Paladin Energy
Annual Report 2021

Plain-text annual report

ASX Announcement 27 August 2021 ANNUAL REPORT FOR THE YEAR ENDING 30 JUNE 2021 Paladin Energy Limited (ASX:PDN OTCQX:PALAF) (“Paladin” or “the Company”) is pleased to announce its financial results for the year ended 30 June 2021. FY2021 HIGHLIGHTS Financial and Operational Performance • During the year, Paladin continued to progress the critical-path elements of its Restart Plan1 for the globally significant Langer Heinrich Mine, including: − optimisation of pit design, tailings management and mining schedules − high level project delivery schedule development − appointment of key contractors • The Langer Heinrich Mine remained on care and maintenance during the year • The reset of Paladin’s capital structure via completion of the successful Placement and Entitlement Offer raising A$218.7M (before costs) with redemption and cancellation of the US$115M Senior Notes and the discharge of all related security • Cash expenditure for FY2021 of US$10.2M (excluding one-off equity raise costs of US$7.6M and payments associated with the redemption of the US$115M Senior Notes) • FY2022 cash expenditure is forecast to be US$12.2M, (including 100% Langer Heinrich Mine costs), an increase from FY2021 cash expenditure, primarily due to investment in future growth options through exploration and the impact of the forecast strengthening of the Australian and Namibian dollars. Cash receivables are forecast to be US$3M with US$1M expected from CNNC Overseas Holding Limited (Paladin’s minority shareholder in 1 ASX Announcement “Langer Heinrich Mine Restart Plan” dated 30 June 2020 the Langer Heinrich Mine) to fund Langer Heinrich care and maintenance activities and US$2M expected from Lotus Resources Limited associated with the repayment of the environmental bond from the sale of Paladin (Africa) Ltd • Net loss after tax from continuing operations for FY2021 was US$58.3M (FY2020 loss of US$46.1M), with the increased loss due to a non-cash revaluation of subsidiary loans • The Company held US$30.7M1 of cash and cash equivalents as at 30 June 2021, and holds no corporate debt. Health & Safety • Paladin had no lost time injuries or reportable environmental incidents during FY2021 • Five employees at the Langer Heinrich Mine tested positive to COVID-19 during the year. These employees have all recovered and returned to work • The Company continued to maintain appropriate protocols across all locations to minimise the potential transmission of COVID-19. Corporate • Ms Melissa Holzberger and Ms Joanne Palmer were appointed as independent non-executive directors of the Company during FY2021. • Paladin further expanded the strength and breadth of its management team during the year with the appointments of Mr Jonathon Clements (General Manager Projects and Development), Mr Jess Oram (General Manager Exploration) and Mr Alex Rybak (General Manager Business Development & Marketing) • An equity raise by way of a fully underwritten pro-rata accelerated non-renounceable entitlement offer and institutional placement, raising A$218.7M, was completed during the year • Proceeds from the Equity Raise were used to fully redeem the US$115M Senior Notes. The reset of Paladin’s capital structure has cleared the Company’s corporate debt, providing capital flexibility and a platform to maximise shareholder value upon expected improvements in the uranium market. Paladin CEO, Ian Purdy said “With our successful equity raising and debt redemption during the year, Paladin is now strongly placed to continue progressing the Langer Heinrich Mine towards restarting production and advancing our portfolio of high-grade exploration assets. The addition of Jonathon, Jess and Alex to Paladin’s executive management team have significantly strengthened our internal skill sets. At the Langer Heinrich Mine we continue to focus on the continued de-risking of the mine restart. We continue to engage with global nuclear energy utilities to secure long term contracts to underpin the restart of the Langer Heinrich Mine and ensure the project, when re-started, will deliver significant economic benefit to all of our shareholders.” 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 OTCQX:PALAF) is an Australian listed uranium company focused on maximising the value of its 75% stake in the Langer Heinrich 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. 1 Excluding restricted cash of US$1M Paladin Energy Ltd 2 Appendix 4E - Financial Report Financial year ended 30 June 2021 Paladin Energy Ltd ABN or equivalent company reference ACN 061 681 098 Results for announcement to the market Revenue from sales of uranium oxide Up 100% Revenue Up 100% Loss after tax attributable to members Down 45% Net loss for the year attributable to members Down 45% 30 June 2021 US$’000 30 June 2020 US$’000 to to to to 2,985 2,985 - - (43,983) (79,866) (43,983) (79,866) Loss per share (US cents) (2.0) (4.1) 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$0.09 US$0.04 30 June 2021 30 June 2020 Other Previous corresponding period is the year ended 30 June 2020. All foreign subsidiaries are prepared using IFRS. TABLE OF CONTENTS Corporate Directory ......................................................................................... 3 Chairman’s Letter ............................................................................................ 4 Insights from the CEO ...................................................................................... 5 Operating and financial review........................................................................... 8 Ore Reserves and Mineral Resources ................................................................. 11 Health and Safety / Sustainable Development ..................................................... 16 Coporate Governance Statement ...................................................................... 17 Directors' Report ............................................................................................ 18 Remuneration Report ...................................................................................... 24 Contents of the Financial Report ....................................................................... 39 Consolidated Income Statement ....................................................................... 40 Consolidated Statement of Comprehensive Income ............................................. 41 Consolidated Statement of Financial Position ...................................................... 42 Consolidated Statement of Changes in Equity ..................................................... 43 Consolidated Statement of Cash Flows ............................................................... 44 Notes to the Consolidated Financial Statements .................................................. 45 Directors' Declaration ...................................................................................... 88 Independent Audit Report ................................................................................ 89 Additional Information..................................................................................... 95 Paladin Energy Ltd 2 Corporate Directory DIRECTORS Non-Executive Chairman Mr Cliff Lawrenson Non-Executive Directors Mr Peter Main Mr Peter Watson Ms Melissa Holzberger Ms Joanne Palmer Chief Executive Officer Mr Ian Purdy Company Secretary REGISTERED OFFICE Mr Jeremy Ryan Level 8, 191 St Georges Terrace Perth Western Australia 6000 Telephone: (+61 8) 9423 8100 Facsimile: (+61 8) 9381 4978 Email: paladin@paladinenergy.com.au Web: www.paladinenergy.com.au SHARE REGISTRY Computershare Investor Services Pty Ltd INVESTOR RELATIONS AUDITORS STOCK EXCHANGE LISTINGS 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 Alex Rybak Level 8, 191 St Georges Terrace Perth Western Australia 6000 (PO Box 8062 Cloisters Square PO WA 6850) Telephone: (+61 8) 9423 8135 Facsimile: (+61 8) 9381 4978 Email: alex.rybak@paladinenergy.com.au PricewaterhouseCoopers 125 St Georges Terrace Perth Western Australia 6000 Australian Securities Exchange Code: PDN 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. Paladin Energy Ltd 3 Chairman’s Letter Dear Stakeholders On behalf of your Board of Directors, I am delighted to present the 2021 Annual Report. During the 2021 Financial Year (FY2021), we achieved a number of important milestones as Paladin’s team works towards restarting our Langer Heinrich Mine and unlocking significant shareholder value. Our Langer Heinrich Mine, located in Namibia, remains a globally significant asset within the uranium sector. The Mine Restart Plan1 completed in 2020 highlighted the strategic significance of the asset and the potential economic returns that can be delivered to shareholders under the right uranium price environment. The team continues to refine and progress the work packages required to deliver the Langer Heinrich Mine back into production and to ensure that we execute the project with minimised risk. With the growing global demand for electricity, and the targets for reduced CO2 emissions, nuclear energy will continue to play a key role in the decarbonisation of global power generation. At Paladin, we stand ready to contribute positively to the reduction of carbon emissions. Uranium mining and processing are critical components of the nuclear fuel cycle as they provide the raw material for producing clean, sustainable base-load electricity. The uranium which will be mined and processed at the Langer Heinrich Mine in the future and used to resource nuclear power plants to displace coal-fired electricity will significantly contribute to reducing CO2 emissions over the life of the mine. During the year we restated our core sustainability commitments to the critical areas that underpin our shared present and our future: Health, Safety and Wellbeing, People and Opportunity, Community and Social Investment and Environmental Stewardship, via our 2020 Sustainability Update. At Paladin, we are committed to upholding our sustainability standards for our people, communities and environment. In this, we are clear that our personal actions will always reflect both Paladin’s values and our sustainability commitments. Importantly, during the year, the Company undertook a transformational reset of our capital structure. The Company now has no corporate debt and the benefit of increased capital flexibility will provide a solid foundation for management to continue its focus on the Langer Heinrich Mine restart and value creation for equity holders in an improving uranium market. We extended our Board of Directors during the year with the addition of Melissa Holzberger and Joanne Palmer as independent Non-Executive Directors. Melissa’s extensive experience in legal, governance and compliance roles and Joanne’s experience within audit and financial services will help strengthen the Board’s experience and expertise. The appointment of Melissa and Joanne reflects Paladin’s commitment to maintaining the highest standards of governance. Their appointments enhance the attributes, experience and diversity of our Board, providing a broader skill set to ensure the effective governance of our Company. I would like to take this opportunity to thank all of our stakeholders, particularly our staff in Australia, Namibia and Canada, for their ongoing support and commitment to our efforts in advancing Langer Heinrich towards restarting production. Finally, on behalf of the Board I would like to thank you, our shareholders, for your continued support and I look forward to reporting on the progress we make over the coming year. Yours faithfully Cliff Lawrenson Chairman 1 ASX Announcement “Langer Heinrich Mine Restart Plan” dated 30 June 2020 Paladin Energy Ltd 4 Insights from the CEO Dear Shareholders The 2021 Financial Year (FY2021) has been another year of significant progress for Paladin. Over the course of the year we completed the transformation of the company and returned Paladin to its position as an industry leading Uranium company. Key achievements included: • Advancing the Langer Heinrich Mine restart planning and further de-risking the operational restart activities • Extending our leadership team to ensure we have the right skills to bring the Langer Heinrich Mine back into production and pursue our existing growth opportunities • Completing a transformational reset of our capital structure through the redemption of our corporate debt, and • Continuing our marketing activities to secure long-term uranium offtake agreements. During the year Paladin also committed to a shared accountability to the core principle of delivering value through sustainable development. Our Paladin Values support every decision we take, and we proactively uphold key operating responsibilities to ensure we are considered and transparent in all we do. With these strong foundations, we can focus on achieving economic, social and environmental sustainability in balanced and successful ways for all stakeholders. Advancing the Langer Heinrich Mine towards production Our primary focus during the year was advancing activities to return the Langer Heinrich Mine back to production. Paladin owns 75% of the Langer Heinrich Mine located in Namibia, which commenced operations in 2007 and has produced and sold over 43Mlb of U3O8 to date. The mine was transitioned into care and maintenance in August 2018 due to the sustained low uranium price. The release of the Langer Heinrich Mine Restart Plan1 (the Restart Plan) in FY2020 provided a low risk, reliable restart plan balancing the ability to rapidly respond to strengthening uranium prices and maximising asset value. Since its release the Company has continued to progress the restart plan and engage with our key consultants AMC (mine planning), Lycopodium Minerals (engineering) and Elemental Engineering (processing). Work programmes included: • Optimisation of pit shells and improved pit design with revised wall angles and detailed geometallurgical data input into resource models for the mining phase • Developing a separate detailed geometallurgical model for the first year mining of the medium grade stockpile • Updating the Mineral Resource model including the validation of dilution assumptions from historical mining data • Engagement with the previous mining contractor on future improvements • Completing various discipline reports (civil, structural, tanks, electrical, instruments, piping and valves) on plant and equipment condition, ready for prioritisation and detailed costing • Completing detailed analysis of historical plant performance from the metallurgical database and establishing key process issues and drivers • Completing reports on plant run-time and capacity, at target grades and crushed ore volumes, and • Engagement of original equipment manufacturers to provide technical support for target process and equipment improvements. 1 ASX Announcement “Langer Heinrich Mine Restart Plan” dated 30 June 2020 Paladin Energy Ltd 5 Insights from the CEO (continued) The engagement of high calibre industry experts, and our own detailed project work, will ensure that, when the right uranium pricing market prevails, the Langer Heinrich Mine can be successfully restarted delivering value to all stakeholders. During the year the Company also continued its care and maintenance activities at the Langer Heinrich Mine, which are focused on maintaining the operational integrity of the plant and ensuring all plant and equipment is in a state of readiness for a production restart. Our People Our people remain the key to the ongoing success of our Company. We have carefully recruited over the year to ensure we have the right team to bring the Langer Heinrich Mine back into production and drive the future growth of the Paladin. • • Jonathon Clements was appointed General Manager Projects and Development. Jonathon is a mining and mineral processing industry professional with over 30 years’ of experience in the resources industry. His extensive experience and qualifications include the management of large sustaining capital portfolios, feasibility studies, maintenance and global projects from concept to construction Jess Oram was appointed as General Manager Exploration. Jess is an experienced exploration geologist and manager with over 25 years’ of experience in mineral exploration and management across a variety of commodities and companies • Alex Rybak was appointed General Manager Business Development & Marketing. Alex is an M&A, Business Development and Strategy professional with over 20 years’ of experience, spanning both in-house and in advisory capacities across a broad range of sectors including mining, oil & gas, healthcare and financial services. The health and safety of our people remains a core 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 continued to implement a range of protocols across all of our locations aimed at reducing the potential for transmission. Strong balance sheet provides flexibility Paladin completed a transformational reset of our capital structure during FY2021. The Company undertook an equity raise by way of a fully underwritten pro-rata accelerated non-renounceable entitlement offer and institutional placement to raise A$218.7M. The entitlement offer and institutional placement were both heavily oversubscribed, demonstrating investors’ confidence that Paladin is well positioned to take advantage of expected improvements in the uranium market. The successful equity raise and Senior Note redemption resulted in: • A reset the Company’s capital structure, significantly improving the Company’s financial strength and resilience; • Removal of the legacy corporate debt via the redemption of the US$115M Senior Notes; • Increased optionality on future funding structures for the capital required to restart the Langer Heinrich Mine; and • Strengthening of the Company’s uranium marketing position as a preferred counterparty. With unrestricted cash reserves of US$30.7M at 30 June 2021, the Company maintains a disciplined and patient approach to restarting the Langer Heinrich Mine and has the financial flexibility to respond to market conditions. We will only restart operations after securing an appropriate term-price contract with sufficient tenure and value to deliver an appropriate return to all stakeholders. Paladin Energy Ltd 6 Insights from the CEO (continued) Uranium market fundamentals