
OBSERVABLE
INPUTS
(LEVEL 3)
QUOTED
MARKET PRICE
(LEVEL 1)
US$M
US$M
US$M
YEAR ENDED 30 JUNE 2014
VALUATION
TECHNIQUE-
MARKET
OBSERVABLE
INPUTS
(LEVEL 2)
VALUATION
TECHNIQUE-
NON MARKET
OBSERVABLE
INPUTS
(LEVEL 3)
US$M
US$M
QUOTED
MARKET PRICE
(LEVEL 1)
US$M
TOTAL
US$M
Financial assets
measured at fair value
Available-for-sale
investments
Listed investments
Financial liabilities for
which fair values are
disclosed
Interest bearing loans
and borrowings
Floating rate borrowings(1)
Debt component of of
Convertible bonds(2)
2.6
2.6
-
-
-
-
-
60.9
401.1
462.0
-
-
-
-
-
2.6
2.6
6.6
6.6
-
-
60.9
401.1
462.0
-
-
-
100.8
491.7
592.5
-
-
-
-
-
TOTAL
US$M
6.6
6.6
100.8
491.7
592.5
(1)The fair value has been determined by discounting the future cash flows using market 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 estimated fair value of the equity component
attributable to the conversion feature, which was valued using an option pricing model. The estimated fair value of the equity component was not considered material at 30
June 2015.
85
FINANCIAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015PALADIN ENERGY LTD ANNUAL REPORT 2015 NOTE 10. 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
2015
US$M
534.5
(183.7)
350.8
198.3
2014
US$M
725.6
(88.8)
636.8
432.4
549.1
1,069.2
64%
60%
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 2015 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.
86
FINANCIAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015PALADIN ENERGY LTD ANNUAL REPORT 2015 PERFORMANCE FOR THE YEAR
NOTE 11. REVENUE
Sale of uranium
Interest income from non-related parties
Total
Recognition and measurement
2015
US$M
198.6
0.9
199.5
2014
US$M
328.8
0.7
329.5
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 12. 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
Gain on disposal of tenements
Total
Administration, Marketing and Non-Production Costs
Corporate and marketing
LHM mine site
KM mine site
Other
Total
2015
US$M
(169.8)
(31.4)
24.9
(7.3)
(6.1)
(189.7)
4.3
0.6
0.6
5.5
(14.7)
(3.3)
-
(1.3)
(19.3)
2014
US$M
(300.9)
(49.4)
41.9
(16.5)
(8.0)
(332.9)
-
0.4
-
0.4
(14.5)
(1.7)
(2.9)
(2.8)
(21.9)
87
FINANCIAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015PALADIN ENERGY LTD ANNUAL REPORT 2015 NOTE 12. OTHER INCOME AND EXPENSES (CONTINUED)
Other Expenses
Write-off of exploration assets(1)
Impairment of exploration assets(2)
Impairment of aircraft
Impairment for available for sale financial assets
LHM fixed costs during plant shutdown
KM fixed costs during plant shutdown
KM care and maintenance expenses
KM mine closure provision increase
KM slope remediation
Foreign Exchange Loss (net)
2015
US$M
(1.4)
(237.5)
(1.0)
(2.9)
(3.8)
-
(13.4)
(7.6)
-
-
2014
US$M
-
(323.6)
(3.8)
(4.3)
-
(4.6)
-
-
(0.1)
(1.2)
Total
(267.6)
(337.6)
(1) The licence for Spinifex Well was surrendered on 22 September 2014. All capitalised costs were written off.
(2) Impairment charge of US$237.5M, Queensland exploration assets US$229.1M and Bigrlyi project US$8.4M. At 30 June 2015, due
to the continuing depressed uranium price, US$229.1M (US$180.8M after tax) was recognised to reduce the carrying value of the
Queensland exploration assets. The estimated recoverable amount of the project of US$100.0M was determined on the basis of fair
value less costs to dispose (level 3 fair value hierarchy), using a valuation range provided by recent comparable market transactions
and other market indicators which ranged from US$0.3/lb to US$7.5/lb. The estimated recoverable amount for the Queensland
exploration assets equated to US$0.75/lb, which is based on more recent market transactions and the current uranium market.
Bigrlyi was written down to a carrying value of US$Nil.
Finance Costs
Interest expense
Accretion relating to convertible bonds (non-cash)
Profit on convertible bond buyback
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
Recognition and measurement
(33.5)
(18.2)
1.0
(5.7)
(0.6)
(57.0)
31.7
(28.7)
(2.3)
(0.5)
(2.3)
(33.8)
(34.1)
(18.1)
-
(1.9)
(5.6)
(59.7)
51.0
(56.5)
(2.9)
(0.7)
(3.1)
(63.2)
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 31.
Depreciation – refer to Note 20.
Employee benefits – refer to Note 25.
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.
88
FINANCIAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015PALADIN ENERGY LTD ANNUAL REPORT 2015
NOTE 13. 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
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 (expense)/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% (2014 – 30%)
Difference in overseas tax rates
Non - deductible items
Under/over prior year adjustment
Losses not recognised
Other foreign exchange differences
DTA not recognised
Income tax (expense)/benefit reported in the Income Statement
Tax Losses
Australian unused tax losses for which no deferred tax asset has been recognised
Other unused tax losses for which no deferred tax asset has been recognised
Total unused tax losses for which no deferred tax asset has been recognised
Unused tax losses for which no DTA has been recognised
2015
US$M
2014
US$M
-
-
38.1
38.1
11.1
(6.9)
4.2
338.2
101.4
0.5
20.8
(27.1)
-
(14.3)
(43.2)
38.1
(387.8)
(384.6)
(772.4)
(222.3)
96.0
96.0
0.4
0.3
0.7
485.6
145.7
(3.4)
25.0
-
(73.6)
41.7
(39.4)
96.0
(309.6)
(381.1)
(690.7)
(207.2)
89
FINANCIAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015PALADIN ENERGY LTD ANNUAL REPORT 2015 NOTE 13. INCOME AND OTHER TAXES (CONTINUED)
Deferred Income Tax
Deferred tax liabilities
Accelerated prepayment deduction for tax purposes
Accelerated depreciation for tax purposes
Exploration expenditure
Inventory / Consumables
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
Foreign currency balances
Interest bearing liabilities
Other
Gross deferred tax assets
Set off against deferred tax liabilities
Net deferred tax assets recognised
2015
US$M
2014
US$M
0.7
100.6
14.7
4.4
-
11.2
-
131.6
(83.7)
47.9
(33.5)
(9.7)
(37.0)
-
(3.5)
(83.7)
83.7
-
0.8
109.2
16.5
-
59.4
9.7
1.3
196.9
(106.7)
90.2
(42.5)
(9.0)
(48.2)
(1.2)
(5.8)
(106.7)
106.7
-
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.
