PALADIN ENERGY LTD
ACN 061 681 098
ASX Announcement
28 August 2020
FINANCIAL REPORT
FOR THE YEAR ENDING 30 JUNE 2020
Paladin Energy Limited (ASX:PDN) (Paladin or the Company) is pleased to announce its financial
results for the year ended 30 June 2020 (FY2020).
FY2020 HIGHLIGHTS
Financial and Operational Performance
• Paladin Energy Limited (Paladin or the Company) announced the results of the Langer Heinrich
Mine Restart Plan (The Restart Plan) during FY2020 confirming restart capital, costs and
operational performance
• The Restart Plan has a low restart capital intensity (US$14/lb) and competitive C1 Cost of
Production (US$27/lb) and confirms the Langer Heinrich Mine is well positioned alongside other
Tier 1 operations to deliver product into a recovering uranium market
• The Langer Heinrich Mine remained in Care and Maintenance during the year
• Net loss after tax from continuing operations for FY2020 of US$46.1M (FY2019 US$49.1M)
• FY2020 expenditure was US$16.8M, compared to guidance of US$17M
• Total Assets of US$364.4M as at 30 June 2020
Health & Safety
• No lost-time injuries were recorded during the year
• The Company instituted appropriate protocols across all locations to minimise the potential
transmission of COVID-19, with no reported confirmed cases to our people, or onsite contractors
Corporate
• Restructuring of Paladin Board and new Chief Executive Officer appointed during FY2020 to
provide the technical and commercial skill set necessary to restart the Langer Heinrich Mine
• Paladin completed the sale of its interest in the non-core Kayelekera Mine to Lotus Resources
Limited and Lily Resources Pty Ltd
• Successful completion of a Share Placement to institutional and sophisticated investors and a
Share Purchase Plan raising gross proceeds of US$21.6M was completed in September 2019
• US$34.2M of cash and cash equivalents as at 30 June 2020 (excluding restricted cash of $1M)
• The Company’s guidance for FY2021 total expenditure is US$9.5M, a 44% reduction from
FY2020
Level 4, 502 Hay Street, Subiaco, Western Australia 6008 Postal: PO Box 201, Subiaco, Western Australia 6904
Tel: +61 (8) 9381 4366 Fax: +61 (8) 9381 4978 Email: paladin@paladinenergy.com.au Website: www.paladinenergy.com.au
Paladin CEO, Ian Purdy said “Reflecting on FY2020, we have made significant progress with the key
highlight being the completion of the Langer Heinrich Mine Restart Plan. The Restart Plan highlights
the significant potential economic returns that can be delivered under the right uranium price
environment. We are encouraged that the uranium market is showing early signs of recovery. While
prices are not yet sufficient to drive the stakeholder returns required to restart operations, the market is
clearly improving and we are in a strong position to restart our mine at the appropriate time. I look
forward to updating you on our continued progress over the course of the year”
This release has been authorised for release by the Board of Directors of Paladin Energy Ltd.
For further information contact:
Ian Purdy
Chief Executive Officer
P: +61 8 9423 8117
E: paladin@paladinenergy.com.au
About Paladin
Paladin Energy Limited (ASX: PDN) is an Australian listed uranium company focused on maximising
the value of its 75% stake in the Langer Heinrich Uranium mine in Namibia.
Langer Heinrich is a globally significant, long-life operation, having already produced over 43Mlb U3O8
to date. Operations at Langer Heinrich were suspended in 2018 due to low uranium prices.
Beyond Langer Heinrich, the Company also owns a large global portfolio of uranium exploration and
development assets. Nuclear power remains a cost-effective, low carbon option for electricity
generation.
Appendix 4E - Financial Report
Financial year ended 30 June 2020
Paladin Energy Ltd
ABN or equivalent company reference
ACN 061 681 098
Results for announcement to the market
Revenue from sales of uranium oxide
Down
100%
Revenue
Down
100%
Loss after tax attributable to members Down
163%
Net loss for the year attributable to
members
Down
163%
30 June 2020
US$’000
30 June 2019
US$’000
to
to
to
to
-
-
21,491
21,491
(79,866)
(30,345)
(79,866)
(30,345)
Loss per share (US cents)
(4.1)
(1.7)
Dividends
Amount per security
Franked amount per security
It is not proposed to pay dividends for the year
N/A
Previous corresponding year:
No dividend paid
N/A
N/A
N/A
An explanation of the results is included in the Operating and Financial Review and the Financial
Report attached.
Net tangible assets per share
US$0.04
US$0.04
30 June 2020
30 June 2019
Other
Previous corresponding period is the year ended 30 June 2019.
All foreign subsidiaries are prepared using IFRS.
PALADIN ENERGY LTD
ACN 061 681 098
ANNUAL
REPORT
2020
Table of Contents
Corporate Directory .......................................................................................................... 2
Chairman’s Letter ............................................................................................................ 3
Insights from the CEO ....................................................................................................... 4
Operating and Financial Review ........................................................................................ 6
Ore Reserves and Mineral Resources ................................................................................ 9
Health and Safety / Sustainable Development..................................................................14
Coporate Governance Statement ....................................................................................16
Directors' Report ...........................................................................................................17
Remuneration Report .............................................................................................25
Contents of the Financial Report ......................................................................................41
Consolidated Income Statement ......................................................................................42
Consolidated Statement of Comprehensive Income .........................................................43
Consolidated Statement of Financial Position ...................................................................44
Consolidated Statement of Changes in Equity ..................................................................45
Consolidated Statement of Cash Flows .............................................................................46
Notes to the Consolidated Financial Statements ...............................................................47
Directors' Declaration ......................................................................................................91
Independent Audit Report ...............................................................................................92
Additional Information ....................................................................................................98
Corporate Directory
DIRECTORS
Non-Executive Chairman
Mr Cliff Lawrenson
Non-Executive Directors
Mr Peter Main
Mr Peter Watson
Chief Executive Officer
Mr Ian Purdy
Company Secretary
Ms Andrea Betti
Mr Ranko Matic
REGISTERED OFFICE
SHARE REGISTRY
INVESTOR RELATIONS
AUDITORS
Level 4, 502 Hay Street
Subiaco Western Australia 6008
Telephone: (+61 8) 9381 4366
Facsimile: (+61 8) 9381 4978
Email: paladin@paladinenergy.com.au
Web: www.paladinenergy.com.au
Computershare Investor Services Pty Ltd
Level 11, 172 St Georges Terrace
Perth Western Australia 6000
Telephone: 1300 850 505 (within Australia) or
(+61 3) 9415 4000 (outside Australia)
Facsimile: (+61 3) 9473 2500
Mr Ian Purdy
Level 4, 502 Hay Street
Subiaco Western Australia 6008
(PO Box 201, Subiaco, 6904)
Telephone: (+61 8) 9423 8117
Facsimile: (+61 8) 9381 4978
Email: ian.purdy@paladinenergy.com.au
PricewaterhouseCoopers
125 St Georges Terrace
Perth Western Australia 6000
STOCK EXCHANGE LISTINGS
Australian Securities Exchange
Code: PDN
Munich, Berlin, Stuttgart and Frankfurt Stock Exchanges
Code: PUR
Namibian Stock Exchange
Code: NM-PDN
The annual report covers the Group consisting of Paladin Energy Ltd (referred throughout as
the Company or Paladin) and its controlled entities (the Group).
Paladin Energy Ltd is a company limited by shares, incorporated and domiciled in Australia.
Through the use of the internet, we have ensured that our corporate reporting is timely, complete, and
available globally at minimum cost to the Company. All press releases, financial statements and other
information are available on our website www.paladinenergy.com.au.
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Paladin Energy Ltd
2
Chairman’s Letter
Dear Stakeholders
On behalf of your Board of Directors, I am delighted to present the 2020 Annual Report. The 2020
year (FY2020) has been one of significant change and progression for the Company.
Over the course of the year, the Company significantly restructured its Board and Executive Team to
provide the technical and commercial skill set necessary to lead the Company going forward. Key to
that restructure was the appointment of Mr Ian Purdy as CEO. Ian brings a wealth of Australian and
international experience and a track record of delivering shareholder value through managing and
optimising operations, delivering large projects and executing on business improvements. I am
extremely pleased with the progress Ian and his team have made this year. I would also like to extend
my thanks to the previous Board and management team for their input and valuable efforts over the
years.
I am very pleased by the work that has been undertaken during the year on advancing the restart of
the Company’s strategically significant Langer Heinrich Mine. The recently completed Langer Heinrich
Mine Restart Plan was an important step forward for the company and marked the end of an extensive
feasibility study program. The economic parameters identified in the Restart Plan highlight the
strategic significance of the asset and the potential economic returns that can be delivered to
shareholders under the right Uranium price environment. Ian and his team will continue to refine and
progress the necessary work packages required to deliver the Langer Heinrich Mine back into
production and I look forward to their progress over the year ahead.
The Langer Heinrich Mine remains our core asset. However, a company is nothing without its people.
The past year has presented significant social and economic disruptions in the form of COVID-19.
Throughout this challenging time Paladin has maintained its focus on people and ensured the health
and safety of all staff. It is a testament to our team and the protocols that we put in place that the
company’s people remain unaffected by the impact of COVID-19. On behalf of the Board, I would like
to thank all our staff for their efforts during the year.
I would also like to thank all of our stakeholders, particularly the Namibian Government and China
National Nuclear Corporation, for their ongoing support and commitment to our efforts in advancing
the Langer Heinrich Mine towards restarting production.
The Uranium market is showing early signs of recovery. Whilst the Uranium price is not yet sufficient
to drive the stakeholder returns we would require to restart operations, the market is improving.
Nuclear energy remains a carbon free source of energy and is an essential fuel source in helping our
economies respond to climate change and greenhouse gas emissions.
As we move in to FY2021, your company is in a strong position. On behalf of the Board, I would like to
thank all of our shareholders for your continued support and I look forward to updating you on our
continued progress over the course of the year.
Yours faithful
Cliff Lawrenson
Chairman
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Paladin Energy Ltd
3
Insights from the CEO
Dear Stakeholders
The 2020 year (FY2020) has been one of considerable progress with Paladin in a significantly
stronger position today than it was 12 months ago. Over the course of the year we have been active
in our efforts to position ourselves for our return to a producing uranium company.
Key achievements throughout the year include:
• Streamlining the business to focus on our core asset, the Langer Heinrich Mine;
• Significantly advancing the Langer Heinrich Mine Restart Plan;
• Commencing marketing activities to secure long-term uranium offtake;
• Reducing our cash expenditure; and
• Developing the right team to take the Company forward.
I am genuinely excited by the opportunities I see in Paladin and I look forward to continuing to drive
the Company towards our aim of restarting profitable production.
A Streamlined Uranium Company
During the year the Company completed the sale of our 85% interest in the non-core Kayelekera Mine
in Malawi, which was a positive step forward for Paladin that has delivered significant financial
benefits. The sale allows us to prioritise our efforts and resources on maximising the value of the
world class Langer Heinrich Mine operation.
Our primary focus during the year was advancing activities related to returning the Langer Heinrich
Mine in Namibia to production. Operations at Langer Heinrich commenced in 2007 and over 43Mlb of
U3O8 has been produced and sold to date. The operation was transitioned into care and maintenance
(C&M) in August 2018 due to the sustained low uranium price. An optimised C&M Transition Plan was
implemented during the year, and activities remain focused on maintaining the operational integrity of
the Langer Heinrich Mine and ensuring all plant and equipment is in a state of readiness for a return to
production.
Langer Heinrich Mine Restart Plan
The release of the Langer Heinrich Restart Plan in June 2020 marked the conclusion of the
Company’s 18 month prefeasibility and optimisation study work programmes.
This is a significant step forward for the Company and provides a low risk, reliable restart plan
balancing the ability to rapidly respond to strengthening uranium prices and maximising asset value,
ensuring the delivery of objectives around:
• Definition of capital improvements required to increase plant runtime to 95%;
• Identification of growth options and work packages to de-bottleneck the plant by 25%;
• Improvement in management systems and process control to increase process stability;
• Verification of license, permits and certificates required for restart;
• Detailing and de-risking the Restart Plan and schedule to ensure benefits will be realised; and
• Modelling key operational Life of Mine metrics.
Paladin will continue to refine and progress work packages under the Restart Plan and I look forward
to updating the market on our ongoing activities. We will only restart operations after securing a term-
price contract with sufficient term and value to deliver appropriate returns to all stakeholders.
Our People
The health and safety of our people remains a core tenet and priority for the Company. During the
year we reported no lost time injuries or reportable incidents. To safeguard our employees against
COVID-19, the company instituted a range of protocols across all our locations aimed at reducing the
potential of transmission. The Company is pleased to report there have been no confirmed cases of
COVID-19 amongst our staff or onsite contractors to date.
Strong Balance Sheet Provides Flexibility
Paladin remains in a strong financial position. The Company successfully completed a placement and
share purchase plan in FY2020 raising gross proceeds of US$21.6M and we undertook a detailed cost
reduction programme focused on minimising expenditure. The Company’s total expenditure guidance
for FY2021 is US$9.5M and includes all C&M costs at Langer Heinrich, restart project costs,
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Paladin Energy Ltd
4
Insights from the CEO (continued)
exploration tenement holding costs and corporate costs. Our ongoing expenditure is significantly
below our historic expenditure and provides the financial security to ensure the Company can
successfully deliver its strategy. As at 30 June 2020 the Company has:
• Significant runway to execute its strategy with US$34.2M in cash at the end of June 2020;
• Greatly reduced expenditure forecast for FY2021 of US$9.5M (US$16.8M in FY2020);
• US$145.7M of Senior Debt, including accrued interest, repayable in January 2023.
The Company maintains a disciplined and patient approach to restarting the Langer Heinrich Mine and
has the financial flexibility to respond to improving uranium market conditions.
Strong Outlook for Uranium
Uranium prices improved materially throughout FY2020 with spot prices surging by more than 30%
(almost $10/lb) since April 2020 in response to a series of COVID-19 related mine suspensions,
closing the year at US$33.00/lb (TradeTech weekly price).
These mine suspensions have been focused in Canada and Kazakhstan, with estimates suggesting a
loss of around 20Mlb, approximately 14% of 2020 global production. Cameco’s Cigar Lake mine in
northern Saskatchewan remained suspended at the end of June. Subsequent to 30 June 2020,
Kazatomprom announced an extension to operational curtailments, and commenced purchases in the
spot market to support their sales commitments and inventory levels. Both companies have recently
announced a recommencement of operating activities but have guided that they will not recover lost
production.
Spot market activity spiked in April and continued at elevated levels throughout the remainder of
FY2020. A record 40Mlb was transacted between April and June 2020, with more than 10Mlb of spot
purchases made by uranium producers covering production shortfalls. Higher spot market prices are
expected to flow through to long-term markets, with increased activity supporting price improvements.
Uranium inventory levels have continued to decline with overall US inventory levels (including
suppliers) the lowest observed since 2012. In Europe, utility inventory levels have declined by 20%
since the end of 2015. This scenario is clearly unsustainable and with available inventories depleted,
a resumption of substantive uranium procurement is overdue. Contractual coverage data published by
the US Energy Information Administration for the USA and the Euratom Supply Agency for Europe
(excluding Russia) is stark with US utility coverage dropping below 50% by 2024 and less than 10% by
2028. In Europe, utility contractual coverage reduces to 50% by 2026, reinforcing the need for an
early return to sustainable uranium procurement.
The Outlook
The Langer Heinrich Mine remains competitively positioned and the Restart Plan highlights the modest
restart capital, competitive operating costs and lower incentive prices required to restart production
when compared to greenfield projects. During FY2021 Paladin will continue to build upon the
foundations set in FY2020 and focus on progressing Langer Heinrich towards a restart of operations.
Key areas of focus for the year will include;
• Continuing to engage with potential customers to secure term-price offtake agreements;
• Advancing the critical-path elements of the Restart Plan;
• Continuing to preserve the Langer Heinrich Mine through cost effective ongoing C&M activities;
• Maintain focus on ensuring the ongoing safety and wellbeing of our staff; and
• Continuing to minimise cash burn, with all work packages to be funded within Paladin’s guidance of
total FY2021 expenditure of US$9.5M.
I would like to thank all our staff for your efforts over the year, and the Board of Directors for their
ongoing support. Finally, I would like to thank our shareholders for your continued support of the
Company, and we look forward to Paladin delivering another successful year of progress in FY2021.
Yours faithfully
Ian Purdy
Chief Executive Officer
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5
Operating and Financial Review
OVERVIEW OF OPERATIONS
The Group owns 75% of the Langer Heinrich Mine in Namibia, which is currently on care and
maintenance (C&M) due to the sustained low Uranium price, and Uranium exploration projects in
Australia and Canada. The Company is incorporated under the laws of Australia with a primary share
market listing on the Australian Securities Exchange (ASX); as well as the Munich, Berlin, Stuttgart
and Frankfurt Stock Exchanges in Europe; and the Namibian Stock Exchange in Africa.
HIGHLIGHTS
Corporate
FY2020 expenditure was US$16.8M, compared to guidance of US$17M.
US$34.2M of cash and cash equivalents as at 30 June 2020 (excluding restricted cash of $1M).
The Company’s guidance for FY2021 total expenditure is US$9.5M, a 44% reduction from FY2020.
On 13 September 2019, Paladin announced that it had successfully completed the Placement of
262,812,641 ordinary shares to raise A$30,223,000 (US$20,654,000) (before costs) and on 8 October
2019 that it had issued a further 12,994,100 ordinary shares to raise A$1,494,000 (US$1,010,000)
under a Share Purchase Plan (SPP).
Langer Heinrich Mine (LHM)
Activities continued under an Optimised C&M Transition Plan and focused on routine C&M activities
including the continuation of restart and debottlenecking planning.
Paladin continues to focus on minimising C&M expenditure whilst progressing work packages for a
restart at the Langer Heinrich Mine.
The Company released an updated Mineral Resources applying the Measured category classification
to the Run of Mine (ROM) stockpiles. These ROM stockpiles were created during mining from 2006 to
2016 as part of the long-term processing strategy for the Langer Heinrich Mine.
There were no production or development activities during the year.
Langer Heinrich Mine Restart Plan
The Company announced the results of the Langer Heinrich Mine Restart Plan to the ASX on 30 June
2020. All of the material assumptions underpinning the Restart Plan have not materially changed
since the release of those results on 30 June 2020 and continue to apply. The Restart Plan concluded
that:
• Langer Heinrich can be brought back into production for US$81M of pre-production expenditure,
allocated as follows:
- Operational readiness (US$34M) required to mobilise the workforce, undertake maintenance
and provide the working capital requirements to commence production;
- Discretionary capital (US$47M) specifically aimed at improving process plant availability and
reliability to lift production capacity by more than 10%;
• Low restart capital intensity (US$14/lb) and competitive C1 Cost of Production (US$27/lb) confirms
Langer Heinrich is well positioned alongside other Tier 1 operations to deliver product into a
recovering uranium market;
• The Restart Plan has confirmed a 17-year mine life for Langer Heinrich with peak production of
5.9Mlb U3O8 per annum for 7 years;
• The Life of Mine Plan outlines three distinct operational phases being Ramp-up (Year 1), Mining
(Years 2-8) and Stockpile (Years 9-17). The utilisation of stockpile material in the Ramp-up phase
greatly reduces operational start up risk and provides a strong platform for the operation to move
towards name plate capacity within a 12-month period;
• Langer Heinrich remains fully permitted to resume mining and Uranium exports;
• The Company will only consider a restart when it secures term-price contracts with sufficient term
and value to deliver an appropriate return to all stakeholders.
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Paladin Energy Ltd
6
Operating and Financial Review (continued)
Exploration
The Company has Uranium exploration projects in Australia(1) and Canada. Details of these
exploration projects and their Mineral Resources are summarised in the Ore Reserves and Mineral
Resources section on pages 9 to 13.
• During the year, the Company has undertaken the work required to meet minimum tenement
commitments at these exploration projects.
• Under the terms of the Michelin Joint Venture Agreement, a mandatory transfer of 5% from
Michelin Nominees Ltd to Aurora Energy Ltd (a wholly owned subsidiary of the Company) was
completed, increasing the Company’s interest from 55% to 60%.
Sale of Kayelekera Mine
On 13 March 2020, the Company completed the sale of its 85% interest in Paladin (Africa) Ltd to Lotus
Resources Limited (65%) and Lily Resources Pty Ltd (20%).
The Company became a substantial shareholder in ASX listed Lotus Resources Limited on 13 March
2020, holding a 14.46% interest following the issue of 90,000,000 shares at a 2cps issue price. These
shares are subject to a 12-month voluntary escrow.
Future receivables from the Kayelekera Sale include A$3M additional shares in Lotus Resources Limited
due on 13 March 2023, US$6M repayment of the environmental performance bond and a 3.5% production
royalty derived from future production at the Kayelekera Mine, capped at A$5M.
FINANCIAL PERFORMANCE
Key financial performance metrics
Earnings
Average selling price
U3O8 sold
Revenue
Cost of sales
Net loss after tax from continuing operations
(Loss)/profit after tax from discontinued
operations
Cash Flows
Cash flows from operating activities
Capital expenditure
Free cash flows
Financial Position
Unrestricted cash and cash equivalents
Debt (principal amount + accrued interest)
Net debt
Total equity
Year ended 30 June
2020
2019
% Change
US$/lb
Mlb
US$’000
US$’000
US$’000
-
-
-
-
(46,051)
28.96
0.742
21,491
(16,951)
(49,122)
US$’000
(46,401)
6,130
US$’000
US$’000
US$’000
US$’000
US$’000
US$’000
US$’000
(11,478)
(4,346)
(15,824)
(12,805)
(1,353)
(14,158)
34,237
145,745
111,508
92,999
55
25,360
132,178
106,818
76,638
58
(100)
(100)
(100)
100
(6)
857
(10)
221
12
35
10
4
21
(5)
Gearing ratio (Net debt / (net debt + equity))
%
Earnings
Net loss after tax from continuing operations decreased by 6%, mainly as a result of foreign exchange
gain of US$8,279,000 which is predominantly due to the foreign exchange translation of the
environmental rehabilitation provision in Namibia. The Namibian dollar depreciated 23% during the
year, from US$1:N$14.0446 at 30 June 2019 to US$1:N$17.2708 at 30 June 2020.
(1) Currently there is a ban on all future uranium mining in Queensland and Western Australia, except for four projects in
Western Australia that had already been approved prior to the last State election.
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Paladin Energy Ltd
7
Operating and Financial Review (continued)
Cash Flows
The Group had unrestricted cash and cash equivalents at 30 June 2020 of US$34,237,000.
Unrestricted cash and cash equivalents increased by US$8,877,000 during the year comprising of the
following cash flows:
• Placement and Share Purchase Plan – net proceeds from issue of shares US$20,864,000.
•
Interest received & paid and other income – the Group received cash inflows of US$2,193,000,
including US$1,357,000 proceed from the assignment of the North Telfer royalty interest.
• Proceeds from sale of Paladin (Africa) Ltd – the Group received US$2,000,000: the first tranche
of repayment of funds advanced to provide security for the US$10,000,000 environmental
performance bond of US$4,000,000, less US$2,000,000 paid to Lotus Resources Limited to
fund planned site restoration at the Kayelekera operations.
• Paladin (Africa) Ltd sale consent fees to Noteholders and other selling costs – of US$1,142,000.
• Langer Heinrich expenditure – ongoing C&M, Langer Heinrich Mine (LHM) utilised
US$3,312,000 in cash flows from operations.