remain positive In the face of the COVID-19 pandemic, global nuclear power generation remained stable in FY2021. China remains at the cornerstone of global nuclear growth with four units added to the grid over the past 12 months and construction commencing on a further eight new nuclear plants. Worldwide, FY2021 saw a total of ten new reactors enter commercial operation, including in the United Arab Emirates and Belarus. With 54 reactors under construction across 20 countries, the outlook for nuclear power remains positive. The advancement of Small Modular Reactor technology in multiple countries is expected to provide additional impetus to uranium demand in future years. With many operating nuclear plants economically disadvantaged by market deregulation in the United States, the successful implementation of a US$1.2 trillion infrastructure bill introduced by the Biden administration will provide key industry support. The first half of 2021 has seen the re-emergence of strong secondary uranium demand via financial entities and junior uranium developers. More than 15 million pounds of uranium has been purchased by these market players so far in 2021. Of particular note is the recently established Sprott Physical Uranium Trust which already holds approximately 19 million pounds of uranium and which is expected to simplify and expand investor ownership of physical material going forward. In contrast with the demand side of the industry, the COVID-19 pandemic has had a notable impact on global uranium supply. Extended shut-downs at Cigar Lake in Canada alongside production cut-backs in Kazakhstan combined to remove almost 28 million pounds from planned uranium production in FY2021. During 2021 the market has also seen the permanent closure of long-standing operations in Australia (Ranger) and Niger (Akouta), removing upwards of six million pounds per annum of primary uranium supply. Kazakhstan intends to maintain a 20% reduction to production through 2023, reducing market supply by an additional 20 million pounds in aggregate. Production cut-backs have increased the rate of inventory drawdown by global nuclear utilities. Inventory levels held by US and European utilities are at their lowest for several years and will continue to reduce in coming years. Meanwhile forward uranium contracting has remained well below replacement levels, exacerbating future supply imbalances. The normalisation of uranium contracting remains a key influence to a return to incentive prices required for the resumption of production at the Langer Heinrich Mine. Outlook We are looking forward with confidence as we continue to progress the restart of our world class Langer Heinrich Mine and assess growth opportunities within the company’s high-grade global exploration portfolio. The Restart Plan highlighted that Langer Heinrich is competitively positioned versus other suspended uranium mines and greenfield projects due to its low levels of restart capital and its low operating costs. With strong project economics, we anticipate Langer Heinrich will be at the forefront of the next wave of uranium mines commissioned to meet the structural shortage in uranium supply. I would like to thank all our staff, contractors and consultants for their hard work and dedication over the year. I would also like to thank the Board of Directors for their ongoing support and finally, I would like to thank our shareholders for your continued support of the Company. The positive outlook for uranium markets and Paladin’s opportunity to positively impact the decarbonisation of global electricity generation provides the platform for an exciting year ahead. Yours faithfully Ian Purdy Chief Executive Officer Paladin Energy Ltd 7 Operating and Financial Review OVERVIEW OF OPERATIONS Paladin Energy Limited (ASX:PDN OTCQX:PALAF) is an Australian listed uranium company focused on maximising the value of its 75% stake in the Langer Heinrich Uranium Mine (LHM) 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. The Company is incorporated under the laws of Australia with a primary share market listing on the Australian Securities Exchange (ASX) and the Namibian Stock Exchange (NSX). The Company also trades on the OTCQX market in the United States of America and the Munich, Berlin, Stuttgart and Frankfurt markets. HIGHLIGHTS Health & Safety • Paladin had no lost time injuries or reportable environmental incidents during FY2021 • Five employees at the Langer Heinrich Mine tested positive to COVID-19 during the year. These employees have all recovered and returned to work • The Company continued to maintain appropriate protocols across all locations to minimise the potential transmission of COVID-19. Operational Performance • During the year, the Company continued to progress the critical-path elements of its plan to restart the globally significant Langer Heinrich Mine, including: - optimisation of pit design, tailings management and mining schedules - - high level project delivery schedule development appointment of key contractors • The Langer Heinrich Mine remained on care and maintenance during the year • There were no production or development activities during the year. Exploration • During the year, the Company has undertaken the work required to meet minimum tenement commitments at its exploration projects in Canada and Australia • 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 60% to 65%. Corporate • Ms Melissa Holzberger and Ms Joanne Palmer were appointed as independent non-executive directors of the Company during FY2021 • Paladin further expanded the strength and breadth of its management team during the year with the appointments of Mr Jonathon Clements (General Manager Projects and Development), Mr Jess Oram (General Manager Exploration) and Mr Alex Rybak (General Manager Business Development & Marketing) • An Equity Raise by way of a fully underwritten pro-rata accelerated non-renounceable entitlement offer and institutional placement, raising A$218.7M, was completed during the year proceeds from the equity raise were used to fully redeem the US$115M Senior Notes • The reset of Paladin’s capital structure has cleared the Company’s corporate debt, providing capital flexibility and a platform to maximise shareholder value upon expected improvements in the uranium market. Paladin Energy Ltd 8 Operating and Financial Review (continued) FINANCIAL PERFORMANCE Key financial performance metric Earnings Average selling price U3O8 sold Revenue Cost of sales Net loss after tax from continuing operations (Loss)/profit after tax from discontinued operations Cash Flows Cash flows from operating activities Capital expenditure Free cash flows Financial Position Unrestricted cash and cash equivalents Debt (principal amount + accrued interest) Net debt Total equity Gearing ratio (Net debt / (net debt + equity)) US$/lb Mlb US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 % Earnings Year ended 30 June 2021 2020 % Change 29.85 100,000 2,985 (2,973) (58,258) - - - - (46,051) 100 100 100 100 27 - (46,401) (100) (5,565) (3,261) (8,826) 30,661 - - 246,708 - (11,478) (4,346) (15,824) 34,237 145,745 111,508 92,999 55 (52) (25) (44) (10) (100) (100) 165 100 Net loss after tax from continuing operations increased by 27%, mainly as a result of foreign exchange losses of US$3,934,000 (2020: foreign exchange gain US$8,279,000) which is predominantly due to the foreign exchange translation of the environmental rehabilitation provision in Namibia. The Namibian dollar appreciated 17% during the year, from US$1:N$17.2708 at 30 June 2020 to US$1:N$14.3121 at 30 June 2021. Cash Flows The Group had unrestricted cash and cash equivalents at 30 June 2021 of US$30,661,000. Unrestricted cash and cash equivalents decreased by US$3,576,000 during the year comprising of the following cash flows: • Receipts from customers – proceeds from a spot sale of 100,000lb of uranium of US$2,985,000. • Cost of sales – cost of sales relating to the spot sale of US$2,973,000. • Placement and Entitlement Offer – net proceeds from issue of shares US$158,963,000. • Redemption of Senior Secured Notes – repayment of US$115,000,000 senior secured notes plus redemption premium and accrued interest of US$42,765,000. • Interest received & paid and other income – the Group received cash inflows of US$1,438,000, including US$1,316,000 proceeds from the final settlement for litigation related to previous activities at the Kayelekera Mine (not related to the sale to Lotus Resources Ltd). • Proceeds from sale of Paladin (Africa) Ltd – the Group received US$1,000,000 from Lotus Resources Ltd: the second tranche of repayment of funds advanced to provide security for the US$10,000,000 environmental performance bond. • Langer Heinrich expenditure – ongoing C&M, Langer Heinrich Mine utilised US$3,050,000 in cash flows from operations. • Langer Heinrich restart study costs – the Group incurred US$2,142,000 in restart study expenditure. • Exploration expenditure – the Group utilised US$1,081,000 for minimum tenement commitments at its exploration projects. Paladin Energy Ltd 9 Operating and Financial Review (continued) • Corporate expenditure – during the year US$3,764,000 was paid for corporate costs. • Payments for property, plant and equipment – during the year US$38,000 was paid for property, plant and equipment. • Effect of movement in exchange rates on cash held – US$3,002,000 was predominantly due to an increase in Australian dollars following the completion of the equity raising and held to cover corporate expenditure. Financial Position Unrestricted group cash and cash equivalents decreased by 10% to US$30,661,000. Debt decreased by 100%, from US$145,745,000 at 30 June 2020 to Nil at 30 June 2021 as Paladin fully redeemed the US$115,000,000 Senior Notes in April 2021. This resulted in the Company’s gearing ratio decreased from 55% at 30 June 2020 to Nil at 30 June 2021. Paladin Energy Ltd 10 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. Paladin Energy Ltd 11 AustraliaCanadaNamibiaNewfoundlandand Labrador Happy ValleyGoose BayQuebecPostvilleSt JohnsCanadaMichelinAdvanced ExplorationKilometers0300NCarley BoreExplorationMount IsaPre-developmentNTQLDWASANSWVICTASManyingeeAdvancedExplorationPerthSydneyHobartAdelaideBrisbaneDarwinKilometers01,000NHead OfficePerth, WAKilometers0300NZimbabweNamibiaSouthAfricaAngolaBotswanaZambiaWindhoekWalvis BaySwakopmundLanger HeinrichMine on Care & Maintenance Ore Reserves and Mineral Resources (continued) NAMIBIA Langer Heinrich Langer Heinrich is located in central western Namibia approximately 80km east of Swakopmund. Langer Heinrich is a surficial calcrete type uranium deposit containing a JORC Code (2012) compliant Mineral Resource of 119.7Mlb U3O8 at a grade of 445ppm U3O8 and 38.8Mlb V2O5 at grade of 145ppm V2O5 at a cut-off 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. The Langer Heinrich Mine transitioned to care and maintenance 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 65% interest (increased from 60% 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 until May 2023 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 U3O8 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 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. Paladin Energy Ltd 12 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. 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 FY2021. There were no material changes to the Company’s Mineral Resources and Ore Reserves. Uranium Mineral Resources 30 June 2021 Grade ppm U3O8 Mlb U3O8 Mt 30 June 2020 Grade ppm U3O8 Mlb U3O8 Mt Change Mlb U3O8 Mt Langer Heinrich1 Namibia Measured In-situ MG ROM stockpiles Lg ROM stockpiles Total Measured Indicated In-situ Inferred In-situ Stockpiles 66.2 4.7 26.1 97.0 490 520 325 445 71.9 5.4 18.7 95.9 66.2 4.7 26.1 97.0 490 520 325 445 71.9 5.4 18.7 95.9 18.8 435 18.0 18.8 435 18.0 6.3 - 420 - 5.8 - 6.3 - 420 - 5.8 - - - - - - - - - - - - - - - 1 JORC Code (2012) compliant Paladin Energy Ltd 13 Ore Reserves and Mineral Resources (continued) Uranium Mineral Resources 30 June 2021 Grade ppm U3O8 Mlb U3O8 Mt 30 June 2020 Grade ppm U3O8 Mlb U3O8 Mt Change Mlb U3O8 Mt Canada Measured Indicated Inferred Australia Measured Indicated Inferred Michelin1 Rainbow Gear Inda Jacques Lake1 Michelin Nash Rainbow Gear Inda Jacques Lake1 Michelin1 Nash Rainbow 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 Manyingee 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 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 1 JORC Code (2012) compliant Paladin Energy Ltd - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 14 Ore Reserves and Mineral Resources (continued) Vanadium Mineral Resources 30 June 2021 Grade ppm V2O5 Mlb V2O5 Mt 30 June 2020 Grade ppm V2O5 Mlb V2O5 Mt Change Mlb V2O5 Mt Langer Heinrich1 Namibia Measured In-situ MG ROM stockpiles LG ROM stockpiles Total Measured Indicated In-situ Inferred In-situ 66.2 4.7 26.1 97.0 160 170 105 145 23.3 1.8 6.0 31.1 66.2 4.7 26.1 97.0 160 170 105 145 23.3 1.8 6.0 31.1 18.8 140 5.8 18.8 140 5.8 6.3 135 1.9 6.3 135 1.9 - - - - - - - - - - - - Uranium Ore Reserves Langer Heinrich1 Namibia Proven Probable Stockpiles 30 June 2021 Grade ppm U3O8 Mlb U3O8 Mt 30 June 2020 Grade ppm U3O8 Mlb U3O8 Mt Change Mlb U3O8 Mt 42.0 13.1 30.8 525 485 355 48.5 14.0 24.0 42.0 13.1 30.8 525 485 355 48.5 14.0 24.0 - - - - - - Figures may not add due to rounding. Mineral Resources and Ore Reserves quoted on a 100% basis. All 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. 1 JORC Code (2012) compliant Paladin Energy Ltd 15 Health and Safety / Sustainable Development SUSTAINABILITY Paladin is committed to the core principle of delivering value through sustainable development. Our Paladin Values, Integrity, Respect, Courage and Community, support every decision we take, and we proactively uphold key operating responsibilities to ensure we are considered and transparent in all we do. With these strong foundations, we can focus on achieving economic, social and environmental sustainability in balanced and successful ways for all stakeholders. Paladin recognises it has a key role to play in reducing global carbon emissions as a fuel supplier to the Nuclear Power industry. During FY2020 the Company restated its Sustainability Commitments: Health, Safety and Wellbeing We put the health, safety and wellbeing of our workforce and all stakeholders at the forefront, with a positive culture of safety that underpins all our decisions and actions. People and Opportunity We value and respect all our people as central to what we do, embracing diversity and promoting equal opportunities to thrive and be recognised. Community and Social Investment We engage positively with local communities, actively listening and contributing to their social prosperity and development with integrity. Environmental Stewardship We protect the environment and work to minimise our impacts on it, achieving continuous improvements in sustainability practices and committing to support emission reductions to achieve the goals of the Paris Agreement on climate change. A copy of Paladin’s 2020 Sustainability Report can be found on the Company’s website paladinenergy.com.au. The Company will release its 2021 Sustainability Report in October 2021. Paladin Energy Ltd 16 Corporate Governance Statement CORPORATE GOVERNANCE FRAMEWORK The Board of directors of Paladin Energy Ltd recognises the importance of its corporate governance framework in establishing accountabilities, guiding and regulating activities, monitoring and managing risks and optimising Paladin’s performance. Paladin, as a listed entity, must comply with the Corporations Act 2001 (Cth), Australian Securities Exchange Listing Rules (ASX LR) and other Australian and international laws. Paladin reviews and amends its corporate governance policies as appropriate to reflect the growth of the Company, current legislation and best practice. Paladin’s website www.paladinenergy.com.au includes copies or summaries of key corporate governance policy documents. The website also contains copies of all Board and Committee Charters. Paladin’s Corporate Governance Statement, dated 30 June 2021 and approved by the Board on 26 August 2021, outlines the key governance principles and practices of the Company which, taken as a whole, sets out the Company’s governance framework. In accordance with ASX Listing Rule 4.10.03 the Corporate Governance Statement is aligned with the fourth edition Corporate Governance Principals and Recommendations published by the ASX Corporate Governance Council in February 2019. 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 and the current Annual Financial Report. The Corporate Governance Statement, together with the Appendix 4G, has been lodged with the ASX. Paladin Energy Ltd 17 Directors’ Report The Directors of Paladin Energy Ltd present their report together with the financial report of the Group consisting of Paladin Energy Ltd and the entities it controlled at the end of, or during, the year ended 30 June 2021 and the auditor’s report. During the year, Paladin appointed two new non-executive directors to provide additional experience and resources in order to maintain the highest standards of governance. The Company has previously announced the following changes to the Board of Directors: • Ms Melissa Holzberger appointed Non-Executive Director (13 May 2021) • Ms Joanne Palmer appointed Non-Executive Director (13 May 2021) Ms Holzberger has extensive executive and non-executive experience in legal, governance and compliance roles and Ms Palmer has experience within audit and financial services which will broaden the Board’s experience and expertise. DIRECTORS The following persons were Directors of Paladin Energy Ltd and were in office for the period stated: Mr Cliff Lawrenson B.Com (Hons) (Non-Executive Chairman) Mr Lawrenson is an experienced non-executive director having served on or chaired public and private companies for over 15 years after a successful career in executive leadership, including in investment banking. Mr Lawrenson holds postgraduate qualifications in commerce and finance and has worked extensively in the resources and energy sectors, across the world. He has a successful track record of leading strategic direction in companies and executing complex corporate transactions. Special Responsibilities Member of Audit & Risk Committee Chairman of Remuneration, Nomination & Governance Committee Current listed company Directorships: Australian Vanadium Limited, Caspin Resources Ltd and Canyon Resources Ltd Former listed company Directorships (last three years): Atlas Iron Limited Mr Peter Watson B Eng (Hons), FIEAust, GAICD, RPEQ (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 & Risk Committee Member of Remuneration, Nomination & Governance Committee Chairman of Technical & Sustainability Committee Current listed company Directorships: Strandline Resources Ltd and New Century Resources Ltd. Former listed company Directorships (last three years): Resource Generation Ltd and Evacuation Services Australia Pty Limited Paladin Energy Ltd 18 Directors’ Report (continued) Mr Peter Main B Bus. (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 through to CEO in the later years 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. 