90
FINANCIAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015PALADIN ENERGY LTD ANNUAL REPORT 2015 NOTE 13. 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 14. 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
2015
US$M
(267.8)
2014
US$M
(338.4)
2015
NUMBER
OF SHARES
2014
NUMBER
OF SHARES
Weighted average number of ordinary shares for basic and diluted earnings per share
1,417,331,645
983,170,716
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
552,056,462
180,688,256
The earnings per share calculations have been adjusted to reflect the bonus element of the institutional and retail entitlement offers
completed on 4 December and 17 December 2014 respectively. The adjustment factor applied was 1.03 and 1.02 for the respective
offerings to the current period 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 2015 and 2014 as the Group is in a loss position.
91
FINANCIAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015PALADIN ENERGY LTD ANNUAL REPORT 2015 NOTE 15. 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 repayment of convertible bonds
Gain on disposal of 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
Decrease/(increase) in inventories
Increase/(decrease) in deferred tax liabilities
Net cash flows (used in)/provided by operating activities
2015
US$M
2014
US$M
(300.1)
(389.6)
25.0
(1.0)
-
(0.6)
(4.3)
0.5
24.5
8.0
1.0
2.9
238.9
0.5
19.4
(6.0)
6.0
(1.4)
(38.0)
(24.7)
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)
10.1
92
FINANCIAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015PALADIN ENERGY LTD ANNUAL REPORT 2015 OPERATING ASSETS AND LIABILITIES
NOTE 16. TRADE AND OTHER RECEIVABLES
Current
Trade receivables
GST and VAT
LHM purchase consideration – receivable
Sundry debtors
Total current receivables
NOTES
2015
US$M
(a)
(b)
(c)
2.1
5.6
-
1.8
9.5
2014
US$M
18.9
7.5
170.0
2.3
198.7
(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$170M from CNNC, being the balance of the
consideration receivable on the sale of its 25% interest in the Langer Heinrich Mine.
Non Current
Sundry debtors
Total non current receivables
0.6
0.6
1.0
1.0
Recognition and measurement
Loans and Receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market.
They arise when the Group provides money, goods or services directly to a debtor with no intention of selling the receivable. They are
included in current assets, except for those with maturities greater than 12 months after the balance date which are classified as non
current assets.
Collectability of trade receivables is reviewed on an ongoing basis. Debts that are known to be uncollectible are written off when
identified. An allowance for doubtful debts is raised when there is objective evidence that the group will not be able to collect the
debt. Financial difficulties of the debtor, default payments or debts more than 60 days overdue are considered objective evidence of
impairment.
93
FINANCIAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015PALADIN ENERGY LTD ANNUAL REPORT 2015 NOTE 17. INVENTORIES
Current
Stores and consumables (at cost)
Stockpiles (at cost)
Work in progress (at net realisable value)
Finished goods (at cost)
Finished goods (at net realisable value)
Total current inventories at the lower of cost and net realisable value
Non Current
Stockpiles (at cost)
Total non current inventories at the lower of cost and net realisable value
Stockpiles at LHM that are unlikely to be processed within 12 months of the balance sheet date.
2015
US$M
2014
US$M
11.1
19.8
9.4
35.0
-
75.3
156.3
156.3
10.3
7.1
5.1
-
55.6
78.1
160.2
160.2
Inventory Expense
Inventories sold recognised as an expense for the year ended 30 June 2015 totalled US$189.7M (2014: US$332.9M) for the Group.
Impairment of Inventories
During 2015, work-in-progress held at LHM was reduced to net realisable value resulting in an impairment loss of US$8.0M (2014:
US$Nil) for the year, recognised in 2015 cost of sales.
During 2014, finished goods held at LHM and KM were reduced to net realisable value resulting in an impairment loss of US$35.7M
(2015: US$Nil) for the year, recognised in 2014 cost of sales.
During 2014, stockpiles held at KM were reduced to net realisable value resulting in an impairment loss of US$8.2M (2015: US$Nil) for
the year, recognised in 2014 cost of sales.
During 2014 stores and consumables held at KM were reduced by US$17.8M (2015: US$Nil) due to obsolescence. This resulted in an
obsolescence expense recognised in 2014 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.
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.
94
FINANCIAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015PALADIN ENERGY LTD ANNUAL REPORT 2015 NOTE 18. ASSETS CLASSIFIED AS HELD FOR SALE
Plant and equipment
Total assets classified as held for sale
2015
US$M
2.8
2.8
2014
US$M
3.8
3.8
As a result of KM being placed on care and maintenance, the Company 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$1.0M has been recorded in the ‘Unallocated’ portion of the segment information.
NOTE 19. OTHER FINANCIAL ASSETS
Non Current
Available-for-sale financial assets
Total non current other financial assets
2015
US$M
2014
US$M
2.6
2.6
6.6
6.6
The Group has an investment in DYL and at 30 June 2015 held 319,106,156 (2014: 304,400,275) fully paid ordinary shares. The holding
of these fully paid ordinary shares represents a 16.7% interest at 30 June 2015 (2014: 18.9%) of the ordinary shares of DYL, a uranium
explorer listed on ASX. The market value of the shares in DYL at 30 June 2015 is A$3.2M (US$2.4M) (2014: A$5.8M / US$5.5M)
based on a share price of 1.0 Australian cents per share (2014: 1.9 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 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 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.