• Langer Heinrich study expenditure – the Group incurred US$3,059,000 in prefeasibility
expenditure.
• Kayelekera expenditure – ongoing C&M resulted
in Kayelekera Mine (KM) utilising
US$3,508,000 in cash flows from operations.
• Exploration expenditure –
the Group utilised US$1,018,000
for minimum
tenement
commitments at its exploration projects.
• Corporate expenditure – during the year US$3,960,000 was paid for corporate costs.
• Payments for property, plant and equipment – during the year US$273,000 was paid for
property, plant and equipment.
• Effect of movement in exchange rates on cash held – US$940,000 was predominantly due to an
increase in Australian dollars held to cover corporate expenditure.
Financial Position
Unrestricted group cash and cash equivalents increased by 35% to US$34,237,000 and net debt
increased by 4%, from US$106,818 at 30 June 2019 to US$111,508 at 30 June 2020. In addition, the
Company’s gearing ratio decreased from 58% at 30 June 2019 to 55% at 30 June 2020.
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Paladin Energy Ltd
8
Ore Reserves and Mineral Resources
PROJECT LOCATIONS AND RESOURCE OVERVIEW
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.
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Paladin Energy Ltd
9
Ore Reserves and Mineral Resources (continued)
NAMIBIA
Langer Heinrich
Langer Heinrich is located in central western Namibia approximately 80km east of Swakopmund.
is a surficial calcrete type uranium deposit containing a JORC Code (2012)
Langer Heinrich
compliant Mineral Resource of 119.7Mlb U3O8 at a grade of 445ppm U3O8 and 38.8Mlb V2O5 at grade
of 145ppm V2O5 at a cutoff of grade of 250ppm U3O8. The deposit consists of seven mineralised zones
designated Detail 1 to 7 along the length of the Langer Heinrich valley within the 15km length of a
contiguous paleo drainage system.
Langer Heinrich Operation transitioned to C&M in August 2018.
CANADA
Michelin Project
Paladin, through its wholly-owned subsidiary Aurora Energy Ltd (Aurora), holds rights to 52,250
hectares of mineral claims 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 currently holds a 60% interest (increased from 55% in May 2020) in a special purpose joint
venture (Michelin Joint Venture) which owns the Michelin Project. The Michelin Joint Venture includes
a farm out agreement over a five year period whereby Paladin will receive an additional 5%
participating interest in the Michelin Project on an annual basis in return for Paladin funding all
obligations for the Michelin Project over this period.
The mineral claims cover a significant area of prospective ground over the CMB. The claims contain
105.6Mlb U3O8 Measured and Indicated Mineral Resources as well as an additional 22Mlb U 3O8
Inferred Mineral Resource in six deposits. The largest of these deposits is Michelin which contains a
total JORC Code (2012) compliant Mineral Resource of 92.0Mlb U3O8, 82.2Mlb of which is classified
Measured and Indicated. Michelin is still open along strike and at depth. Cut-off grades for all
deposits except Jacques Lake reflect the use of open cut (200ppm) and underground (500ppm)
mining methodologies in the determination of prospects for eventual economic extraction. For
Jacques Lake, there was insufficient Mineral Resources remaining after pit optimisation studies to
warrant any portion being considered for underground mining.
QUEENSLAND
Mount Isa Project
The Mount Isa Project, which is now wholly-owned by Paladin, is located 40km north of Mount Isa and
consists of six Mineral Development Licences.
The Mount Isa Project includes 10 deposits containing 106.2Mlb U3O8 Measured and Indicated
Mineral Resources as well as 42.2Mlb U3O8 Inferred Mineral Resources at a cut-off grade of 250ppm
U3O8 for all deposits except Valhalla which utilised a cut-off grade of 230ppm U3O8.
WESTERN AUSTRALIA
Manyingee Project
Manyingee is located in the north-west of Western Australia, 1,100km north of Perth and 85km inland
from the coastal township of Onslow. The property is comprised of three mining leases covering 1,307
hectares. Field trials by AFMEX demonstrated that the Manyingee sandstone-hosted uranium deposit
is amenable to extraction by in-situ recovery (ISR) in 1985.
Manyingee contains an Indicated Mineral Resource of 15.7Mlb U3O8 grading 850ppm and an Inferred
Mineral Resource of 10.2Mlb U3O8 grading 850ppm (JORC Code (2012) compliant) at a cut-off grade
of 250ppm U3O8.
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Paladin Energy Ltd
10
Ore Reserves and Mineral Resources (continued)
Carley Bore
Carley Bore is located approximately 100km south of Manyingee in Western Australia. Carley Bore
consists of two contiguous exploration licences with granted retention status.
The Carley Bore deposit contains an JORC Code (2012) compliant Mineral Resources, 5.0Mlb U3O8
grading 420ppm in the Indicated category and 10.6Mlb U3O8 grading 280ppm in the Inferred category
at a cut-off grade of 150ppm U3O8. Potential exists for extensions to mineralisation north and south of
the estimated Carley Bore Mineral Resource.
MALAWI
Kayelekera Mine
Paladin sold its interest in the Kayelekera Mine on 13 March 2020.
MINERAL RESOURCES AND ORE RESERVES SUMMARY
The following tables detail the Company’s Mineral Resources and Ore Reserves and the changes that
have occurred within FY2020. There were no material changes to the Company’s Mineral Resources
and Ore Reserves other than disposal of the interests upon sale of the Kayelekera Project.
Langer Heinrich1
Uranium Mineral Resources
Namibia
Measured
In-situ
MG ROM
stockpiles
LG ROM
stockpiles
Total Measured
Indicated
In-situ
Inferred
In-situ
Stockpiles
Malawi
Measured
Indicated
Inferred
Stockpiles
1 JORC Code (2012) compliant
Kayelekera
30 June 2019
Grade
ppm
U3O8 Mlb U3O8 Mt
30 June 2020
Grade
ppm
U3O8 Mlb U3O8 Mt Mlb U3O8
Change
Mt
60.7
-
-
60.7
515
-
-
515
68.7
-
-
68.7
66.2
4.7
26.1
97.0
490
520
325
445
71.9
5.4
18.7
95.9
5.5
4.7
3.2
5.4
26.1 18.7
36.3 27.2
21.5
460
21.7
18.8
435
18.0
-2.7
-3.7
8.7
30.8
0.7
12.7
5.4
1.6
470
355
9.0 6.3
24.0
-
420
-
5.8
-
-2.4
-30.8
-3.2
-24.0
1,010
700
620
755
1.7
19.6
7.4
2.6
-
-
-
-
-
-
-
-
-
-
-
-
-0.7
-12.7
-5.4
-1.6
-1.7
-19.6
-7.4
-2.6
457703_6.docx
Paladin Energy Ltd
11
Ore Reserves and Mineral Resources (continued)
Uranium Mineral Resources
Canada
Measured
Indicated
Inferred
Michelin1
Rainbow
Gear
Inda
Jacques Lake1
Michelin1
Nash
Rainbow
Gear
Inda
Jacques Lake1
Michelin1
Nash
Rainbow
Australia
Measured
Indicated
Inferred
Valhalla
Andersons
Bikini
Duke Batman
Odin
Skal
Valhalla
Carley Bore1
Manyingee1
Andersons
Bikini
Duke Batman
Honey Pot
Mirrioola
Odin
Skal
Valhalla
Watta
Warwai
Carley Bore1
Manyingee1
1 JORC Code (2012) compliant
30 June 2019
Grade
ppm
U3O8 Mlb U3O8 Mt
30 June 2020
Grade
ppm
U3O8 Mlb U3O8 Mt Mlb U3O8
Change
Mt
17.6
0.2
0.4
1.2
13.0
20.6
0.7
0.8
0.3
3.3
3.6
4.5
0.5
0.9
16.0
1.4
5.8
0.5
8.2
14.3
18.6
5.4
8.4
0.1
6.7
0.3
2.6
2.0
5.8
1.4
9.1
5.6
0.4
17.4
5.4
965
920
770
690
630
980
830
860
920
670
550
985
720
810
820
1,450
495
1,370
555
640
840
420
850
1,640
490
1,100
700
560
590
520
640
400
360
280
850
37.6
0.4
0.6
1.8
18.0
44.6
1.2
1.4
0.6
4.8
4.4
9.9
0.8
1.6
28.9
4.6
6.3
1.6
10.0
20.2
34.5
5.0
15.7
0.4
7.3
0.7
4.0
2.5
7.6
1.6
12.8
5.0
0.3
10.6
10.2
17.6
0.2
0.4
1.2
13.0
20.6
0.7
0.8
0.3
3.3
3.6
4.5
0.5
0.9
16.0
1.4
5.8
0.5
8.2
14.3
18.6
5.4
8.4
0.1
6.7
0.3
2.6
2.0
5.8
1.4
9.1
5.6
0.4
17.4
5.4
965
920
770
690
630
980
830
860
920
670
550
985
720
810
820
1,450
495
1,370
555
640
840
420
850
1,640
490
1,100
700
560
590
520
640
400
360
280
850
37.6
0.4
0.6
1.8
18.0
44.6
1.2
1.4
0.6
4.8
4.4
9.9
0.8
1.6
28.9
4.6
6.3
1.6
10.0
20.2
34.5
5.0
15.7
0.4
7.3
0.7
4.0
2.5
7.6
1.6
12.8
5.0
0.3
10.6
10.2
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
457703_6.docx
Paladin Energy Ltd
12
Ore Reserves and Mineral Resources (continued)
Langer Heinrich1
Vanadium Mineral Resources
Namibia
Measured
In-situ
MG ROM
stockpiles
LG ROM
stockpiles
Total Measured
Indicated
In-situ
Inferred
In-situ
1JORC Code (2012) compliant
Langer Heinrich1
Uranium Ore Reserves
Namibia
Proven
Probable
Stockpiles
Malawi
Proven
Probable
Stockpiles
Kayelekera
30 June 2019
Grade
ppm V2O5 Mlb V2O5 Mt
Mt
30 June 2020
Grade
ppm V2O5 Mlb V2O5 Mt Mlb V2O5
Change
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
66.2
4.7
26.1
97.0
160
170
105
145
23.3
1.8
6.0
31.1
66.2 23.3
1.8
4.7
26.1
6.0
97.0 31.1
-
18.8
140
5.8
18.8
5.8
-
6.3
135
1.9
6.3
1.9
30 June 2019
Change
Mt
grade
ppm U3O8 Mlb U3O8 Mt
Mlb U3O8 Mt Mlb U3O8
30 June 2020
grade
ppm
U3O8
42.0
13.1
30.8
0.4
5.3
1.6
525
485
355
1,170
880
755
48.5 42.0
14.0 13.1
24.0 30.8
525
485
355
48.5
14.0
24.0
-
-
-
-
-
-
1.0
10.4
2.6
-
-
-
-
-
-
-
-
-
-0.4
-5.3
-1.6
-1.0
-10.4
-2.6
Figures may not add due to rounding. Mineral Resources and Ore Reserves quoted on a 100% basis.
1JORC Code (2012) compliant
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.
The information above relating to exploration, Mineral Resources and ore reserves is, except where
stated, based on information compiled by David Princep B.Sc P.Geo FAusIMM(CP) who is an
independent consultant and who is a member of the AusIMM. Mr Princep has 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 Person as defined in the 2012 Edition of the
“Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves”. Mr
Princep consents to the inclusion of this information in the form and context in which it appears.
457703_6.docx
Paladin Energy Ltd
13
Health and Safety / Sustainable Development
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. Paladin considers excellence in
radiation management 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.
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.
Proactive Lead Safety Indicators such are used as a tool to further improve safety outcomes.
The Company’s annual Lost Time Injury Frequency Rate (LTIFR) remained at 0.00 (2018:0.00). For
FY2020, there were no Lost Time Injuries (LTIs), the same as for the previous year.
SUSTAINABLE DEVELOPMENT
Paladin is committed to the goal of sustainable development, which is reflected in its corporate
values. The Company also 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 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.
Corporate Sustainability Reporting
Sustainability reporting reflects Paladin’s commitment to be accountable to its internal and external
stakeholders with regard to the Company’s sustainability performance and future direction. This year
will see Paladin produce its ninth Sustainability Report, a copy of which will be posted on the
Company’s website www.paladinenergy.com.au in November 2020. These Reports summarise
Paladin’s key sustainability issues, its approach to managing them and its related performance across
the Company’s Langer Heinrich Mine (LHM) operation in Namibia and exploration activities in
Australia and Canada. The report is presented in accordance with the Global Reporting Initiative
(GRI) Reporting Standards, with Paladin’s focus on those standards/indicators that are considered
material to the Company. We have conducted materiality assessments to define the reporting
parameters.
Paladin has been reporting on its approach to sustainable development within its Annual Reports
since 2008. Paladin produced its first stand-alone annual Sustainability Report for 2012. Paladin now
has an established comprehensive process to systematically collect data for various sustainability
metrics at its operations in Namibia. The process involves the collection and consolidation of site-level
data in accordance with the GRI Standards.
Our Commitment
Paladin is committed to ensuring that effective environmental management is planned and undertaken
for all aspects of its operations. The approach to environmental management is guided by Paladin’s
Environmental Policy, which promotes high standards 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;
• Striving to achieve continuous improvement in environmental performance;
• Preventing and mitigating pollution;
• Communicating environmental responsibility to employees and contractors;
• Effective consultation with stakeholders on environmental issues;
457703_6.docx
Paladin Energy Ltd
14
Health and Safety / Sustainable Development (continued)
• Inspections and audits of environmental performance; and
• Reporting on environmental performance.
Paladin has established Corporate Sustainable Development Standards for all of its operational
subsidiaries. Operational compliance with Paladin’s Standards forms part of the site based
Environmental Audit Programme.
In March 2020, prior to the sale of Kayelekera, there was record rainfall at the Kayelekera Mine that
was largely contained in rainfall runoff storage ponds. A relatively minor release of rainfall runoff water
occurred, which was measured and analysed, and found to be lower than World Health Organisation
compliance and statutory limits for uranium and other contaminants in the river system. Malawian
regulators assessed that the Kayelekera Mine’s response to the issue was appropriate and there was
no environmental or community impact from this rainfall runoff release. There were no other
reportable environmental incidents recorded during the year.
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Paladin Energy Ltd
15
Corporate Governance Statement
CORPORATE GOVERNANCE FRAMEWORK
The Board of Directors of Paladin Energy Ltd is responsible for the corporate governance of the
Group.
Paladin has adopted systems of control and accountability as the basis for the administration of
corporate governance. 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).
The Company’s Corporate Governance Statement, dated 30 June 2020, and approved by the Board
on 28 August 2020, outlines the key principles and practices of the Company which, taken as a whole,
represents the system of governance and is reported against the Recommendations contained within
the ASX Corporate Governance Council’s (ASX CGC) 3rd Edition of its Corporate Governance
Principles and Recommendations. For FY2020, Paladin has complied with these recommendations
and has referenced these throughout this Corporate Governance Statement.
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, has been lodged with the ASX.
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Paladin Energy Ltd
16
Directors’ Report
The Directors of Paladin Energy Ltd present their report together with the financial report of the Group
consisting of Paladin Energy Ltd (Company) and the entities (Group) it controlled at the end of, or during,
the year ended 30 June 2020 and the auditor’s report.
Over the year, Paladin made significant changes to its Board and Executive Management Team to
provide the technical and commercial skill set necessary to lead the Company going forward. The
decision to restructure the board was made following discussions with and feedback received from
shareholders. The Company has previously announced the following changes to the Board of Directors:
• Mr Cliff Lawrenson appointed Non-Executive Chairman (29 October 2019)
• Mr Peter Main and Mr Peter Watson appointed Non-Executive Directors (11 December 2019)
The restructuring of the Board included a reduction in the number of Directors from four to three to
provide a board right sized for the Company’s current position and to provide a reduction in total annual
Director’s remuneration.
Compensation payable to Paladin’s Chairman was reduced from A$125,000 to A$110,000 and the fixed
cash compensation payable to the remaining Non-Executive Directors was been reduced from A$80,000
to A$70,000.
The result of these changes is that fixed compensation payable to the Board has been reduced by
A$115,000 per annum.
Performance Rights were issued to Non-Executives in lieu of a portion of cash remuneration. The total
14M performance rights represent 0.69% of issued share capital.
On 4 February 2020, Paladin also announced the appointment of Mr Ian Purdy as Chief Executive Officer
(CEO). Mr Purdy has a proven leadership record as a successful CEO and CFO with extensive
Australian and international natural resources experience.
DIRECTORS
The following persons were Directors of Paladin Energy Ltd and were in office for the period stated:
Mr Cliff Lawrenson B.Com (Hons) (appointed 29 October 2019)
(Non-Executive Chairman)
Mr Lawrenson holds postgraduate qualifications in commerce and finance and has worked extensively in
project development and investment banking around the world, including in South Africa, Australia, USA
and Singapore. Mr Lawrenson is an experienced mining executive and director with deep expertise in the
minerals and energy sectors derived from his considerable global experience. He has a successful track
record of leading strategic direction in companies and executing corporate transactions.
Mr Lawrenson’s previous roles include Managing Director of Atlas Iron Ltd from January 2017 to October
2018 when the company was acquired by Hancock Prospecting Pty Ltd. Prior to this, he led several ASX
listed companies through various stages of development. Mr Lawrenson held the position of Group Chief
Executive Officer of GRD Ltd from 2006 to 2009, GRD Ltd incorporated GRD Minproc Ltd, OceanaGold
Ltd and Global Renewables. Prior to joining GRD Ltd, Mr Lawrenson was a senior executive and vice
president of CMS Energy Corporation in the United States of America and Singapore for seven years. An
investment banking career preceded the above.
Special Responsibilities
Member of Audit and Risk Committee from 29 October 2019
Chairman of Remuneration Committee from 29 October 2019
Chairman of Nomination and Governance Committee from 29 October 2019
Member of Sustainability Committee from 29 October 2019
Current Directorships: Pacific Energy Pty Ltd, Onsite Rentals Group
Former Directorships (last three years): Atlas Iron Limited
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Paladin Energy Ltd
17
Directors’ Report (continued)
Mr Peter Watson (appointed 11 December 2019)
Non-Executive Director
Mr Peter Watson is a chemical engineer with more than 35 years’ experience in the global resources
sector across senior technical, project, and management roles as well as corporate experience in running
ASX listed companies. His experience includes project development, project delivery, asset optimisation
and mining facilities operations across multiple commodities and global jurisdictions, including Africa.
Mr Watson has held technical and senior executive roles with a number of companies, culminating in his
appointment as the MD & CEO of Sedgman Limited. Mr Watson has also held a number of senior and
directorship roles at Strandline Resources Ltd, Sedgman Limited, New Century Resources, Resource
Generation and EvacGroup (private), bringing significant board level experience at both the public and
wholly owned company level, particularly on matters covering project development and delivery,
operations re-start, safety, governance, financial reporting, risk management, strategy and leadership.
Special Responsibilities
Member of Audit and Risk Committee from 11 December 2019
Member of Remuneration Committee from 11 December 2019
Member of Nomination and Governance Committee from 11 December 2019
Chairman of Sustainability Committee from 11 December 2019
Current Directorships: Strandline Resources (ASX:STA) and New Century Resources Ltd (ASX:NCZ).
Former Directorships (last three years): Resource Generation (ASX:RES) – resigned November 2018
Mr Peter Main (appointed 11 December 2019)
Non-Executive Director
Mr Peter Main is a mining and finance professional with extensive experience spanning more than 30
years. During that time, Mr Main has developed an extensive working knowledge in financial markets
centred around the mining sector developing a wealth of industry experience. During his career Mr Main
has spent 13 years in a variety of roles in the mining industry from operations through to CEO of a TSX-V
listed mining company, obtaining diverse experience across most facets of the industry. He spent 20
years in finance, more recently in an advisory capacity to the mining and finance industries. Prior to that
Mr Main primarily worked for investment banks, including 11 years managing the Royal Bank of Canada's
(RBC) Australian equity sales and trading business and co-managing RBC's regional business. Mr Main
also spent six years at Hartley Poynton as a mining analyst and almost nine years full time service in the
Australian Army.
Special Responsibilities
Chairman of Audit and Risk Committee from 11 December 2019
Member of Remuneration Committee from 11 December 2019
Member of Nomination and Governance Committee from 11 December 2019
Member of Sustainability Committee from 11 December 2019
Current Directorships: Nil
Former Directorships (last three years): Rizal Resources (TSX-V)
Mr Rick Wayne Crabb B. Juris (Hons), LLB, MBA, FAICD (retired 29 October 2019)
(Non-Executive Chairman)
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 with Robinson Cox (now Clayton Utz) and Blakiston & Crabb (now Gilbert + Tobin) specialising in
mining, energy, corporate and commercial law and advised in relation to numerous project developments
in Australia, Asia and Africa. He is also non-executive chairman of Eagle Mountain Mining Limited (since
6 September 2017) and non-executive chairman of Ora Gold Limited (director since November 2017). He
was a non-executive director of Golden Rim Resources Ltd (from August 2001 to November 2017) and
has held numerous other public listed company directorships over the past 30 years. Mr Crabb was a
councilor on the Western Australian Division of the Australian Institute of Company Directors from 2008 to
2017.
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Paladin Energy Ltd
18
Directors’ Report (continued)
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
Chairman of Remuneration Committee from 1 February 2018 (member from 1 June 2005)
Chairman of Nomination and Governance Committee from 1 February 2018 (member from 1 June 2005)
Member of Sustainability Committee from 25 November 2010
Mr David Riekie B. Econ. Dip Acc. CA, MAICD (resigned 11 December 2019)
(Non-Executive Director)
Mr Riekie is an experienced ASX director at both the Executive and Non-Executive level. He has
operated in a variety of countries globally and throughout Africa; notably Namibia and Tanzania. He has
throughout his career provided corporate, strategic and compliance services to a variety of organisations
operating in the Resource and Industrial sector, usually enterprises seeking expansion capital and listing
on ASX. He has been directly responsible for successful capital raising, stakeholder engagement,
acquisition and divestment programmes. Additional experiences were been gained during his time as a
corporate reconstruction specialist with Price Waterhouse. He has overseen, exploration and resource
development, scoping and feasibility studies, production, optimisation and rehabilitation initiatives. He
has special interest in the energy and energy storage sector, primarily through energy storage minerals
and commodities with specific knowledge of uranium, oil and gas, graphite, lithium, nickel, copper and
cobalt. Mr Riekie is a Non-Executive Director of remote power generation and energy solutions
specialist, ASX listed Zenith Energy Limited.
Mr Riekie was appointed to the Paladin Board on 1 February 2018.
Special Responsibilities
Chairman of Audit and Risk Committee from 1 February 2018
Member of Remuneration Committee from 1 February 2018
Member of Nomination and Governance Committee from 1 February 2018
Mr Daniel Harris B.Sc (resigned 11 December 2019)
(Non-Executive Director)
Mr Harris is a seasoned and highly experienced mining executive and director. Most recently, Mr Harris
held the role of interim CEO and Managing Director of ASX listed Atlas Iron until January 2017 and then
resumed his role as a Non-executive Director and Chairman of the Audit and Risk Committee until March
2019. Mr Harris has been involved in all aspects of the industry for over 40 years and held both COO and
CEO positions in Atlantic Ltd and Strategic Minerals Corporation and was also the former Vice President
of EVRAZ Plc in Moscow. Mr Harris is a consultant and member of the Advisory Board of Black Rock
Metals in Montreal and is a consultant and advisor to GSA Environmental in the UK. Mr Harris is
currently a Non-executive Director of Perth based Australian Vanadium Ltd and is a Non-executive
Director of Queensland Energy and Minerals, based in Brisbane.