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. Prior to that Mr Main 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 & Risk Committee Member of Remuneration, Nomination & Governance Committee Current listed company Directorships: Carbine Resources Limited Former listed company Directorships (last three years): Rizal Resources Ms Melissa Holzberger LLM Resources Law (Distinction) (Scotland), Dip. International Nuclear Law (Hons) (France), LLB (Adel), BA (Adel), GDLP, FGIA, GAICD (appointed 13 May 2021) (Non-Executive Director) Ms Melissa Holzberger is a commercial and mining lawyer with over 20 years’ experience in the energy and resources sector, including the uranium industry. She is an experienced company director having served on ASX-listed, public, government and not-for-profit boards spanning a wide range of sectors. She brings legal, risk, compliance, corporate ethics and corporate governance expertise, together with valuable experience in uranium mining operations and projects, international trade, logistics, product stewardship and sustainability having previously worked for both BHP and Rio Tinto. Ms Holzberger is a member of the Federal Government’s Australian Radiation Protection and Nuclear Safety Agency’s Radiation Health and Safety Advisory Council and founding Principal of Sloan Holzberger Lawyers. Current listed company Directorships: Silex Systems Limited Ms Joanne Palmer RCA, FCA (ICAEW), FCA (ICAA), GAICD, BSc Hons Mathematics & Statistics (appointed 13 May 2021) (Non-Executive Director) Ms Joanne Palmer is a Registered Company Auditor and a Fellow of Chartered Accountants in Australia, England and Wales. Ms Palmer is currently an Executive Director of Pitcher Partners in Perth. Ms Palmer brings over 25 years of industry experience providing audit and assurance services on company listings, mergers, acquisitions and takeovers and significant experience in auditing international mining companies. Ms Palmer is a council member of the Association of Mining & Exploration Companies (AMEC). Ms Palmer has had an extensive financial services career including leading Ernst and Young’s Financial Accounting Advisory Services team in Perth, working predominantly in the mining sector assisting both multinational companies, mid-caps and junior explorers with technical accounting, regulatory advice and finance function support services. Current listed company Directorships: None CHIEF EXECUTIVE OFFICER Mr Ian Purdy BCom, FCA, FAICD (Chief Executive Officer) 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. Paladin Energy Ltd 19 Directors’ Report (continued) COMPANY SECRETARY Mr Nathan Bartrop BCom, LLB, FGIA, FCG (appointed 26 February 2021) (Company Secretary) Mr Bartrop is a corporate governance professional (Chartered Secretary) with over 10 years’ experience in ASX Listing Rules compliance, corporate advisory and corporate governance. Mr Bartrop has assisted numerous listed and dual listed entities across a wide range of industries as Company Secretary. During his career Mr Bartrop has also worked as an ASX listings compliance adviser at ASX in Perth and Sydney, where he was actively involved in the new listing of companies on the ASX and advising listed entities on their compliance with ASX listing rules. He is a Fellow and WA State Council member of the Governance Institute of Australia. Ms Andrea Betti CA, AGIA, BCom, MBA (resigned 26 February 2021) (Joint Company Secretary) 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 (resigned 26 February 2021) (Joint Company Secretary) 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. 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 Technical & Sustainability1 Remuneration, Nomination & Governance Committee Name Mr Cliff Lawrenson Mr Peter Watson Mr Peter Main Ms Melissa Holzberger Ms Joanne Palmer Number attended 6 6 6 1 1 Number eligible to attend 6 6 6 1 1 Number attended 4 4 4 12 12 Number eligible to attend Number attended Number eligible to attend Number attended Number eligible to attend 4 4 4 1 1 22 4 22 12 12 4 4 4 1 1 2 2 2 - - 2 2 2 - - 1 Committee changed its name to Technical & Sustainability in February 2021 2 Indicates that a Director attended some or all meetings by invitation whilst not being a member of a specific committee Paladin Energy Ltd 20 Directors’ Report (continued) 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 8 to 10 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$58,258,000 (2020: loss after tax US$46,051,000) representing an increase of 27% from the previous year. DIVIDENDS No dividend has been paid during the financial year and no dividend is recommended for the current year. SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS Significant changes in the state of affairs of the Group during the financial year were as follows: Capital Raising In April 2021, Paladin successfully completed an equity raise by way of a fully underwritten pro-rata accelerated non-renounceable entitlement offer and institutional placement, to raise A$218.7M. The fully underwritten A$218.7M equity raise comprised: • An institutional placement of 347.3M new fully paid ordinary shares in Paladin to raise A$128.5M (Placement); and • A 1 for 8.5 pro-rata accelerated non-renounceable entitlement offer of 243.7M new shares to raise A$90.2M (Entitlement Offer) All new shares were issued at a price of A$0.37 per new share under the equity raise. Cancellation of Senior Secured Notes On 12 May 2021, Paladin completed the cancellation of all the US$115M Senior Notes that were repayable in January 2023. Commenced trading on U.S. based OTCQX Market On 2 June 2021, Paladin commenced trading on the OTCQX market. The OTCQX is the top market tier operated by OTC Market Group, Inc. in New York, on which over 11,000 U.S. and global securities trade. This allows for greater access to retail and small institutional investors, with investors being able to trade and settle in U.S. hours and U.S. dollars, allowing for greater visibility and accessibility of the Company. APPOINTMENT OF NEW NON-EXECUTIVE DIRECTORS On 13 May 2021, Paladin appointed Ms Melissa Holzberger and Ms Joanne Palmer as Non-Executive Directors. APPOINTMENT OF THREE NEW EXECUTIVES On 12 October 2020 Mr Jonathon Clements was appointed General Manager Projects and Development. On 28 June 2021, Paladin announced the appointed Mr Jess Oram as General Manager Exploration and Mr Alex Rybak as General Manager Business Development & Marketing effective from 19 July 2021. SIGNIFICANT EVENTS AFTER THE BALANCE DATE Since the end of the financial year, the Directors are not aware of any other matter or circumstance not otherwise dealt with in this report, 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. Paladin Energy Ltd 21 Directors’ Report (continued) 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 (KMP) 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 KMP for FY2020 and FY2021 and the intrinsic value of share-based payments that vested to KMP during the period. In FY2021 shares issued upon the vesting of Performance Rights during the year are subject to a 12-month voluntary escrow with a holding lock in place from the date of issue and have therefore not been disclosed in the tables below. This voluntary disclosure is in addition and different to the disclosures required by the Corporations Act and Accounting Standards, particularly in relation to performance and share rights. As a general principle, the Accounting Standards require a value to be placed on performance and share rights based on probabilistic calculations at the time of grant, which may be reflected in the remuneration report even if ultimately the rights do not vest because vesting conditions are not met. By contrast, this table discloses the intrinsic value of rights, which represents only those 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 FY2021. The tables do not include the accounting value for performance 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. The Company is undergoing a comprehensive review of its executive remuneration policy and practice which is being conducted by an independent remuneration specialist. The review is centred on strengthening the alignment between variable remuneration outcomes and the shareholder experience. The focus of the review is to better ensure that the Company’s executive remuneration structure is adaptable and more directly aligns to and supports the company’s business strategy and goals. Paladin Energy Ltd 22 Directors’ Report (continued) REMUNERATION FOR THE YEAR AT A GLANCE (CONTINUED) Executive Remuneration - cash value of earnings realised (unaudited) (continued) 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$. 2021 (A$) / (US$) Name Mr Ian Purdy Ms Anna Sudlow Mr Jonathon Clements1 Mr Michael Drake2 Base Salary & Superannuation A$ 521,694 320,000 232,399 44,366 US$ 389,219 238,742 173,386 33,100 Total 1,118,459 834,447 Other A$ - 2,286 - - 2,286 Total Cash A$ 521,694 322,286 232,399 44,366 US$ 389,219 240,448 173,386 33,100 US$ - 1,706 - - 1,706 1,120,745 836,153 Refer to the Compensation of KMP 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 2021 financial year US$1 = A$1.34036. Shares issued upon the vesting of Performance Rights during the year are subject to a 12-month voluntary escrow with a holding lock in place from the date of issue and have therefore not been disclosed in the table above. 2020 (A$) / (US$) Name Mr Ian Purdy3 Ms Anna Sudlow Mr Scott Sullivan4 Mr Michael Drake6 Mr Craig Barnes7 Base Salary & Superannuation Other A$ 214,649 320,124 310,847 363,207 151,356 US$ 143,969 214,713 208,491 243,609 101,517 A$ - - 266,0565 159,9195 - US$ - - 178,4485 107,2615 - 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 12 October 2020. 2 Resigned 3 July 2020 3 Appointed 4 February 2020. 4 Ceased employment 3 March 2020 5 Ex gratia termination payment plus payment in lieu of notice. 6 Resigned 3 July 2020 7 Resigned 9 August 2019 Paladin Energy Ltd 23 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 • Mr Peter Watson, Non-Executive Director • Mr Peter Main, Non-Executive Director • Ms Melissa Holzberger, Non-Executive Director (appointed 13 May 2021) • Ms Joanne Palmer, Non-Executive Director (appointed 13 May 2021) • Mr Ian Purdy, Chief Executive Officer • Ms Anna Sudlow, Chief Financial Officer • Mr Jonathon Clements, General Manager – Projects & Development (appointed 12 October 2020) • 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, Nomination and Governance Committee is charged with assisting the Board by reviewing and it makes making appropriate recommendations on remuneration packages for the KMP. 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. In addition, The Remuneration, Nomination & Governance 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, Nomination & Governance Committee. 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. Paladin Energy Ltd 24 Directors’ Report (continued) REMUNERATION REPORT (AUDITED) (CONTINUED) KEY ELEMENTS OF KEY MANAGEMENT PERSONNEL REMUNERATION STRATEGY (CONTINUED) The Board is cognisant of general shareholder preference that long-term equity-based remuneration be linked to Paladin’s performance and growth in shareholder value. Performance and Share Appreciation Rights (PRs and SARs) issued under the Long-Term Incentive (LTI) programme usually have a one to three-year performance period. These 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 PRs or 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 PRs and 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 2017 30 June 2018 30 June 2019 30 June 2020 30 June 2021 (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) (457,785) (26.7) A$0.0471 367,762 21.5 A$0.175 (30,345) (1.7) A$0.125 (75)% - 272% - (29)% - (79,866) (1.7) A$0.10 (20)% - (43,983) (2.0) A$0.515 415% - The remuneration structure for the Key Management Personnel has two elements: • Fixed remuneration; and • Long-term incentives. 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 sacrifice may packaging. include certain salary Statutory superannuation contributions Statutory % of base salary. Variable Performance Linked Remuneration (“at risk” remuneration) Long-term under the Rights Plan incentive, granted and Award determined based on individual performance and Paladin’s performance. Vesting dependent on creation of shareholder value together with a retention element. contribution 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. 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. Paladin Energy Ltd 25 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 2009 Employee Share 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 Plan terms were amended at the 2020 Annual General Meeting (2020 Employee Share Rights Plan). 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, GM – Projects & Development and Non-Executive Directors under the 2009 Employee Share Rights Plan 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. The PRs vesting hurdles were A$0.20, A$0.30, A$0.40 and A$0.50. 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 performance 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 27. Share Appreciation Rights (SARs) SARs were granted under the 2009 Employee Share Rights 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). Paladin does not offer any loan facilities to KMPs. A summary of SARs held by KMPs is on page 27. Paladin Energy Ltd 26 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 The Board has the discretion to vest PR and SARS issued under the 2009 Employee Share Rights Plan upon a change of control event. In exercising any such discretion the Board may take into account the number of SARs to be vested upon a change of control relative to the total shares on issue. Cessation of Employment Under the 2009 Employee Share Rights Plan, all PRs and SARs that have not vested will be forfeited 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 2021 - Nil All Performance Rights granted to KMPs vested during the year. 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 Share Appreciation Rights of KMPs (excluding Non-Executive Directors) at 30 June 2021 Date granted Exercisable date Expiry date Fair value 1 July 2019 1 July 2019 1 July 2019 Total 1 July 2020 1 July 2021 1 July 2022 1 July 2025 1 July 2026 1 July 2027 A$0.05 A$0.06 A$0.07 Exercise price A$0.1226 A$0.1226 A$0.1226 Number 700,000 700,000 1,100,000 2,500,000 In summary, this balance represents 0.09% of the issued capital. Share Appreciation Rights of KMPs (excluding Non-Executive Directors) at 30 June 2020 Date granted Exercisable date Expiry date Fair value 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 A$0.05 A$0.07 A$0.09 A$0.05 A$0.06 A$0.07 In summary, this balance represents 0.25% of the issued capital. Exercise price A$0.20 A$0.20 A$0.20 A$0.1226 A$0.1226 A$0.1226 Number 700,0001 700,0001 1,100,0001 700,000 700,000 1,100,000 5,000,000 1 Michael Drake – now lapsed due to resignation and were forfeited during FY2021 Paladin Energy Ltd 27 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$895,282) as approved by shareholders at the 2008 annual general meeting. Fees paid for the year to 30 June 2021 total A$267,310 (US$199,431). Remuneration Component Elements Base Fee Must be contained within aggregate limit Details (per annum) Chairman A$110,000 (US$82,068) Non-Executive Director A$70,000 (US$54,225) Superannuation Performance Rights Statutory contributions are included in the fees set out above Statutory % of fees 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 (4th 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. PRs were issued to Non-Executive Directors under the 2009 Employee Share Rights Plan 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. Share Appreciation Rights held by Non-Executive Directors at 30 June 2021 - Nil Performance Rights held by Non-Executive Directors at 30 June 2021 - Nil All Performance Rights granted to Non-Executive Directors vested during the year. 