95
FINANCIAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015PALADIN ENERGY LTD ANNUAL REPORT 2015 NOTE 20. 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
2015
US$M
720.6
(456.2)
2014
US$M
706.6
(436.1)
264.4
270.5
10.6
(2.7)
7.9
1.4
-
1.4
11.2
(2.5)
8.7
5.8
(3.2)
2.6
Net carrying value property, plant and equipment
273.7
281.8
Property, Plant and Equipment Pledged as Security for Liabilities
Refer to Note 7 for information on property, plant and equipment pledged as security.
Reconciliations
Reconciliations of the carrying amounts of each class of property, plant and equipment at the beginning and end of the year are set
out below:
TOTAL
US$M
PLANT AND
EQUIPMENT
US$M
LAND AND
BUILDINGS
US$M
CONSTRUCTION
WORK IN
PROGRESS
US$M
281.8
10.5
(17.8)
-
(0.1)
(0.7)
273.7
301.0
16.7
(24.8)
(4.2)
-
(0.8)
(2.4)
0.1
(3.8)
281.8
270.5
2.0
(17.2)
9.3
-
(0.2)
264.4
290.3
4.9
(24.0)
(3.8)
9.0
-
(2.1)
-
(3.8)
270.5
8.7
-
(0.4)
0.1
-
(0.5)
7.9
9.2
-
(0.4)
(0.4)
0.5
-
(0.3)
0.1
-
8.7
2.6
8.5
(0.2)
(9.4)
(0.1)
-
1.4
1.5
11.8
(0.4)
-
(9.5)
(0.8)
-
-
-
2.6
2015
Net carrying value at start of year
Additions
Depreciation and amortisation expense
Reclassification of assets
Reclassification to mine development
Foreign currency translation
Net carrying value at end of year
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
Net carrying value at end of year
96
FINANCIAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015PALADIN ENERGY LTD ANNUAL REPORT 2015 NOTE 20. 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 20 years
Databases10 years
Plant and equipment 2-6 years
Leasehold improvementsperiod of lease
Mine plant and equipmentlesser of life of asset and unit of production basi
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).
The future recoverability of the property, plant and equipment, mine development and intangibles is dependent on a number of key
factors including: uranium price, discount rates used in determining the estimated discounted cash flows, foreign exchanges rates, tax
rates, the level of proved and probable reserves and measured, indicated and inferred mineral resources, future technological changes
which could impact the cost of production and futures legal changes, including changes to environmental restoration obligations.
The carrying value of the LHM property, plant and equipment has been determined based on the higher of the fair value less costs to
sell and value in use. Fair value less costs to sell was determined using the recent transaction with CNNC. Value in use was determined
using the discounted cash flow method utilising foreign exchange rate assumptions, TradeTech forecast pricing, estimated operating
costs, capital requirements, quantities of recoverable minerals and production levels based on the current Life of Mine Plan and the
2016 budget. No impairment was recognised.
97
FINANCIAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015PALADIN ENERGY LTD ANNUAL REPORT 2015 NOTE 21. MINE DEVELOPMENT
Mine development – at cost
Less accumulated depreciation and impairment
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
Disposals
Net carrying value at end of year
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
98
2015
US$M
213.1
(170.1)
43.0
43.9
-
(7.5)
6.5
0.1
-
43.0
2014
US$M
206.5
(162.6)(1)
43.9
42.8
19.9
(19.9)
0.5
0.8
(0.2)
43.9
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, Estimates and Assumptions
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 2014 and
2015.
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.
FINANCIAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015PALADIN ENERGY LTD ANNUAL REPORT 2015 NOTE 22. EXPLORATION AND EVALUATION EXPENDITURE
The following tables detail the expenditures on interests in mineral properties by area of interest for the years ended 30 June 2015 and
30 June 2014:
VALHALLA
/SKAL
ISA
NORTH
US$M
US$M
FUSION
US$M
ANGELA
PAMELA
BIGRLYI
US$M
US$M
NIGER
US$M
KM
LHM
CANADA
OTHER
URANIUM
PROJECTS
US$M
US$M
US$M
US$M
TOTAL
US$M
Areas of interest
Balance 30 June 2014
Acquisition property
payments
Project exploration and
evaluation expenditure
Labour
Outside services
Other expenses
Total expenditure
Expenditure expensed
332.5
60.5
11.3
-
-
-
0.1
-
0.2
0.3
(0.3)
0.1
-
0.2
0.3
(0.3)
-
-
0.1
0.1
(0.1)
Expenditure capitalised
-
-
-
Foreign exchange
differences
Write off of Spinifex Well
Impairment of exploration
and evaluation
(61.2)
-
(11.9)
-
(2.1)
-
(181.7)
(38.2)
(9.2)
Balance 30 June 2015
89.6
10.4
-
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
576.1
137.7
10.9
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
Impairment of exploration
and evaluation
(246.7)
(76.9)
-
Balance 30 June 2014
332.5
60.5
11.3
-
-
-
-
0.1
0.1
(0.1)
-
-
-
-
-
-
0.1
-
0.2
0.3
(0.3)
-
-
-
-
10.3
-
-
-
0.1
0.1
(0.1)
-
(1.9)
-
(8.4)
-
10.0
-
-
-
-
-
-
0.3
-
10.3
-
-
-
-
-
-
-
-
-
-
-
-
-
0.1
-
0.1
0.2
(0.2)
-
-
-
-
-
-
0.1
-
0.1
0.2
(0.2)
-
-
-
-
-
-
0.2
0.2
0.1
0.5
(0.5)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
263.3
9.4
687.3
-
0.4
0.4
1.7
0.4
1.3
3.4
(0.1)
0.6
0.1
0.5
1.2
(0.4)
2.6
0.5
2.6
5.7
(1.6)
3.3
0.8
4.1
(36.2)
-
(1.7)
(1.4)
(115.0)
(1.4)
-
-
(237.5)
230.4
7.5
337.9
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
99
FINANCIAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015PALADIN ENERGY LTD ANNUAL REPORT 2015 NOTE 22. 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.