Mr Harris was appointed to the Paladin Board on 1 February 2018.
Special Responsibilities
Chairman of Sustainability Committee from 1 February 2018
Member of Remuneration Committee from 1 February 2018
Member of Nomination and Governance Committee from 1 February 2018
Member of Audit and Risk Committee from 1 February 2018
Mr John Hodder B.Sc. B.Com. (resigned 11 December 2019)
(Non-Executive Director)
Mr Hodder is a Geologist by background with a B.Sc. in Geological Sciences and a B.Com. in Finance
and Commerce from the University of Queensland. He spent ten years in the mining and oil and gas
industries before completing an M.B.A. at London Business School. Mr Hodder established the
Commonwealth Development Corporation (CDC) mining, oil and gas investment department in 1995 and
was responsible for its investment activities for some eight years. He has served as a director of a
number of junior mining companies and has significant experience of operating and investing in Africa.
Mr Hodder also worked at Suncorp and Solaris as a Fund Manager focusing on the resources sector
managing an index-linked natural resource portfolio of $1.25bn. In 2014 Mr Hodder was one of three
principals who established Tembo Capital a mining focused private equity fund group.
457703_6.docx
Paladin Energy Ltd
19
Directors’ Report (continued)
Mr Hodder was appointed to the Paladin Board on 14 February 2018.
Special Responsibilities
Member of Audit and Risk Committee from 14 February 2018
Member of Nomination and Governance Committee from 14 February 2018
CHIEF EXECUTIVE OFFICER
Mr Ian Purdy BCom FCA FAICD (appointed 4 February 2020)
Mr Purdy is a highly-respected executive with more than three decades’ experience within Australian and
international natural resources companies. In his time as a CEO and CFO of listed and private
companies, Mr Purdy has delivered significant shareholder value through managing and optimising
operations, delivering large projects and executing on business improvements and asset sales. He also
has extensive capital markets experience and a proven track record of delivering company funding
requirements.
Mr Purdy was previously the CFO of Quadrant Energy, Managing Director and CEO of Mirabela Nickel
Limited, Managing Director of Norilsk Nickel Australia, Director of Finance and Strategy of LionOre
Australia, and has held senior finance and commercial roles at North Limited and WMC Limited.
Mr Scott Sullivan BEng (Hons1), MBA, FAusIMM), GAICD (ceased employment 3 March 2020)
Mr Sullivan is an experienced mining industry executive with over 30 years of diversified mining
experience, across multiple commodities and projects domestically and internationally. His experience
spans strategic planning in mines and smelters; feasibilities; commissioning; mine expansion and
restructuring; mine, port and rail infrastructure; project management; sustainability and government and
has a strong emphasis on operational optimisation.
He was General Manager of Newcrest’s large and complex Telfer gold-copper mine in the Pilbara
Western Australia. Prior roles include CEO and Managing Director roles with ASX-listed companies
centered in West Africa and the US and Asset President of NSW Energy Coal at BHP Billiton, being
directly responsible for the operation and rapid expansion of one of Australia’s iconic and highest
producing coal mines, Mt Arthur, along with the Caroona Coal project and BHPB’s share in the NCIG port
infrastructure in Newcastle. Mr Sullivan was also GM of the Wambo Coal OC and UG operations in the
Hunter Valley with Peabody Energy and successfully commissioned the UG mine to be one of the most
productive thin seam Long Wall mines in the world.
JOINT COMPANY SECRETARY
Ms Andrea Betti CA, AGIA, BCom, MBA
Ms Betti is an accounting and corporate governance professional with over 20 years’ experience in
accounting, corporate governance, corporate advisory, finance and corporate banking. Ms Betti has
acted as Chief Financial Officer and Company Secretary for companies in the private and publicly listed
sectors, as well as senior executive roles in the banking and finance industry.
Mr Ranko Matic B.Bus, CA
Mr Matic is a Chartered Accountant with over 25 years’ experience in the areas of financial and executive
management, accounting, audit, business and corporate advisory. Mr Matic serves as a Non-Executive
Director and Company Secretary for a number of publicly listed natural resources companies.
457703_6.docx
Paladin Energy Ltd
20
Directors’ Report (continued)
BOARD AND COMMITTEE MEETINGS
The number of Directors’ meetings and meetings of committees held during the financial year, and the
number of meetings attended by each Director in the period they held office were:
Board of
Directors
Audit and Risk
Committee
Remuneration
Committee
Nomination and
Governance
Committee
Sustainability
Committee
Name
Mr Cliff Lawrenson
Mr Peter Watson
Mr Peter Main
Mr Rick Crabb
Mr David Riekie
Mr Daniel Harris
Mr John Hodder
Number
attended
5
4
4
3
4
4
4
Number
eligible
to attend
5
4
4
3
4
4
4
Number
attended
2
1
1
-
2
2
2
Number
eligible
to attend
2
1
1
-
2
2
2
Number
attended
1
1
1
1
1
1
-
Number
eligible
to attend
1
1
1
1
1
1
-
Number
attended
-
-
-
-
-
-
-
Number
eligible
to attend
-
-
-
-
-
-
-
Number
attended
1
1
-
1
-
1
-
Number
eligible
to attend
1
1
-
1
-
1
-
Of the above Board meetings, 5 were face to face with the remainder held electronically.
INTERESTS IN THE SECURITIES OF THE COMPANY
As at the date of this report, no Director owns securities of Paladin Energy Ltd.
PRINCIPAL ACTIVITY
The principal activity of the Group was the development and operation of the Langer Heinrich Mine in
Namibia, together with exploration and evaluation activities in Australia and Canada.
REVIEW AND RESULTS OF OPERATIONS
A detailed operational and financial review of the Group is set out on pages 6 to 8 of this report under the
section entitled Operating and Financial Review.
The Group’s loss after tax from continuing operations for the year is US$46,051,000 (2019: loss after tax
US$49,122,000) representing a decrease of 6% from the previous year.
Included in the Consolidated Financial Statements for the year ended 30 June 2020 is an independent
auditor’s report which includes an Emphasis of Matter paragraph in regard to the existence of a material
uncertainty that may cast significant doubt about the Group’s ability to continue as a going concern. For
further information, refer to Note 4 in the Consolidated Financial Statements, together with the auditor’s
report.
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
Significant changes in the state of affairs of the Group during the financial year were as follows:
Capital Raising
On 13 September 2019, Paladin successfully completed the Placement of 262,812,641 ordinary shares to
raise A$30,223,000 (US$20,654,000) (before costs) and on 8 October 2019 that it had issued a further
12,994,100 ordinary shares to raise A$1,494,000 (US$1,010,000) under a Share Purchase Plan (SPP).
Sale of Kayelekera Mine
On 13 March 2020, Paladin completed the sale of its 85% interest in Paladin (Africa) Ltd to Lotus
Resources Limited (65%) and Lily Resources Pty Ltd (20%).
Paladin became a substantial shareholder in Lotus Resources Limited on 13 March 2020, holding a
14.46% interest following the issue of 90,000,000 shares at a 2cps issue price. These shares are subject
to a 12-month voluntary escrow.
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Paladin Energy Ltd
21
Directors’ Report (continued)
Future receivables from the Kayelekera Sale include:
• A$3M additional shares in Lotus Resources Limited due on 13 March 2023;
• US$6M repayment of the environmental performance bond (US$1M due 13 March 2021, US$2M
due 13 March 2022 and US$3M due 13 March 2023);
• A 3.5% production royalty derived from future production at the Kayelekera Mine, capped at A$5M
(US$3.4M).
APPOINTMENT OF NEW CEO AND BOARD CHANGES
On 29 October 2019, Paladin appointed Mr Cliff Lawrenson as Chairman following Mr Rick Crabb’s
retirement.
On 11 December 2019, in response to discussions and feedback received from shareholders, Paladin
appointed Mr Peter Main and Mr Peter Watson as Non-Executive Directors and on 4 February 2020,
Paladin appointed Mr Ian Purdy as Chief Executive Officer (CEO).
SIGNIFICANT EVENTS AFTER THE BALANCE DATE
Since the end of the financial year, the Directors are not aware of any 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.
LIKELY DEVELOPMENTS
Likely developments in the operations of the Group are set out under the section entitled Operating and
Financial Review.
ENVIRONMENTAL REGULATIONS
The Group is subject to 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 a mining and processing operation in Namibia (on care and
maintenance due to current uranium market conditions), as well as exploration projects in Australia, and
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 licenses 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.
REMUNERATION FOR THE YEAR AT A GLANCE
Executive Remuneration – cash value of earnings realised (unaudited)
Details of the remuneration received by the Key Management Personnel are prepared in accordance with
statutory requirements and Accounting Standards, and are detailed further in the Remuneration Report.
In keeping with Paladin’s practice since 2011, the tables below set out the cash value of earnings realised
by the CEO and other executives considered to represent Key Management Personnel (KMP) for 2019
and 2020 and the intrinsic value of share-based payments that vested to KMP during the period. This
voluntary disclosure 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 vesting conditions are not met. By contrast, this table discloses the intrinsic value of share
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Paladin Energy Ltd
22
Directors’ Report (continued)
rights, which represents only those share rights which actually vested and resulted in shares issued to a
KMP. The intrinsic value is Paladin’s closing share price on the date of vesting.
Paladin believes that this additional information is useful to investors as recognised by the 2009
Productivity Commission Inquiry Report ‘Executive Remuneration in Australia’. The Commission
recommended that remuneration reports should include actual levels of remuneration received by the
individuals named in the report in order to increase its usefulness to investors.
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 2020 year. The tables do not include the accounting value for share rights and share
appreciation 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, therefore the tables are
presented in both A$ and US$ (being the functional and presentation currency of Paladin). The detailed
schedules of remuneration presented later in this report are presented in US$.
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23
Directors’ Report (continued)
REMUNERATION FOR THE YEAR AT A GLANCE
Executive Remuneration - cash value of earnings realised (unaudited)
2020 (A$) / (US$)
Name
Mr Ian Purdy(1)
Ms Anna Sudlow
Mr Scott Sullivan(2)
Mr Michael Drake(3)
Mr Craig Barnes(4)
Base Salary &
Superannuation
US$
A$
143,969
214,649
214,713
320,124
208,491
310,847
243,609
363,207
101,517
151,356
Other
A$
-
-
266,056(5)
159,919(5)
-
US$
-
-
178,448(5)
107,261(5)
-
Total
Cash
A$
214,649
320,124
576,903
523,126
151,356
US$
143,969
214,713
386,939
350,870
101,517
Total
1,360,183
912,299
425,975
285,709
1,786,158
1,198,008
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 2020 financial year US$1 = A$1.49094.
(1) Appointed 4 February 2020.
(2) Ceased employment 3 March 2020.
(3) Resigned 3 July 2020.
(4) Resigned 9 August 2019.
(5) Ex gratia termination payment plus payment in lieu of notice.
2019 (A$) / (US$)
Name
Base Salary &
Superannuation
US$
A$
Other
Total
Cash
A$
US$
A$
US$
Mr Scott Sullivan
Mr Craig Barnes
Mr Michael Drake
400,000
389,477
128,892
285,885 200,000(1) 142,943(1)
278,364
-
-
92,121 82,250(2)
58,785(2)
600,000
389,477
211,142
428,828
278,364
150,906
Total
918,369
656,370 282,250
201,728
1,200,619
858,098
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 2019 financial year US$1 = A$1.39916.
(1) Bonus awarded for FY2019.
(2) Fees for services as a consultant prior to commencing as an employee on 11 February 2019.
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Paladin Energy Ltd
24
Directors’ Report (continued)
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, KMP 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.
Over the year, Paladin made significant changes to its Board and Executive Management Team to
provide the technical and commercial skill set necessary to lead the Company going forward. The
decision to restructure the board was made following discussions with and feedback received from
shareholders.
Key Management Personnel comprise:
• Mr Cliff Lawrenson, Non-Executive Chairman (appointed 29 October 2019)
• Mr Ian Purdy, Chief Executive Officer (appointed 4 February 2020)
• Mr Peter Watson, Non-Executive Director (appointed 11 December 2019)
• Mr Peter Main, Non-Executive Director (appointed 11 December 2019)
• Ms Anna Sudlow, Chief Financial Officer (appointed 1 July 2019)
• Mr Craig Barnes, Chief Financial Officer (resigned 9 August 2019)
• Mr Rick Crabb, Non-Executive Chairman (retired 29 October 2019)
• Mr Scott Sullivan, Chief Executive Officer (ceased employment 3 March 2020)
• Mr David Riekie, Non-Executive Director (resigned 11 December 2019)
• Mr Daniel Harris, Non-Executive Director (resigned 11 December 2019)
• Mr John Hodder, Non-Executive Director (resigned 11 December 2019)
• Mr Michael Drake, Chief Operating Officer (resigned 3 July 2020)
For the purposes of this report, the term Executive encompasses the CEO and senior executives of the
Group.
REMUNERATION APPROVAL PROCESS
The Remuneration Committee is charged with assisting the Board by reviewing and making appropriate
recommendations on remuneration packages for the KMP. In addition, it makes recommendations on
long-term incentive plans and associated performance hurdles together with the quantum of grants made,
taking into account both the individual’s and Paladin’s performance.
The Remuneration Committee, chaired by Mr Cliff Lawrenson, held two meetings during the year.
Messrs Watson and Main are also Committee members. The CEO is invited to attend those meetings
which consider the remuneration strategy of the Group and recommendations in relation to KMP.
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. The
remuneration for the CEO is determined by the Remuneration Committee.
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Paladin Energy Ltd
25
Directors’ Report (continued)
REMUNERATION REPORT (Audited) (continued)
KEY ELEMENTS OF KEY MANAGEMENT PERSONNEL 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 Paladin’s shareholders; and
• Comply with applicable legal requirements and appropriate standards of governance.
The above strategies also recognise the financial position of the Group given the low prevailing uranium
prices. This strategy applies group wide for all employees.
The overall level of compensation takes into account Paladin’s earnings and growth in shareholder
wealth, together with the achievement of strategic goals but must also reflect current economic
conditions. Consideration of Paladin’s earnings will be more relevant as Paladin moves from care and
maintenance, to restart and profitability, which is highly dependent on prevailing Uranium prices.
The Board is cognisant of general shareholder concern that long-term equity-based remuneration be
linked to Paladin’s performance and growth in shareholder value. Share Appreciation Rights (SARs)
issued under the Long Term Incentive (LTI) programme usually have a one to three-year performance
period. These SARs will therefore only vest at the end of a one to three-year period. This promotes a
focus on long-term performance as the value of the SARs is linked to the ongoing performance of
Paladin. This period represents an appropriate balance between providing a genuine and foreseeable
incentive to KMP and fostering a long-term alignment to shareholder interests. If a KMP resigns during
this period, they will ordinarily forfeit their SARs.
The table below compares the earnings per share to the closing share price for Paladin's five most
recently completed financial years.
30 June
2016
30 June
2017
30 June
2018
30 June
2019
30 June
2020
(Loss)/profit for the year attributable
to members of the parent (US$’000)
EPS continuing operations (US cents)
Share Price (A$)
Increase/(decrease) in share price
Dividend payment (US$’000)
(121,981)
(7.1)
A$0.185
(24)%
-
(457,785)
(26.7)
A$0.047(1)
(75)%
-
367,762
21.5
A$0.175
(30,345)
(1.7)
A$0.125
(79,866)
(1.7)
A$0.10
272%
-
(29)%
-
(20)%
-
(1) The securities of Paladin were suspended from official quotation, at the request of Paladin, on 13 June
2017 and were reinstated on 16 February 2018.
The remuneration structure for the Key Management Personnel has two elements:
• Fixed remuneration; and,
• Long-term incentives.
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26
Directors’ Report (continued)
REMUNERATION REPORT (Audited) (continued)
COMPONENTS OF KEY MANAGEMENT PERSONNEL REMUNERATION
These are detailed as follows:
Remuneration Component Elements
Details
Fixed Remuneration
Annual base salary determined
as at 1 July each year
The ‘not at risk’ cash component which
may include certain salary sacrifice
packaging.
Statutory superannuation
contributions
Statutory % of base salary.
Variable Performance Linked
Remuneration
(“at risk” remuneration)
Long-term incentive, granted
under the Rights Plan
Award determined based on individual
performance and contribution and
Paladin’s performance. Vesting
dependent on creation of shareholder
value
retention
element.
together with a
Fixed Remuneration
This is reviewed annually with consideration given to both Paladin’s 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. Paladin did not engage remuneration consultants during the year.
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Paladin Energy Ltd
27
Directors’ Report (continued)
REMUNERATION REPORT (Audited) (continued)
COMPONENTS OF KEY MANAGEMENT PERSONNEL REMUNERATION (continued)
Variable Performance Linked Remuneration
Long-term Incentives
Paladin believes that encouraging its KMPs to become shareholders is the best way of aligning their
interests with those of its shareholders. In 2009, Paladin 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 2018 Annual General Meeting.
The Rights Plans are long-term incentive plans aimed at advancing the interests of Paladin 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 Paladin.
They are an important tool in assisting to attract and retain talented people.
Performance Rights (PRs)
PRs were issued to the CEO, CFO and Non-Executive Directors in order to provide an equity based
component to their respective remuneration packages.
Each PR that vests will automatically entitle the holder to be issued with one share.
The PRs have been issued for nil cash consideration and no consideration is payable by the holder upon
the vesting of a PR. The holder of any Shares issued on the vesting of the PRs will generally be restricted
from selling, transferring or otherwise disposing of the Shares for a period ending 12 months after the
date that the relevant vesting condition was satisfied.
Any PRs that have not vested on or before the date that is five years after the date of the issue will
automatically lapse and become incapable of vesting into Shares.
The number of share rights able to be issued under the Plans is limited to 5% of the issued capital.
A summary of PRs held by KMPs is on page 29.
Share Appreciation Rights (SARs)
SARs are granted under the plan for no consideration. SARs are a right to receive a bonus equal to the
appreciation in Paladin's share price over a period. SARs benefit the holder with an increase in share
price; the holder is not required to pay the exercise price, but rather just receives the amount of the value
increase in shares. The number of ordinary shares ultimately issuable upon vesting of the SARs will vary
as the number of ordinary shares to be issued is based upon Paladin’s relative share price growth over
the relevant vesting periods.
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 five years (with certain exclusions
under the Australian corporate legislation).
The Board is cognisant of general shareholder concern that long-term equity-based rewards should be
linked to the performance of Paladin. The holder of a SAR only receives an amount equivalent to the
share price increase (i.e. the net appreciation amount, which is the market price on exercise date minus
market price on grant date) in shares.
Paladin does not offer any loan facilities to KMPs.
A summary of SARs held by KMPs is on page 29.
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Paladin Energy Ltd
28
Directors’ Report (continued)
REMUNERATION REPORT (Audited) (continued)
COMPONENTS OF KEY MANAGEMENT PERSONNEL REMUNERATION (continued)
Variable Performance Linked Remuneration (continued)
Shares Acquired Under the Rights Plan
Shares to be allocated to participants on vesting are currently issued from equity. No consideration is
paid on the vesting of the share rights and resultant shares carry full dividend and voting rights.
Change of Control
All PRs and SARs 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 SARs relative to total issued shares is very
insignificant and thus are not considered a disincentive to a change of control.
Cessation of Employment
Under the Rights Plan, all PRs and SARs will be cancelled on cessation of employment, unless special
circumstances exist such as retirement, total and permanent disability, redundancy or death.
Performance Rights of KMPs (excluding Non-Executive Directors) at 30 June 2020
Date granted
5 February 2020
5 February 2020
5 February 2020
5 February 2020
30 April 2020
30 April 2020
30 April 2020
30 April 2020
Total
Expiry date
5 February 2025
5 February 2025
5 February 2025
5 February 2025
12 June 2025
12 June 2025
12 June 2025
12 June 2025
Fair value
A$0.038
A$0.038
A$0.038
A$0.038
A$0.05
A$0.05
A$0.05
A$0.05
Vesting price
A$0.20
A$0.30
A$0.40
A$0.50
A$0.20
A$0.30
A$0.40
A$0.50
Number
6,250,000
6,250,000
6,250,000
6,250,000
2,500,000
2,500,000
2,500,000
2,500,000
35,000,000
In summary, this balance represents 1.73% of the issued capital.
Share Appreciation Rights of KMPs (excluding Non-Executive Directors) at 30 June 2020
Date granted
Exercisable date
Expiry date
11 February 2019
11 February 2019
11 February 2019
1 July 2019
1 July 2019
1 July 2019
Total
1 March 2020
1 March 2021
1 March 2022
1 July 2020
1 July 2021
1 July 2022
1 March 2025
1 March 2026
1 March 2027
1 July 2025
1 July 2026
1 July 2027
Exercise
price
Fair
value
A$0.05 A$0.20
A$0.07 A$0.20
A$0.09 A$0.20
A$0.05 A$0.1226
A$0.06 A$0.1226
A$0.07 A$0.1226
Number
700,000(1)
700,000(1)
1,100,000(1)
700,000
700,000
1,100,000
5,000,000
(1) Michael Drake – now lapsed due to resignation. Will be cancelled during FY2021.
In summary, this balance represents 0.25% of the issued capital.
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Paladin Energy Ltd
29
Directors’ Report (continued)
REMUNERATION REPORT (Audited) (continued)
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 Paladin;
-
-
-
the nature of its operations;
the time commitment required; and,
the responsibility the Directors carry.
The aggregate annual remuneration permitted to be paid to Non-Executive Directors is A$1,200,000
(US$804,861) as approved by shareholders at the 2008 AGM. Fees paid for the year to 30 June 2020
total A$304,758 (US$204,408).
Remuneration Component Elements
Base Fee
Must
aggregate limit
be
contained within
Superannuation
Statutory
are
included in the fees set out above
contributions
Details
(per annum)
Chairman
A$110,000 (US$73,779)
Non-Executive Director
A$70,000 (US$46,950)
Statutory % of fees
Performance Rights
The Board acknowledges that the granting of PRs to Non-Executive Directors is contrary to
Recommendation 8.2 of the ASX Corporate Governance Principles and Recommendations (3rd Edition).
However, the Board considers the issue of the PRs to be reasonable in the circumstances in order to
align Non-Executive Directors’ interests with that of shareholders and to provide appropriate remuneration
to the Non-Executive Directors for their ongoing commitment to Paladin whilst minimising expenditure of
Paladin’s cash resources.
The Board notes that in connection with the grant of the PRs to Non-Executive Directors, the fixed annual
cash compensation payable to Paladin’s Chairman has been reduced from A$125,000 to A$110,000 and
that the fixed cash compensation payable to the remaining Non-Executive Directors has been reduced
from A$80,000 to A$70,000. In addition, the number of Directors on Paladin’s Board has been reduced
from four to three, reducing the annual cash compensation by a further A$80,000. The result of these
changes is that fixed compensation payable to the Board has been reduced by A$115,000 per annum.
PRs were issued to Non-Executive Directors in lieu of a portion of cash remuneration. The PRs were
issued in order to provide an equity based component to their respective remuneration packages.