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 Other Fees/Benefits 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$0.50 Number 3,500,000 3,500,000 3,500,000 3,500,000 14,000,000 In addition, Paladin’s Constitution provides for additional compensation to be paid if any of the Directors are called upon to perform extra services or make any special exertions on behalf of Paladin or the business of Paladin. Paladin may compensate such Director in accordance with such services or exertions, and such compensation may be either in addition to or in substitution for the Directors’ fees referred to above. No additional fees were paid during the year, other than the Directors’ fees disclosed. Directors are also entitled to be reimbursed for reasonable expenses incurred whilst engaged on Paladin business. There is no entitlement to compensation on termination of Non-Executive directorships. Non-Executive Directors do not earn retirement benefits, other than the statutory superannuation. Paladin Energy Ltd 28 Directors’ Report (continued) REMUNERATION REPORT (AUDITED) (CONTINUED) Compensation of Key Management Personnel of the Group for the years ended 30 June 2021 and 2020. Year 2021 2020 2021 2020 2021 2020 2021 2021 2020 2020 2020 2020 Non-Executive Directors Mr Cliff Lawrenson1 Peter Main2 Peter Watson2 Ms Melissa Holzberger3 Ms Joanne Palmer3 Mr Rick Crabb4 Mr David Riekie5 Mr Daniel Harris5 Mr John Hodder5 Subtotal 2021 Subtotal 2020 1 Appointed 29 October 2019 2 Appointed 11 December 2019 3 Appointed 13 May 2021 4 Retired 29 October 2019 5 Resigned 11 December 2019 Paladin Energy Ltd Short-Term Benefits Salary & Fees US$ 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$ % 82,068 51,106 52,225 26,126 47,694 23,859 5,897 5,897 25,522 21,867 23,944 23,944 193,781 196,368 - - - - - - - - - - - - - - - - - - - - - - - - - - - - 1,271 - - 4,531 2,267 560 560 2,425 2,077 - - 5,651 8,040 156,417 12,304 104,278 8,203 104,278 8,203 - - - - - - 364,973 28,710 238,485 64,681 156,503 34,329 156,503 34,329 6,457 6,457 27,947 23,944 23,944 23,944 564,405 233,118 319,655 96,436 209,770 51,181 209,770 51,181 8,655 8,655 41,667 35,699 35,699 35,699 756,505 347,562 156,417 12,304 104,278 8,203 104,278 8,203 - - - - - - 364,973 28,710 65.6 19.0 66.6 23.9 66.6 23.9 - - - - - - 29 Directors’ Report (continued) REMUNERATION REPORT (AUDITED) (CONTINUED) Compensation of Key Management Personnel of the Group for the years ended 30 June 2021 and 2020. Short-Term Benefits Year Salary & Fees US$ Other US$ Termination Payment US$ 2021 2020 2021 2020 2021 2020 2020 2021 2020 373,034 136,926 222,557 200,626 161,247 197,926 97,995 29,054 229,522 785,892 862,995 979,673 1,059,363 - - 1,7063 - - - - - - 1,706 - 1,706 - - - - - - 178,4486 - - 107,2606 - 285,708 - 285,708 Other Key Management Personnel Mr Ian Purdy1 Ms Anna Sudlow2 Mr Jonathon Clements4 Mr Scott Sullivan5 Mr Craig Barnes7 Mr Michael Drake8 Mr Michael Drake Subtotal 2021 Subtotal 2020 Directors & KMPs Total – 2021 Total - 2020 Post Employment Superannuation US$ Share Based Payment Share Rights US$ Total Total Total Performance Related Total Performance Related US$ A$ US$ % 651,738 16,185 51,268 7,043 405,159 16,185 61,082 14,087 535,677 12,139 (55,155) 10,565 - 3,522 - 4,046 14,087 1,030 48,555 1,592,574 58,225 49,304 1,040,957 195,237 645,607 275,795 709,063 331,784 101,517 33,100 351,899 2,428,727 1,256,232 1,395,257 291,086 865,345 411,194 950,399 494,670 151,356 44,366 524,661 3,255,367 1,872,967 651,738 51,268 405,159 61,082 535,677 (55,155) - - 1,030 1,592,574 58,225 54,206 1,957,547 86,935 57,344 2,993,132 1,489,350 4,011,872 2,220,529 1,957,547 86,935 62.6 26.3 62.8 22.1 75.5 - - - 0.3 Notes to the Compensation Tables 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 KMPs 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 2021 financial year US$1 = A$1.34036 (2020 financial year US$1 = A$1.49094. 1 Appointed 4 February 2020 2 Appointed 1 July 2019 3 Insurance 4 Appointed 12 October 2020 5 Ceased employment 3 March 2020 6 Ex gratia termination payment plus payment in lieu of notice 7 Resigned 9 August 2019 8 Resigned 3 July 2020 Paladin Energy Ltd 30 Directors’ Report (continued) REMUNERATION REPORT (AUDITED) (CONTINUED) Share Appreciation Rights Holdings of Key Management Personnel (Group) 30 June 2021 Executives Ms Anna Sudlow Mr Michael Drake1 Total 30 June 2020 Executives Mr Scott Sullivan Mr Craig Barnes Ms Anna Sudlow Mr Michael Drake7 01 Jul 20 number 2,500,000 2,500,000 5,000,000 01 Jul 19 number 5,000,0002 2,329,000 - 2,500,000 Granted as remuneration number Fair value at grant date US$ Vested as shares number Lapsed number 30 Jun 21 Number - - - - - - - - - - (2,500,000) 2,500,000 - (2,500,000) 2,500,000 Granted as remuneration number Fair value at grant date US$ Vested as shares number Lapsed number 30 Jun 20 Number 1,000,0003 - 2,500,0006 - 26,509 - 112,202 - - - - - - (6,000,000)4 (2,329,000)5 - - - - 2,500,000 2,500,0008 (8,329,000) 5,000,000 Total 9,829,000 3,500,000 138,711 Performance Rights Holdings of Key Management Personnel (Group) 30 June 2021 Directors/Executives Mr Cliff Lawrenson Mr Peter Watson Mr Peter Main Mr Ian Purdy Ms Anna Sudlow Mr Jonathon Clements Total 01 Jul 20 number 6,000,000 4,000,000 4,000,000 25,000,000 10,000,000 - 49,000,000 Granted as remuneration number Fair value at grant date US$ Vested as shares number Lapsed number 30 Jun 21 Number - - - - - 8,000,0009 8,000,000 - - - - - 542,710 542,710 (6,000,000) (4,000,000) (4,000,000) (25,000,000) (10,000,000) (8,000,000) (57,000,000) - - - - - - - - - - - - - - Shares are subject to a 12-month voluntary escrow with a holding lock in place from the date of issue. 1 Resigned on 3 July 2020. Not exercised and lapsed on 3 July 2020 due to resignation. 2 1,000,000 SARs exercisable at A$0.1775 vested on 1 July 2019 but were not exercised and have now been cancelled upon cessation on 4 February 2020. 3 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. 4 Ceased employment on 3 March 2020. 5 Resigned on 9 August 2019. Not exercised and have now been cancelled. 6 Granted 1 July 2019. Fair value per right at grant date was US$0.04. 7 Resigned on 3 July 2020. Not exercised and lapsed on 3 July 2020 due to resignation. 8 700,000 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. 9 Granted 8 October 2020. Fair value per right at grant date was US$0.068. Paladin Energy Ltd 31 Directors’ Report (continued) REMUNERATION REPORT (AUDITED) (CONTINUED) Performance Rights Holdings of Key Management Personnel (Group) 30 June 2020 Executives Mr Cliff Lawrenson Mr Peter Watson Mr Peter Main Mr Ian Purdy Ms Anna Sudlow Total 01 Jul 19 number Granted as remuneration number Fair value at grant date US$ Vested as shares number Lapsed number 30 Jun 20 Number - - - - - - 6,000,0001 4,000,0001 4,000,0001 25,000,0001 10,000,0002 49,000,000 153,232 102,155 102,155 638,467 345,390 1,341,399 - - - - - - - - - - - - 6,000,000 4,000,000 4,000,000 25,000,000 10,000,000 49,000,000 Shares held in Paladin Energy Ltd (number) 30 June 2021 Directors Mr Cliff Lawrenson Mr Peter Main Mr Peter Watson Ms Melissa Holzberger Ms Joanne Palmer Executives Mr Ian Purdy Ms Anna Sudlow Mr Jonathon Clements Total 30 June 2020 Directors Mr Rick Crabb Executives Mr Scott Sullivan Total Balance 01 Jul 20 On Vesting of Rights3 Net Change Other4 Balance 30 June 21 - - - - - - - - - 6,000,000 4,000,000 4,000,000 - - 25,000,000 10,000,000 8,000,000 57,000,000 135,1364 94,5944 94,5944 21,7435 21,7255 675,6764 - - 1,043,468 6,135,136 4,094,594 4,094,594 21,743 21,725 25,675,676 10,000,000 8,000,000 58,043,468 Balance 01 Jul 19 219,630 100,000 319,630 On Vesting of Rights Net Change Other Balance 30 June 20 - - - (219,630)6 (100,000)7 (319,630) - - - No other KMP held shares during the year ended 30 June 2021 and 30 June 2020. 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. 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. 3 Shares are subject to a 12-month voluntary escrow with a holding lock in place from the date of issue. 4 Acquisition of shares pursuant to the Paladin Energy Ltd 1 for 8.5 entitlement offer. 5 On market purchase. 6 Retired on 29 October 2019. 7 Ceased employment on 3 March 2020. Paladin Energy Ltd 32 Directors’ Report (continued) REMUNERATION REPORT (AUDITED) (CONTINUED) 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. Mr Ian Purdy, Chief Executive Officer Term of agreement – no fixed term. Base salary, plus statutory superannuation entitlements, of A$500,000 (2020: A$500,000). Long term incentive: Mr Purdy was granted 25,000,000 Performance Rights upon appointment, under Paladin’s 2009 Employee Share Rights Plan, on 5 February 2020, as follows: Date granted 5 February 2020 5 February 2020 5 February 2020 5 February 2020 Expiry date 5 February 2025 5 February 2025 5 February 2025 5 February 2025 Total 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. Ms Anna Sudlow, Chief Financial Officer Term of agreement – no fixed term. Base salary, inclusive of superannuation of A$320,000 (2020: A$320,000). Long term incentive: Ms Sudlow was issued 2,500,000 Share Appreciation Rights (SARs) on 1 July 2019 under Paladin’s 2009 Employee 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 2009 Employee Share Rights Plan, on 30 April 2020, as follows: Date granted 30 April 2020 30 April 2020 30 April 2020 30 April 2020 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 Total No termination benefit is specified in the agreement. Notice period six months. Number 2,500,000 2,500,000 2,500,000 2,500,000 10,000,000 Paladin Energy Ltd 33 Directors’ Report (continued) REMUNERATION REPORT (AUDITED) (CONTINUED) CONTRACTS FOR SERVICES (CONTINUED) Mr Jonathon Clements, General Manager – Projects & Development (appointed 12 October 2020) Term of agreement – no fixed term. Base salary, plus statutory superannuation entitlements, of A$300,000. Long term incentive: Mr Clements was granted 8,000,000 Performance Rights, under Paladin’s 2009 Employee Share Rights Plan, on 8 October 2020, as follows: Date granted 8 October 2020 8 October 2020 8 October 2020 8 October 2020 Expiry date 8 October 2025 8 October 2025 8 October 2025 8 October 2025 Fair value A$0.11 A$0.09 A$0.08 A$0.08 Vesting price A$0.20 A$0.30 A$0.40 A$0.50 Total No termination benefit is specified in the agreement. Notice period three months. Number 2,000,000 2,000,000 2,000,000 2,000,000 8,000,000 Remuneration for all parties referred to above includes provision of an initial and ongoing discretionary participation in Paladin’s long-term incentive plans. 57,000,000 (2020: Nil) Performance Rights vested to Key Management Personnel during the year ended 30 June 2021. 700,000 (2020: 1,700,000) Share Appreciation Rights vested to Key Management Personnel during the year ended 30 June 2020. 4,543,000 (2020: Nil) Share Appreciation Rights were exercised during the year ended 30 June 2021 (None by KMPs). 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. Long term incentive: Mr Drake was issued 2,500,000 SARs on 11 February 2019 under Paladin’s 2009 Employee 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. Paladin Energy Ltd 34 Directors’ Report (continued) REMUNERATION REPORT (AUDITED) (CONTINUED) TOTAL PERFORMANCE RIGHTS No unvested Performance Rights at 30 June 2021. TOTAL SHARE APPRECIATION RIGHTS The outstanding balance of Share Appreciation Rights at 30 June 2021 is as follows: Date granted Exercisable date Expiry date 20 October 2015 20 October 2015 20 October 2015 20 October 2015 20 October 2015 20 October 2015 27 September 2016 27 September 2016 27 September 2016 16 April 2018 16 April 2018 16 April 2018 1 July 2019 1 July 2019 1 July 2019 1 October 2019 1 October 2019 1 October 2019 27 October 2020 27 October 2020 14 December 2020 14 December 2020 Total 1 November 2016 1 November 2017 1 November 2018 1 November 2016 1 November 2017 1 November 2018 11 November 2017 11 November 2018 11 November 2019 16 April 2018 16 April 2019 16 April 2020 1 July 2020 1 July 2021 1 July 2022 1 October 2020 1 October 2021 1 October 2022 9 November 2021 9 November 2022 21 December 2021 21 December 2022 1 November 2021 1 November 2022 1 November 2023 1 November 2021 1 November 2022 1 November 2023 11 November 2022 11 November 2023 11 November 2024 16 April 2023 16 April 2024 16 April 2025 1 July 2025 1 July 2026 1 July 2027 1 October 2025 1 October 2026 1 October 2027 10 November 2026 10 November 2027 22 December 2026 22 December 2027 Fair value A$0.13 A$0.13 A$0.13 A$0.10 A$0.10 A$0.10 A$0.08 A$0.08 A$0.08 A$0.17 A$0.05 A$0.07 A$0.05 A$0.06 A$0.07 A$0.03 A$0.04 A$0.05 A$0.13 A$0.13 A$0.21 A$0.21 Exercise price A$0.20 A$0.20 A$0.20 A$0.20 A$0.20 A$0.20 A$0.20 A$0.20 A$0.20 A$0.15 A$0.15 A$0.15 A$0.1226 A$0.1226 A$0.1226 A$0.12 A$0.12 A$0.12 A$0.00 A$0.00 A$0.00 A$0.00 Number 82,500 41,250 41,250 50,000 25,000 25,000 92,000 92,000 92,000 105,000 52,500 52,500 700,000 700,000 1,100,000 105,000 476,250 476,250 600,000 600,000 100,000 100,000 5,708,500 In summary, this balance represents 0.21% of the issued capital. 1,822,188 shares were issued on the exercise of SARs during the year ended 30 June 2021 (2020: Nil). There were no other transactions with KMPs. 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. Paladin Energy Ltd 35 Directors’ Report (continued) INDEMINIFICATION OF AUDITORS To the extent permitted by law, Paladin has agreed to indemnify 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. 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 There is no outstanding balance of Performance Rights at the date of this report. TOTAL SHARE APPRECIATION RIGHTS The outstanding balance of Share Appreciation Rights at the date of this report is as follows: Date granted Exercisable date Expiry date 20 October 2015 20 October 2015 20 October 2015 20 October 2015 20 October 2015 20 October 2015 27 September 2016 27 September 2016 27 September 2016 16 April 2018 16 April 2018 16 April 2018 1 July 2019 1 July 2019 1 July 2019 1 October 2019 1 October 2019 1 October 2019 27 October 2020 27 October 2020 14 December 2020 14 December 2020 Total 1 November 2016 1 November 2017 1 November 2018 1 November 2016 1 November 2017 1 November 2018 11 November 2017 11 November 2018 11 November 2019 16 April 2018 16 April 2019 16 April 2020 1 July 2020 1 July 2021 1 July 2022 1 October 2020 1 October 2021 1 October 2022 9 November 2021 9 November 2022 21 December 2021 21 December 2022 1 November 2021 1 November 2022 1 November 2023 1 November 2021 1 November 2022 1 November 2023 11 November 2022 11 November 2023 11 November 2024 16 April 2023 16 April 2024 16 April 2025 1 July 2025 1 July 2026 1 July 2027 1 October 2025 1 October 2026 1 October 2027 10 November 2026 10 November 2027 22 December 2026 22 December 2027 Fair value A$0.13 A$0.13 A$0.13 A$0.10 A$0.10 A$0.10 A$0.08 A$0.08 A$0.08 A$0.17 A$0.05 A$0.07 A$0.05 A$0.06 A$0.07 A$0.03 A$0.04 A$0.05 A$0.13 A$0.13 A$0.21 A$0.21 Exercise price A$0.20 A$0.20 A$0.20 A$0.20 A$0.20 A$0.20 A$0.20 A$0.20 A$0.20 A$0.15 A$0.15 A$0.15 A$0.1226 A$0.1226 A$0.1226 A$0.12 A$0.12 A$0.12 A$0.00 A$0.00 A$0.00 A$0.00 Number 50,000 25,000 25,000 50,000 25,000 25,000 81,000 81,000 81,000 105,000 52,500 52,500 700,000 700,000 1,100,000 105,000 426,250 426,250 600,000 600,000 100,000 100,000 5,510,500 Paladin Energy Ltd 36 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 27. LEAD AUDITOR’S INDEPENDENCE DECLARATION The Lead Auditor’s Independence Declaration is set out on page 38 of the Financial Report. Dated this 26th day of August 2021. Signed in accordance with a resolution of the Directors Cliff Lawrenson Chairman Perth, Western Australia Paladin Energy Ltd 37 Auditor’s Independence Declaration As lead auditor for the audit of Paladin Energy Ltd for the year ended 30 June 2021, 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 Ltd and the entities it controlled during the period. Justin Carroll Partner PricewaterhouseCoopers Perth 26 August 2021 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. 38 Financial Report For the year ended 30 June 2021 CONTENTS OF THE FINANCIAL REPORT Consolidated Income Statement ....................................................................................................................... 40 Consolidated Statement of Comprehensive Income ......................................................................................... 41 Consolidated Statement of Financial Position ................................................................................................. 42 Consolidated Statement of Changes in Equity ................................................................................................. 43 Consolidated Statement of Cash Flows ............................................................................................................ 44 Notes to the Consolidated Financial Statements ............................................................................................ 45 Paladin Energy Ltd 39 Consolidated Income Statement For the year ended 30 June 2021 Notes 2021 US$’000 2020 US$’000 Revenue Revenue Cost of sales Gross profit Other income Foreign exchange loss (net) Administration, marketing and non-production costs Loss before interest and tax Finance costs Net loss before income tax from continuing operations Income tax expense Net loss after tax from continuing operations 11 12 12 12 12 12 13 Loss after tax from discontinued operations 18 Net loss after tax Attributable to: Non-controlling interests Members of the parent Net loss after tax Loss per share (US cents) 2,985 (2,973) 12 2,452 (3,934) (24,225) (25,695) (32,412) - - - 10,306 - (31,477) (21,171) (24,880) (58,107) (46,051) (151) (58,258) - (58,258) (14,275) (43,983) (58,258) - (46,051) (46,401) (92,452) (12,586) (79,866) (92,452) Loss after tax from operations attributable to ordinary equity holders of the Company - continuing operations, basic and diluted (US cents) discontinued operations, basic and diluted (US cents) - 14 14 (2.0) - (1.7) (2.4) The above Consolidated Income Statement should be read in conjunction with the accompanying notes. Paladin Energy Ltd 40 Consolidated Statement of Comprehensive Income For the year ended 30 June 2021 Notes 2021 US$’000 (58,258) 2020 US$’000 (92,452) Net loss after tax Other comprehensive income Items that may be subsequently reclassified to profit or loss: Foreign currency translation Revaluation of financial assets 9 9 2,975 8,201 (1,254) 2,233 Income tax on items of other comprehensive income Items that will not be subsequently reclassified to profit or loss: Foreign currency translation attributable to non-controlling interests Other comprehensive profit for the year, net of tax - - - - 11,176 979 Total comprehensive loss for the year (47,082) (91,473) Total loss attributable to: Non-controlling interests Members of the parent (14,275) (32,807) (12,586) (78,887) (47,082) (91,473) The above Consolidated Statement of Comprehensive Income should be read in conjunction with the accompanying notes. Paladin Energy Ltd 41 Consolidated Statement of Financial Position As at 30 June 2021 Notes 2021 US$’000 2020 US$’000 ASSETS Current assets Cash and cash equivalents Restricted cash Trade and other receivables Prepayments Inventories TOTAL CURRENT ASSETS Non-current assets Trade and other receivables Non-current financial assets Right-of-use assets Property, plant and equipment Mine development Exploration and evaluation expenditure Intangible assets TOTAL NON-CURRENT ASSETS TOTAL ASSETS LIBILITIES Current liabilities Trade and other payables Lease liabilities Provisions TOTAL CURRENT LIABILITIES Non-current liabilities Interest bearing loans and borrowings Other Interest bearing loans - CNNC Lease liabilities Provisions TOTAL NON-CURRENT LIABILITIES TOTAL LIABILITIES NET ASSETS EQUITY Contributed equity Reserves Accumulated losses Parent interests Non-controlling interests TOTAL EQUITY 6a 6b 16 17 16 19 20 21 22 23 24 25 7 8 25 9 9 30,661 1,000 1,978 1,259 5,123 40,021 4,776 12,880 780 