At June 2015, the Group reassessed the carrying value of its capitalised exploration and evaluation expenditure for indicators
of impairment. Estimates of recoverable amounts are based on a number of market indicators including similar recent market
transactions, net asset value calculations, brokers’ sum-of-parts valuations and uranium company trading multiples. Based on this
range of indicators the Group has recognised an impairment charge of US$237.5M: Queensland exploration assets US$229.1M and
Bigrlyi project US$8.4M.
100
FINANCIAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015PALADIN ENERGY LTD ANNUAL REPORT 2015 NOTE 23. INTANGIBLE ASSETS
At 30 June
Intangible assets – at cost
Less accumulated depreciation and impairment
Net carrying value – intangible assets
Amortisation of US$0.5M (2014: US$0.6M) is included in cost of sales in the Income Statement.
Movements in Intangible Assets
Movements in each group of intangible asset during the financial year are set out below:
2015
US$M
27.8
(16.1)
11.7
2014
US$M
27.8
(15.6)
12.2
2015
Net carrying value at 1 July 2014
Amortisation expense
Net carrying value at 30 June 2015
2014
Net carrying value at 1 July 2013
Amortisation expense
Net carrying value at 30 June 2014
Description of the Group’s Intangible Assets
1.Right to supply of power
RIGHT
TO SUPPLY
OF POWER
US$M
RIGHT
TO SUPPLY
OF WATER
US$M
TOTAL
US$M
3.6
(0.1)
3.5
3.8
(0.2)
3.6
8.6
(0.4)
8.2
9.0
(0.4)
8.6
12.2
(0.5)
11.7
12.8
(0.6)
12.2
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.
101
FINANCIAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015PALADIN ENERGY LTD ANNUAL REPORT 2015 NOTE 24. TRADE AND OTHER PAYABLES
Current
Trade and other payables
Total current payables
2015
US$M
2014
US$M
30.4
30.4
39.3
39.3
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.
NOTE 25. PROVISIONS
Current
Employee benefits
Total current provisions
Non Current
Employee benefits
Rehabilitation provision
Demobilisation provision
Total non current provisions
NOTES
2015
US$M
2014
US$M
12
12
3.5
3.5
1.4
82.5
1.5
85.4
5.5
5.5
2.0
68.9
1.8
72.7
Movements in Provisions
Movements in each class of provision during the financial year, excluding provisions relating to employee benefits, are set out below:
DEMOBILISATION REHABILITATION
US$M
US$M
1.8
0.1
(0.2)
(0.2)
1.5
-
1.5
1.5
-
1.8
1.8
68.9
12.6
6.5
(5.5)
82.5
-
82.5
82.5
-
68.9
68.9
TOTAL
US$M
70.7
12.7
6.3
(5.7)
84.0
-
84.0
84.0
-
70.7
70.7
At 1 July 2014
Arising during the year
Effects of changes in discount rates
Foreign currency movements
At 30 June 2015
2015
Current
Non current
2014
Current
Non current
102
FINANCIAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015PALADIN ENERGY LTD ANNUAL REPORT 2015 NOTE 25. PROVISIONS (CONTINUED)
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 23 years’ time.
Demobilisation
A provision for demobilisation has been recorded in relation to LHM for the costs of demobilising the mining contractor.
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.
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 26. UNEARNED REVENUE
Non Current
Unearned revenue
Total unearned revenue
2015
US$M
200.00
200.00
2014
US$M
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$200M under a six-year off-take agreement with EdF, a major electricity generator and distribution company in
France, to deliver a total of 13.73Mlb U3O8 in the period from 2019 to 2024. Uranium delivered under the off-take agreement will be sold
to EdF at market prices prevailing at the time of delivery bounded by escalating floor and ceiling prices.
To secure the Company’s obligation to deliver product representing the prepayment amount, EdF holds security over 60.1% of the
Group’s Michelin project in Canada. The percentage of Michelin secured will be reduced by joint agreement as the value of that project
is enhanced by the Group’s ongoing work. The Michelin security can also be replaced by other appropriate security if required.
103
FINANCIAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015PALADIN ENERGY LTD ANNUAL REPORT 2015 OTHER NOTES
NOTE 27. KEY MANAGEMENT PERSONNEL
Details of Key Management Personnel
(i)Directors
Mr Rick CrabbChairman (Non-executive)
Mr John BorshoffManaging Director/CEO
Mr Sean LlewelynDirector (Non-executive)
Mr Donald ShumkaDirector (Non-executive)
Mr Peter Donkin Director (Non-executive)
Mr Philip BailyDirector (Non-executive)
Mr Wendong ZhangDirector (Non-executive)
(ii) Executives
Ms Gillian SwabyGroup Company Secretary and Executive General Manager – Corporate Services
Mr Dustin GarrowExecutive General Manager – Marketing
Mr Craig BarnesChief Financial Officer
Mr Mark ChalmersExecutive General Manager – Production (Resigned effective 30 June 2015)
Compensation of Key Management Personnel: Compensation by Category
Short-term employee benefits
Post employment benefits
Long-term benefits
Share-based payment
2015
US$’000
2014
US$’000
3,666
(371)
142
205
3,642
4,094
(11)
84
792
4,959
The average exchange rate used for the year to 30 June 2015 to translate the Australian dollar remuneration to Key Management
Personnel was, US$1 = A$1.20149 (2014: US$1 = A$1.09006).
104
FINANCIAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015PALADIN ENERGY LTD ANNUAL REPORT 2015 NOTE 28. AUDITORS’ REMUNERATION
The auditor of the Paladin Energy Ltd Group is Ernst & Young.