Performance Rights held by Non-Executive Directors at 30 June 2020
Date granted
5 February 2020
5 February 2020
5 February 2020
5 February 2020
Total
Expiry date
5 February 2025
5 February 2025
5 February 2025
5 February 2025
Fair value
A$0.038
A$0.038
A$0.038
A$0.038
Vesting price
A$0.20
A$0.30
A$0.40
A$0.50
Number
3,500,000
3,500,000
3,500,000
3,500,000
14,000,000
In summary, this balance represents 0.69% of the issued capital.
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Paladin Energy Ltd
30
Directors’ Report (continued)
REMUNERATION REPORT (Audited) (continued)
Other Fees/Benefits
In addition, Paladin’s Constitution provides for additional compensation to be paid if any of the Directors
are called upon to perform extra services or make any special exertions on behalf of Paladin or the
business of Paladin. Paladin may compensate such Director in accordance with such services or
exertions, and such compensation may be either in addition to or in substitution for the Directors’ fees
referred to above. No additional fees were paid during the year, other than the Directors’ fees disclosed.
Non-Executive Directors are also entitled to be reimbursed for reasonable expenses incurred whilst
engaged on Paladin business. There is no entitlement to compensation on termination of Non-Executive
directorships. Non-Executive Directors do not earn retirement benefits (other than the statutory
superannuation) and are not entitled to any form of performance linked remuneration.
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Paladin Energy Ltd
31
Directors’ Report (continued)
REMUNERATION REPORT (audited) (continued)
Compensation of Key Management Personnel of the Group for the years ended 30 June 2020 and 2019.
Year
2020
2020
2020
2020
2019
2020
2019
2020
2019
2020
2019
2020
2020
2020
2019
2020
2019
2020
2019
Non-Executive Directors
Mr Cliff Lawrenson(1)
Peter Main(2)
Peter Watson(2)
Mr Rick Crabb(3)
Mr David Riekie(4)
Mr Daniel Harris(4)
Mr John Hodder(4)
Other Key Management
Personnel
Ian Purdy(5)
Anna Sudlow(6)
Mr Scott Sullivan(7)
Mr Craig Barnes(8)
Mr Michael Drake(9)
Total - 2020
Total – 2019
Notes to the Compensation Table
Short-Term Benefits
Salary
& Fees
US$
Other
US$
Termination
Payment
US$
Post
Employment
Superannuation
US$
Share
Based
Payment
Share
Rights
US$
Total
Total
Total
Performance
Related
Total
Performance
Related
US$
A$
US$
51,106
26,126
23,859
25,522
81,588
21,867
52,216
23,944
57,177
23,944
57,177
136,926
200,626
197,926
271,211
97,995
263,690
229,522
85,576
-
-
-
-
-
-
-
-
-
-
-
-
-
142,943(10)
-
-
-
58,785(11)
-
-
-
-
-
-
-
-
-
-
-
-
-
178,448(12)
-
-
-
107,260(12)
-
1,059,363
868,635
-
201,728
285,708
-
1,271
-
2,267
2,425
7,751
2,077
4,961
-
-
7,043
14,087
10,565
14,674
3,522
14,674
14,087
6,545
57,344
48,605
12,304
8,203
8,203
-
-
-
-
-
-
-
-
-
-
64,681
34,329
34,329
27,947
89,339
23,944
57,177
23,944
57,177
23,944
57,177
51,268
61,082
(55,155)
80,643
-
-
1,030
24,768
195,237
275,795
331,784
509,471
101,517
278,364
351,899
175,674
96,436
51,181
51,181
41,667
125,000
35,699
80,000
35,699
80,000
35,699
80,000
291,086
411,194
494,670
712,833
151,356
389,477
524,661
245,797
12,304
8,203
8,203
-
-
-
-
-
-
-
-
51,268
61,082
(55,155)
223,586
-
-
1,030
24,768
86,935
105,411
1,489,350
1,224,379
2,220,529
1,713,107
86,935
248,354
%
19.0
23.9
23.9
-
-
-
-
-
-
-
-
26.3
22.1
-
43.9
-
-
0.3
14.1
Presentation Currency - The compensation table has been presented in US$, Paladin’s functional and presentation currency. The A$ value has also been shown as this is considered to be the most relevant comparator between years, given that
100% 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 2020 financial year US$1 = A$1.49094 (2019 financial year US$1 =
A$1.39916.
(1) Appointed 29 October 2019
(2) Appointed 11 December 2019
(3) Retired 29 October 2019
(4) Resigned 11 December 2019
(5) Appointed 4 February 2020
(6) Appointed 1 July 2019
(7) Ceased employment 3 March 2020. FY2019 share based payments expense relating to unvested SARs has been reversed.
(8) Resigned 9 August 2019
(9) Resigned 3 July 2020
(10) Bonus awarded for FY2019
(11) Fees for services as a consultant prior to commencing as an employee on 11 February 2019
(12) Ex gratia termination payment plus payment in lieu of notice
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32
Directors’ Report (continued)
REMUNERATION REPORT (audited) (continued)
Options Holdings of Key Management Personnel (Group)
30 June 2019
Executives
Mr Alexander Molyneux
Total
01 Jul 18
number
Granted as
remuneration
number
Fair value at
grant date
US$’000
Vested as
shares
number
Lapsed
number
30 Jun 19
Number
3,000,000
3,000,000
-
-
-
-
-
(3,000,000)(1)
-
(3,000,000)
-
-
(1) Resigned on 1 July 2018.
Share Appreciation Rights Holdings of Key Management Personnel (Group)
30 June 2020
Executives
Mr Scott Sullivan
Mr Craig Barnes
Mr Michael Drake(5)
Ms Anna Sudlow
01 Jul 19
number
Granted as
remuneration
number
Fair value at
grant date
US$
Vested as
shares
number
Lapsed
number
30 Jun 20
Number
5,000,000(1) 1,000,000(2)
2,329,000
2,500,000
-
-
-
2,500,000(7)
26,509
-
-
112,202
-
-
-
-
(6,000,000)(3)
(2,329,000)(4)
-
-
-
-
2,500,000(6)
2,500,000
Total
(1) 1,000,000 SARs exercisable at A$0.1775 vested on 1 July 2019 but were not exercised and have now
(8,329,000)
3,500,000
9,829,000
138,711
-
5,000,000
been cancelled upon cessation on 4 February 2020.
(2) Granted 1 October 2019. Fair value per right at grant date was US$0.03. Not exercised and have now
been cancelled upon cessation of employment.
(3) Ceased employment on 3 March 2020.
(4) Resigned on 9 August 2019. Not exercised and have now been cancelled.
(5) Resigned on 3 July 2020. Not exercised and lapsed on 3 July 2020 due to resignation.
(6) 700,000 SARs exercisable at A$0.20 vested on 1 March 2020 but have not been exercised with
1,800,000 SARs exercisable at A$0.20 lapsing on 3 July 2020.
(7) Granted 1 July 2019. Fair value per right at grant date was US$0.04.
30 June 2019
Executives
Mr Scott Sullivan
Mr Craig Barnes
Mr Michael Drake
01 Jul 18
number
Granted as
remuneration
number
Fair value at
grant date
US$
Vested as
shares
number
Lapsed
number
30 Jun 19
Number
- 5,000,000(1)
2,329,000
-
- 2,500,000(2)
216,386
-
129,335
-
-
-
-
-
-
-
-
5,000,000
2,329,000
2,500,000
9,829,000
Total
2,329,000
7,500,000
345,721
(1) Granted 1 July 2018. Fair value per right at grant date was US$0.04.
(2) Granted 11 February 2019. Fair value per right at grant date was US$0.05.
Performance Rights Holdings of Key Management Personnel (Group)
30 June 2020
Executives
Mr Cliff Lawrenson
Mr Peter Watson
Mr Peter Main
Mr Ian Purdy
Ms Anna Sudlow
Total
01 Jul 19
number
Granted as
remuneration
number
Fair value at
grant date
US$
Vested as
shares
number
Lapsed
number
30 Jun 20
Number
-
-
-
-
-
-
6,000,000(1)
4,000,000(1)
4,000,000(1)
25,000,000(1)
10,000,000(2)
153,232
102,155
102,155
638,467
345,390
49,000,000
1,341,399
-
-
-
-
-
-
-
-
-
-
-
-
6,000,000
4,000,000
4,000,000
25,000,000
10,000,000
49,000,000
(1) Granted 5 February 2020. Fair value per right at grant date was US$0.026.
(2) Granted 30 April 2020. Fair value per right at grant date was US$0.035.
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33
Directors’ Report (continued)
REMUNERATION REPORT (audited) (continued)
Shares held in Paladin Energy Ltd (number)
30 June 2020
Directors
Mr Rick Crabb
Executives
Mr Scott Sullivan
Balance
01 Jul 19
On Vesting
of Rights
Net Change
Other
Balance
30 June 20
219,630
-
(219,630)(1)
100,000
-
(100,000)(2)
-
-
-
Total
319,630
-
(319,630)
(1) Retired on 29 October 2019.
(2) Ceased employment on 3 March 2020.
30 June 2019
Directors
Mr Rick Crabb
Executives
Mr Scott Sullivan
Balance
01 Jul 18
On Vesting
of Rights
Net Change
Other
Balance
30 June 19
119,630
-
-
-
100,000(1)
219,630
100,000(1)
100,000
Total
119,630
-
200,000
319,630
(8,
(1) On market purchase.
No other KMP held shares during the year ended 30 June 2020 and 30 June 2019.
All equity transactions with KMP have been entered into under terms and conditions no more
favourable than those the Group would have adopted if dealing at arm’s length.
CONTRACTS FOR SERVICES
Remuneration and other terms of employment for the KMP are normally formalised in contracts for
services.
All contracts with KMP may be terminated early by either party providing between three and six
months written notice or providing payments in lieu of the notice period (based on fixed component of
remuneration). On termination notice by Paladin, 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.
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Paladin Energy Ltd
34
Directors’ Report (continued)
REMUNERATION REPORT (audited) (continued)
CONTRACTS FOR SERVICES (continued)
Mr Ian Purdy, Chief Executive Officer (appointed 4 February 2020)
Term of agreement – no fixed term.
Base salary, (plus statutory superannuation entitlements), of A$500,000.
Long term incentive: Mr. Purdy was granted 25,000,000 Performance Rights upon appointment, under
Paladin’s Employee Performance Share Rights Plan, on 5 February 2020, as follows:-
Date granted
5 February 2020
5 February 2020
5 February 2020
5 February 2020
Total
Expiry date
5 February 2025
5 February 2025
5 February 2025
5 February 2025
Fair value
A$0.038
A$0.038
A$0.038
A$0.038
Vesting price
A$0.20
A$0.30
A$0.40
A$0.50
Number
6,250,000
6,250,000
6,250,000
6,250,000
25,000,000
No termination benefit is specified in the agreement.
Notice period six months.
Mr Scott Sullivan, Chief Executive Officer (ceased employment 3 March 2020)
Term of agreement – no fixed term.
Base salary, inclusive of superannuation of A$406,400 (2019: A$400,000).
Short term incentive/bonus: up to a maximum of 50% of the total annual remuneration package, to be
paid in cash and determined having regard to market relativities, the performance of the Company and
Mr Sullivan’s performance.
Long term incentive: Mr Sullivan was issued 5,000,000 Share Appreciation Rights (SARs) on 1 July
2018 under Paladin’s Employee Performance Share Rights Plan. The SARs had an exercise price of
A$0.1775 and were to vest in accordance with the following vesting conditions:
• 1,000,000 vested on 1 July 2019
• 1,000,000 to vest on 1 July 2020
• 1,000,000 to vest on 1 July 2021
• 2,000,000 to vest on 1 July 2022 provided the Langer Heinrich Mine has restarted production.
Long term incentive: Mr Sullivan was issued 1,000,000 Share Appreciation Rights (SARs) on 1
October 2019 under Paladin’s Employee Performance Share Rights Plan. The SARs had an exercise
price of A$0.12 were to in accordance with the following vesting conditions:
• 500,000 to vest on 1 October 2020
• 250,000 to vest on 1 October 2021
• 250,000 to vest on 1 October 2022
All the above SARs issued in 2018 and 2019 have lapsed, unexercised.
No termination benefit is specified in the agreement.
Notice period six months.
Mr Michael Drake, Chief Operating Officer (resigned 3 July 2020)
Term of agreement – no fixed term.
Base salary, inclusive of superannuation of A$330,000.
Short term incentive/bonus: up to a maximum of 40% of the total annual remuneration package, to be
paid in cash or shares in Paladin (or a combination of both at Paladin’s election) and determined
having regard to market relativities, the performance of the Company and Mr Drake’s performance.
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35
Directors’ Report (continued)
REMUNERATION REPORT (audited) (continued)
CONTRACTS FOR SERVICES (continued)
Long term incentive: Mr Drake was issued 2,500,000 Share Appreciation Rights (SARs) on
11 February 2019 under Paladin’s Employee Performance Share Rights Plan. The SARs had an
exercise price of A$0.20 were to vest in accordance with the following vesting conditions:
• 700,000 vested on 1 March 2020
• 700,000 will vest on 1 March 2021 (now lapsed due to resignation)
• 1,100,000 will vest on 1 March 2022 (now lapsed due to resignation)
No termination benefit is specified in the agreement.
Notice period three months.
Ms Anna Sudlow, Chief Financial Officer (appointed 1 July 2019)
Term of agreement – no fixed term.
Base salary, inclusive of superannuation of A$320,000.
Long term incentive: Ms. Sudlow was issued 2,500,000 Share Appreciation Rights (SARs) on 1 July
2019 under Paladin’s Employee Performance Share Rights Plan. The SARs have an exercise price of
A$0.1226 and will vest in accordance with the following vesting conditions:
• 700,000 vested on 1 July 2020
• 700,000 will vest on 1 July 2021
• 1,100,000 will vest on 1 July 2022
Long term incentive: Ms. Sudlow was granted 10,000,000 Performance Rights, under Paladin’s
Employee Performance Share Rights Plan, on 30 April 2020, as follows:-
Date granted
30 April 2020
30 April 2020
30 April 2020
30 April 2020
Total
Expiry date
12 June 2025
12 June 2025
12 June 2025
12 June 2025
Fair value
A$0.05
A$0.05
A$0.05
A$0.05
Vesting price
A$0.20
A$0.30
A$0.40
A$0.50
Number
2,500,000
2,500,000
2,500,000
2,500,000
10,000,000
No termination benefit is specified in the agreement.
Notice period six months.
Remuneration for all parties referred to above includes provision of an initial and ongoing discretionary
participation in Paladin’s long-term incentive plans.
1,700,000 (2019: 605,500) Share Appreciation Rights vested to Key Management Personnel during
the year ended 30 June 2020. No (2019: Nil) Share Appreciation Rights were exercised during the
year ended 30 June 2020.
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Paladin Energy Ltd
36
Directors’ Report (continued)
TOTAL PERFORMANCE RIGHTS
The outstanding balance of Performance Rights at 30 June 2020 are as follows:
Date granted
5 February 2020
5 February 2020
5 February 2020
5 February 2020
30 April 2020
30 April 2020
30 April 2020
30 April 2020
Total
Expiry date
5 February 2025
5 February 2025
5 February 2025
5 February 2025
12 June 2025
12 June 2025
12 June 2025
12 June 2025
Fair value
A$0.038
A$0.038
A$0.038
A$0.038
A$0.05
A$0.05
A$0.05
A$0.05
Vesting price
A$0.20
A$0.30
A$0.40
A$0.50
A$0.20
A$0.30
A$0.40
A$0.50
Number
9,750,000
9,750,000
9,750,000
9,750,000
2,500,000
2,500,000
2,500,000
2,500,000
49,000,000
In summary, this balance represents 2.42% of the issued capital.
TOTAL SHARE APPRECIATION RIGHTS
The outstanding balance of Share Appreciation Rights at 30 June 2020 are as follows:
Date granted
Exercisable date
1 November 2016
1 November 2017
1 November 2018
1 November 2016
1 November 2017
1 November 2018
20 October 2015
20 October 2015
20 October 2015
3 March 2016
3 March 2016
3 March 2016
27 September 2016 11 November 2017
27 September 2016 11 November 2018
27 September 2016 11 November 2019
16 April 2018
16 April 2018
16 April 2018
11 February 2019
11 February 2019
11 February 2019
1 July 2019
1 July 2019
1 July 2019
1 October 2019
1 October 2019
1 October 2019
Total
16 April 2018
16 April 2019
16 April 2020
1 March 2020
1 March 2021
1 March 2022
1 July 2020
1 July 2021
1 July 2022
1 October 2020
1 October 2021
1 October 2022
Expiry date
Exercise
price
Fair
value
1 November 2021
A$0.13 A$0.20
1 November 2022
A$0.13 A$0.20
1 November 2023
A$0.13 A$0.20
1 November 2021
A$0.10 A$0.20
1 November 2022
A$0.10 A$0.20
A$0.10 A$0.20
1 November 2023
11 November 2022 A$0.08 A$0.20
11 November 2023 A$0.08 A$0.20
11 November 2024 A$0.08 A$0.20
A$0.17 A$0.15
16 April 2023
A$0.05 A$0.15
16 April 2024
A$0.07 A$0.15
16 April 2025
A$0.05 A$0.20
1 March 2025
A$0.07 A$0.20
1 March 2026
A$0.09 A$0.20
1 March 2027
A$0.05 A$0.1226
1 July 2025
A$0.06 A$0.1226
1 July 2026
A$0.07 A$0.1226
1 July 2027
A$0.03 A$0.12
1 October 2025
A$0.04 A$0.12
1 October 2026
A$0.05 A$0.12
1 October 2027
Number
918,750
459,375
459,375
50,000
25,000
25,000
269,000
269,000
269,000
1,326,250
663,125
663,125
700,000
700,000
1,100,000
700,000
700,000
1,100,000
1,312,500
656,250
656,250
13,022,000
In summary, this balance represents 0.64% of the issued capital.
No shares were issued on the exercise of Share Appreciation Rights during the year ended 30 June
2020.
End of audited Remuneration Report
DIRECTORS’ INDEMNITIES
During the year Paladin 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 Paladin 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.
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Paladin Energy Ltd
37
Directors’ Report (continued)
INDEMINIFICATION OF AUDITORS
the extent permitted by
To
its auditors,
PricewaterhouseCoopers, as part of the terms of its audit engagement agreement against claims by
third parties arising from the audit (for an unspecified amount). The Directors of Paladin Energy
Limited have not provided PricewaterhouseCoopers with any indemnities. No payment has been
made to indemnify PricewaterhouseCoopers during or since the financial year.
law, Paladin has agreed
indemnify
to
ROUNDING
The amounts contained in this report, the Financial Report and the Operating and Financial Review
have been rounded to the nearest US$1,000 (where rounding is applicable) under the option available
to Paladin under ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191.
Paladin is an entity to which the Instrument applies.
TOTAL PERFORMANCE RIGHTS
The outstanding balance of Performance Rights at the date of this report are as follows:
Date granted
5 February 2020
5 February 2020
5 February 2020
5 February 2020
30 April 2020
30 April 2020
30 April 2020
30 April 2020
Total
Expiry date
5 February 2025
5 February 2025
5 February 2025
5 February 2025
12 June 2025
12 June 2025
12 June 2025
12 June 2025
Fair value
A$0.038
A$0.038
A$0.038
A$0.038
A$0.05
A$0.05
A$0.05
A$0.05
Vesting price
A$0.20
A$0.30
A$0.40
A$0.50
A$0.20
A$0.30
A$0.40
A$0.50
Number
9,750,000
9,750,000
9,750,000
9,750,000
2,500,000
2,500,000
2,500,000
2,500,000
49,000,000
TOTAL SHARE APPRECIATION RIGHTS
The outstanding balance of Share Appreciation Rights at the date of this report are as follows:
Date granted
Exercisable date
1 November 2016
1 November 2017
1 November 2018
1 November 2016
1 November 2017
1 November 2018
20 October 2015
20 October 2015
20 October 2015
3 March 2016
3 March 2016
3 March 2016
27 September 2016 11 November 2017
27 September 2016 11 November 2018
27 September 2016 11 November 2019
16 April 2018
16 April 2018
16 April 2018
11 February 2019
11 February 2019
11 February 2019
1 July 2019
1 July 2019
1 July 2019
1 October 2019
1 October 2019
1 October 2019
Total
16 April 2018
16 April 2019
16 April 2020
1 March 2020
1 March 2021
1 March 2022
1 July 2020
1 July 2021
1 July 2022
1 October 2020
1 October 2021
1 October 2022
Expiry date
Exercise
price
Fair
value
A$0.13 A$0.20
1 November 2021
A$0.13 A$0.20
1 November 2022
A$0.13 A$0.20
1 November 2023
A$0.10 A$0.20
1 November 2021
A$0.10 A$0.20
1 November 2022
1 November 2023
A$0.10 A$0.20
11 November 2022 A$0.08 A$0.20
11 November 2023 A$0.08 A$0.20
11 November 2024 A$0.08 A$0.20
A$0.17 A$0.15
16 April 2023
A$0.05 A$0.15
16 April 2024
A$0.07 A$0.15
16 April 2025
A$0.05 A$0.20
1 March 2025
A$0.07 A$0.20
1 March 2026
A$0.09 A$0.20
1 March 2027
A$0.05 A$0.1226
1 July 2025
A$0.06 A$0.1226
1 July 2026
A$0.07 A$0.1226
1 July 2027
A$0.03 A$0.12
1 October 2025
A$0.04 A$0.12
1 October 2026
A$0.05 A$0.12
1 October 2027
Number
918,750
459,375
459,375
50,000
25,000
25,000
269,000
269,000
269,000
1,326,250
663,125
663,125
700,000(1)
700,000(1)
1,100,000(1)
700,000
700,000
1,100,000
1,312,500
656,250
656,250
13,022,000
(1) Michael Drake – now lapsed due to resignation. Will be cancelled during FY2021.
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Paladin Energy Ltd
38
Directors’ Report (continued)
AUDITOR
PricewaterhouseCoopers were appointed auditors for Paladin by shareholders at the 2016 Annual
General Meeting on 18 November 2016.
NON-AUDIT SERVICES
During
the year, non-audit and assurance services were provided by Paladin’s auditor,
PricewaterhouseCoopers. 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.
Details of amounts paid or payable to PricewaterhouseCoopers can be found in Note 28.
LEAD AUDITOR’S INDEPENDENCE DECLARATION
The Lead Auditor’s Independence Declaration is set out on page 40 of the Financial Report.
Dated this 28 day of August 2020
Signed in accordance with a resolution of the Directors
Cliff Lawrenson
Chairman
Perth, Western Australia
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39
Auditor’s Independence Declaration
As lead auditor for the audit of Paladin Energy Limited for the year ended 30 June 2020, I declare that
to the best of my knowledge and belief, there have been:
(a)
no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit, and
(b)
no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Paladin Energy Limited and the entities it controlled during the
period.