178,089 16,748 99,557 8,312 321,142 361,163 2,262 49 540 2,851 - 68,743 788 42,073 111,604 114,455 246,708 34,237 1,000 1,116 1,222 5,132 42,707 5,512 4,328 215 190,889 18,548 93,369 8,831 321,692 364,399 1,544 215 522 2,281 134,394 102,638 - 32,087 269,119 271,400 92,999 2,489,082 (59,354) (2,146,511) 283,217 (36,509) 2,327,789 (70,269) (2,104,132) 153,388 (60,389) 246,708 92,999 The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes. Paladin Energy Ltd 42 Accumulated Losses US$’000 (2,025,649) (79,866) - Attributable to Owners of the Parent US$’000 209,678 (79,866) 979 Non-Controlling Interests US$’000 (133,040) (12,586) - Total US$’000 76,638 (92,452) 979 (79,866) (78,887) (12,586) (91,473) Consolidated Statement of Changes in Equity For the year ended 30 June 2021 Balance at 30 June 2019 Loss for the period Other comprehensive income Total comprehensive income/(loss) for the year net of tax Share-based payment Capital raising Sale of Paladin Africa Ltd Earn in of 5% share of Michelin Project Contributed Equity (Note 9) US$’000 2,306,925 Reserves (Note 9) US$’000 (71,598) - - - - 20,864 - - - 978 978 351 - - - - - - 1,383 350 20,864 - 1,383 153,388 (43,983) 11,176 (32,807) 2,094 158,938 1,604 - Balance at 30 June 2020 2,327,789 (70,269) (2,104,132) Loss for the period Other comprehensive income Total comprehensive income/(loss) for the year net of tax Share-based payment Capital raising Earn in of 5% share of Michelin Project Transactions with owners capacity as owners in their - - - 2,355 158,938 - - - 11,176 11,176 (261) - - - (43,983) - (43,983) - - 1,604 - Balance at 30 June 2021 2,489,082 (59,354) (2,146,511) 283,217 The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes. Paladin Energy Ltd - - 86,620 (1,383) (60,389) (14,275) - (14,275) - - (1,604) 36,759 (36,509) 350 20,864 86,620 - 92,999 (58,258) 11,176 (47,082) 2,094 158,938 - 39,759 246,708 43 Consolidated Statement of Cash Flows For the year ended 30 June 2021 Notes 2021 US$’000 2020 US$’000 15 CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers1 Payments to suppliers and employees2 Exploration and evaluation expenditure Other income3 Interest received Interest and other costs of finance paid Tax 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 NET CASH OUTFLOW FROM INVESTING ACTIVITIES CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issue of shares Equity fundraising costs Secured Notes interest paid4 Repayment of Secured Notes Subsidiary sale consent fee to Noteholders and other selling costs NET CASH INFLOW FROM FINANCING ACTIVITIES NET (DECREASE)/ INCREASE 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 UNRESTRICTED CASH AND CASH EQUIVALENTS AT THE END OF THE FINANCIAL YEAR 2,985 (9,787) - 1,340 95 (47) (151) (5,565) (38) 50 (1,081) (2,142) 1,000 (2,211) 166,560 (7,597) (42,765) (115,000) - 1,198 - (13,628) (4) 1,766 435 (47) - (11,478) (273) 39 (1,014) (3,059) 4,000 (307) 21,664 (800) - - (1,142) 19,722 (6,578) 7,937 34,237 3,002 25,360 940 30,661 34,237 The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes. 1 During FY2021 the Company participated in a spot trading opportunity. 2 Includes cost of sales relating to the spot trade of US$2,973,000. 3 During FY2021 the Company reached final settlement for litigation related to previous activities at the Kayelekera Mine in the amount of US$1,316,000 (not related to the sale to Lotus Resources Ltd). 4 The Group’s accounting policy is to treat interest as a finance cost. Paladin Energy Ltd 44 Notes to the Consolidated Financial Statements For the year ended 30 June 2021 BASIS OF PREPARATION .......................................................................................................................................... 46 Corporate Information ...................................................................................................................... 46 Note 1. Structure of the Financial Report ...................................................................................................... 46 Note 2. Basis of Preparation ......................................................................................................................... 46 Note 3. Note 4. Going Concern .................................................................................................................................. 49 SEGMENT INFORMATION .................................................................................................................................. 50 Segment Information ...................................................................................................................... 50 Note 5. CAPITAL STRUCTURE ....................................................................................................................................... 53 Cash and Cash Equivalents ................................................................................................................ 53 Note 6a. Restricted Cash .................................................................................................................................. 53 Note 6b Interest Bearing Loans and Borrowings ............................................................................................. 54 Note 7. Other Interest Bearing Loans - CNNC ................................................................................................ 55 Note 8. Contributed Equity and Reserves ...................................................................................................... 57 Note 9. Note 10. Financial Risk Management ............................................................................................................... 59 PERFORMANCE FOR THE YEAR .......................................................................................................................... 65 Revenue ............................................................................................................................................. 65 Note 11. Income and Expenses ...................................................................................................................... 66 Note 12. Income and Other Taxes .................................................................................................................... 67 Note 13. Earnings Per Share ............................................................................................................................ 69 Note 14. Reconciliation of Earnings After Income Tax to Net Cash Note 15. Flow from Operating Activities .......................................................................................................... 70 OPERATING ASSETS AND LIABILITIES ................................................................................................................. 71 Trade and Other Receivables ............................................................................................................. 71 Note 16. Inventories ....................................................................................................................................... 72 Note 17. Discontinued Operations and Assets and Liabilities Classified as held for sale ................................. 73 Note 18. Non Current Financial Assets ............................................................................................................. 75 Note 19. Property, Plant and Equipment ......................................................................................................... 75 Note 20. Mine Development ......................................................................................................................... 77 Note 21. Exploration and Evaluation Expenditure ........................................................................................... 78 Note 22. Intangible Assets ............................................................................................................................... 79 Note 23. Trade and Other Payables ................................................................................................................. 80 Note 24. Provisions .......................................................................................................................................... 81 Note 25. OTHER NOTES ................................................................................................................................................. 83 Key Management Personnel ............................................................................................................. 83 Note 26. Auditors’ Remuneration .................................................................................................................... 83 Note 27. Commitments and Contingencies ..................................................................................................... 84 Note 28. Related Parties .................................................................................................................................. 85 Note 29. Group Information ............................................................................................................................ 85 Note 30. Events after the Balance Date ........................................................................................................... 86 Note 31. New Accounting Standards and Interpretations ............................................................................... 87 Note 32. Paladin Energy Ltd 45 Notes to the Consolidated Financial Statements (continued) For the year ended 30 June 2021 BASIS OF PREPARATION NOTE 1. CORPORATE INFORMATION The Financial Report of Paladin Energy Ltd (Paladin) for the year ended 30 June 2021 was authorised for issue by the Directors on 26 August 2021. Paladin is a company limited by shares, incorporated and domiciled in Australia whose shares are publicly traded on the ASX in Australia, with additional listings on the Munich, Berlin, Stuttgart and Frankfurt Stock Exchanges in Europe; and the Namibian Stock Exchange in Africa. The Company also trades on the OTCQX market in the United States and the Munich, Berlin, Stuttgart and Frankfurt markets. The Group’s principal place of business is Level 8, 191 St Georges Terrace, Perth, Western Australia. The nature of the operations and principal activities of the Group are described in the Operating and Financial Review (unaudited) on pages 8 to 10. 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. Paladin Energy Ltd 46 Notes to the Consolidated Financial Statements (continued) For the year ended 30 June 2021 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 Investments Commission (ASIC) Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191. 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 2021. 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 2020. The nature and impact of each new standard and amendment is described below: Reference Summary Impact AASB 2018-7 ASIC Areas of Focus for 30 June 2020 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. In its most recent publication in June 2020, ASIC identified five areas of focus which address financial reporting under COVID-19 conditions and should be read in conjunction with ASIC’s COVID-19 frequently asked questions. There was no material impact on the financial statements. There was no material impact on the following five areas: • Asset values • Provisions • Solvency and going concern assessments • Events occurring after year end and before completing the financial report, and • Disclosures and Operating and Financial Review (OFR). Paladin Energy Ltd 47 Notes to the Consolidated Financial Statements (continued) For the year ended 30 June 2021 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 2021 (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. Paladin Energy Ltd 48 Notes to the Consolidated Financial Statements (continued) For the year ended 30 June 2021 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. Significant Accounting Judgements, Estimates and Assumptions The preparation of the Group’s consolidated financial statements requires management to make judgements, estimates and assumptions in applying the group’s accounting policies 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. Areas involving significant estimates or judgements are: • Estimated fair value of certain financial liabilities -Note 8 Estimates and judgements are continually evaluated. They are based on historical experience and other factors, including expectations of future events that may have a financial impact on the entity and that are believed to be reasonable under the circumstances. NOTE 4. GOING CONCERN At 30 June 2020 the Directors assessed that there was material uncertainty that may have cast significant doubt on the entity’s ability to continue as a going concern. This related to the Group’s ability to repay the US$115,000,000 Senior Secured Notes with a balance, including accrued interest, of US$134,394,000 maturing in 2023. Paladin fully redeemed the US$115,000,000 senior secured notes in April 2021. The senior secured notes have subsequently been cancelled and delisted and all security registrations have been discharged. At 30 June 2021, Paladin has no corporate debt. 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 Directors are satisfied that it is appropriate to prepare the financial statements on a going concern basis. Paladin Energy Ltd 49 Notes to the Consolidated Financial Statements (continued) For the year ended 30 June 2021 SEGMENT INFORMATION NOTE 5. SEGMENT INFORMATION Identification of Reportable Segments The Company has identified its operating segments to be Exploration, Namibia and Australia, on the basis of the nature of the activity and geographical location and different regulatory environments. The main segment activity in Namibia1 is the production and sale of uranium from the mine located in this country’s geographic regions. The Australian segment includes the Company’s sales and marketing, corporate and administration. The Exploration2 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 Exploration tenements with the balance remaining in Australia. 1 In May 2018, the Company received the consent of relevant stakeholders to place the LHM into care and maintenance and the LHM stopped presenting ore to the plant. 2 In FY2021, the Company has only undertaken the work required to meet minimum tenement commitments. Paladin Energy Ltd 50 Notes to the Consolidated Financial Statements (continued) For the year ended 30 June 2021 NOTE 5. SEGMENT INFORMATION (CONTINUED) The following tables present revenue, expenditure and asset information regarding operating segments for the years ended 30 June 2021 and 30 June 2020. Year ended 30 June 2021 Sales to external customers Total consolidated revenue Exploration U$’000 - - Namibia US$’000 2,985 2,985 (2,973) 12 40 Australia US$’000 - - Consolidated US$’000 2,985 2,985 - - 5,475 (2,973) 12 5,515 (25,141) (6,081) (31,222) (25,089) (606) (25,695) (8,992) (23,420) (32,412) (34,081) (24,026) (58,107) - (151) (151) (34,081) (24,177) (58,258) - - - - - - - - - 94,840 215,156 51,1671 361,163 Australia U$’000 68,755 Canada US$’000 31,540 Namibia US$’000 207,967 Consolidated US$’000 308,262 Cost of sales Gross profit Other income Other expenses Segment loss before income tax and finance costs Finance costs Loss before income tax Income tax expense Net loss after tax At 30 June 2021 Segment assets/total assets Non-current financial instruments) by country assets (excluding Additions to non-current assets by country - - Property, Plant and Equipment Exploration and Evaluation Expenditure 39 566 - 510 - 2,167 39 3,243 1 Includes US$30,350,000 in cash and cash equivalents. Paladin Energy Ltd 51 Notes to the Consolidated Financial Statements (continued) For the year ended 30 June 2021 NOTE 5. SEGMENT INFORMATION (CONTINUED) Year ended 30 June 2020 Sales to external customers Total consolidated revenue Exploration U$’000 - - Namibia US$’000 - - Malawi US$’000 - - Australia US$’000 - - Consolidated US$’000 - - Cost of sales Gross profit Other income Other expenses Segment loss before income tax and finance costs Finance costs Loss before income tax Income tax expense Net loss after tax from continuing operations Loss after operations tax from discontinued - - - (4) (4) - (4) - (4) - - - 7,578 (24,274) (16,696) (7,447) (24,143) - (24,143) - - - - - - - - - - - - - 2,728 10,306 (7,199) (31,477) (4,471) (21,171) (17,433) (24,880) (21,904) (46,051) - - (21,904) (46,051) - (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 - 44,4051 364,399 Non-current assets (excluding financial instruments) by country Additions to non-current assets by country - Property, Plant and Equipment - Exploration and Evaluation Expenditure Australia U$’000 Canada US$’000 Namibia US$’000 Consolidated US$’000 68,817 28,105 220,442 317,364 245 578 56 436 - 3,059 301 4,073 1 Includes US$32,620,000 in cash and cash equivalents. Paladin Energy Ltd 52 Notes to the Consolidated Financial Statements (continued) For the year ended 30 June 2021 CAPITAL STRUCTURE The group's objectives when managing capital are to safeguard its ability to continue as a going concern, so that it can continue to provide returns to shareholders and benefits for other stakeholders and to maintain an efficient capital structure to reduce the cost of capital. Capital includes issued capital and all other equity reserves attributable to the equity holders of the parent. In order to maintain or adjust the capital structure, the group may issue new shares or sell assets to reduce debt. The group monitors capital on the basis of the level of return on capital and also the level of net cash/debt. The group manages funds on a group basis with all funds being drawn by the parent entity. NOTE 6a. CASH AND CASH EQUIVALENTS Cash at bank and on hand Short-term bank deposits Total cash and cash equivalents NOTE 6b. RESTRICTED CASH Restricted cash at bank Total restricted cash and cash equivalents 2021 US$’000 3,608 27,053 2020 US$’000 5,264 28,973 30,661 34,237 2021 US$’000 1,000 2020 US$’000 1,000 1,000 1,000 The cash is restricted for use in respect of an environmental guarantee provided by the LHM. Recognition and measurement Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts. Cash at bank earns interest at floating rates based on daily bank deposit rates. Short-term deposits are made for varying periods depending on the immediate cash requirements of the Group and earn interest at the respective short- term deposit rates. Paladin Energy Ltd 53 Notes to the Consolidated Financial Statements (continued) For the year ended 30 June 2021 NOTE 7. INTEREST BEARING LOANS AND BORROWINGS Maturity 2021 US$’000 Non-Current Senior secured notes 2023 Total non-current interest bearing loans and borrowings 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 Senior secured notes redemption Repayment of senior secured notes issued Senior secured notes redemption premium & interest paid Total redemption Senior loans and borrowings - - - - - - - - - 115,000 42,765 157,765 2020 US$’000 134,394 134,394 115,000 (7,475) 107,525 (9,099) 5,222 30,746 134,394 - - - Paladin fully redeemed the US$115,000,000 senior secured notes in April 2021. The Senior Notes have subsequently been cancelled and delisted and all security registrations have been discharged. FY2020 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 Notes repayable on 25 January 2023. The Senior Notes were 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 Senior Notes were not convertible and were listed on the Singapore Stock Exchange. The underwriters of the Notes received 3% of the Company’s issued shares. PIK Interest on the Notes accrued at a rate of 10% per annum and was deferred on each interest payment date commencing on 31 March 2018. No additional Notes were issued in respect of such deferred PIK interest. Each amount of deferred PIK interest also bore interest at the rate of 10% per annum from and including the date on which the payment was deferred. However Paladin was 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 could 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 was not required to pay cash interest. All amounts of deferred PIK interest (and any interest accrued thereon) were due and payable (in cash) when the notes were redeemed. Paladin Energy Ltd 54 Notes to the Consolidated Financial Statements (continued) For the year ended 30 June 2021 NOTE 7. INTEREST BEARING LOANS AND BORROWINGS (CONTINUED) Fair value disclosures Details of the fair value of the Group’s interest bearing liabilities are set out in Notes 8 and 10. 