Amounts received or due and receivable by Ernst & Young (Australia) for:
Audit or review of the financial report of the consolidated Group
Other services
Taxation services:
Tax compliance services
International tax consulting
Other tax advice
Sub-total
Amounts received or due and receivable by related practices of Ernst & Young (Australia) for:
Audit or review of the financial report of subsidiaries and audit related services
Taxation services:
Tax compliance services
International tax consulting
Other
Sub-total
2015
US$’000
2014
US$’000
319
99
109
44
-
571
129
45
-
23
197
527
52
53
30
10
672
143
36
5
4
188
The level of non-audit related fees was driven by the tax compliance requirements of multiple jurisdictions and by the specialist advice
requirements of potential acquisitions and group restructures.
Whilst always striving to meet the highest corporate governance standards, Paladin is also cognisant of the need to retain the value
of the best available specialist advice. Paladin engaged Ernst & Young because of their specialised experience in both Africa and the
mining sector and Ernst & Young’s detailed understanding of the Paladin Group.
In terms of the Company’s Corporate Governance Policy all non-audit services are reviewed and approved by the Audit Committee
prior to commencement to ensure that they do not adversely affect the integrity and objectivity of the auditor and that the nature of
the services provided does not compromise the Code of Ethics for Professional Accountants APES 110 issued by the Accounting
Professional and Ethical Standards Board.
All non-audit services provided by Ernst & Young were allowable services that received the sign off of the audit partner confirming that,
in his professional opinion, they do not in any way impair the independence of the firm. Where any service might be perceived to be
subjective, Ernst & Young policy requires approval by the Oceania Independence and Conflicts Leader.
105
FINANCIAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015PALADIN ENERGY LTD ANNUAL REPORT 2015 NOTE 29. COMMITMENTS AND CONTINGENCIES
There were no outstanding commitments or contingencies, which are not disclosed in the Financial Report of the Group as at 30 June
2015 other than:
Tenements
Commitments for tenements contracted for at the reporting date but not recognised
as liabilities, payable:
Within one year
Later than one year but not later than 5 years
More than 5 years
Total tenements commitment
2015
US$M
2014
US$M
0.6
9.8
11.2
21.6
2.6
6.4
16.8
25.8
These include commitments relating to tenement lease rentals and the minimum expenditure requirements of the Namibian, Malawian,
Canadian, Western Australian, South Australian, Northern Territorian and Queensland Mines Departments attaching to the tenements
and are subject to re-negotiation upon expiry of the exploration leases or when application for a mining licence is made.
These are necessary in order to maintain the tenements in which the Group and other parties are involved. All parties are committed
to meet the conditions under which the tenements were granted in accordance with the relevant mining legislation in Namibia, Malawi,
Australia and Canada.
Operating Lease Commitments
The Group has entered into various property leases relating to rental of offices and residential accommodation.
These non-cancellable leases have remaining terms of between 1 month and 13 months. All leases include a clause to enable upward
revision of rental charge on an annual basis according to prevailing market conditions.
Future minimum rentals payable under non-cancellable operating leases as at 30 June are as follows:
Within one year
Later than one year but not later than 5 years
More than 5 years
Total operating lease commitment
2015
US$M
0.8
0.1
-
0.9
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
2015
US$M
15.3
1.9
-
17.2
2014
US$M
1.0
1.0
-
2.0
2014
US$M
22.2
2.1
-
24.3
In relation to the Manyingee Uranium Project, the re-negotiated acquisition terms provide for a payment of A$0.75M (US$0.57M) (2014:
A$0.75M (US$0.71M)) by the Group to the vendors when all project development approvals are obtained.
Bank Guarantees
As at 30 June 2015 the Group has outstanding US$378,192 (A$494,021) (2014: US$679,877 / A$721,792) as a current guarantee
provided by a bank for the corporate office lease; a US$143,538 (A$187,500) (2014: US$248,199 / A$263,500) guarantee for
tenements; a US$86,988 (A$113,630) (2014: US$103,612 / A$110,000) guarantee for corporate credit cards, and a US$10M (2014:
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 N$151.1M (2014: N$276M), which is approximately US$12.0M (2014:
US$26.0M). The Group denies the claim and will vigorously defend it. The Group is also counter claiming damages from the contractor
and cross-claiming from another contractor. The precise quantum of the counter-claim and cross claim has not yet been established,
however the merits of the Company’s defences against the claims are considered to be good, and it is expected that in the final result
the Company’s quantum is likely to exceed any residual entitlement that may be due on the contractors’ claims.
106
FINANCIAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015PALADIN ENERGY LTD ANNUAL REPORT 2015 NOTE 30. RELATED PARTIES
Key Management Personnel
The only related party transactions are with Directors and Key Management Personnel. Refer to Note 27. Details of material controlled
entities are set out in Note 32.
NOTE 31. SHARE-BASED PAYMENT PLANS
Share-based payment expense
The share-based payment plans are described in the Directors’ Remuneration Report.
2015
US$M
0.5
2014
US$M
0.5
1,791,992 (2014: 1,621,104) share rights were granted during the year as an allocation to those employees affected by the 10%
reduction in management personnel salaries.
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)
Outstanding at the end of the year
(1) 306,888 rights were granted under the Contractor Performance Share Rights Plan (2014: 240,690).
(2) The weighted average share price at the vesting date is A$0.35 (2014: A$0.48).
The outstanding balance as at 30 June 2015 is represented by:
2015
NO.
2014
NO.
2,079,094
1,791,992
(694,260)
(2,388,072)
3,358,957
1,671,104
(1,307,162)
(1,643,805)
788,754
2,079,094
DATE RIGHTS GRANTED
VESTING DATE
VESTING PERFORMANCE CONDITIONS
1 December 2014
Total
1 December 2015
Time based
NUMBER
788,754
788,754
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 2015 is 0.4 years (2014: 0.3 years).
Weighted Average Fair Value
The weighted average fair value of share rights granted during the year was A$0.32 (2014: A$0.41).
Rights Pricing Model
The fair value of the equity-settled share rights granted under the plan is estimated as at the date of grant using either the Black-
Scholes valuation model for rights with non-market based performance conditions (time based and EPS) or the Monte-Carlo simulation
model for rights that contained a market based performance condition (TSR and market price).