Justin Carroll
Partner
PricewaterhouseCoopers
Perth
28 August 2020
PricewaterhouseCoopers, ABN 52 780 433 757
Brookfield Place, 125 St Georges Terrace, PERTH WA 6000, GPO Box D198, PERTH WA 6840
T: +61 8 9238 3000, F: +61 8 9238 3999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
Financial Report
For the year ended 30 June 2020
Contents of the Financial Report
Consolidated Income Statement ......................................................................................42
Consolidated Statement of Comprehensive Income .........................................................43
Consolidated Statement of Financial Position ..................................................................44
Consolidated Statement of Changes in Equity ..................................................................45
Consolidated Statement of Cash Flows ............................................................................46
Notes to the Consolidated Financial Statements ..............................................................47
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41
Consolidated Income Statement
For the year ended 30 June 2020
Revenue
Revenue
Cost of sales
Gross profit
Other income
Administration, marketing and non-production
costs
Loss before interest and tax
Finance costs
Net loss before income tax from continuing
operations
Income tax expense
Notes
2020
US$’000
2019
US$’000
11
12
12
12
12
13
-
-
-
10,306
(31,477)
(21,171)
(24,880)
21,491
(16,951)
4,540
1,028
(32,190)
(26,622)
(22,500)
(46,051)
(49,122)
-
-
Net loss after tax from continuing operations
(46,051)
(49,122)
(Loss)/profit after
operations
tax
from discontinued
19
(46,401)
6,130
Net loss after tax
Attributable to:
Non-controlling interests
Members of the parent
Net loss after tax
Loss per share (US cents)
(92,452)
(42,992)
(12,586)
(79,866)
(92,452)
(12,647)
(30,345)
(42,992)
Loss after tax from operations attributable to
ordinary equity holders of the Company
– continuing operations, basic and diluted
(US cents)
– discontinued operations, basic and diluted
(US cents)
14
14
(1.7)
(2.4)
(1.7)
0.4
The above Consolidated Income Statement should be read in conjunction with the accompanying
notes.
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42
Consolidated Statement of Comprehensive Income
For the year ended 30 June 2020
Net loss after tax
Other comprehensive income
Items that may be subsequently reclassified to
profit or loss:
Foreign currency translation
Revaluation of financial assets
Income tax on items of other comprehensive income
Items that will not be subsequently reclassified
to profit or loss:
Foreign currency translation attributable to non-
controlling interests
2020
US$’000
2019
US$’000
(92,452)
(42,992)
(1,254)
(1,247)
2,233
-
-
-
-
(242)
Other comprehensive profit/(loss) for the year, net of tax
979
(1,489)
Total comprehensive loss for the year
(91,473)
(44,481)
Total comprehensive loss attributable to:
Non-controlling interests
Members of the parent
(12,586)
(78,887)
(12,889)
(31,592)
(91,473)
(44,481)
The above Consolidated Statement of Comprehensive Income should be read in conjunction with the
accompanying notes.
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Paladin Energy Ltd
43
Consolidated Statement of Financial Position
As at 30 June 2020
Notes
2020
US$’000
2019
US$’000
ASSETS
Current assets
Cash and cash equivalents
Restricted cash
Trade and other receivables
Prepayments
Inventories
Assets classified as held for sale
TOTAL CURRENT ASSETS
Non-current assets
Trade and other receivables
Non-current financial assets
Right-of-use assets
Property, plant and equipment
Mine development
Exploration and evaluation expenditure
Intangible assets
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
LIABILITIES
Current liabilities
Trade and other payables
Lease liabilities
Provisions
Unearned revenue
Liabilities classified as held for sale
TOTAL CURRENT LIABILITIES
Non-current liabilities
Interest bearing loans and borrowings
Other Interest bearing loans - CNNC
Provisions
TOTAL NON-CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Contributed equity
Reserves
Accumulated losses
Parent interests
Non-controlling interests
TOTAL EQUITY
6a
6b
17
18
19
17
20
21
22
23
24
25
26
19
7
8
26
9
9
34,237
1,000
1,116
1,222
5,132
-
25,360
1,023
1,017
1,224
5,363
10,829
42,707
44,816
5,512
4,328
215
190,889
18,548
93,369
8,831
338
-
-
206,599
22,958
90,523
9,462
321,692
329,880
364,399
374,696
1,541
215
522
3
-
2,350
-
697
146
42,394
2,281
45,587
134,394
102,638
32,087
118,149
98,264
36,058
269,119
252,471
271,400
298,058
92,999
76,638
2,327,789
(70,269)
(2,104,132)
153,388
(60,389)
2,306,925
(71,598)
(2,025,649)
209,678
(133,040)
92,999
76,638
The above Consolidated Statement of Financial Position should be read in conjunction with the
accompanying notes.
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Paladin Energy Ltd
44
Consolidated Statement of Changes in Equity
For the year ended 30 June 2020
Contributed
Equity
(Note 9)
US$’000
Reserves
(Note 9)
US$’000
Accumulated
Losses
US$’000
Attributable
to Owners of
the Parent
US$’000
Non-Controlling
Interests
Total
US$’000
US$’000
Balance at 1 July 2018
2,301,286
(62,769)
(2,002,644)
Loss for the period
Other comprehensive loss
Total comprehensive loss for the year net of tax
SARS exercised
Share-based payment
Acquisition of 17.92% interest in Summit Resources
Ltd
Summit Resources Ltd change in functional currency
Earn in of 5% share of Michelin Project
Acquisition of control of Michelin Project
-
-
-
90
-
5,549
-
-
-
-
(30,345)
(1,247)
(1,247)
-
26
(1,652)
(5,956)
-
-
-
(30,345)
-
-
-
5,952
1,388
-
Balance at 30 June 2019
2,306,925
(71,598)
(2,025,649)
Loss for the period
Other comprehensive income
Total comprehensive income/(loss)
for the year net of tax
Share-based payment
Capital raising
Sale of Paladin Africa Ltd
Earn in of 5% share of Michelin Project
-
-
-
-
20,864
-
-
-
979
979
350
-
-
-
(79,866)
-
235,873
(30,345)
(1,247)
(31,592)
90
26
3,897
(4)
1,388
-
209,678
(79,866)
979
(129,113)
106,760
(12,647)
(242)
(42,992)
(1,489)
(12,889)
(44,481)
-
-
(3,897)
-
(1,388)
14,247
(133,040)
90
26
-
(4)
-
14,247
76,638
(12,586)
(92,452)
-
979
(79,866)
(78,887)
(12,586)
(91,473)
-
-
-
1,383
350
20,864
-
1,383
-
-
86,620
(1,383)
350
20,864
86,620
-
Balance at 30 June 2020
2,327,789
(70,269)
(2,104,132)
153,388
(60,389)
92,999
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
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Paladin Energy Ltd
45
Consolidated Statement of Cash Flows
For the year ended 30 June 2020
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers
Payments to suppliers and employees
Exploration and evaluation expenditure
Other income
Proceeds from assignment of royalty interest
Interest received
Interest and other costs of finance paid
NET CASH OUTFLOW FROM OPERATING
ACTIVITIES
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for property, plant and equipment
Proceeds from sale of property, plant & equipment
Capitalised exploration expenditure
LHM restart study costs
Proceeds from sale of subsidiary
Notes
2020
US$’000
2019
US$’000
-
(13,628)
(4)
409
1,357
435
(47)
22,467
(35,950)
(16)
314
-
380
-
15
(11,478)
(12,805)
(273)
39
(1,014)
(3,059)
4,000
(50)
402
(1,303)
-
-
NET CASH OUTFLOW FROM INVESTING ACTIVITIES
(307)
(951)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares
Equity fundraising costs
Subsidiary sale consent fee to Noteholders and other
selling costs
NET CASH INFLOW FROM FINANCING ACTIVITIES
NET INCREASE/(DECREASE) IN CASH AND CASH
EQUIVALENTS
Unrestricted cash and cash equivalents at the
beginning of the financial year
Effects of exchange rate changes on cash
and cash equivalents
Cash and cash equivalents transferred to
‘Assets Classified as Held for Sale’
21,664
(800)
(1,142)
19,722
-
-
-
-
7,937
(13,756)
25,360
39,166
940
-
32
(82)
UNRESTRICTED CASH AND CASH EQUIVALENTS
AT THE END OF THE FINANCIAL YEAR
6a
34,237
25,360
The above Consolidated Statement of Cash Flows should be read in conjunction with the
accompanying notes. Non cash investing and financing activities are disclosed in Note 16.
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Paladin Energy Ltd
46
Notes to the Consolidated Financial Statements
For the year ended 30 June 2020
BASIS OF PREPARATION ..................................................................................................... 48
Corporate Information ....................................................................................... 48
Note 1.
Structure of the Financial Report ....................................................................... 48
Note 2.
Basis of Preparation .......................................................................................... 48
Note 3.
Note 4.
Going Concern .................................................................................................. 51
SEGMENT INFORMATION ..................................................................................................... 52
Segment Information ......................................................................................... 52
Note 5.
CAPITAL STRUCTURE ........................................................................................................... 55
Cash and Cash Equivalents .............................................................................. 55
Note 6a.
Restricted Cash ................................................................................................. 55
Note 6b
Interest Bearing Loans and Borrowings ............................................................. 56
Note 7.
Other Interest Bearing Loans - CNNC ............................................................... 57
Note 8.
Contributed Equity and Reserves ...................................................................... 58
Note 9.
Financial Risk Management .............................................................................. 61
Note 10.
PERFORMANCE FOR THE YEAR .......................................................................................... 66
Revenue ............................................................................................................ 66
Note 11.
Income and Expenses ....................................................................................... 67
Note 12.
Income and Other Taxes ................................................................................... 68
Note 13.
Earnings Per Share ........................................................................................... 70
Note 14.
Reconciliation of Earnings After Income Tax to Net Cash
Note 15.
Flow from Operating Activities ........................................................................... 71
Note 16
Non-Cash Investing and Financing Activities ..................................................... 71
OPERATING ASSETS AND LIABILITIES ............................................................................... 72
Trade and Other Receivables ............................................................................ 72
Note 17.
Inventories ........................................................................................................ 73
Note 18.
Discontinued Operations and Assets and Liabilities Classified as held for sale .. 74
Note 19.
Non Current Financial Assets ............................................................................ 76
Note 20.
Property, Plant and Equipment .......................................................................... 77
Note 21.
Mine Development ............................................................................................ 79
Note 22.
Exploration and Evaluation Expenditure ............................................................ 80
Note 23.
Intangible Assets ............................................................................................... 81
Note 24.
Trade and Other Payables ................................................................................ 82
Note 25.
Note 26.
Provisions ......................................................................................................... 83
OTHER NOTES ....................................................................................................................... 85
Key Management Personnel ............................................................................. 85
Note 27.
Auditors’ Remuneration ..................................................................................... 85
Note 28.
Commitments and Contingencies ...................................................................... 86
Note 29.
Related Parties .................................................................................................. 87
Note 30.
Group Information ............................................................................................. 87
Note 31.
Events after the Balance Date ........................................................................... 88
Note 32.
New Accounting Standards and Interpretations ................................................. 89
Note 33.
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Paladin Energy Ltd
47
Notes to the Consolidated Financial Statements (continued)
For the year ended 30 June 2020
BASIS OF PREPARATION
NOTE 1.
CORPORATE INFORMATION
The Financial Report of Paladin Energy Ltd (Paladin) for the year ended 30 June 2020 was authorised
for issue by the Directors on 28 August 2020.
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 Munich, Berlin, Stuttgart and Frankfurt Stock
Exchanges in Europe; and the Namibian Stock Exchange in Africa.
The Group’s principal place of business is Level 4, 502 Hay Street, Subiaco, Western Australia. The
nature of the operations and principal activities of the Group are described in the Operating and
Financial Review (unaudited) on pages 6 to 8.
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.
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.
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48
Notes to the Consolidated Financial Statements (continued)
For the year ended 30 June 2020
NOTE 3. BASIS OF PREPARATION (continued)
Introduction and Statement of Compliance (continued)
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. 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.
The Financial Report is presented in US dollars and all values are rounded to the nearest thousand
dollars (US$1,000) unless otherwise stated under the option available to the Company under
Australian Securities and
in
Financial/Directors’ Reports) Instrument 2016/191.
Investments Commission
(ASIC) Corporations
(Rounding
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 2019.
Certain prior year amounts have been reclassified for consistency with the current year presentation.
These reclassifications had no effect on the report results of the Group.
The Group has adopted all new and amended Australian Accounting Standards and AASB
Interpretations effective from 1 July 2019. The nature and impact of each new standard and
amendment is described below:
Reference
Summary
Impact
AASB 16
Leases
AASB 16 will primarily affect the
accounting by lessees and will result
in the recognition of almost all leases
on the balance sheet. The standard
removes the current distinction
between operating and financing
leases and requires recognition of an
asset (the right to use the leased item)
and a financial liability to pay rentals
for almost all lease contracts. The
accounting by lessors, however, will
not significantly change.
The group has adopted AASB 16 retrospectively from 1 July
2019, but has not restated comparatives for the 2018
reporting period, as permitted under the specific transitional
provisions in the standard. The reclassifications and the
adjustments arising from the new leasing rules are therefore
recognised in the opening balance sheet on 1 July 2019.
On adoption of AASB 16, the group recognised lease
liabilities in relation to leases which had previously been
classified as ‘operating leases’ under the principles of AASB
117 Leases. These liabilities were measured at the present
value of the remaining lease payments, discounted using
the lessee’s incremental borrowing rate as of 1 July 2019.
The right-of-use assets for property leases were measured
at the amount equal to the lease liability, adjusted by the
amount of any prepaid or accrued lease payments relating
to that lease recognised in the balance sheet as at 30 June
2019.
The change in accounting policy affected the following items
in the balance sheet on 1 July 2019:
· right-of-use assets – increased by US$575,000
· lease liabilities (current) – increased by US$(269,000)
· lease liabilities (non-current) – increased by US$(306,000)
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Paladin Energy Ltd
49
Notes to the Consolidated Financial Statements (continued)
For the year ended 30 June 2020
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 2020 (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; and
• 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.
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).
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.
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Paladin Energy Ltd
50
Notes to the Consolidated Financial Statements (continued)
For the year ended 30 June 2020
NOTE 3. BASIS OF PREPARATION (continued)
Foreign Currency Translation (continued)
Group Companies
Some Group entities have a functional currency of US dollars which is consistent with the Group’s
presentational currency. For all other Group entities the functional currency has been translated into
US dollars for presentation purposes. Assets and liabilities are translated using exchange rates
prevailing at the balance 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 functional currency of individual subsidiaries reflects their operating environment.
Following Paladin’s acquisition of the outstanding shares in Summit Resources Ltd and its subsequent
delisting from the ASX, the functional currency of the Summit group of companies was changed to
United States dollars from Australian dollars in line with the Paladin Energy Group. The decision was
made by management to change the entity’s functional currency to one which most faithfully
represents the economic effects of the underlying transactions, events and conditions that are relevant
to the Company.
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.
NOTE 4. GOING CONCERN
The financial statements have been prepared on the basis of accounting policies applicable to a going
concern. This basis presumes that funds will be available to finance future operations and that the
realisation of assets and settlement of liabilities, contingent obligations and commitments will occur in
the ordinary course of business.
The Group incurred a net loss after tax from continuing operations of US$46,051,000 (30 June 2019:
loss US$49,122,000) for the year ended 30 June 2020 and a net cash outflow from operating activities
of US$11,478,000 (30 June 2019: outflow US$12,805,000). As at 30 June 2020, the Group had a net
current asset surplus of US$40,426,000 (30 June 2019: surplus US$41,414,000, excluding non-
current Kayelekera Mine (KM) environmental rehabilitation provision of US$42,185,000 disclosed as
part of liabilities directly associated with assets classified as held for sale). The Group has unrestricted
cash of US$34,237,000 (30 June 2019: US$25,360,000).
During the next twelve months, there are currently no repayment obligations in respect of interest
bearing loans and borrowings of US$134,394,000 and the Group has a number of options available to
it to obtain sufficient funding to repay the notes by their maturity in 2023. These options include: the
sale of Group assets; raising new financing and/or renegotiating the tenure or terms of the senior
secured notes or raising additional equity.
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Paladin Energy Ltd
51
Notes to the Consolidated Financial Statements (continued)
For the year ended 30 June 2020
NOTE 4. GOING CONCERN (continued)
As a result of these matters, there is a material uncertainty that may cast significant doubt on the
entity's ability to continue as a going concern and, therefore, that the entity may be unable to realise its
assets and discharge its liabilities in the normal course of business. The financial report does not
include adjustments relating to the recoverability or classification of the recorded assets nor to the
amounts or classification of liabilities that might be necessary should the Company not be able to
continue as a going concern.
The Directors are satisfied that it is appropriate to prepare the financial statements on a going concern
basis on the basis that the above can be reasonably expected to be accomplished.
SEGMENT INFORMATION
NOTE 5.
SEGMENT INFORMATION
Identification of Reportable Segments
The Company has identified its operating segments to be Exploration, Namibia, Malawi and Australia,
on the basis of the nature of the activity and geographical location and different regulatory
environments. The main segment activity in Namibia(1) and Malawi(2) is the production and sale of
uranium from the mines located in this country’s geographic regions. The Australian segment includes
the Company’s sales and marketing, treasury, corporate and administration and also includes revenue
from stock purchased to fulfil a sales order. The Exploration(3) segment is focused on developing
exploration and evaluation projects in Australia and Canada.
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.
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 Australia.
(1)
In May 2018, the Company received the consent of relevant stakeholders to place LHM into care
and maintenance and LHM stopped presenting ore to the plant.
(2) On 13 March 2020, the Company completed the sale of its 85% interest in Paladin (Africa) Ltd to
(3)
Lotus Resources Limited (Lotus) (65%) and Lily Resources Pty Ltd (Lily) (20%).
In FY2020, the Company has only undertaken the work required to meet minimum tenement
commitments.
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Paladin Energy Ltd
52
Notes to the Consolidated Financial Statements (continued)
For the year ended 30 June 2020
NOTE 5. SEGMENT INFORMATION (continued)
The following table’s present revenue, expenditure and asset information regarding operating
segments for the years ended 30 June 2020 and 30 June 2019.
Year ended
30 June 2020
Sales to external customers
Total consolidated revenue
Cost of sales
Gross profit
Other income
Other expenses
Segment (loss)/profit before income
tax and finance costs
Exploration
US$’000
-
-
-
-
-
Namibia
US$’000
-
-
-
-
7,578
(4)
(24,274)
(4)
(16,696)
Finance costs
-
(7,447)
(Loss)/profit before income tax
(4)
(24,143)
Malawi
US$’000
-
-
-
-
-
-
-
-
-
Australia
US$’000
-
-
Consolidated
US$’000
-
-
-
-
-
-
2,728
10,306
(7,199)
(31,477)
(4,471)
(21,171)
(17,433)
(24,880)
(21,904)
(46,051)
Income tax expense
-
-
-
-
-
-
Net loss after tax from continuing operations
(4)
(24,143)
-
(21,904)
(46,051)
Loss after tax from discontinued operations
-
-
(46,401)
-
(46,401)
Net loss after tax
(4)
(24,143)
(46,401)
(21,904)
(92,452)
At 30 June 2020
Segment assets/total assets
90,952
229,042
-
44,405(1)
364,399
Australia
US$’000
Canada
US$’000
Namibia
US$’000
Other
US$’000
Consolidated
US$’000
Non-current assets (excluding financial
instruments) by country
68,817
28,105
220,442
-
317,364
Additions to non-current assets by country
Property, Plant and Equipment
Exploration and Evaluation Expenditure
245
578
56
436
-
3,059
-
301
- 4,073
(1) Includes US$32,620,000 in cash and cash equivalents.
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Paladin Energy Ltd
53
Notes to the Consolidated Financial Statements (continued)
For the year ended 30 June 2020
NOTE 5. SEGMENT INFORMATION (continued)
Year ended
30 June 2019
Sales to external customers
Total consolidated revenue
Cost of sales
Gross profit
Other income
Exploration
US$’000
-
-
-
-
-
Namibia
US$’000
6,573
6,573
(5,157)
1,416
Malawi
US$’000
-
-
-
-
Australia
US$’000
14,918(3)
14,918
Consolidated
US$’000
21,491
21,491
(11,794)
(16,951)
669
571
359
3,124
4,540
1,599
Other expenses
(16)
(26,009)
(4,906)
(6,165)
(37,096)
Change in estimate of mine
closure provision
Segment (loss)/profit before income
tax and finance costs
-
-
10,465
-
10,465
(16)
(23,924)
6,130
(2,682)
(20,492)
Finance costs
-
(8,235)
-
(14,265)
(22,500)
(Loss)/profit before income tax
(16)
(32,159)
6,130
(16,947)
(42,992)
Income tax expense
-
-
-
-
-
Net (loss)/profit after tax
(16)
(32,159)
6,130
(16,947)
(42,992)
At 30 June 2019
Segment assets/total assets
91,334
249,727
10,829(1)
22,806(2)
374,696
Australia
US$’000
Canada
US$’000
Namibia
US$’000
Other
US$’000
Consolidated
US$’000
Non-current assets (excluding financial
instruments) by country
62,773
28,956
238,151
Additions to non-current assets by country
Property, Plant and Equipment
Exploration and Evaluation Expenditure
50
2
639 664
-
-
-
-
-
329,880
52
1,303
In 2019, the two most significant customers equated on a proportionate basis to 69% (US$14,948,250
Taiwan) and 31% (US$6,578,598 China) of the Group’s total sales revenue.
(1) Includes US$10,220,000 Kayelekera Performance Bond (restricted cash).
(2) Includes US$21,587,000 in cash and cash equivalents.
(3) During the year, the Groups parent company, Paladin Energy Ltd purchased stock to fulfil a sales
order.
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Paladin Energy Ltd
54
Notes to the Consolidated Financial Statements (continued)
For the year ended 30 June 2020
CAPITAL STRUCTURE
The group's objectives when managing capital are to safeguard its ability to continue as a going
concern, so that it can continue to provide returns to shareholders and benefits for other stakeholders
and to maintain an efficient capital structure to reduce the cost of capital. Capital includes issued
capital and all other equity reserves attributable to the equity holders of the parent.
In order to maintain or adjust the capital structure, the group may issue new shares or sell assets to
reduce debt.
The group monitors capital on the basis of the level of return on capital and also the level of net
cash/debt. The group manages funds on a group basis with all funds being drawn by the parent entity.
NOTE 6a. CASH AND CASH EQUIVALENTS
Cash at bank and on hand
Short-term bank deposits
Total cash and cash equivalents
NOTE 6b. RESTRICTED CASH
Restricted cash at bank
Total restricted cash and cash equivalents
2020
US$’000
2019
US$’000
5,264
28,973
7,297
18,063
34,237
25,360
1,000
1,000
1,023
1,023
The cash is restricted for use in respect of environmental and supplier guarantees provided by LHM.
Recognition and measurement
Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions,
other short-term, highly liquid investments with original maturities of three months or less that are
readily convertible to known amounts of cash and which are subject to an insignificant risk of changes
in value, and bank overdrafts. Cash at bank earns interest at floating rates based on daily bank
deposit rates. Short-term deposits are made for varying periods depending on the immediate cash
requirements of the Group and earn interest at the respective short-term deposit rates.
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Paladin Energy Ltd
55
Notes to the Consolidated Financial Statements (continued)
For the year ended 30 June 2020
NOTE 7.
INTEREST BEARING LOANS AND BORROWINGS
Maturity
2020
US$’000
2019
US$’000
Non-Current
Senior secured notes(1)
2023
134,394
118,149
Total non-current interest bearing loans and borrowings
134,394
118,149
Senior secured notes
Face value of senior secured notes issued
Equity component
Liability component on initial recognition
Transaction costs
Accretion expense
Capitalised interest
Liability component at 30 June
Fair value disclosures
115,000
(7,475)
107,525
(9,099)
5,222
30,746
134,394
115,000
(7,475)
107,525
(9,099)
2,545
17,178
118,149
Details of the fair value of the Group’s interest bearing liabilities are set out in Note 10.