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 Senior Notes that exhibited characteristics of debt was recognised as a liability in the Statement of Financial Position, net of transaction costs. On issue of Senior Notes, the fair value of the liability component was determined using a market rate for an equivalent non-convertible bond and this amount was carried as a liability on the amortised cost basis until extinguished on redemption. The increase in the liability due to the passage of time was recognised as a finance cost. The remainder of the proceeds was allocated to the equity component and was recognised in shareholders’ equity. The carrying amount of the equity component was not remeasured in subsequent years. NOTE 8. OTHER INTEREST BEARING LOANS - CNNC (Non-Current) LHU’s loans from CNNC 2021 US$’000 2020 US$’000 68,743 102,638 As part of the sale of the 25% interest in Langer Heinrich Mauritius Holdings Limited (LHMHL) in 2014 to CNNC Overseas Uranium Holding Limited (CNNC), US$96,000,000 (representing 25%) of the intercompany shareholder loans owing by Langer Heinrich Uranium (Pty) Ltd (LHU) to Paladin Finance Pty Ltd (PFPL) were assigned to CNNC under the same interest rate and conditions in place at the time. Under the Shareholders’ Agreement between CNNC, PFPL and LHMHL, each shareholder has agreed not to demand repayment of the loans 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 LHU generating sufficient free cash flows to repay the loans and these loans have not been guaranteed by Paladin. On consolidation, PFPL’s 75% share of the LHU intercompany shareholder loans are eliminated against the intercompany shareholder loans receivable recorded in PFPL and therefore, they do not appear on Paladin’s consolidated statement of financial position. As a result of the consolidation of 100% of LHU’s assets and liabilities, LHU's shareholder loan liability to CNNC is recognised on the consolidated statement of financial position. On 1 January 2021, two shareholder loan facility agreements were extended with revised terms. The face value of the loans remain the same. The revised terms included modifications to the term and interest rate of the loans. These revisions are considered a substantial modification under AASB9. Under AASB9 Financial Instruments, amendments constituting a “substantial” modification of the loan terms require the original loan facilities to be “extinguished” and derecognised and new loan facilities are recognised at fair value. The revised terms of the shareholder loans reflect a mix of fixed and floating rate interest and interest free periods and consider that the LHM is on care and maintenance and not generating revenue. The shareholders loan terms may not be reflective of market conditions for external borrowings at this time. The future value of anticipated cash flows, based on the revised loan terms, has been derived using an income approach by discounting the revised cashflows at a rate of that the Company considers representative of an unsecured borrowing rate available in the market. Paladin Energy Ltd 55 Notes to the Consolidated Financial Statements (continued) For the year ended 30 June 2021 NOTE 8. OTHER INTEREST BEARING LOANS – CNNC (CONTINUED) As a result, the book value of the total amount of the shareholder loans amounting to US$400,438,000 (owing to the Group and CNNC at 31 December 2020) was derecognised and “new” loans recognised at a fair value of US$247,633,000 at that date with the difference taken directly to equity as a shareholder contribution. After eliminations, the fair value of the CNNC share of the loan facilities was recognised at US$64,432,000. The difference between the fair value and face value of the loans has been recognised in equity and will be unwound over the term of the loans through the effective interest rate. At 30 June 2021 $2,918,000 accretion expense had been recognised from 1 January 2021. The effect of modification has resulted in the following balances being recognised in the LHU accounts as set out below: Balance of shareholder loans at 30 June 2020 (at amortised cost) Amount owing to PFPL (eliminated on consolidation) Amount owing to CNNC Total LHU shareholder loans Balance of shareholder loans at 1 January 2021 (at fair value) Amount owing to PFPL (eliminated on consolidation) Amount owing to CNNC Total LHU shareholder loans US$’000 291,766 102,638 394,408 US$’000 183,201 64,432 247,633 There is no change in the face value of the loans which amounted to $105,584,000 at 30 June 2021. NOTE 9. CONTRIBUTED EQUITY AND RESERVES Issued and Paid Up Capital Number of Shares 2021 2020 2021 US$’000 2020 US$’000 Ordinary shares Issued and fully paid 2,677,756,397 2,027,891,013 2,489,082 2,327,789 Fully paid ordinary shares carry one vote per share and carry the right to dividends. Recognition and measurement Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction, net of tax, from the proceeds. Paladin Energy Ltd 56 Notes to the Consolidated Financial Statements (continued) For the year ended 30 June 2021 NOTE 9. CONTRIBUTED EQUITY AND RESERVES (CONTINUED) Movements in ordinary shares on issue Number of Shares Issue Price A$ Exchange Rate US$: A$ Date Balance 30 June 2019 September 2019 October 2019 Share placement Share Purchase Plan Transaction Costs 1,752,084,272 262,812,641 12,994,100 Balance 30 June 2020 2,027,891,013 December 2020 December 2020 January 2021 March 2021 March 2021 April 2021 April 2021 May 2021 May 2021 June 2021 SARs exercised Conversion of PRs Conversion of PRs Conversion of PRs Share placement Institutional offer SARs exercised Conversion of PRs SARs exercised SARs exercised Transfer from share- based payment reserve Transaction costs 1,056,623 14,250,000 14,250,000 14,250,000 520,330,943 70,712,253 245,195 14,250,000 326,377 193,993 Balance 30 June 2021 2,677,756,397 0.115 0.115 1.46333 1.48029 - - - - 0.37 0.37 - - - - - - - - 1.31480 1.29958 - - - - Total US$’000 2,306,925 20,654 1,010 (800) 2,327,789 - - - - 146,427 20,132 - - - - 2,355 (7,621) 2,489,082 Paladin Energy Ltd 57 Notes to the Consolidated Financial Statements (continued) For the year ended 30 June 2021 NOTE 9. CONTRIBUTED EQUITY AND RESERVES (CONTINUED) Reserves Balance at 1 July 2019 Share-based payments Foreign currency translation Revaluation of financial assets Consolidation reserve US$’000 48,319 Listed option application reserve US$’000 137 - - - - - - Share based payment reserve Foreign currency translation reserve Financial assets at FVOCI reserve Premium on acquisition reserve US$’000 - US$’000 14,086 US$’000 47,952 351 - - US$’000 (182,092) - (1,255) - Balance at 30 June 2020 48,319 137 48,303 (183,347) Share-based payments Foreign currency translation Revaluation of financial assets - - - - - - (261) - - - 2,975 - Total US$’000 (71,598) 351 (1,255) 2,233 - - - 14,086 (70,269) - - - (261) 2,975 8,201 - - 2,233 2,233 - - 8,201 Balance at 30 June 2021 48,319 137 48,042 (180,372) 10,434 14,086 (59,354) Paladin Energy Ltd 58 Notes to the Consolidated Financial Statements (continued) For the year ended 30 June 2021 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. 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 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 both US and Australian 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. Paladin Energy Ltd 59 Notes to the Consolidated Financial Statements (continued) For the year ended 30 June 2021 NOTE 10. FINANCIAL RISK MANAGEMENT (CONTINUED) Market Risk (continued) 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 2021 US$’000 2020 US$’000 17,428 416 12,880 30,724 (1,097) 29,627 4,627 321 4,328 9,276 (813) 8,463 The following table summarises the sensitivity of financial instruments held at balance sheet date to movements in the exchange rate of the Australian dollar to the US dollar, with all other variables held constant. The 9% sensitivity is based on reasonably possible changes, over a financial year, using the observed range of actual historical rates for the preceding five year period. Post-Tax Gain/(Loss) AUD/USD +9% (2020: +5%) AUD/USD -9% (2020: -5%) IMPACT ON PROFIT/LOSS 2020 US$’000 2021 US$’000 (2,051) 1,712 (312) 282 IMPACT ON EQUITY 2021 US$’000 891 (744) 2020 US$’000 159 (144) 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 2021 US$’000 2020 US$’000 78 38 116 (169) (53) 1,604 69 1,673 (98) 1,575 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. The interest rate risk on interest-bearing liabilities is not considered to be a material risk. These loans represent the 25% of intercompany shareholder loans owing by LHU to Paladin Finance Pty Ltd (PFPL) that were assigned to CNNC upon the sale of a 25% interest in LHMHL to CNNC in 2014. These loans maintain the same conditions as the intercompany shareholder loans and have a range of fixed and floating rates. During the year, the shareholder loans were extended with revised conditions. Note 8 details the impact of the extensions. All other financial assets and liabilities in the form of receivables, investments in shares, payables and provisions, are non-interest bearing. Paladin Energy Ltd 60 Notes to the Consolidated Financial Statements (continued) For the year ended 30 June 2021 NOTE 10. FINANCIAL RISK MANAGEMENT (CONTINUED) Market Risk (continued) 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 Deposit Restricted cash Financial liabilities Interest-bearing liabilities Net exposure Market Price Risk 2021 US$’000 2020 US$’000 30,661 34,237 1,000 1,000 31,661 35,237 (68,743) (102,638) (37,082) (67,401) Price risk is the risk that the Group's financial position will be adversely affected by movements in the market value of its available-for-sale financial assets. The financial instruments exposed to movements in market value are as follows: Financial assets Other financial assets 2021 US$’000 2020 US$’000 12,880 4,328 The following table summarises the sensitivity of financial instruments held at balance date to movements in the market price of available-for-sale financial instruments, with all other variables held constant. The 25% sensitivity is based on reasonable possible changes, over a financial year, using the observed range of actual historical prices. Post-Tax Gain/(Loss) Market price +25% (2020: +25%) Market price -25% (2020: -25%) Post-tax impact on reserve Market price +25% (2020: +25%) Market price -25% (2020: -25%) Liquidity Risk IMPACT ON EQUITY 2020 2021 US$’000 US$’000 2,254 (2,254) 2,254 (2,254) 757 (757) 757 (757) 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. Paladin Energy Ltd 61 Notes to the Consolidated Financial Statements (continued) For the year ended 30 June 2021 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 US$’000 US$’000 US$’000 US$’000 US$’000 2021 Trade and other payables LHU’s loans from CNNC - principal Interest payable on CNNC loans 2,262 80,928 24,656 2,262 - - Total payables 107,846 2,262 2020 Trade and other payables Loans and borrowings Deferred interest LHU’s loans from CNNC - principal Interest payable on CNNC loans Total payables Credit Risk 1,541 115,000 30,745 80,928 21,710 249,924 1,541 - - - - 1,541 - - - - - - - - - - - - - - - 115,000 30,745 - - - 80,928 24,656 105,584 - - - 80,928 21,710 145,745 102,638 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’s receivables are due from 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$38,415,000 (2020: US$41,866,000), comprising cash and receivables. Current Cash and cash equivalents* Restricted cash* Other receivables – other entities Non-Current Other receivables – other entities Total 2021 US$’000 2020 US$’000 30,661 1,000 1,978 34,237 1,000 1,116 33,639 36,353 4,776 5,513 38,415 41,866 * The Group’s maximum deposit with a single financial institution represents 62% (2020: 77%) of cash and cash equivalents. This financial institution has a credit rating of Aa3 (2020: Aa3). Restricted cash is held in Namibia, this financial institution has a credit rating of Ba2 (2020: Ba2). Paladin Energy Ltd 62 Notes to the Consolidated Financial Statements (continued) For the year ended 30 June 2021 NOTE 10. FINANCIAL RISK MANAGEMENT (CONTINUED) Credit Risk (continued) 2021 2021 Trade receivables Other receivables Total receivables 2020 Trade receivables Other receivables Total receivables Receivables ageing analysis Total <1 year 1-2 years 2-3 years >3 years US$’000 US$’000 US$’000 US$’000 US$’000 - 6,754 - 1,978 6,754 1,978 - 6,629 - 1,116 6,629 1,116 - 380 380 - 316 316 - 4,396 4,396 - - - - 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 2021: 2021 2020 Carrying amount US$’000 Fair value Carrying amount US$’000 US$’000 Fair value US$’000 Interest bearing borrowings loans and - Senior secured notes1 Total non-current - - - - 134,394 134,394 68,627 68,627 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. 1 Paladin fully redeemed the US$115,000,000 senior secured notes in April 2021. The senior secured notes have subsequently been cancelled and delisted and all security registrations have been discharged. Refer to note 7. Paladin Energy Ltd 63 Notes to the Consolidated Financial Statements (continued) For the year ended 30 June 2021 NOTE 10. FINANCIAL RISK MANAGEMENT (CONTINUED) Fair Values (continued) The fair value of the financial instruments as well as the methods used to estimate the fair value are summarised in the table below: Year ended 30 June 2021 Year ended 30 June 2020 (Level 1) US$’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 12,880 - - 12,880 - 1,889 4,364 6,253 12,880 1,889 4,364 19,133 4,328 - - 4,328 Financial liabilities for which fair values are disclosed US$115M senior secured notes1 - - - - - - 68,627 68,627 - - - - - - - - - - - - - 1,467 4,623 6,090 4,328 1,467 4,623 10,418 - - 68,627 68,627 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 is 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 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. 1 The fair value has been determined using a valuation technique based on the quoted market price of the notes. Paladin Energy Ltd 64 Notes to the Consolidated Financial Statements (continued) For the year ended 30 June 2021 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 Gearing Ratio (defined as net debt/total capital) PERFORMANCE FOR THE YEAR NOTE 11. REVENUE Sale of uranium Total 2021 US$’000 - (30,661) 2020 US$’000 145,745 (34,237) (30,661) 111,508 246,708 92,999 216,047 204,507 0% 55% 2021 US$’000 2,985 2,985 2020 US$’000 - - During FY2021 the Company participated in a uranium spot trading opportunity. Recognition and Measurement Amounts disclosed as revenue are net of duties and taxes paid. The Group’s main source of revenue is the sale of uranium, however the Group is in Care and Maintenance and consequently minimal revenue is being generated. 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 provide for the nature and timing of satisfaction of performance obligations, including payment terms and 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 to the customer 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. 