Recognition and measurement
Share-based compensation benefits are provided to employees via the Employee Performance Share Rights Plan and the Contractor
Performance Share Rights Plan (Rights Plans).
The fair value of rights granted under the Rights Plans is recognised as an employee benefit expense with a corresponding increase in
equity. The fair value is measured at grant date and recognised over the period during which the employees become unconditionally
entitled to the rights.
107
FINANCIAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015PALADIN ENERGY LTD ANNUAL REPORT 2015 NOTE 32. GROUP INFORMATION
Information Relating to Paladin Energy Ltd
Current assets
Total assets
Current liabilities
Total liabilities
Issued capital
Accumulated losses
Option application reserve
Share-based payments reserve
Available-for-sale investment revaluation reserve
Convertible bond non distributable reserve
Total shareholders’ equity
Net loss after tax from operations
Total comprehensive loss
2015
US$M
2014
US$M
120.4
1,109.4
8.0
611.0
2,094.9
(1,737.4)
0.1
46.4
-
94.4
205.6
1,160.8
9.5
765.4
1,926.9
(1,665.3)
0.1
47.6
0.6
85.5
498.4
395.4
(72.2)
(174.3)
(317.2)
(316.6)
Details of Any Guarantees Entered Into by the Parent in Relation to the Debts of its Subsidiaries
Paladin has provided a guarantee and indemnity for payment of the secured money and all their other obligations to the lenders of the
Syndicated Facility Agreement. Paladin has also provided a guarantee and indemnity for the Project Finance Facility which supports
the Kayelekera Mine.
Details of Any Contingent Liabilities of the Parent Entity
Paladin has provided the following guarantees:
i. Guarantee of US$40.0M 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.
108
FINANCIAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015PALADIN ENERGY LTD ANNUAL REPORT 2015 NOTE 32. GROUP INFORMATION (CONTINUED)
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.
Investments in Material Controlled Entities
NAME
COUNTRY OF
INCORPORATION
PERCENTAGE
INTEREST HELD
2014
%
2015
%
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 (liquidated 2015)
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
Paladin Intellectual Property Pty Ltd
Fusion Resources Pty Ltd
NGM Resources Pty Ltd
Indo Energy Ltd
Paladin Energy Canada Ltd
Michelin Uranium Ltd
Paladin Canada Investment (NL) Ltd
Paladin Canada Holdings (NL) Ltd
Aurora Energy Ltd
Australia
Australia
Australia
Australia
Australia
Malawi
Switzerland
Netherlands
Netherlands
Mauritius
Namibia
Australia
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
75
75
100
100
100
100
82
82
82
100
100
100
100
100
100
100
100
100
100
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
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 Holdings Ltd (LHM)
COUNTRY OF
INCORPORATION
Malawi
Australia
Mauritius
2015
%
15
18
25
2014
%
15
18
25
109
FINANCIAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015PALADIN ENERGY LTD ANNUAL REPORT 2015 NOTE 32. GROUP INFORMATION (CONTINUED)
Accumulated balances of material non-controlling interest
Paladin (Africa) Limited
Summit Resources Ltd
Langer Heinrich Mauritius Holdings Ltd
Profit/(loss) allocated to material non-controlling interest
Paladin (Africa) Ltd
Summit Resources Ltd
Langer Heinrich Mauritius Holdings Ltd
2015
US$M
(82.9)
4.7
22.2
(3.4)
(20.3)
(8.6)
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 2015
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 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
LHM
US$M
191.8
(191.1)
-
(14.9)
(3.4)
(17.6)
(17.0)
(34.6)
(34.6)
(8.6)
-
LHM
US$M
207.1
(213.5)
-
(13.0)
(6.7)
(26.1)
10.7
(15.4)
(15.4)
-
-
PAL
US$M
6.7
(6.8)
-
(2.2)
(23.6)
(25.9)
-
(25.9)
(25.9)
(3.4)
-
PAL
US$M
121.8
(182.1)
-
(5.4)
(8.4)
(74.1)
-
(74.1)
(74.1)
(10.5)
-
2014
US$M
(83.9)
30.6
30.8
(10.5)
(40.9)
-
SRL
US$M
0.1
-
(168.5)
-
(0.8)
(169.2)
-
(169.2)
(173.7)
(20.3)
-
SRL
US$M
0.2
-
(323.6)
-
(0.9)
(324.3)
97.1
(227.2)
(228.1)
(40.9)
-
110
FINANCIAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015PALADIN ENERGY LTD ANNUAL REPORT 2015 NOTE 32. GROUP INFORMATION (CONTINUED)
Summarised statement of financial position as at 30 June 2015
Current assets
Non current assets
Current liabilities
Non current liabilities
Total equity
Attributable to:
-Equity holders of parent
-Non-controlling interest
Summarised statement of financial position as at 30 June 2014
Current assets
Non current assets
Current liabilities
Non current liabilities
Total equity
Attributable to:
-Equity holders of parent
-Non-controlling interest
Summarised statement of cash flow for the year ended 30 June 2015
Operating
Investing
Financing
Net decrease in cash and cash equivalents
Summarised statement of cash flow for the year ended 30 June 2014
Operating
Investing
Financing
Net decrease in cash and cash equivalents
LHM
US$M
122.3
483.9
(46.2)
(468.5)
91.5
69.3
22.2
LHM
US$M
112.0
579.3
(45.4)
(522.9)
123.0
92.2
30.8
LHM
US$M
29.0
(10.2)
-
18.8
LHM
US$M
57.5
(12.9)
(25.4)
19.2
PAL
US$M
12.6
127.5
(123.2)
(569.0)
(552.1)
(469.2)
(82.9)
PAL
US$M
47.0
127.2
(126.6)
(606.7)
(559.1)
(475.2)
(83.9)
PAL
US$M
(0.5)
0.6
-
0.1
PAL
US$M
25.1
(6.8)
(26.1)
(7.8)
SRL
US$M
1.6
31.4
(0.1)
(10.2)
22.7
18.0
4.7
SRL
US$M
2.5
236.7
(0.1)
(71.8)
167.3
136.7
30.6
SRL
US$M
(0.2)
(0.3)
-
(0.5)
SRL
US$M
(0.4)
(0.2)
-
(0.6)
111
FINANCIAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015PALADIN ENERGY LTD ANNUAL REPORT 2015 NOTE 33. 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 2015 Financial Report:
Material Reduction in Costs
On 30 July 2015, the Company advised of a material reduction in its cash flow break-even level through a sustainable reduction in its
all-in cash costs (including capital expenditure, corporate costs and debt servicing).