Secured loans and borrowings
(1) On 25 January 2018, as part of the effectuation of the DOCA, the Company issued
US$115,000,000 9%/10% payment in kind (PIK) toggle senior secured notes repayable on
25 January 2023. The notes are secured by the majority of the Group’s assets, with the main
exceptions being the Group’s shares in Summit Resources Limited and the Canadian subsidiaries.
Subscribers for the notes received a pro-rata allocation of 25% of the Company’s issued shares.
The notes are not convertible and are listed on the Singapore Stock Exchange. The underwriters
of the notes received 3% of the Company’s issued shares.
PIK Interest on the notes accrues at a rate of 10% per annum and will be deferred on each interest
payment date commencing on 31 March 2018. No additional notes will be issued in respect of such
deferred PIK interest. Each amount of deferred PIK interest also bears interest at the rate of 10%
per annum from and including the date on which the payment was deferred. However Paladin shall
be required to pay cash interest (rather than PIK interest) at a rate of 9% per annum if (a) the
operating cash flows (determined in accordance with IFRS) minus maintenance capital expenditure
of Paladin and its subsidiaries (on an attributable basis) for the half-year immediately preceding
such interest payment date is no less than US$5,000,000 and (b) Paladin and its subsidiaries (on a
consolidated basis) have, after giving pro forma effect to such cash interest payment, no less than
US$50,000,000 of cash and cash equivalents (net of restricted cash) as of the last day falling 15
calendar days before the relevant interest payment date (31 March and 30 September).
Paladin may also elect to pay cash interest at a rate of 9% per annum on each payment date
commencing from 31 March 2018 for interest due in respect of any interest period except for the
final interest period, with respect to 25%, 50%, 75% or 100% of the applicable interest payment
(with the relevant balance being deferred PIK interest), even if Paladin is not required to pay cash
interest. All amounts of deferred PIK interest (and any interest accrued thereon) is due and
payable (in cash) when the notes are redeemed.
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56
Notes to the Consolidated Financial Statements (continued)
For the year ended 30 June 2020
NOTE 7.
INTEREST BEARING LOANS AND BORROWINGS (continued)
Recognition and measurement
Loans and borrowings are initially recognised at fair value, net of transaction costs incurred. Loans
and 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 secured notes that exhibits characteristics of debt is recognised as a liability in the
Statement of Financial Position, net of transaction costs. On issue of secured notes, 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.
NOTE 8. OTHER INTEREST BEARING LOANS - CNNC
Non-Current
LHM’s loans from CNNC
30 June
2020
US$’000
30 June
2019
US$’000
102,638
98,264
The increase in the loan balance during FY2020 is as a result of accrued interest.
As part of the sale of the 25% interest in LHM in 2014, US$96,000,000 (representing 25%) of the
intercompany shareholder loans owing by LHM to Paladin Finance Pty Ltd (PFPL) were assigned to
CNNC under the same interest rate (LIBOR plus a margin between 2% and 4.25%) and conditions as
those existing at the time.
Under the Shareholders’ Agreement between CNNC and PFPL, each shareholder has agreed not to
demand repayment without the prior written consent of the other shareholder. As neither CNNC nor
PFPL can demand repayment, the repayment of the loans can be deferred. Repayment is dependent
on LHM generating sufficient free cash flows to repay the loans and the loans have not been
guaranteed by Paladin.
On consolidation, PFPL’s 75% share of the LHM 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 LHM’s assets and liabilities, LHM's total liability of US$102,638,000 to CNNC is recognised
on the consolidated statement of financial position.
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Paladin Energy Ltd
57
Notes to the Consolidated Financial Statements (continued)
For the year ended 30 June 2020
NOTE 9.
CONTRIBUTED EQUITY AND RESERVES
Issued and Paid Up Capital
Number of Shares
2020
2019
2020
US$’000
2019
US$’000
Ordinary shares
Issued and fully paid
2,027,891,013 1,752,084,272
2,327,789
2,306,925
Fully paid ordinary shares carry one vote per share and carry the right to dividends.
Recognition and measurement
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new
shares are shown in equity as a deduction, net of tax, from the proceeds.
Movements in ordinary shares on issue
Date
Balance at 1 July 2018
September 2018
October 2018
November 2018
SARs exercised
Acquisition of Summit
Acquisition of Summit
Transfer from share-
based payment reserve
Number of
Shares
1,712,843,812
170,373
34,291,724
4,778,363
Issue
Price
A$
Exchange
Rate
US$: A$
-
0.20
0.20
-
1.39668
1.37493
Balance 30 June 2019
1,752,084,272
September 2019
October 2019
Share placement
Share Purchase Plan
Transaction costs
262,812,641
12,994,100
0.115
0.115
1.46333
1.48029
Balance 30 June 2020
2,027,891,013
Total
US$’000
2,301,286
-
4,854
695
90
2,306,925
20,654
1,010
(800)
2,327,789
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Paladin Energy Ltd
58
Notes to the Consolidated Financial Statements (continued)
For the year ended 30 June 2020
NOTE 9. CONTRIBUTED EQUITY AND RESERVES (continued)
Reserves
Consolidation
reserve
US$’000
Listed
option
application
reserve
US$’000
Share-
based
payments
reserve
US$’000
Foreign
currency
translation
reserve
US$’000
Financial
assets at
FVOCI
reserve
US$’000
Balance at 1 July 2018
48,319
137
47,926
(174,067)
Acquisition of 17.92% interest in
Summit Resources Ltd
Share-based payments
Foreign currency translation
-
-
-
-
-
-
-
26
-
-
-
(8,025)
Balance at 30 June 2019
48,319
137
47,952
(182,092)
Balance at 1 July 2019
48,319
137
47,952
(182,092)
-
-
-
-
-
-
Premium on
acquisition
reserve
Total
US$’000
US$’000
14,916
(62,769)
(830)
-
-
(830)
26
(8,025)
14,086
(71,598)
14,086
(71,598)
Share-based payments
Foreign currency translation
Revaluation of financial assets
-
-
-
-
-
-
351
-
-
-
(1,255)
-
-
-
2,233
-
-
-
351
(1,255)
2,233
Balance at 30 June 2020
48,319
137
48,303
(183,347)
2,233
14,086
(70,269)
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59
Notes to the Consolidated Financial Statements (continued)
For the year ended 30 June 2020
NOTE 9. CONTRIBUTED EQUITY AND RESERVES (continued)
Nature and Purpose of Reserves
Consolidation reserve
This reserve is the result of the difference between the fair value and the net assets of a reduction of
interest in controlled entities where Paladin retained control.
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.
Financial assets at fair value in other comprehensive income
This reserve records the changes in fair value of certain investments in equity securities in Other
Comprehensive Income. The group transfers amounts from this reserve to retained earnings when the
relevant equity securities are derecognised.
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.
Premium on acquisition reserve
This reserve represents the premium paid on the acquisition of an interest in Summit.
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Paladin Energy Ltd
60
Notes to the Consolidated Financial Statements (continued)
For the year ended 30 June 2020
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.
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 finance function manages the
purchase of foreign currency to meet operational requirements.
The financial instruments exposed to movements in the Australian dollar are as follows:
Financial assets
Cash and cash equivalents
Trade and other receivables
Non-current financial assets
Financial liabilities
Trade and other payables
Net exposure
2020
US$’000
2019
US$’000
4,627
321
4,328
238
373
-
9,276
611
(813)
(588)
8,463
23
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
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Paladin Energy Ltd
61
Notes to the Consolidated Financial Statements (continued)
For the year ended 30 June 2020
NOTE 10. FINANCIAL RISK MANAGEMENT (continued)
Market Risk (continued)
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
2020
US$’000
2019
US$’000
1,604
69
1,673
1,173
663
1,836
(98)
(178)
1,575
1,658
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.
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 rate movements are as follows:
Financial assets
Cash and cash equivalents – short-term deposits
Restricted cash
Financial liabilities
Interest-bearing liabilities
Net exposure
2020
US$’000
2019
US$’000
34,237
1,000
25,360
1,023
35,237
26,383
(102,638)
(98,264)
(67,401)
(71,881)
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 finance 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.
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Paladin Energy Ltd
62
Notes to the Consolidated Financial Statements (continued)
For the year ended 30 June 2020
NOTE 10. FINANCIAL RISK MANAGEMENT (continued)
The maturity profile of the Group’s payables based on contractual undiscounted payments is as
follows:
Payables maturity analysis
Total
<1 year
1-2 years
2-3 years
>3 years
2020
US$’000
US$’000
US$’000
US$’000
US$’000
Trade and other payables
Loans and borrowings
Deferred interest(1)
LHM’s loans from CNNC - principal
Interest payable on CNNC loans(1)
1,541
115,000
30,745
80,928
21,710
1,541
-
-
-
-
-
-
-
-
-
-
115,000
30,745
-
-
-
-
-
80,928
21,710
Total payables
(1) Paladin may elect to pay cash interest even if it is not required to pay cash interest, however interest
can be deferred and is not payable, unless certain cash flow and cash holding limits have been met.
Refer to detailed disclosure in Note 7 and Note 8.
249,924
102,638
145,745
1,541
-
2019
US$’000
US$’000
US$’000
US$’000 US$’000
Trade and other payables
Loans and borrowings
Deferred interest(1)
LHM’s loans from CNNC - principal
Interest payable on CNNC loans(1)
2,350
115,000
17,178
80,928
17,335
2,350
-
-
-
-
Total payables
232,791
2,350
-
-
-
-
-
-
-
-
-
-
-
-
-
115,000
17,178
80,928
17,335
230,441
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.
Cash and cash equivalents are also subject to the impairment requirements of AASB 9.
The maximum exposure to credit risk at the reporting date was a total of US$41,866,000 (2019
US$27,738,000), comprising cash and receivables.
Current
Cash and cash equivalents*
Restricted cash
Trade receivables
Other receivables – other entities
Non-Current
Other receivables – other entities
Total
2020
US$’000
2019
US$’000
34,237
1,000
-
1,116
25,360
1,023
-
1,017
36,353
27,400
5,513
338
41,866
27,738
* The Group’s maximum deposit with a single financial institution represents 77% (2019: 81%) of cash
and cash equivalents. This financial institution has a credit rating of Aa3 (2019: Aa3).
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Paladin Energy Ltd
63
Notes to the Consolidated Financial Statements (continued)
For the year ended 30 June 2020
NOTE 10. FINANCIAL RISK MANAGEMENT (continued)
Credit Risk (continued)
Receivables ageing analysis
Total
Current
>1 year
>1-2 year
>2 years
US$’000
US$’000
US$’000
US$’000
US$’000
2020
Trade receivables
Other receivables
-
6,629
-
1,116
Total receivables
6,629
1,116
2019
Trade receivables
Other receivables
-
1,355
-
1,017
Total receivables
1,355
1,017
-
316
316
-
338
338
-
1,492
-
3,705
1,492
3,705
-
-
-
-
-
-
The Group considers the probability of default upon the initial recognition of an asset. The Group also
considers whether there has been a significant increase in credit risk on an ongoing basis throughout
each reporting period. To assess whether there is a significant increase in credit risk the company
compares the risk of a default occurring on the asset as at the reporting date with the risk of default as
at the date of initial recognition. It considers available reasonable and supportive forwarding-looking
information. In calculating the expected credit loss rates, the Group has applied an expected credit
loss based on industry provided information.
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 2020:
2020
2019
Carrying
amount
US$’000
Fair
value
US$’000
Carrying
amount
US$’000
Fair
value
US$’000
Interest bearing loans and borrowings
- Senior secured notes
Total non-current
134,394
134,394
68,627
68,627
118,149
118,149
105,546
105,546
Total
134,394
68,627
118,149
105,546
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.
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64
Notes to the Consolidated Financial Statements (continued)
For the year ended 30 June 2020
NOTE 10. FINANCIAL RISK MANAGEMENT (continued)
Fair Values (continued)
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 2020
Year ended 30 June 2019
(Level 1)
US$’000
(Level 2)
US$’000
(Level 3)
US$’000
Total
US$’000
(Level 1)
US$’000
(Level 2)
US$’000
(Level 3)
US$’000
Total
US$’000
Financial assets for which fair values are disclosed
Australia listed shares
Share receivables
Cash receivables
4,328
-
-
4,328
-
-
-
-
-
1,467
4,623
6,090
4,328
1,467
4,623
10,418
-
-
-
-
Financial liabilities for which fair values are disclosed
US$115M senior
secured notes(1)
68,627
68,627
-
-
-
-
68,627
68,627
105,546
105,546
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
105,546
105,546
(1) The fair value has been determined using a valuation technique based on the quoted market price
of the notes.
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 and equity to provide the cash resources required.
Management reviews the capital structure from time to time as appropriate.
The Group finance 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 finance monitors compliance with various restrictions and undertakings associated with the
US$115M senior secured notes. At the time of reporting, the Company was in compliance with all of
the facility’s terms and conditions.
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65
Notes to the Consolidated Financial Statements (continued)
For the year ended 30 June 2020
NOTE 10. FINANCIAL RISK MANAGEMENT (continued)
Capital Management (continued)
Debt (face value plus accrued interest)(1)
Less cash and cash equivalents
Net debt
Total equity
Total Capital
2020
US$’000
2019
US$’000
145,745
(34,237)
132,178
(25,360)
111,508
106,818
92,999
76,638
204,507
183,456
Gearing Ratio (defined as net debt/total capital)
55%
58%
(1) Excludes LHM’s loans from CNNC that were assigned by PFPL to CNNC and form part of CNNC’s
25% interest in LHM as the Group views these as shareholder loans to LHM.
PERFORMANCE FOR THE YEAR
NOTE 11. REVENUE
Sale of uranium
Total
Recognition and Measurement
-
-
21,491
21,491
Amounts disclosed as revenue are net of duties and taxes paid. The Group’s main source of revenue
is the sale of uranium. Revenue is measured based on the consideration specified in a contract with a
customer. The Group’s sales arrangements with its customers are pursuant to enforceable contracts
that indicate the nature and timing of satisfaction of performance obligations, including payment terms
and where payment due dates. Each delivery is considered a separate performance obligation under
the contract.
The Group recognises revenue when it transfers control over a good or service to a customer. The
Group has concluded that this occurs on the delivery of the product at the converter. When uranium is
delivered to converters, the converter will credit the Group’s account for the volume of accepted
uranium. Based on delivery terms in the sales contract with its customer, the converter will transfer the
title of a contractually specified quantity of uranium to the customer’s account at the converter’s facility.
At this point, control has been transferred and the Group recognises revenue for the uranium supply.
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66
Notes to the Consolidated Financial Statements (continued)
For the year ended 30 June 2020
NOTE 12.
INCOME AND EXPENSES
Cost of Sales
Product distribution costs
Royalties
Inventory movement
Inventory purchased
Total
Other Income
Other income
Foreign exchange gain (net)
Total
Administration, Marketing and Non-Production Costs
Corporate and marketing
Corporate restructure costs
LHM mine site
LHM depreciation
LHM restart study
LHM restructure costs
Other
Total
Finance Costs
Interest expense:
Senior Secured Notes
LHM’s loans from CNNC
Paladin
Noteholders and other selling costs
(Africa) Ltd sale consent
fee
to
Accretion expense relating to Senior Secured Notes
Mine closure provision accretion expense
Total
2020
US$’000
2019
US$’000
-
-
-
-
-
(209)
(181)
(5,748)
(10,813)
(16,951)
2,027
8,279
10,306
466
562
1,028
(6,695)
(182)
(3,065)
(21,048)
-
(84)
(403)
(31,477)
(5,505)
(670)
(1,651)
(22,251)
(1,751)
(174)
(188)
(32,190)
(13,568)
(4,374)
(1,188)
(12,321)
(4,934)
-
(2,677)
(3,073)
(1,944)
(3,301)
(24,880)
(22,500)
Total depreciation and amortisation expense
(21,107)
(22,279)
Recognition and Measurement
Borrowing Costs
Borrowing costs incurred for the construction of any qualifying asset are capitalised during the period
of time that is required to complete and prepare the asset for its intended use or sale. Other borrowing
costs are expensed as incurred including the unwinding of discounts related to mine closure
provisions. When relevant, the capitalisation rate used to determine the amount of borrowing costs to
be capitalised is the weighted average interest rate applicable to the entity's outstanding borrowings
during the year.
Employee Benefits Expense
Wages and salaries
Defined contribution superannuation
Share-based payments
Other employee benefits
Total
(4,368)
(439)
(340)
(438)
(5,401)
(451)
(116)
(778)
(5,585)
(6,746)
The table above sets out personnel costs expensed during the year and are included within
Administration, Marketing and Non-Production Costs within the Consolidated Income Statement.
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Paladin Energy Ltd
67
Notes to the Consolidated Financial Statements (continued)
For the year ended 30 June 2020
NOTE 13.
INCOME AND OTHER TAXES
Income Tax Expense
Current income tax
Current income tax expense
Deferred income tax
Related to the origination and reversal of temporary differences
Income tax expense reported in the Income Statement
Amounts Charged or Credited Directly to Equity
Deferred income tax related to items charged or credited directly to equity:
Foreign currency translation reserve movement
Other and prior period
Income tax benefit reported in equity
2020
US$’000
2019
US$’000
-
-
-
-
-
-
-
-
-
-
-
-
Numerical Reconciliation of Income
Tax Benefit to Prima Facie Tax Payable
(Loss)/profit before income tax expense from continuing operations
(46,051)
(49,122)
Tax at the Australian tax rate of 30% (2019 – 30%)
13,815
14,736
Difference in overseas tax rates
Non-deductible items
Under/over prior year adjustment
Tax losses utilised
Deferred tax assets on losses not recognised
3,530
99
(17,444)
3,317
143
-
-
(18,196)
Income tax expense reported in the income statement
-
-
Tax Losses
Australian unused tax losses for which no deferred tax asset has been
recognised(1)
Other unused tax losses for which no deferred tax asset has been
recognised(2)
Total unused tax losses for which no deferred tax asset has been
recognised
(72,154)
(62,097)
(381,546)
(368,231)
(453,700)
(430,328)
(1) Including tax losses transferred from SRL on consolidation
(2) Excluding tax losses from discontinued operation
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Paladin Energy Ltd
68
Notes to the Consolidated Financial Statements (continued)
For the year ended 30 June 2020
NOTE 13.
INCOME AND OTHER TAXES (continued)
Deferred Income Tax
Deferred tax liabilities
Accelerated prepayment deduction for tax purposes
Accelerated depreciation for tax purposes
Foreign currency balances
Exploration expenditure
Inventory / Consumables
Asset disposal
Other
Gross deferred tax liabilities
Set off of deferred tax assets
Net deferred tax liabilities
Deferred tax assets
Revenue losses available for offset against future taxable income
Foreign currency balances
Interest bearing liabilities
Provisions
Other
Deferred tax assets not recognised
Gross deferred tax assets
Set off against deferred tax liabilities
Net deferred tax assets recognised
2020
US$’000
2019
US$’000
(58)
(75,984)
-
(1,311)
(3,154)
(407)
(823)
(283)
(77,484)
(42,225)
(10,042)
(3,198)
-
-
(81,737)
81,737
(133,232)
133,232
-
-
112,670
65,955
21,322
4,174
64
(122,448)
142,827
-
10,918
-
138
(20,651)
81,737
(81,737)
133,232
(133,232)
-
-
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)
(2)
(3)
the Consolidated Entities derive future assessable income of a nature and of an amount
sufficient to enable the benefit from the deductions for the losses to be realised;
the Consolidated Entities continue to comply with the conditions for deductibility imposed by tax
legislation; and
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.
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Paladin Energy Ltd
69
Notes to the Consolidated Financial Statements (continued)
For the year ended 30 June 2020
NOTE 13.
INCOME AND OTHER TAXES (continued)
Recognition and Measurement (continued)
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.
NOTE 14. EARNINGS PER SHARE
2020
US cents
2019
US cents
Loss per share attributable to ordinary equity holders of the
Parent from continuing operations
(1.7)
(1.7)
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
2020
US$’000
2019
US$’000
(33,465)
(30,345)
2020
Number
of Shares
2019
Number
of Shares
Weighted average number of ordinary shares used in
calculation of basic earnings per share
1,966,201,370
1,739,349,593
Weighted average number of ordinary shares used
calculation for diluted earnings per share
in
1,966,201,370
1,740,156,128
Total number of securities not included in weighted average
calculation due to their antidilutive nature in the current
period, that could potentially dilute basic earnings per share
in the future
Recognition and Measurement
Basic Earnings Per Share
-
806,535
Basic earnings per share are calculated by dividing the profit attributable to equity holders of the
Company by the weighted average number of ordinary shares outstanding during the period.
Diluted Earnings Per Share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to
take into account the after income tax effect associated with dilutive potential ordinary shares and the
weighted average number of shares assumed to have been issued for no consideration in relation to
dilutive potential ordinary shares. Diluted earnings per share is the same as basic earnings per share
in 2020 and 2019 as the number of potentially dilutive shares does not change the result of earnings
per share.
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Paladin Energy Ltd
70
Notes to the Consolidated Financial Statements (continued)
For the year ended 30 June 2020
NOTE 15. RECONCILIATION OF EARNINGS AFTER INCOME TAX TO NET CASH FLOW FROM
OPERATING ACTVITIES
Reconciliation of Net Loss After Tax to Net Cash
Flows Used in Operating Activities
Net loss
(92,452)
(42,992)
2020
US$’000
2019
US$’000
Adjustments for
Depreciation and amortisation
Sundry income
Gain on disposal of property, plant and equipment
Change in estimate of environmental rehabilitation
provision - KM
Net exchange differences
Share-based payments
Non-cash financing costs
Loss on sale of subsidiary
Changes in operating assets and liabilities
Decrease in prepayments
(Increase)/decrease in trade and other receivables
Decrease in inventories
Decrease in trade and other payables
Decrease in provisions
Decrease/(increase) in assets classified as held for
sale
Increase in liabilities directly associated with assets
classified as held for sale
21,107
-
(8)
-
(1,111)
340
23,691
42,540
2
(5,274)
232
(809)
(175)
355
84
22,279
143
(25)
(10,465)
(562)
116
22,500
-
287
7,140
5,354
(11,710)
(4,552)
(527)
209
Net cash flows used in operating activities
(11,478)
(12,805)
NOTE 16.
NON CASH INVESTING AND FINANCING ACTIVITIES
The non-cash elements of investing and financing activities are reconciled below:
Acquisition of outstanding shares (17.92%) in
Summit Resources Ltd
25 October 2018 issue of 34,291,724 shares
16 November 2018 issue of 4,778,363 shares
Acquisition of non-controlling interest (refer to Note 9)
Transfer of 50% participating interest in Michelin Project
Consolidation of Michelin Project
Disposal of interest in Michelin Project
Transfer of participating interest (refer to Note 23)
-
-
-
-
-
-
4,854
695
5,549
14,247
-
14,247
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Paladin Energy Ltd
71
Notes to the Consolidated Financial Statements (continued)
For the year ended 30 June 2020
OPERATING ASSETS AND LIABILITIES
NOTE 17. TRADE AND OTHER RECEIVABLES
Current
Trade receivables and other receivables
GST and VAT
Notes
(a)
(b)
Total current receivables
Non-Current
Trade receivables and other receivables
Long term deposits
(c)
(d)
Total non-current receivables
2020
US$’000
2019
US$’000
1,057
59
1,116
5,197
315
5,512
687
330
1,017
-
338
338
(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 expected credit loss
model is used for calculating an allowance for doubtful debts. No allowance has been
recognised for the current year or the previous year.