1 Excludes LHU’s loans from CNNC that were assigned by PFPL to CNNC and form part of CNNC’s 25% interest in LHMHL as the Group views these as shareholder loans to LHU. Paladin Energy Ltd 65 Notes to the Consolidated Financial Statements (continued) For the year ended 30 June 2021 NOTE 12. INCOME AND EXPENSES Cost of Sales Inventory purchased Total Other Income Other income Foreign exchange gain (net) Total Foreign exchange loss (net) Administration, Marketing and Non-Production Costs Corporate and marketing Corporate restructure costs LHM mine site LHM depreciation LHM restructure costs Other Total (Africa) Ltd sale consent Finance Costs Senior Secured Notes LHU’s loans from CNNC Paladin Noteholders and other selling costs Accretion expense relating to Senior Secured Notes Mine closure provision accretion expense Accretion expense on shareholder loan Lease interest expense Other finance costs Total fee to Total depreciation and amortisation expense Recognition and Measurement Borrowing Costs 2021 US$’000 (2,973) (2,973) 2,452 - 2,452 (3,934) (3,539) (300) (3,011) (15,120) - (2,255) (24,225) (12,019) (2,946) - (11,352) (3,128) (2,918) (2) (47) (32,412) (15,241) 2020 US$’000 - - 2,027 8,279 10,306 - (6,695) (182) (3,065) (21,048) (84) (403) (31,477) (13,568) (4,374) (1,188) (2,677) (3,073) - - - (24,880) (21,107) Borrowing costs incurred for the construction of any qualifying asset are capitalised during the period of time that is required to complete and prepare the asset for its intended use or sale. Other borrowing costs are expensed as incurred including the unwinding of discounts related to mine closure provisions. When relevant, the capitalisation rate used to determine the amount of borrowing costs to be capitalised is the weighted average interest rate applicable to the entity's outstanding borrowings during the year. Employee Benefits Expense Wages and salaries Defined contribution superannuation Share-based payments Other employee benefits Total 2021 US$’000 (3,457) (332) (2,094) (561) (6,444) 2020 US$’000 (4,368) (439) (340) (438) (5,585) The table above sets out personnel costs expensed during the year and are included within Administration, Marketing and Non-Production Costs within the Consolidated Income Statement. Paladin Energy Ltd 66 Notes to the Consolidated Financial Statements (continued) For the year ended 30 June 2021 NOTE 13. INCOME AND OTHER TAXES Income Tax Expense Current income tax Current income tax expense Deferred income tax Related to the origination and reversal of temporary differences Income tax expense reported in the Income Statement Amounts Charged or Credited Directly to Equity Deferred income tax related to items charged or credited directly to equity: Fair value adjustment to CNNC Loans Tax losses recognised to offset fair value adjustment Income tax benefit reported in equity Numerical Reconciliation of Income Tax Benefit to Prima Facie Tax Payable Loss before income tax expense from continuing operations Tax at the Australian tax rate of 30% (2020 – 30%) Difference in overseas tax rates Non-deductible items Under/over prior year adjustment Tax losses utilised Deferred tax assets on losses not recognised 2021 US$’000 2020 US$’000 151 - 151 (13,815) 13,815 - - - - - - - (58,107) (46,051) 17,432 4,899 1,356 - 13,815 3,530 99 (23,536) (17,444) Income tax expense reported in the income statement 151 - Tax Losses Australian unused tax losses for which no deferred tax asset has been recognised1 Other unused tax losses for which no deferred tax asset has been recognised2 Total unused tax losses for which no deferred tax asset has been recognised 2021 US$’000 2020 US$’000 (87,014) (72,154) (380,039) (381,546) (467,053) (453,700) 1 Including tax losses transferred from SRL on consolidation 2 Excluding tax losses from discontinued operation Paladin Energy Ltd 67 Notes to the Consolidated Financial Statements (continued) For the year ended 30 June 2021 NOTE 13. INCOME AND OTHER TAXES (CONTINUED) Deferred Income Tax Deferred tax liabilities Accelerated prepayment deduction for tax purposes Accelerated depreciation for tax purposes Exploration expenditure Inventory / Consumables Asset disposal Other Gross deferred tax liabilities Set off of deferred tax assets Net deferred tax liabilities Deferred tax assets Revenue losses available for offset against future taxable income Foreign currency balances Interest bearing liabilities Provisions Other Deferred tax assets not recognised Gross deferred tax assets Set off against deferred tax liabilities 2021 US$’000 (110) (70,820) (2,294) (3,152) - - (76,376) 76,376 - 88,293 45,582 29,269 8,085 2,750 (97,603) 76,376 (76,376) 2020 US$’000 (58) (75,984) (1,311) (3,154) (407) (823) (81,737) 81,737 - 112,670 65,955 21,322 4,174 64 (122,448) 81,737 (81,737) Net deferred tax assets recognised - - 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. Paladin Energy Ltd 68 Notes to the Consolidated Financial Statements (continued) For the year ended 30 June 2021 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 Loss per share attributable to ordinary equity holders of the Parent from continuing operations 2021 US cents 2020 US cents (2.0) (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 2021 US$’000 2020 US$’000 (43,983) (33,465) 2021 Number of Shares 2020 Number of Shares Weighted average number of ordinary shares used in calculation of basic earnings per share 2,201,765,877 1,966,201,370 Weighted average number of ordinary shares used in calculation for diluted earnings per share 2,205,415,804 1,966,201,370 Total number of securities not included in weighted average calculation due to their antidilutive nature in the current period, that could potentially dilute basic earnings per share in the future 3,649,927 - Recognition and Measurement Basic Earnings Per Share Basic earnings per share are calculated by dividing the profit attributable to equity holders of the Company by the weighted average number of ordinary shares outstanding during the period. Diluted Earnings Per Share Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income tax effect associated with dilutive potential ordinary shares and the weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares. Diluted earnings per share is the same as basic earnings per share in 2021 and 2020 as the number of potentially dilutive shares does not change the result of earnings per share. Paladin Energy Ltd 69 Notes to the Consolidated Financial Statements (continued) For the year ended 30 June 2021 NOTE 15. RECONCILIATION OF EARNINGS AFTER INCOME TAX TO NET CASH FLOW FROM OPERATING ACTIVITIES 2021 US$’000 2020 US$’000 Reconciliation of Net Loss After Tax to Net Cash Flows Used in Operating Activities Net loss (58,258) (92,452) Adjustments for Depreciation and amortisation Sundry income Gain on disposal of property, plant and equipment Net exchange differences Share-based payments Financing costs Accretion expense on shareholder loan Loss on sale of subsidiary Changes in operating assets and liabilities (Increase)/decrease in prepayments Increase in trade and other receivables Decrease in inventories Increase/(decrease) in trade and other payables Increase/(decrease) in provisions Decrease/(increase) in assets classified as held for sale Increase in liabilities directly associated with assets classified as held for sale 15,241 (1,015) (12) 3,525 2,028 29,447 2,918 - (37) (128) 9 700 17 - - 21,107 - (8) (1,111) 340 23,691 - 42,540 2 (5,274) 232 (809) (175) 355 84 Net cash flows used in operating activities (5,565) (11,478) Paladin Energy Ltd 70 Notes to the Consolidated Financial Statements (continued) For the year ended 30 June 2021 OPERATING ASSETS AND LIABILITIES NOTE 16. TRADE AND OTHER RECEIVABLES Notes 2021 US$’000 2020 US$’000 Current Trade receivables and other receivables GST and VAT Total current receivables Non-Current Trade receivables and other receivables Long term deposits Total non-current receivables A B A C 1,877 101 1,978 4,396 380 4,776 1,057 59 1,116 5,197 315 5,512 A. Trade receivables are non-interest bearing. Carrying value approximates fair value due to the short-term nature of the receivables. Other receivables are amounts that generally arise from transactions outside the usual operating activities of the group. Future receivables from the Kayelekera Sale include: • A$3M additional shares in Lotus Resources Limited due to be issued 13 March 2023; • US$5M repayment of the environmental performance bond (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. B. C. GST and VAT receivables relates to amounts due from Governments in Australia, Namibia and Canada. Long term deposits relate 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. Other Receivables These amounts generally arise from transactions outside the usual operating activities of the group. Paladin Energy Ltd 71 Notes to the Consolidated Financial Statements (continued) For the year ended 30 June 2021 NOTE 16. 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 17. INVENTORIES Current Stores and consumables (at cost) Total current inventories at the lower of cost and net realisable value Inventory Expense 2021 US$’000 5,123 5,123 2020 US$’000 5,132 5,132 Uranium inventories sold recognised as an expense for the year ended 30 June 2021 totalled US$2,973,000 for the Group. All inventory was purchased (2020: US$Nil). Write-down of Inventories During 2021 stores and consumables held at the LHM were written down by US$5,105 (2020: US$68,682) due to obsolescence. 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. Paladin Energy Ltd 72 Notes to the Consolidated Financial Statements (continued) For the year ended 30 June 2021 NOTE 18. DISCONTINUED OPERATIONS AND ASSETS AND LIABILITIES CLASSIFIED AS HELD FOR SALE 1. Description FY2020 - 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 of shares (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 holds a 9.43% interest at 30 June 2021. 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. 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 2022), and the final US$3M on the third anniversary (13 March 2023). At 30 June 2021 US$5M has been received by Paladin. At 30 June 2020 - Future receivables from the Kayelekera Sale include: • A$3M additional shares in Lotus to be issued on 13 March 2023; • US$5M repayment of the environmental performance bond (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$5M. 2. Financial performance and cash flow information of discontinued operations (Loss)/profit after tax from discontinued operations Other income Change in estimate of KM mine closure provision Care and maintenance expenses Loss on sale of subsidiary after income tax (Loss)/profit after tax from discontinued operations Cash Flows Net cash outflow from operating activities Net cash inflow from investing activities Net decrease in cash and cash equivalents 2021 US$’000 - - - - - - - - 2020 US$’000 188 - (4,049) (42,540) (46,401) (3,238) - (3,238) Paladin Energy Ltd 73 Notes to the Consolidated Financial Statements (continued) For the year ended 30 June 2021 NOTE 18. DISCONTINUED OPERATIONS AND ASSETS AND LIABILITIES CLASSIFIED AS HELD FOR SALE (CONTINUED) 3. Details of the sale of the subsidiary Consideration received or receivable Cash Fair value of Lotus shares issued1 Fair value of receivables – shares and cash2 Total disposal consideration Carrying amount of assets sold Carrying amount of liabilities sold Gain on sale before income tax and de-recognition of non-controlling interest in PAL Derecognise non-controlling interest Loss on sale after income tax Recognition and Measurement 2021 US$’000 - - - - - - - - - 2020 US$’000 4,137 1,953 5,986 12,076 (10,474) 42,478 44,080 (86,620) (42,540) 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. 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. 1 On 13 March 2020, the fair value of the 90M Lotus shares issued was A$0.034 per share. It has been recognised as a financial asset with subsequent fair value movements recognised through Other Comprehensive Income. 2 The fair value of receivables has been assessed using a discount rate to reflect the credit risk and the time value of money. Paladin Energy Ltd 74 Notes to the Consolidated Financial Statements (continued) For the year ended 30 June 2021 NOTE 19. NON-CURRENT FINANCIAL ASSETS Non-current financial assets 2021 US$’000 2020 US$’000 12,880 4,328 The Group has an investment in Lotus Resources Limited and at 30 June 2021 held 90,000,000 shares (2020: 90,000,000 shares) subject to a 12-month voluntary escrow which expired on 13 March 2021. The market value of these shares at 30 June 2021 is A$17.1M (US$12.9M) (2020: A$6.3M (US$4.3M)) based on a share price of A$0.19 (2020: A$0.07) per share. Recognition and Measurement Financial assets are recognised on trade date, being the date on which the group commits to purchase or sell the asset. Equity Instruments The group measures all equity investments at fair value. Where the group’s management has elected to present fair value gains and losses on equity investments in OCI, there is no subsequent reclassification of fair value gains and losses to profit or loss following the derecognition of the investment. Dividends from such investments continue to be recognised in profit or loss as other income when the group’s right to receive payments is established. Changes in the fair value of financial assets at FVPL are recognised in other gains/(losses) in the statement of profit or loss as applicable. Impairment losses (and reversal of impairment losses) on equity investments measured at FVOCI are not reported separately from other changes in fair value. NOTE 20. PROPERTY, PLANT AND EQUIPMENT Total Plant and Equipment Land and Buildings US$’000 US$’000 US$’000 Construction Work in Progress US$’000 2021 Net carrying value At 1 July 2020 Additions Depreciation and amortisation expense Disposals Foreign currency translation At 30 June 2021 Cost Accumulated depreciation 2020 Net carrying value At 1 July 2019 Additions Depreciation and amortisation expense Disposals Foreign currency translation At 30 June 2020 Cost Accumulated depreciation Paladin Energy Ltd 190,889 39 (12,819) (38) 18 185,361 39 (12,455) (38) 18 178,089 172,925 380,059 (201,970) 369,442 (196,517) 206,599 301 (15,451) (551) (9) 200,653 301 (15,033) (551) (9) 190,889 185,361 380,363 (189,474) 369,747 (184,386) 4,772 - (364) - - 4,408 9,861 (5,453) 5,190 - (418) - - 4,772 9,860 (5,088) 756 - - - - 756 756 - 756 - - - - 756 756 - 75 Notes to the Consolidated Financial Statements (continued) For the year ended 30 June 2021 NOTE 20. PROPERTY, PLANT AND EQUIPMENT (CONTINUED) 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. 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 20 years 10 years 2-6 years • Leasehold improvements period of lease • Mine plant and equipment 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 Langer Heinrich Mine CGU. Paladin Energy Ltd 76 Notes to the Consolidated Financial Statements (continued) For the year ended 30 June 2021 NOTE 21. MINE DEVELOPMENT Mine development – at cost Less accumulated depreciation and impairment Net carrying value – mine development Net carrying value at start of year Depreciation and amortisation expense Net carrying value at end of year Recognition and Measurement Mine development 2021 US$’000 63,091 (46,343) 16,748 18,548 (1,800) 16,748 2020 US$’000 63,091 (44,543) 18,548 22,958 (4,410) 18,548 Pre-production costs are deferred as development costs until such time as the asset is capable of being operated in a manner intended by management and depreciated on a straight line basis. Post-production costs are recognised as a cost of production. Significant Judgements, Estimates and Assumptions Proved and Probable Reserves The Group uses the concept of a life of mine as an accounting value to determine such things as depreciation rates and the appropriate period to discount mine closure provisions. In determining life of mine, the proved and probable reserves measured in accordance with the 2012 edition of the JORC Code specific to a mine are taken into account which by their very nature require judgements, estimates and assumptions. Paladin Energy Ltd 77 Notes to the Consolidated Financial Statements (continued) For the year ended 30 June 2021 NOTE 22. EXPLORATION AND EVALUATION EXPENDITURE The following table details the expenditures on interests in mineral properties by area of interest for the year ended 30 June 2021: Valhalla/Skal Isa North Carley Bore Canada Manyingee Fusion LHU Total Areas of interest Balance 1 July 2019 Expenditure capitalised Foreign exchange differences Balance 30 June 2020 Expenditure capitalised Foreign exchange differences Balance 30 June 2021 US$’000 39,347 94 US$’000 7,201 342 US$’000 7,847 19 US$’000 28,676 436 US$’000 7,354 62 US$’000 98 61 US$’000 - 3,059 US$’000 90,523 4,073 - 39,441 - 7,543 - 7,866 (1,227) 27,885 - 7,416 - 159 - 3,059 (1,227) 93,369 79 259 51 510 108 69 2,167 3,243 - 39,520 - 7,802 - 7,917 2,945 31,340 - 7,524 - 228 - 5,226 2,945 99,557 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. 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. Paladin Energy Ltd 78 Notes to the Consolidated Financial Statements (continued) For the year ended 30 June 2021 NOTE 23. INTANGIBLE ASSETS At 30 June Intangible assets – at cost Less accumulated depreciation and impairment Net carrying value – intangible assets 2021 US$’000 2020 US$’000 17,803 (9,491) 17,803 (8,972) 8,312 8,831 Amortisation of US$519,000 (2020: US$631,000) is included in non production costs in the Consolidated Income Statement. Movements in Intangible Assets Movements in each group of intangible asset during the financial year are set out below: 2021 Net carrying value at 1 July 2020 Amortisation expense Right to Supply of Power US$’000 Right to Supply of Water US$’000 Total US$’000 2,473 (145) 6,358 (374) 8,831 (519) Net carrying value at 30 June 2021 2,328 5,984 8,312 2020 Net carrying value at 1 July 2019 Amortisation expense 2,650 (177) 6,812 (454) 9,462 (631) Net carrying value at 30 June 2020 2,473 6,358 8,831 Description of the Group’s Intangible Assets 1. Right to supply of power LHU has entered into a contract with NamPower in Namibia for the right to access power at the LHM. In order to obtain this right, the power line connection to the mine was funded by LHU. However, ownership of the power line rests with NamPower. The amount funded is being amortised on a straight line basis. 2. Right to supply of water LHU has entered into a contract with NamWater in Namibia for the right to access water at the LHM. In order to obtain this right, the water pipeline connection to the mine was funded by LHU. However, ownership of the pipeline rests with NamWater. The amount funded is being amortised on a straight line basis. Paladin Energy Ltd 79 Notes to the Consolidated Financial Statements (continued) For the year ended 30 June 2021 NOTE 23. INTANGIBLE ASSETS (CONTINUED) 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 Straight line method over the remaining useful life (16 years). The amortisation method is reviewed at each financial year-end. Impairment testing Annually and more frequently when an indication of impairment exists. NOTE 24. TRADE AND OTHER PAYABLES Current Trade and other payables Unearned Revenue Total current payables 2021 US$’000 2020 US$’000 2,262 - 2,262 1,541 3 1,544 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. Paladin Energy Ltd 80 Notes to the Consolidated Financial Statements (continued) For the year ended 30 June 2021 NOTE 25. PROVISIONS Current Employee benefits Total current provisions Non-Current Environmental rehabilitation provision Total non-current provisions Movements in Provisions 2021 US$’000 2020 US$’000 540 540 42,073 42,073 522 522 32,087 32,087 Movements in provisions during the financial year, excluding provisions relating to employee benefits, are set out below: At 1 July 2020 Unwinding of discount rate Foreign currency movements At 30 June 2021 2021 Current Non-current 2020 Current Non-current Nature and Timing of Provisions Environmental rehabilitation Environmental Rehabilitation US$’000 32,087 3,128 6,858 42,073 - 42,073 - 32,087 A provision for environmental rehabilitation and mine closure has been recorded in relation to the 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. Paladin Energy Ltd 81 Notes to the Consolidated Financial Statements (continued) For the year ended 30 June 2021 NOTE 25. 