Subsequent to the cost reductions announced on 30 July 2015, Paladin has identified further significant cash flow optimisation
initiatives. Such initiatives include:
LHM operating initiatives – As a consequence of the BRP, barren solution used for wash in the counter current decantation section
of the LHM plant is expected to reduce from approximately 50ppm U3O8 to less than 10ppm. This will result in a significant
improvement in wash efficiency. The Company’s original FY2016 outlook assumed wash efficiency of 93.1%. Paladin now anticipates
a wash efficiency in the range of 95% to 98% for FY2016. The Company has also revised its FY2016 life of mine plan for LHM
resulting in an average feed-grade of 694ppm U3O8, i.e., an increase of 11ppm over the guidance provided in the last Quarterly
Activities Report announced on 16 July 2015.
Corporate costs, exploration and KM initiatives – Paladin has implemented reductions in these areas to further reduce annualised
cash expenditure over the initiatives set out in the cost reduction announcement of 30 July 2015. The additional initiatives include
a reduction in approximately 50% of corporate staff that was undertaken on 21 August 2015 concurrent with the reduction in the
number of directors and reduction in board fees announced the same day. Exploration has been put on care and maintenance
whereby the Company will undertake the work required to meet minimum license expenditures only.
Change of Chief Executive Officer
On 30 July 2015, the Company advised that its Board and Managing Director and CEO Mr John Borshoff had agreed that Mr Borshoff
would step down from his role with the Company.
A process to identify a suitable new CEO is now underway. In the interim, Mr Alexander Molyneux has been appointed Interim CEO. Mr
Molyneux joins with substantial experience in natural resources executive leadership, including both public mining company CEO and
uranium experience.
Mr Molyneux’s core mandate will be to: (i) to continue the optimisation of Paladin’s overall cash flow break-even level with the aim to
become cash flow generative in the current uranium price environment; (ii) focus on accelerating strategic initiatives that deliver value;
and (iii) to assist the Board in its search for a permanent CEO.
Board and Management Restructuring
On 21 August 2015, the Company advised of board and management changes, and a reduction in board remuneration.
Paladin’s board accepted the resignation of Non-Executive Director Mr Sean Llewelyn.
Ms Gillian Swaby, Group Company Secretary and EGM Corporate Services, and the Company agreed Ms Swaby would step down
from her role at the Company. Mr Ranko Matic was appointed Company Secretary.
Paladin’s board adjusted its remuneration structure with an effective date of 1 July 2015. The revised structure will alter the base salary
for Non-Executive Directors to A$65,000 and the Non-Executive Chairman to A$125,000.
112
FINANCIAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015PALADIN ENERGY LTD ANNUAL REPORT 2015 NOTE 34. 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 2015:
APPLICATION
DATE OF
STANDARD*
1 January
2018
APPLICATION
DATE FOR
GROUP*
1 July 2018
REFERENCE
AASB 9/
IFRS 9
TITLE
Financial
Instruments
SUMMARY
AASB 9 (December 2014) is a new standard which replaces AASB
139. This new version supersedes AASB 9 issued in December 2009
(as amended) and AASB 9 (issued in December 2010) and includes
a model for classification and measurement, a single, forward-looking
‘expected loss’ impairment model and a substantially reformed
approach to hedge accounting.
AASB 9 is effective for annual periods beginning on or after 1 January
2018. However, the Standard is available for early adoption. The own
credit changes can be early adopted in isolation without otherwise
changing the accounting for financial instruments.
Classification and measurement
AASB 9 includes requirements for a simpler approach for classification
and measurement of financial assets compared with the requirements
of AASB 139. There are also some changes made in relation to
financial liabilities.
The main changes are described below.
Financial assets
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.
Financial liabilities
Changes introduced by AASB 9 in respect of financial liabilities
are limited to the measurement of liabilities designated at fair value
through profit or loss (FVPL) using the fair value option.
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 or losses
attributable to changes in the entity’s own credit risk would be
recognised in OCI. These amounts recognised in OCI are not recycled
to profit or loss if the liability is ever repurchased at a discount.
Impairment
The final version of AASB 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.
113
FINANCIAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015PALADIN ENERGY LTD ANNUAL REPORT 2015 NOTE 34. NEW ACCOUNTING STANDARDS AND INTERPRETATIONS (CONTINUED)
Accounting Standards and Interpretations issued but not yet effective (continued)
REFERENCE
TITLE
SUMMARY
Hedge accounting
APPLICATION
DATE OF
STANDARD*
APPLICATION
DATE FOR
GROUP*
AASB 2014-3 Amendments
to Australian
Accounting
Standards –
Accounting for
Acquisitions
of Interests
in Joint
Operations
[AASB 1 &
AASB 11]
AASB 15
Revenue from
Contracts with
Customers
1 January
2016
1 July 2016
1 January
2017
Note A
1 July 2017
Note B
Amendments to AASB 9 (December 2009 & 2010 editions and AASB
2013-9) issued in December 2013 included the new hedge accounting
requirements, including changes to hedge effectiveness testing,
treatment of hedging costs, risk components that can be hedged and
disclosures.
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.
AASB 2014-7 incorporates the consequential amendments arising
from the issuance of AASB 9 in Dec 2014.
AASB 2014-8 limits the application of the existing versions of AASB
9 (AASB 9 (December 2009) and AASB 9 (December 2010)) from 1
February 2015 and applies to annual reporting periods beginning on
after 1 January 2015.