(b) GST and VAT receivables relates to amounts due from Governments in Australia, Namibia,
Malawi, the Netherlands and Canada.
(c)
Future receivables from the Kayelekera Sale include:
• A$3M additional shares in Lotus Resources Limited due to be issued 13 March 2023;
• US$6M repayment of the environmental performance bond (US$1M due 13 March 2021,
US$2M due 13 March 2022 and US$3M due 13 March 2023).
Future Shares - Changes in the fair value of financial assets at fair value through profit or loss are
recognised in other gains/(losses) in the statement of profit or loss as applicable.
Future cash receivables - An expected credit loss model is used for calculating an allowance for
doubtful debts. Details about the group’s impairment policies and the calculation of the expected
credit loss are provided in Note 10.
(d)
Long term deposits relates to guarantees provided by a bank for the corporate office lease,
tenements and corporate credit cards.
Recognition and Measurement
Trade Receivables
Receivables are initially recognised at fair value and subsequently at the amounts considered
receivable. Trade receivables are amounts due from customers for goods sold or services performed
in the ordinary course of business. They are generally due for settlement within 30 days and therefore
are all classified as current.
Due to the short-term nature of the current receivables, their carrying amount is assumed to
approximate fair value.
AASB 9 includes revised guidance on a new expected credit loss model for calculating impairment on
financial assets. As both our mines are currently in care and maintenance, this change did not have a
material impact on the consolidated financial statements.
Other Receivables
These amounts generally arise from transactions outside the usual operating activities of the group.
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Paladin Energy Ltd
72
Notes to the Consolidated Financial Statements (continued)
For the year ended 30 June 2020
NOTE 17. TRADE AND OTHER RECEIVABLES (continued)
The group assesses on a forward-looking basis the expected credit loss associated with its debt
instruments carried at amortised cost and fair value through other comprehensive income. The
impairment methodology applied depends on whether there has been a significant increase in credit
risk.
For trade receivables, the group applies the simplified approach permitted by AASB 9, which requires
expected lifetime losses to be recognised from initial recognition of the receivables.
Trade receivables are written off where there is no reasonable expectation of recovery. Indicators that there
is no reasonable expectation of recovery include, amongst others, the failure of a debtor to engage in a
repayment plan with the group, and a failure to make contractual payments for a period of greater than 120
days past due. Impairment losses on trade receivables are presented as net impairment losses within
operating profit. Subsequent recoveries of amounts previously written off are credited against the same line
item.
NOTE 18. INVENTORIES
Current
2020
US$’000
2019
US$’000
Stores and consumables (at cost – refer below)
5,132
Total current inventories at the lower of cost and net realisable value
5,132
5,363*
5,363
* Stores and consumables held at KM have been transferred to ‘Assets Classified as Held for Sale’.
(Refer to Note 19).
Inventory Expense
Inventories sold recognised as an expense for the year ended 30 June 2020 totalled US$Nil (2019:
US$16,951,000, which included purchased inventory of US$10,813,000) for the Group.
Write-down of Inventories
During 2020 stores and consumables held at LHM were written down by US$68,682 due to
obsolescence. (During 2019 the provision for obsolete stock at LHM was revised based on the actual
usage during the first year of care and maintenance, which resulted in the reduction of the provision
and an increase of stores and consumables by US$3,735,000).
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.
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Paladin Energy Ltd
73
Notes to the Consolidated Financial Statements (continued)
For the year ended 30 June 2020
NOTE 19. DISCONTINUED OPERATIONS AND ASSETS AND LIABILITIES CLASSIFIED AS
HELD FOR SALE
(a) Description
Sale of Kayelekera Mine
On 13 March 2020, the Company completed the sale of its 85% interest in Paladin (Africa) Ltd to Lotus
Resources Limited (Lotus) (65%) and Lily Resources Pty Ltd (Lily) (20%). This is the Malawi operating
segment (refer to Note 5).
The consideration for the sale of Paladin’s 85% shareholding in PAL was A$5M (US$3.2M), comprising
A$200,000 (US$137,000) cash, A$4.8M (US$3.1M) in Lotus shares. On 13 March 2020 Lotus issued
A$1.8M (US$1.1M) shares to Paladin (90,000,000 shares), subject to a 12-month voluntary escrow, with
A$3M (US$2.1M) to be issued on the third anniversary of completion, 13 March 2023. The issue price will be
based on the lower of the 30-day VWAP at the time of issue, or the price of a Lotus capital raising in the 90
days preceding. Paladin is entitled to receive a 3.5% royalty based on revenues derived from future
production at Kayelekera, capped at A$5M (US$3.4M).
On 13 March 2020, the Company became a substantial shareholder in Lotus, holding a 14.46% interest
following the issue of 90,000,000 shares at a 2cps issue price upon completion of the sale.
Paladin is also entitled to receive the funds advanced to provide security for the US$10M environmental
performance bond issued to the Government of Malawi for KM. The repayments will occur in four tranches:
US$4M on completion (13 March 2020), US$1M on the first anniversary (13 March 2021), US$2M on the
second anniversary (13 March 2020), and the final US$3M on the third anniversary (13 March 2023).
Future receivables from the Kayelekera Sale include:
• A$3M additional shares in Lotus Resources Limited to be issued on 13 March 2023;
• US$6M repayment of the environmental performance bond (US$1M due 13 March 2021,
US$2M due 13 March 2022 and US$3M due 13 March 2023);
• A 3.5% production royalty derived from future production at the Kayelekera Mine, capped at
A$5M.
(b) Assets and liabilities of disposal group classified as held for sale
The following assets and liabilities were reclassified as held for sale in relation to the discontinued
operation as at 30 June 2020:
Assets classified as held for sale
Cash and cash equivalents (Note 6a)
Restricted cash (Note 6b)
Trade and other receivables (Note 17)
Prepayments
Inventories (Note 18)
Total assets of disposal group classified as held for
sale
Liabilities directly associated with assets classified
as held for sale
Trade and other payables (Note 25)
Provisions (Note 26)
Environmental rehabilitation provision (Note 26)
Total liabilities of disposal group classified as held for
sale
Net liabilities classified as held for sale
2020
US$’000
2019
US$’000
-
-
-
-
-
-
-
-
-
-
-
83
10,220
130
65
331
10,829
140
69
42,185
42,394
31,565
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74
Notes to the Consolidated Financial Statements (continued)
For the year ended 30 June 2020
NOTE 19. DISCONTINUED OPERATIONS AND ASSETS AND LIABILITIES CLASSIFIED AS
HELD FOR SALE (continued)
(c)
Financial performance and cash flow information of discontinued operations
(Loss)/profit after tax from discontinued operations
Other income
Change in estimate of KM mine closure provision
Care and maintenance expenses
Loss on sale of subsidiary after income tax
(Loss)/profit after tax from discontinued
operations
Cash Flows
Net cash outflow from operating activities
Net cash inflow from investing activities
Net decrease in cash and cash equivalents
(d) Details of the sale of the subsidiary
Consideration received or receivable
Cash
Fair value of Lotus shares issued(1)
Fair value of receivables – shares and cash(2)
Total disposal consideration
Carrying amount of assets sold
Carrying amount of liabilities sold
Gain on sale before income tax and de-recognition
of non-controlling interest in PAL
Derecognise non-controlling interest
Loss on sale after income tax
2020
US$’000
2019
US$’000
188
-
(4,049)
(42,540)
571
10,465
(4,906)
-
(46,401)
6,130
(3,238)
-
(3,238)
(4,280)
295
(3,985)
4,137
1,953
5,986
12,076
(10,474)
42,478
44,080
(86,620)
(42,540)
-
-
-
-
-
-
-
-
-
(1) On 13 March 2020, the fair value of the 90M Lotus shares issued was A$0.034 per share. It has
been recognised as a financial asset with subsequent fair fair value movements recognised through
Other Comprehensive Income.
(2) The fair value of receivables has been assessed using a discount rate to reflect the credit risk and
the time value of money.
Recognition and Measurement
Non-current assets (or disposal groups) are classified as held for sale if their carrying amount will be
recovered principally through a sale transaction rather than through continuing use and a sale is
considered highly probable. They are measured at the lower of their carrying amount and fair value
less costs to sell, except for assets such as deferred tax assets, assets arising from employee
benefits, financial assets and investment property that are carried at fair value and contractual rights
under insurance contracts, which are specifically exempt from this requirement.
An impairment loss is recognised for any initial or subsequent write-down of the asset (or disposal
group) to fair value less costs to sell. A gain is recognised for any subsequent increases in fair value
less costs to sell of an asset (or disposal group), but not in excess of any cumulative impairment loss
previously recognised. A gain or loss not previously recognised by the date of the sale of the non-
current asset (or disposal group) is recognised at the date of de-recognition.
Non-current assets (including those that are part of a disposal group) are not depreciated or amortised
while they are classified as held for sale. Interest and other expenses attributable to the liabilities of a
disposal group classified as held for sale continue to be recognised.
Non-current assets classified as held for sale and the assets of a disposal group classified as held for
sale are presented separately from the other assets in the balance sheet. The liabilities of a disposal
group classified as held for sale are presented separately from other liabilities in the balance sheet.
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Paladin Energy Ltd
75
Notes to the Consolidated Financial Statements (continued)
For the year ended 30 June 2020
NOTE 19. DISCONTINUED OPERATIONS AND ASSETS AND LIABILITIES CLASSIFIED AS
HELD FOR SALE (continued)
A discontinued operation is a component of the entity that has been disposed of or is classified as held
for sale and that represents a separate major line of business or geographical area of operations, is
part of a single co-ordinated plan to dispose of such a line of business or area of operations, or is a
subsidiary acquired exclusively with a view to resale. The results of discontinued operations are
presented separately in the statement of profit or loss.
NOTE 20. NON-CURRENT FINANCIAL ASSETS
Non-current financial assets
30 June
2020
US$’000
30 June
2019
US$’000
4,328
-
The Group has an investment in Lotus and at 30 June 2020 held 90,000,000 shares subject to a 12-
month voluntary escrow. The market value of these shares in Lotus at 30 June 2020 is A$6.3M
(US$4.3M) based on a share price of A$0.07 per share.
Recognition and Measurement
Financial assets are recognised on trade date, being the date on which the group commits to
purchase or sell the asset.
Equity Instruments
The group measures all equity investments at fair value. Where the group’s management has elected
to present fair value gains and losses on equity investments in OCI, there is no subsequent
reclassification of fair value gains and losses to profit or loss following the derecognition of the
investment. Dividends from such investments continue to be recognised in profit or loss as other
income when the group’s right to receive payments is established.
Changes in the fair value of financial assets at FVPL are recognised in other gains/(losses) in the
statement of profit or loss as applicable. Impairment losses (and reversal of impairment losses) on
equity investments measured at FVOCI are not reported separately from other changes in fair value.
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Paladin Energy Ltd
76
Notes to the Consolidated Financial Statements (continued)
For the year ended 30 June 2020
NOTE 21. PROPERTY, PLANT AND EQUIPMENT
Total
US$’000
Plant
and
Equipment
US$’000
Land and
Buildings
US$’000
Construction
Work in
Progress
US$’000
2020
Net carrying value
At 1 July 2019
Additions
Depreciation and amortisation expense
Disposals
Foreign currency translation
206,599
301
(15,451)
(551)
(9)
200,653
301
(15,033)
(551)
(9)
5,190
-
(418)
-
-
At 30 June 2020
190,889
185,361
4,772
Cost
Accumulated depreciation
380,363
(189,474)
369,747
(184,386)
9,860
(5,088)
2019
Net carrying value
At 1 July 2018
Additions
Depreciation and amortisation expense
Reclassification of assets
Reclassification to mine development
Adjustment
Foreign currency translation
223,986
52
(17,108)
-
(35)
(272)
(24)
217,499
52
(16,688)
74
(13)
(272)
1
5,635
-
(420)
-
-
-
(25)
At 30 June 2019
206,599
200,653
5,190
Cost*
Accumulated depreciation*
380,844
(174,245)
370,228
(169,575)
9,860
(4,670)
756
-
-
-
-
756
756
-
852
-
-
(74)
(22)
-
-
756
756
-
* 2019 Property, Plant and Equipment of net carrying value US$Nil (US$341,529,306 cost and
US$341,529,306 accumulated depreciation) at KM have been transferred to ‘Assets Classified as Held
for Sale’ (Refer to Note 19).
Property, Plant and Equipment Pledged as Security for Liabilities
Refer to Note 7 for information on property, plant and equipment pledged as security.
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.
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77
Notes to the Consolidated Financial Statements (continued)
For the year ended 30 June 2020
NOTE 21. PROPERTY, PLANT AND EQUIPMENT (continued)
Recognition and Measurement
Property, plant and equipment costs include both the costs associated with construction of equipment
associated with establishment of an operating mine, and the estimated costs of dismantling and
removing the asset and restoring the site on which it is located.
Land is not depreciated. Depreciation on other assets is calculated using the unit of production basis
or the straight line method to allocate their cost amount, net of their residual values, over their
estimated useful lives, as follows:
• Buildings
• Databases
• Plant and equipment
• Leasehold improvements
• Mine plant and equipment
20 years
10 years
2-6 years
period of lease
remaining useful life of the assets
The estimates of useful lives, residual values and depreciation method are reviewed at the end of
each reporting period with the effect of any changes in estimate accounted for on a prospective basis.
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 of disposal
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 unit or CGU).
The future recoverability of the property, plant and equipment, mine development and intangibles is
dependent on a number of key factors including: uranium price, capex, life of mine, restart date,
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 future legal
changes, including changes to environmental restoration obligations.
Paladin did not identify any impairment indicators in relation to the LHM CGU.
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Notes to the Consolidated Financial Statements (continued)
For the year ended 30 June 2020
NOTE 22. MINE DEVELOPMENT
Mine development – at cost
Less accumulated depreciation and impairment
Net carrying value – mine development
Net carrying value at start of year
Depreciation and amortisation expense
Adjustment to base amount of mine
rehabilitation
Net carrying value at end of year
2020
US$’000
2019
US$’000
63,091
(44,543)
18,548
22,958
(4,410)
-
18,548
108,267*
(85,309)*
22,958
28,142
(4,461)
(723)
22,958
* 2019 Mine Development of net carrying value US$Nil (US$111,800,648 cost and US$111,800,648
accumulated depreciation) at Kayelekera have been transferred to ‘Assets Classified as Held for Sale’
(Refer to Note 19).
Recognition and Measurement
Mine development
Pre-production costs are deferred as development costs until such time as the asset is capable of
being operated in a manner intended by management and depreciated on a straight line basis. Post-
production costs are recognised as a cost of production.
Significant Judgements, Estimates and Assumptions
The Group has assessed that the useful lives of the individual identifiable components of the relative
ore bodies are short and that the strip ratio over the life of component is relatively uniform.
Accordingly, the Group has accounted for production stripping costs as a production cost in the years
ended 30 June 2019 and 2020. Refer to Note 21 for assessment of recoverability.
Proved and Probable Reserves
The Group uses the concept of a life of mine as an accounting value to determine such things as
depreciation rates and the appropriate period to discount mine closure provisions. In determining life
of mine, the proved and probable reserves measured in accordance with the 2012 edition of the JORC
Code specific to a mine are taken into account which by their very nature require judgements,
estimates and assumptions.
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Notes to the Consolidated Financial Statements (continued)
For the year ended 30 June 2020
NOTE 23. EXPLORATION AND EVALUATION EXPENDITURE
The following table details the expenditures on interests in mineral properties by area of interest for the year ended
30 June 2020:
Valhalla
/Skal
Isa
North
Carley
Bore
Canada
Manyingee
Fusion
LHM
Total
Areas of interest
US$’000
US$’000
US$’000
US$’000
US$’000
US$’000
US$’000
US$’000
Balance 1 July 2018
39,781
7,666
7,800
13,883
7,309
Expenditure capitalised
Foreign
differences
Acquisition of control of
Michelin Project(1)
exchange
112
(546)
337
(802)
47
-
664
(118)
-
-
-
14,247
45
-
-
Balance 30 June 2019
39,347
7,201
7,847
28,676
7,354
-
98
-
-
98
61
-
-
-
-
-
-
76,439
1,303
(1,466)
14,247
90,523
3,059
-
4,073
(1,227)
Expenditure capitalised
Foreign
differences
Balance 30 June 2020
exchange
94
-
342
-
19
-
436
(1,227)
62
-
39,441
7,543
7,866
27,885
7,416
159
3,059
93,369
(1) Recognises Paladin’s control over the Michelin JV resulting in the consolidation of 100% of the Canadian
assets with a non-controlling interest recognised for Michelin Nominees Limited’s 50% interest in the
Michelin Project. There is a farm out over a five year period whereby the EdF Claimants will transfer 5%
participating interest in the Michelin Project to Paladin on an annual basis in return for Paladin funding all
obligations for the Michelin Project over this period.
Recognition and Measurement
Exploration and evaluation expenditure related to areas of interest is capitalised and carried forward to the
extent that:
1.
2.
rights to tenure of the area of interest are current; and
costs are expected to be recouped through successful development and exploitation of the area
of interest or alternatively by its sale.
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.
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Notes to the Consolidated Financial Statements (continued)
For the year ended 30 June 2020
NOTE 23. EXPLORATION AND EVALUATION EXPENDITURE (continued)
Recognition and Measurement (continued)
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.
Since 30 June 2020, there have been no events or changes in circumstances to indicate that the carrying
value may not be recoverable.
NOTE 24.
INTANGIBLE ASSETS
At 30 June
2020
US$’000
2019
US$’000
Intangible assets – at cost
Less accumulated depreciation and impairment
17,803
(8,972)
17,803*
(8,341)*
Net carrying value – intangible assets
8,831
9,462
* Intangible assets of net carrying value US$Nil (US$10,000,000 cost and US$10,000,000 accumulated
depreciation) at Kayelekera have been transferred to ‘Assets Classified as Held for Sale’ (Refer to Note 19).
Amortisation of US$631,000 (2019: US$631,000) is included in non production costs (2019: cost of sales) in
the Consolidated Income Statement.
Movements in Intangible Assets
Movements in each group of intangible asset during the financial year are set out below:
2020
Net carrying value at 1 July 2019
Amortisation expense
Right
to Supply
of Power
US$’000
Right
to Supply
of Water
US$’000
Total
US$’000
2,650
(177)
6,812
(454)
9,462
(631)
Net carrying value at 30 June 2020
2,473
6,358
8,831
2019
Net carrying value at 1 July 2018
Amortisation expense
2,827
(177)
7,266
(454)
10,093
(631)
Net carrying value at 30 June 2019
2,650
6,812
9,462
Description of the Group’s Intangible Assets
1.
Right to supply of power
LHM 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 straight line basis.
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Notes to the Consolidated Financial Statements (continued)
For the year ended 30 June 2020
NOTE 24.
INTANGIBLE ASSETS (continued)
2.
Right to supply of water
LHM 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 straight line 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
amortisation method is reviewed at each financial year-end.
Straight line method over the remaining useful life (15 years). The
Impairment testing
Annually and more frequently when an indication of impairment exists.
The rights to use water and power supply have been granted for a minimum of 17 years from April 2007 by
the relevant utilities with the option of renewal without significant cost at the end of this period.
NOTE 25.
TRADE AND OTHER PAYABLES
Current
Trade and other payables
Onerous contracts
Total current payables
2020
US$’000
2019
US$’000
1,541
-
1,541
2,271
79
2,350
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.
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Notes to the Consolidated Financial Statements (continued)
For the year ended 30 June 2020
NOTE 26. PROVISIONS
Current
Employee benefits
Total current provisions
Non-Current
Environmental rehabilitation provision
Demobilisation provision
Total non-current provisions
Movements in Provisions
2020
US$’000
2019
US$’000
522
522
32,087
-
32,087
697
697
36,058
-
36,058
Movements in provisions during the financial year, excluding provisions relating to employee benefits, are set
out below:
At 1 July 2019
Unwinding of discount rate
Foreign currency movements
At 30 June 2020
2020
Current
Non-current
2019
Current
Non-current
Nature and Timing of Provisions
Environmental rehabilitation
Environmental
Rehabilitation
US$’000
36,058
3,072
(7,043)
32,087
-
32,087
32,087
-
36,058
36,058
Total
US$’000
36,058
3,072
(7,043)
32,087
-
32,087
32,087
-
36,058
36,058
A provision for environmental rehabilitation and mine closure has been recorded in relation to LHM. 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.
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.
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Notes to the Consolidated Financial Statements (continued)
For the year ended 30 June 2020
NOTE 26. PROVISIONS (continued)
Recognition and Measurement (continued)
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. Foreign exchange movements are treated as a
finance component and recognised in the Income Statement.
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 corporate bonds with terms to maturity and currency that match, as closely as
possible, the estimated future cash outflows.
Significant Accounting Judgements, Estimates and Assumptions
Environmental 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.
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Notes to the Consolidated Financial Statements (continued)
For the year ended 30 June 2020
OTHER NOTES
NOTE 27. KEY MANAGEMENT PERSONNEL
Details of Key Management Personnel
(i)
Directors
Mr Cliff Lawrenson
Mr Peter Watson
Mr Peter Main
Mr Rick Crabb
Mr David Riekie
Mr Daniel Harris
Mr John Hodder
Chairman (Non-executive) (appointed 29 October 2019)
Director (Non-executive) (appointed 11 December 2019)
Director (Non-executive) (appointed 11 December 2019)
Chairman (Non-executive) (retired 29 October 2019)
Director (Non-executive) (resigned 11 December 2019)
Director (Non-executive) (resigned 11 December 2019)
Director (Non-executive) (resigned 11 December 2019)
(ii) Executives
Mr Ian Purdy
Mr Scott Sullivan
Ms Anna Sudlow
Mr Craig Barnes
Mr Michael Drake
Chief Executive Officer (appointed 4 February 2020)
Chief Executive Officer (ceased employment 3 March 2020)
Chief Financial Officer (appointed 1 July 2019)
Chief Financial Officer (resigned 9 August 2019)
Chief Operating Officer (resigned 3 July 2020)
Compensation of Key Management Personnel: Compensation by Category
Short-term employee benefits
Post-employment benefits
Share-based payments
NOTE 28. AUDITORS’ REMUNERATION
The auditor of the Paladin Energy Ltd Group is PricewaterhouseCoopers.
2020
US$
2019
US$
1,345,071
57,344
86,935
1,070,363
48,605
105,411
1,489,350
1,224,379
Amounts received or due and receivable by
PricewaterhouseCoopers (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 PricewaterhouseCoopers (Australia) for:
Audit or review of the financial report of
subsidiaries and audit related services
Other services
Taxation services:
Tax compliance services
Sub-total
Total
127,850
39,854
10,329
-
124,406
-
25,660
110,090
16,766
178,033
276,922
24,352
1,219
63,365
585
481
2,169
26,052
66,119
204,085
343,041
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Notes to the Consolidated Financial Statements (continued)
For the year ended 30 June 2020
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 2020 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
2020
US$’000
2019
US$’000
41
987
539
337
848
644
1,567
1,829
These include commitments relating to tenement lease rentals and the minimum expenditure requirements of
the Namibian, Canadian, Western Australian 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, Australia and Canada.
Other Commitments
Commitments for transport, capital, purchase order commitments, fuel and utilities and other supplies
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 commitments
503
297
1,115
2,756
366
1,372
1,915
4,494
In relation to the Manyingee Project, the re-negotiated acquisition terms provide for a payment of A$750,000
(US$515,187) (2019: A$750,000 (US$527,144)) by the Group to the vendors when all project development
approvals are obtained.