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. Paladin Energy Ltd 82 Notes to the Consolidated Financial Statements (continued) For the year ended 30 June 2021 OTHER NOTES NOTE 26. KEY MANAGEMENT PERSONNEL Details of Key Management Personnel 1 2 Directors Chairman (Non-Executive) Mr Cliff Lawrenson Director (Non-Executive) Mr Peter Watson Mr Peter Main Director (Non-Executive) Ms Melissa Holzberger Director (Non-Executive) Director (Non-Executive) Ms Joanne Palmer Executives Mr Ian Purdy Ms Anna Sudlow Mr Jonathon Clements General Manager - Projects & Development Mr Jess Oram Mr Alex Rybak Chief Executive Officer Chief Financial Officer General Manager Exploration (appointed 19 July 2021) General Manager – Business Development & Marketing (appointed 19 July 2021) Compensation of Key Management Personnel: Compensation by Category Short-term employee benefits Post-employment benefits Share-based payments NOTE 27. AUDITORS’ REMUNERATION The auditor of the Paladin Energy Ltd Group is PricewaterhouseCoopers. Amounts PricewaterhouseCoopers (Australia) for: received or due and receivable by 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 Paladin Energy Ltd 2021 US$’000 981,379 54,206 1,957,547 2020 US$’000 1,345,071 57,344 86,935 2,993,132 1,489,350 2021 US$’000 2020 US$’000 140,237 - 27,900 - - 127,850 - 39,854 10,329 - 168,137 178,033 27,965 288 450 28,703 196,840 24,352 1,219 481 26,052 204,085 83 Notes to the Consolidated Financial Statements (continued) For the year ended 30 June 2021 NOTE 28. COMMITMENTS AND CONTINGENCIES There were no outstanding commitments or contingencies, which are not disclosed in the Financial Report of the Group as at 30 June 2021 other than: Tenements Commitments for tenements contracted for at the reporting date but not recognised as liabilities, payable: Within one year Later than one year but not later than 5 years More than 5 years Total tenements commitment 2021 US$’000 2020 US$’000 90 681 493 1,264 41 987 539 1,567 These include commitments relating to tenement lease rentals and the minimum expenditure requirements of the Namibian, Canadian, Western Australian and Queensland Mines Departments attaching to the tenements and are subject to re-negotiation upon expiry of the exploration leases or when application for a mining licence is made. These are necessary in order to maintain the tenements in which the Group and other parties are involved. All parties are committed to meet the conditions under which the tenements were granted in accordance with the relevant mining legislation in Namibia, Australia and Canada. Other Commitments Commitments for transport, capital, purchase order commitments, fuel and utilities and other supplies contracted for at the reporting date but not recognised as liabilities, payable: Within one year Later than one year but not later than 5 years More than 5 years 2021 US$’000 145 1,023 558 2020 US$’000 503 297 1,115 Total other commitments 1,726 1,915 In relation to the Manyingee Project, the re-negotiated acquisition terms provide for a payment of A$750,000 (US$564,899) (2020: A$750,000 (US$515,187)) by the Group to the vendors when all project development approvals are obtained. Bank Guarantees As at 30 June 2021 the Group has outstanding US$123,549 (A$164,032) (2020: US$154,656 (A$225,145)) as a current guarantee provided by a bank for the corporate office lease; a US$11,298 (A$15,000) (2020: US$92,734 (A$135,000)) guarantee for tenements and a US$48,958 (A$65,000) (2020: US$44,650 (A$65,000)) guarantee for corporate credit cards. Paladin Energy Ltd 84 Notes to the Consolidated Financial Statements (continued) For the year ended 30 June 2021 NOTE 29. RELATED PARTIES Key Management Personnel The only related party transactions are with Directors and Key Management Personnel. Refer to Note 26. Details of material controlled entities are set out in Note 30. Loans from related parties – LHU’s loans from CNNC (refer to Note 8) Non-Current At 1 July 2020 Interest charged Fair value adjustment to shareholder loan Accretion expense At 30 June 2021 Purchase of uranium NOTE 30. GROUP INFORMATION Information Relating to Paladin Energy Ltd (parent) Current assets Total assets Current liabilities Total liabilities Issued capital Accumulated losses Option application reserve Share-based payments reserve Revaluation reserve Total shareholders’ equity Net loss after tax from operations Total comprehensive loss 2021 US$’000 102,638 2,946 (39,759) 2,918 2020 US$’000 98,264 4,374 - - 68,743 102,638 2,973 - 2021 US$’000 32,127 252,854 1,388 11,934 2020 US$’000 32,989 232,448 1,336 147,265 2,489,082 (2,813,872) 137 48,042 10,434 2,327,789 (2,293,279) 137 48,303 2,233 266,177 85,183 (41,141) (41,141) (12,149) (12,149) 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 recognised a provision of US$42,073,000 for the LHM Environmental Trust Fund. Paladin Energy Ltd 85 Notes to the Consolidated Financial Statements (continued) For the year ended 30 June 2021 NOTE 30. GROUP INFORMATION (CONTINUED) Tax Consolidation Paladin and its 100% owned Australian resident subsidiaries formed a tax consolidated group (the Group) with effect from 1 July 2003. Paladin is the head entity of the Group. Members of the Group have entered into a tax- sharing agreement that provides that the head entity will be liable for all taxes payable by the Group from the consolidation date. The parties have agreed to apportion the head entity’s taxation liability within the Group based on each contributing member’s share of the Group’s taxable income and losses. Investments in Material Controlled Entities NAME COUNTRY OF INCORPORATION PERCENTAGE INTEREST HELD 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 2021 % 100 75 75 100 100 100 100 100 100 100 65 2020 % 100 75 75 100 100 100 100 100 100 100 60 All investments comprise ordinary shares and all shares held are unquoted. NOTE 31. EVENTS AFTER THE BALANCE DATE Since the end of the financial year, the Directors are not aware of any other matter or circumstance not otherwise dealt with in this report, 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. Paladin Energy Ltd 86 Notes to the Consolidated Financial Statements (continued) For the year ended 30 June 2021 NOTE 32. 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 2021: Application date of standard* Application date for Group* 1 January 2022 1 July 2022 Reference/ Title Summary Narrow scope amendments issued for AASB 116, AASB 137, AASB 3 and Annual Improvements made to AASB 1, AASB 9, AASB 16 and AASB 141 (AASB 2020- 3) The AASB has made • Narrow scope amendments to - - - - - AASB 116 Property, Plant and Equipment in relation to proceeds before intended use AASB 137 Provisions, Contingent Liabilities and Contingent Assets in relation to onerous contracts and the cost of fulfilling a contract AASB 3 Business combinations in relation to references to the Conceptual Framework, and Annual improvements to AASB 16, AASB 1, AASB 9 and AASB 141. Classification of liabilities as current or non-current (AASB 2020-1, AASB 2020- 6) The AASB issued a narrow-scope amendment to AASB 101 Presentation of Financial Statements that liabilities are classified as either current or non-current, depending on the rights that exist at the end of the reporting period. to clarify 1 January 2023 1 July 2023 * Designates the beginning of the applicable annual reporting period unless otherwise stated. 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 2021, it is not expected that the new Standards and Interpretations will significantly affect the Group’s financial performance. Paladin Energy Ltd 87 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 39 to 87, 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 2021 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) The financial statements and notes also comply with International Financial Reporting Standards as disclosed in Note 3 to the Financial Statements. c) There are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable. 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 2021 (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 26th August 2021 On behalf of the board _______________________________ Cliff Lawrenson Chairman Paladin Energy Ltd 88 Independent auditor’s report To the members of Paladin Energy Ltd Report on the audit of the financial report Our opinion In our opinion: The accompanying financial report of Paladin Energy Ltd (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 2021 and of its financial performance for the year then ended (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 2021 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 significant accounting policies and other explanatory information 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 & 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. 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. 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 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. 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. 90 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. Key audit matter Revision of shareholder loan terms (Refer to note 8) US68,743,000 On 1 January 2021 the shareholder loan facility agreements between the Group’s 75%-owned Namibian subsidiary Langer Heinrich Uranium (Pty) Ltd and its shareholders were extended. The revised terms and conditions of the facility agreements were sufficiently different from previous terms and conditions such that the new arrangements constituted an extinguishment of the previous facilities and the recognition, at fair value, of the new facilities. In accordance with AASB 9 Financial Instruments the fair values of the loans under the revised facility agreements were determined by applying a market interest rate to the future cash flows arising from the loans. The difference between these fair values and the carrying amount of the loans at 1 January 2021 represents a non-cash contribution from owners and has been recognised in equity. This was a key audit matter due to the complexity of the accounting requirements for debt modifications, the judgement required to determine the fair value of the revised loans and the significant adjustments to the carrying value of the loans resulting from the revision. How our audit addressed the key audit matter We focused our work on assessing the appropriateness of the accounting treatment for the revised shareholder loan terms and our procedures included: • • • • • • obtaining the revised shareholder loan facility agreements to assess the relevant changes in terms and conditions assessing the assumptions used by management in determining whether the revision resulted in a debt modification or extinguishment under AASB 9 Financial Instruments assessing the reasonableness of the interest rate used to calculate the fair value of the revised loans testing the mathematical accuracy of the calculation of fair values of the revised loans assessing the reasonableness of the calculation of interest expense subsequent the revision on 1 January 2021 assessing the appropriateness of disclosures relating to this matter in the financial report 91 Key audit matter How our audit addressed the key audit matter Assessment of impairment indicators for Langer Heinrich (Refer to notes 5 and 20-23) US$207,967,000 We evaluated the Group’s assessment of whether there were any indicators of asset impairment at 30 June 2021 for the Langer Heinrich CGU. The Group performed an assessment for impairment indicators as required by Australian Accounting Standards for the Langer Heinrich Cash Generating Unit (CGU) which is currently in care & maintenance. As at 30 June 2021, the US$207,967,000 Namibian segment non-current assets (comprising property, plant and equipment, mine properties, exploration and evaluation and intangible 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. Closure and rehabilitation provisions (Refer to note 25) US$42,073,000 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 2021 the consolidated statement of financial position included provisions for such obligations of US$42.1 million. 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 and inflation rates applied to future cash outflows associated with rehabilitation activities to bring them to their present value. We applied professional scepticism in our evaluation of judgements made by the Group and our procedures included: • • • • • comparing medium and long term uranium pricing to external industry forecasts comparing resource estimates to the most recent Langer Heinrich Resource Statement comparing foreign exchange and inflation rate assumptions to current economic forecasts assessing the Group's market capitalisation as an indicator for impairment assessing the reasonableness of the accounting policy and method selected in light of the Accounting Standards We obtained the Group’s assessment of its 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: • • • • comparing the rehabilitation costs being estimated at Langer Heinrich to an external expert’s assessment of the rehabilitation obligation examining supporting information for significant changes in future cost estimates from the prior year assessing the timing of work to be performed by comparison to mine plans and environmental rehabilitation plans submitted to relevant authorities considering the appropriateness of the discount and inflation rates utilised in calculating the provision by comparing them to current market consensus rates. 92 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 2021, 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. 93 Report on the remuneration report Our opinion on the remuneration report We have audited the remuneration report included in pages 24 to 35 of the directors’ report for the year ended 30 June 2021. In our opinion, the remuneration report of Paladin Energy Ltd for the year ended 30 June 2021 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 26 August 2021 94 Additional Information Pursuant to the Listing Requirements of ASX as at 20 August 2021: 1. 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 1,512 3,281 1,679 3,873 828 11,173 No. of Shares 317,652 8,789,931 13,332,165 135,967,650 2,519,483,673 2,677,891,071 1,753 shareholders hold less than a marketable parcel of shares. 2. The twenty largest shareholders hold 79.09% of the total shares issued Holder CITICORP NOMINEES PTY LIMITED HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED NDOVU CAPITAL XII B V BNP PARIBAS NOMINEES PTY LTD J P MORGAN NOMINEES AUSTRALIA PTY LIMITED NATIONAL NOMINEES LIMITED MERRILL LYNCH (AUSTRALIA) NOMINEES PTY LIMITED HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED BNP PARIBAS NOMS PTY LTD HOPU CLEAN ENERGY (SINGAPORE) PTE LTD UBS NOMINEES PTY LTD BNP PARIBAS NOMINEES PTY LTD SIX SIS LTD BNP PARIBAS NOMINEES PTY LTD ACF CLEARSTREAM BNP PARIBAS NOMINEES PTY LTD WOODROSS NOMINEES PTY LTD HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - A/C 2 EGP CONSULTING PTY LIMITED SACHEM COVE SPECIAL OPPORTUNITIES FUND LP HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED BRISPOT NOMINEES PTY LTD No. of Shares 500,823,785 423,544,611 261,589,744 178,767,744 133,589,561 98,208,973 70,964,493 62,417,326 61,954,406 49,174,305 36,090,390 33,999,602 33,086,333 33,064,683 32,745,012 26,630,701 25,675,676 200,135,14 193,277,64 162,479,60 % 18.70 15.82 9.77 6.68 4.99 3.67 2.65 2.33 2.31 1.84 1.35 1.27 1.24 1.23 1.22 0.99 0.96 0.75 0.72 0.61 Substantial shareholders as disclosed in substantial shareholder notices given to the Company are as follows: Tembo Capital Mining Fund II LP and related entities Paradice Investment Management Pty Ltd 2,117,916,583 79.09 3. Voting Rights 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. Paladin Energy Ltd 95 Additional Information (continued) 4. Securities Subject to Voluntary Escrow There are 57,000,000 PRs converted into ordinary shares that are subject to escrow. 5. Unquoted securities Unlisted Share Appreciation Rights The Company has 5,510,500 share appreciation rights on issue, issued in accordance with the Share Rights Plan approved by shareholders. The number of beneficial holders of share appreciation rights totals 15. Unlisted Performance Rights The Company has nil performance rights on issue. Paladin Energy Ltd 96 Additional Information (continued) Tenement information required by listing rule 5.20 Tenement EPM 11898 EPM 13412 EPM 13413 EPM 13682 EPM 14040 EPM 14233 EPM 14694 EPM 14712 EPM 14821 EPM 14935 EPM 15156 MDL 507 MDL 508 MDL 509 MDL 510 MDL 511 MDL 513 M08/86 M08/87 M08/88 E08/1645 E08/1646 EL 6132 ML 140 ML 172 022147M 024697M 024995M 025621M 025641M 025649M 025651M 025658M 025675M 025676M 025677M 025678M 025680M 025681M 025932M Location QLD, Australia QLD, Australia QLD, Australia QLD, Australia QLD, Australia QLD, Australia QLD, Australia QLD, Australia QLD, Australia QLD, Australia QLD, Australia QLD, Australia QLD, Australia QLD, Australia QLD, Australia QLD, Australia QLD, Australia WA, Australia WA, Australia WA, Australia WA, Australia WA, Australia SA, Australia Namibia, Africa Namibia, Africa NL, Canada NL, Canada NL, Canada NL, Canada NL, Canada NL, Canada NL, Canada NL, Canada NL, Canada NL, Canada NL, Canada NL, Canada NL, Canada NL, Canada NL, Canada Ownership 20% 20% 20% 20% 0% 18% 20% 20% 20% 20% 20% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 7.5% 75% 75% 65% 65% 65% 65% 65% 65% 65% 65% 65% 65% 65% 65% 65% 65% 65% Paladin Energy Ltd 97 

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