AASB 2014-3 amends AASB 11 Joint Arrangements to provide
guidance on the accounting for acquisitions of interests in joint
operations in which the activity constitutes a business. The
amendments require:
(a) the acquirer of an interest in a joint operation in which the
activity constitutes a business, as defined in AASB 3 Business
Combinations, to apply all of the principles on business
combinations accounting in AASB 3 and other Australian
Accounting Standards except for those principles that conflict with
the guidance in AASB 11; and
(b) the acquirer to disclose the information required by AASB 3 and
other Australian Accounting Standards for business combinations.
This Standard also makes an editorial correction to AASB 11
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
The AASB issued the Australian equivalent of IFRS 15, being AASB
15, in December 2014.
Currently, these standards are effective for annual reporting periods
commencing on or after 1 January 2017. Early application is permitted.
(Note A)
AASB 2014-5 incorporates the consequential amendments to a
number Australian Accounting Standards (including Interpretations)
arising from the issuance of AASB 15.
114
FINANCIAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015PALADIN ENERGY LTD ANNUAL REPORT 2015 NOTE 34. NEW ACCOUNTING STANDARDS AND INTERPRETATIONS (CONTINUED)
Accounting Standards and Interpretations issued but not yet effective (continued)
SUMMARY
AASB 2014-10 amends AASB 10 Consolidated Financial
Statements and AASB 128 to address an inconsistency between the
requirements in AASB 10 and those in AASB 128 (August 2011), in
dealing with the sale or contribution of assets between an investor
and its associate or joint venture. The amendments require:
(a) a full gain or loss to be recognised when a transaction involves a
business (whether it is housed in a subsidiary or not); and
(b) a partial gain or loss to be recognised when a transaction involves
assets that do not constitute a business, even if these assets are
housed in a subsidiary.
AASB 2014-10 also makes an editorial correction to AASB 10.
AASB 2014-10 applies to annual reporting periods beginning on or
after 1 January 2016. Early adoption permitted.
The Standard makes amendments to AASB 101 Presentation of
Financial Statements arising from the IASB’s Disclosure Initiative
project. The amendments are designed to further encourage
companies to apply professional judgment in determining what
information to disclose in the financial statements. For example,
the amendments make clear that materiality applies to the whole of
financial statements and that the inclusion of immaterial information
can inhibit the usefulness of financial disclosures. The amendments
also clarify that companies should use professional judgment in
determining where and in what order information is presented in the
financial disclosures.
The Standard completes the AASB’s project to remove Australian
guidance on materiality from Australian Accounting Standards.
REFERENCE
AASB 2014-
10
TITLE
Amendments
to Australian
Accounting
Standards
– Sale or
Contribution
of Assets
between an
Investor and
its Associate
or Joint
Venture
AASB 2015-2 Amendments
to Australian
Accounting
Standards
– Disclosure
Initiative:
Amendments
to AASB 101
AASB 2015-3 Amendments
to Australian
Accounting
Standards
arising from
the Withdrawal
of AASB 1031
Materiality
APPLICATION
DATE OF
STANDARD*
1 January
2016
APPLICATION
DATE FOR
GROUP*
1 July 2016
1 January
2016
1 July 2016
1 July 2015
1 July 2015
* Designates the beginning of the applicable annual reporting period unless otherwise stated.
Note A: The IASB and the AASB have proposed a one year deferral to IFRS 15/AASB 15, which if approved, would move the effective date to annual reporting periods
commencing on or after 1 January 2018.
The potential effect of these Standards is yet to be fully determined. For Standards and Interpretations effective from 1 July 2015, it is
not expected that the new Standards and Interpretations will significantly affect the Group’s financial performance.
115
FINANCIAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015PALADIN ENERGY LTD ANNUAL REPORT 2015 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 2015 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;
(b)
the financial statements and notes also comply with International Financial Reporting Standards as disclosed in note 3;
(c)
(d)
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 2015.
On behalf of the Board
Rick Crabb
Chairman
Perth, Western Australia
27 August 2015
116
FINANCIAL REPORTPALADIN ENERGY LTD ANNUAL REPORT 2015
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 (“the Company”), which comprises the consolidated
statement of financial position as at 30 June 2015 and 30 June 2014, 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 year.
Directors’ responsibility for the financial report
The directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance
with Australian Accounting Standards and the Corporations Act 2001 and for such internal controls as the directors determine are
necessary to enable the preparation of the financial report that is free from material misstatement, whether due to fraud or error. In
Note 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
117
FINANCIAL REPORTPALADIN ENERGY LTD ANNUAL REPORT 2015
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 2015 and 30 June 2014 and of its
performance for each of the years ended on those dates
ii) complying with Australian Accounting Standards and the Corporations Regulations 2001
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 2015. 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 2015, complies with section 300A of the
Corporations Act 2001.
Ernst & Young
G H Meyerowitz
Partner
Perth
27 August 2015
118
FINANCIAL REPORTPALADIN ENERGY LTD ANNUAL REPORT 2015
ADDITIONAL INFORMATION
Pursuant to the Listing Requirements of ASX as at 25 August 2015:
(A) DISTRIBUTION AND NUMBER OF HOLDERS
RANGE
1
1,001
5,001
10,001
100,001
-
-
-
-
-
1,000
5,000
10,000
100,000
maximum
TOTAL HOLDERS
8,251
9,287
3,439
5,867
1,045
27,889
13,758 shareholders hold less than a marketable parcel of shares.
(B) THE TWENTY LARGEST SHAREHOLDERS HOLD 65.77% OF THE TOTAL SHARES ISSUED.
HOLDER
HOPU Clean Energy (Singapore) Pte Ltd
Citicorp Nominees Pty Limited
HSBC Custody Nomiees (Australia) Limited
CDS & Co
J P Morgan Nominees Australia Limited
Energia Minerals Limited
CEDE & Co
National Nominees Limited
HSBC Custody Nominees (Australia) Limited-GSCO ECA
HSBC Custody Nominees (Australia) Limited - A/C 3
ABN Amro Clearing Sydney Nominees Pty Ltd
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