Bank Guarantees
As at 30 June 2020 the Group has outstanding US$154,656 (A$225,145) (2019: US$158,245 (A$225,145))
as a current guarantee provided by a bank for the corporate office lease; a US$92,734 (A$135,000) (2019:
US$110,700 (A$157,500)) guarantee for tenements and a US$44,650 (A$65,000) (2019: US$45,686
(A$65,000)) guarantee for corporate credit cards.
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Notes to the Consolidated Financial Statements (continued)
For the year ended 30 June 2020
NOTE 30. RELATED PARTIES
Key Management Personnel
The only related party transactions are with Directors and Key Management Personnel. Refer to Note 27.
Details of material controlled entities are set out in Note 31.
Loans from related parties – LHM’s loans from CNNC (refer to Note 8)
Non-Current
At 1 July 2019
Interest charged
At 30 June 2020
2020
US$’000
2019
US$’000
98,264
4,374
93,330
4,934
102,638
98,264
Revenue from sale of uranium
-
6,579
NOTE
31. GROUP INFORMATION
Information Relating to Paladin Energy Ltd (parent)
Current assets
Total assets
Current liabilities
Total liabilities
Issued capital
Accumulated losses
Option application reserve
Share-based payments reserve
Revaluation reserve
Total shareholders’ equity
Net loss after tax from operations
Total comprehensive loss
32,989
232,448
20,421
205,784
1,336
147,265
1,107
131,899
2,327,789
(2,293,279)
137
48,303
2,233
2,306,925
(2,281,130)
137
47,953
-
85,183
73,885
(12,149)
(12,149)
(52,023)
(52,023)
The financial information for the parent entity has been prepared on the same basis as the consolidated
financial statements, except as set out below.
Investments in subsidiaries, associates and joint venture entities
Investments in subsidiaries, associates and joint venture entities are accounted for at cost in the financial
statements of Paladin Energy Ltd. Dividends received from associates are recognised in the parent entity’s
profit or loss when its right to receive the dividend is established.
Details of Any Contingent Liabilities of the Parent Entity
Paladin has provided a guarantee of US$32,087,383 for the LHM Environmental Trust Fund.
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.
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87
Notes to the Consolidated Financial Statements (continued)
For the year ended 30 June 2020
NOTE
31. GROUP INFORMATION (continued)
Investments in Material Controlled Entities
NAME
COUNTRY OF
INCORPORATION
Paladin Energy Minerals NL
Langer Heinrich Mauritius Holdings Ltd
Langer Heinrich Uranium (Pty) Ltd
Valhalla Uranium Pty Ltd
Summit Resources Ltd
Summit Resources (Aust) Pty Ltd
Paladin Energy Canada Ltd
Michelin Uranium Ltd
Paladin Canada Investment (NL) Ltd
Paladin Canada Holdings (NL) Ltd
Aurora Energy Ltd
Australia
Mauritius
Namibia
Australia
Australia
Australia
Canada
Canada
Canada
Canada
Canada
All investments comprise ordinary shares and all shares held are unquoted.
PERCENTAGE
INTEREST HELD
2019
%
100
75
75
100
100
100
100
100
100
100
55
2020
%
100
75
75
100
100
100
100
100
100
100
60
NOTE 32. EVENTS AFTER THE BALANCE DATE
Since the end of the financial year, the Directors are not aware of any 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.
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Notes to the Consolidated Financial Statements (continued)
For the year ended 30 June 2020
NOTE 33. NEW ACCOUNTING STANDARDS AND INTERPRETATIONS
Accounting Standards and Interpretations issued but not yet effective
The following Australian Accounting Standards that have recently been issued or amended but are not yet
effective are relevant to the Group but have not been applied by the Group for the annual reporting period
ending 30 June 2020:
Reference/ Title
Summary
AASB amends the definition
of material (AASB 2018-7)
AASB amends the definition
of a business (AASB 2018-6)
Disclosure of the effect of new
IFRS standards not yet issued
in Australia (AASB 2019-5)
Release of 4th edition of
Corporate Government
Principles and
Recommendations
The AASB has issued amendments to the guidance in
AASB 3 Business Combinations that revises the
definition of a business.
The AASB has made amendments to AASB 101
Presentation of Financial Statements and AASB
108 Accounting Policies, Changes in Accounting
Estimates and Errors and consequential
amendments to other Australian Accounting Standards
(AAS) which: i) use a consistent definition
of materiality throughout AAS and the Conceptual
Framework for Financial Reporting ; ii) clarify
when information is material; and iii) incorporate some of
the guidance in AASB 101 about
immaterial information.
The AASB has made amendments to AASB 1054
Australian Additional Disclosures which clarify
that entities that intend to comply with IFRS Standards
will need to disclose the potential effect of
new IFRS Standards that have not yet been issued by
the AASB as Australian Accounting
Standards.
The ASX Corporate Governance Council (Council) has
released the Fourth Edition of its Corporate
Governance Principles and Recommendations , which
will take effect for a listed entity’s first full
financial year commencing on or after 1 January 2020.
The changes in the Fourth Edition are
designed to encourage listed entities to commit to
improving the culture and values of their
organisation by clearly articulating the principles and
policies they adopt, and remaining
accountable to all stakeholders by monitoring and
reporting on the organisation’s performance
against each standard.
As a result of the coronavirus (COVID-19) pandemic, rent
concessions have been granted to
lessees. The IASB issued amendments outlining an
optional practical expedient where lessees
benefiting from these rent concessions may account for
them as variable lease payments in the
periods in which they are granted. The AASB is expected
to issue equivalent amendments shortly.
The AASB issued a narrow-scope amendment to AASB
101 Presentation of Financial Statements
to clarify that liabilities are classified as either current or
non-current, depending on the rights that
exist at the end of the reporting period.
Certain narrow scope amendments have been approved
and issued for IAS 116: Property, Plant
and Equipment - Proceeds before intended use , IAS 137
Onerous Contracts - Cost of Fulfilling a
Contract , IFRS 3 Reference to the Conceptual
Framework and Annual Improvements to IFRS
Standards 2018-2020 affecting IFRS 16, IFRS 1, IAS 41
and IFRS 9. The AASB is expected to
issue equivalent Australian amendments shortly.
* Designates the beginning of the applicable annual reporting period unless otherwise stated.
Narrow scope amendments
issued for IAS 16, IAS 37,
IFRS 3 and Annual
Improvements to
IFRS Standards 2018-2020
affecting IFRS 1, IFRS 9, IFRS
16 and IAS 41
Classification of liabilities as
current or non-current (AASB
2020-1)
COVID-19 rent concessions
Application
date of
standard*
Application
date for
Group*
1 January
2020
1 January
2020
1 July 2020
1 July 2020
1 January
2020
1 July 2020
1 January
2020
1 July 2020
1 June
2020
1 July 2020
1 January
2022
1 July 2022
1 January
2022
1 July 2022
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Notes to the Consolidated Financial Statements (continued)
For the year ended 30 June 2020
NOTE 33. NEW ACCOUNTING STANDARDS AND INTERPRETATIONS (continued)
The Group has considered what impact these new Accounting Standards will have on the financial
statements, when applied next year, and have concluded that they will have no material impact.
The Group has elected not to early adopt these new standards or amendments in the financial statements.
For Standards and Interpretations effective from 1 July 2020, it is not expected that the new Standards and
Interpretations will significantly affect the Group’s financial performance.
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Directors’ Declaration
1.
In the opinion of the Directors’ of Paladin Energy Ltd:
(a)
The consolidated financial statements and notes that are set out on pages 41 to 90, are in
accordance with the Corporations Act 2001, including:
(i)
giving a true and fair view of the consolidated entity’s financial position as at
30 June 2020 and of its performance for the financial year ended on that date; and
(ii)
complying with Australian Accounting Standards (including the Australian Accounting
Interpretations) and the Corporations Regulations 2001.
(b)
(c)
The financial statements and notes also comply with International Financial Reporting
Standards as disclosed in Note 3 to the Financial Statements.
Subject to the matters set out in Note 4 to the Financial Statements, there are reasonable
grounds to believe that the Company will be able to pay its debts as and when they become
due and payable.
2.
This declaration has been made after receiving the declarations required to be made in accordance
with section 295A of the Corporations Act 2001 for the financial year ending 30 June 2020 (section
295A Declarations). The section 295A Declarations have been made by the Chief Executive Officer,
Ian Purdy and the Chief Financial Officer, Anna Sudlow.
Dated at Perth on 28 August 2020
On behalf of the board
_______________________________
Cliff Lawrenson
Chairman
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Independent auditor’s report
To the members of Paladin Energy Limited
Report on the audit of the financial report
Our opinion
In our opinion:
The accompanying financial report of Paladin Energy Limited (the Company) and its controlled
entities (together the Group) is in accordance with the Corporations Act 2001, including:
(a)
giving a true and fair view of the Group's financial position as at 30 June 2020 and of its
financial performance for the year then ended, and
(b)
complying with Australian Accounting Standards and the Corporations Regulations 2001.
What we have audited
The Group financial report comprises:
•
•
•
•
•
•
•
the consolidated statement of financial position as at 30 June 2020
the consolidated statement of comprehensive income for the year then ended
the consolidated statement of changes in equity for the year then ended
the consolidated statement of cash flows for the year then ended
the consolidated income statement for the year then ended
the notes to the consolidated financial statements, which include a summary of significant
accounting policies, and
the directors’ declaration.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the financial
report section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Independence
We are independent of the Group in accordance with the auditor independence requirements of the
Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical
Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence
Standards) (the Code) that are relevant to our audit of the financial report in Australia. We have also
fulfilled our other ethical responsibilities in accordance with the Code.
Material uncertainty related to going concern
We draw attention to Note 4 in the financial report, which indicates that the Group incurred a net loss
after tax from continuing operations of US$46.1 million and a net cash outflow from operations of
US$11.5 million during the year ended 30 June 2020.
PricewaterhouseCoopers, ABN 52 780 433 757
Brookfield Place, 125 St Georges Terrace, PERTH WA 6000, GPO Box D198, PERTH WA 6840
T: +61 8 9238 3000, F: +61 8 9238 3999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
While the Group's senior secured notes of US$134.4 million have no repayment obligations until their
maturity in 2023, the Langer Heinrich Mine remains in care and maintenance so the Group will not
generate any cash to fund its ongoing operations or to repay these senior secured notes when due.
These conditions, along with other matters set forth in Note 4, indicate that a material uncertainty
exists that may cast significant doubt on the Group’s ability to continue as a going concern. Our
opinion is not modified in respect of this matter.
Our audit approach
An audit is designed to provide reasonable assurance about whether the financial report is free from
material misstatement. Misstatements may arise due to fraud or error. They are considered material if
individually or in aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of the financial report.
We tailored the scope of our audit to ensure that we performed enough work to be able to give an
opinion on the financial report as a whole, taking into account the geographic and management
structure of the Group, its accounting processes and controls and the industry in which it operates.
The Group owns uranium mining and exploration assets in Namibia, Canada and Australia.
Materiality
Audit scope
For the purpose of our audit we used overall Group
materiality of US$3.6 million, which represents
approximately 1% of the Group’s total assets.
We applied this threshold, together with qualitative
considerations, to determine the scope of our audit and
the nature, timing and extent of our audit procedures
and to evaluate the effect of misstatements on the
financial report as a whole.
We chose total assets as the benchmark because the
Group is not currently operating its assets which are in
the care and maintenance or exploration stage. The use
of total assets as a benchmark provides a level of
materiality which, in our view, is appropriate for the
audit having regard to the expected requirements of
users of the Group’s financial report.
We utilised a 1% threshold based on our professional
judgement, noting it is within the range of commonly
acceptable asset-related thresholds in the mining
industry.
Our audit focused on where the Group made subjective
judgements; for example, significant accounting
estimates involving assumptions and inherently
uncertain future events.
In establishing the overall approach to the Group’s
audit, we determined the type of work that needed to be
performed by the group engagement team and by the
component auditor in Namibia operating under our
instruction. We structured our audit as follows:
•
•
•
The component auditor performed audit
procedures on the financial information of Langer
Heinrich Uranium (Pty) Ltd
The Group engagement team performed audit
procedures, as required due to their financial
significance, on the financial information of the
Group’s remaining subsidiaries, and
The Group engagement team and component
auditor had active dialogue throughout the year
through discussions, review of audit working
papers and written instructions and reporting.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report for the current period. The key audit matters were addressed in the
context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do
not provide a separate opinion on these matters. Further, any commentary on the outcomes of a
particular audit procedure is made in that context. We communicated the key audit matters to the
Audit and Risk Committee.
In addition to the matter described in the Material uncertainty related to going concern section, we
have determined the matter(s) described below to be the key audit matters to be communicated in our
report.
Key audit matter
How our audit addressed the key audit matter
Assessment of impairment indicators for
Langer Heinrich
(Refer to note 21) US$190.9 million in Property, plant
and equipment
The Group performed an assessment for impairment
indicators as required by Australian Accounting
Standards for the Langer Heinrich Cash Generating
Unit (CGU) mine which is currently in care &
maintenance.
As at 30 June 2020, the $220.4 million Namibian
segment non-current assets are attributable to the
Langer Heinrich CGU. The Group concluded that there
were no impairment indicators.
This was a key audit matter due to the significant
carrying value of the Group’s Langer Heinrich CGU and
the judgements required and assumptions used in
determining whether there were any impairment
indicators.
We evaluated the Group’s assessment of whether there
were any indicators of asset impairment at 30 June
2020 for the Langer Heinrich CGU.
We applied professional scepticism in our evaluation of
judgements made by the Group, by amongst other
procedures to evaluate its assessment:
•
•
•
•
comparing medium and long term uranium pricing
to external industry forecasts,
comparing resource estimates to Langer Heinrich
latest Resource Statement,
comparing production and processing volumes to
historical performance and technical
documentation of planned upgrades,
comparing operating costs and capital costs to
underlying Life of Mine plans,
• evaluated the competency and objectivity of the
expert retained by the Group to assist with the
preparation of the Life of Mine plans,
•
comparing foreign exchange and inflation rate
assumptions to current economic forecast, and
• evaluating the discount rate used by the Group,
including having regard to the inputs utilised in the
Group’s weighted average costs of capital with the
assistance of PwC valuation experts.
Closure and rehabilitation provisions
(Refer to note 26) US$32.1 million in Non-current
Provisions
As a result of its mining and processing operations, the
Group is obliged to restore and rehabilitate the
environment disturbed by these operations.
Rehabilitation activities are governed by a combination
of legislative and licence requirements. At 30 June
2020 the consolidated statement of financial position
included provisions for such obligations of US$32.1
million.
We obtained the Group’s assessment of their
obligations to rehabilitate disturbed areas and the
estimated future cost of that work, which forms the
basis for the closure and rehabilitation provision
calculations (the model) for the Langer Heinrich mine.
We evaluated and tested key assumptions utilised in
this model by performing the following procedures:
• evaluated the competency and objectivity of the
expert retained by the Group to assist with the
assessment of the Langer Heinrich rehabilitation
obligation,
Key audit matter
This was a key audit matter given the determination of
these provisions required judgement in the assessment
of the nature and extent of future works to be
performed, the future cost of performing the works, the
timing of when the rehabilitation will take place and
economic assumptions such as the discount rate and
inflation rates applied to future cash outflows
associated with rehabilitation activities to bring them to
their present value.
Sale of Paladin (Africa) Limited
(Refer to note 19)
On 13 March 2020, the Group completed the sale of
their 85% interest in Paladin (Africa) Limited.
There were a number of conditions precedent to
complete the Share Sale Agreement (SSA) for the
transaction to be recorded in the Group’s financial
results for the year.
The Group considered that the conditions precedent of
this transaction were substantially complete and
accounted for the disposal of their interest and
recognised US$12.1 million for the consideration,
resulting in a loss on sale of US$42.5 million.
This was a key audit matter as judgement was required
by the Group to determine whether the conditions
precedent to complete the SSA had been substantially
completed. Judgement was also required in the
determination of the fair value of the consideration
received.
How our audit addressed the key audit matter
•
compared the rehabilitation costs being estimated
at Langer Heinrich to an external expert’s
assessment of the rehabilitation obligation,
• examined the Group’s assessment for significant
changes in future cost estimates from the prior
year, with a focus on the impact on the timing and
amount of expenditure required,
• assessed the forecast timing of work to be
performed by comparison to mine plans and
environmental rehabilitation plans submitted to
relevant authorities, and
•
considered the appropriateness of the discount
rates and inflation rates utilised in calculating the
provision by comparing them to current market
consensus rates.
• We obtained and read the SSA to develop an
understanding of the performance obligations and
conditions precedent in the agreement. Based on
this understanding we evaluated the Group’s
assessment as to which performance obligations
and conditions were satisfied or substantially
complete as at 30 June 2020.
• We evaluated the accounting treatment of the
derecognition of the assets & liabilities previously
held for sale and the derecognition of the 15% non-
controlling interest in Paladin (Africa) Limited.
• We inspected evidence for the satisfaction of the
conditions precedent and subsequent completion of
the SSA.
• We inspected evidence of the receipt of proceeds
from Lotus Resources Limited, as required by the
SSA, during the year. For the deferred
consideration receivable, we evaluated the fair
value determined by management with the
assistance of PwC valuation experts.
• We evaluated the adequacy of the disclosures made
in Note 19 in light of the requirements of Australian
Accounting Standards.
Other information
The directors are responsible for the other information. The other information comprises the
information included in the annual report for the year ended 30 June 2020, but does not include the
financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not
express any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
If, based on the work we have performed on the other information that we obtained prior to the date of
this auditor’s report, we conclude that there is a material misstatement of this other information, we
are required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors 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 control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of the financial report.
A further description of our responsibilities for the audit of the financial report is located at the
Auditing and Assurance Standards Board website at:
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf. This description forms part of
our auditor's report.
Report on the remuneration report
Our opinion on the remuneration report
We have audited the remuneration report included in pages 25 to 37 of the directors’ report for the
year ended 30 June 2020.
In our opinion, the remuneration report of Paladin Energy Limited for the year ended 30 June 2020
complies with section 300A of the Corporations Act 2001.
Responsibilities
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.
PricewaterhouseCoopers
Justin Carroll
Partner
Perth
28 August 2020
Additional Information
Pursuant to the Listing Requirements of ASX as at 3 August 2020:
(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
18,227
1,399
886
1,865
581
22,958
No. of Shares
2,090,839
3,865,341
7,037,298
72,449,625
1,942,447,910
2,027,891,013
19,266 shareholders hold less than a marketable parcel of shares.
(b)
The twenty largest shareholders hold 83.29% of the total shares issued
No. of Shares
276,409,972
261,589,744
222,192,837
159,532,522
123,492,167
119,133,172
115,384,615
56,236,491
48,271,178
Holder
CITICORP NOMINEES PTY LIMITED
NDOVU CAPITAL XII B V
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
BNP PARIBAS NOMINEES PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED-GSCO ECA
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
HOPU CLEAN ENERGY (SINGAPORE) PTE LTD
SACHEM COVE SPECIAL OPPORTUNITIES FUND LP
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - A/C 2
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
2.27
2.01
BNP PARIBAS NOMS PTY LTD
1.77
MERRILL LYNCH (AUSTRALIA) NOMINEES PTY LIMITED
1.41
WASHINGTON H SOUL PATTINSON & CO LTD
1.41
BNP PARIBAS NOMINEES PTY LTD
1.38
NATIONAL NOMINEES LIMITED
1.29
SANDHURST TRUSTEES LTD
1.12
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
1.05
SACHEM COVE SPECIAL OPPORTUNITIES FUND LP
CS THIRD NOMINEES PTY LIMITED 15,613,072 0.77
0.65
CS FOURTH NOMINEES PTY LIMITED 13,178,449
45,981,485
40,823,286
35,875,264
28,686,505
28,664,980
27,986,026
26,132,351
22,611,374
21,200,000
%
13.63
12.90
10.96
7.87
6.09
5.87
5.69
2.77
2.38
Substantial shareholders as disclosed in substantial shareholder notices given to the Company are as follows:
1,688,995,490
83.29
Tembo Capital Mining Fund II LP and related entities
Paradice Investment Management Pty Ltd
HOPU Clean Energy (Singapore) Pte Ltd
Sachem Cove Special Opportunities Fund LP
(c)
Voting Rights
13.05%
9.516%
5.94%
5.00%
Ordinary Shares
For all shares, voting rights are one vote per member on a show of hands and one vote per share in a poll.
Share Appreciation Rights
There are no voting rights attached to share appreciation rights.
Performance Rights
There are no voting rights attached to performance rights.
(d) Securities Subject to Voluntary Escrow
There are no ordinary fully paid shares subject to voluntary escrow.
(e) Unquoted securities
Unlisted Share Appreciation Rights
The Company has 13,022,000 share appreciation rights on issue, issued in accordance with the Share Rights
Plan approved by shareholders in November 2018. The number of beneficial holders of share appreciation
rights totals 18.
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98
Additional Information (continued)
Unlisted Performance Rights
The Company has 49,000,000 performance rights on issue, issued in accordance with the Share Rights Plan
approved by shareholders in November 2018. The number of beneficial holders of performance rights totals
five.
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99
Additional Information (continued)
Tenements held
URANIUM PROJECTS
Project
Tenements
Interest %
JV Partner/s
Operator Note
NAMIBIA – AFRICA
Langer Heinrich
2 MLI
100%
LABRADOR/NEWFOUNDLAND – CANADA
Central Mineral Belt 15 MLC
60%
QUEENSLAND
Mount Isa
6 MDLs
100%
WESTERN AUSTRALIA
-
-
Manyingee
3 MLs
Carley Bore 2 ELs
100%
100%
-
-
NON-URANIUM PROJECTS
QUEENSLAND
Western Isa Joint Venture
LHUPL 1
AUR
PDN
PDN
PDN
Mount Isa
10 EPMs
20%
Aeon Metals Limited
1 EPM
18%
2%
Aeon Metals Limited
Centaurus Metals Limited
AML
AML
3
3
SOUTH AUSTRALIA
Reaphook JV
1 EL
7.5%
Perilya Limited
Signature Resources NL
Perilya
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100
Additional Information (continued)
Tenements held (continued)
Operators
Paladin Equity
(direct and indirect)
Note
AUR
CNNC
LHUPL
PAC
SRA
PDN
Notes
1.
2.
Aurora Energy Ltd
CNNC Overseas Uranium Holding Limited
Langer Heinrich Uranium (Pty) Ltd
Pacific Mines Pty Ltd
Summit Resources (Aust) Pty Ltd
Paladin Energy Ltd
60%
0%
75%
100%
100%
1
1
2
Paladin holds an ultimate 75% interest in LHUPL with 25% held by CNNC.
Aeon Metals Limited earned 80% equity in the Western Isa Joint Venture tenements through expenditure of
A$8M within three years of commencement (10 December 2007). SRA and Pacific Mines Pty Ltd have
retained up to 20% equity in each of these tenements. SRA retained up to 18% equity in one of these
tenements. Aeon Metals Limited were formally known as Aston Metals (Qld) Limited.
Tenement Types
EL
EPL
EPM
MDL
ML
MLI
MLC
Exploration Licence (Australia)
Exclusive Prospecting Licence (Africa)
Exploration Permit for Minerals (Australia)
Mineral Development Licence (Australia)
Mining Lease (Australia)
Mining Licence (Africa)
Mineral Licence (Newfoundland/Labrador)
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