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Panoramic Resources Limited
Level 9, 553 Hay Street, Perth WA 6000
Postal Address
PO Box Z5487, Perth WA 6831
Telephone: +61 8 6266 8600
Facsimile: + 61 8 9421 1008
Email: info@panres.com
ABN: 47 095 792 288
www.panoramicresources.com
2015 ANNUAL REPORT
Contents
CHAIRMAN’S REPORT
MANAGING DIRECTOR’S REPORT
LAST FOUR YEARS FINANCIAL RESULTS
KEY POINTS
SAFETY
PRODUCTION
FINANCIAL HIGHLIGHTS
NICKEL DIVISION
PGM DIVISION
GOLD DIVISION
EXPLORATION
2
4
6
6
7
7
8
10
12
12
13
SUSTAINABILITY AND COMMUNITY ENGAGEMENT 14
FY2016 GOALS
FY2016 EXPENDITURE GUIDANCE
DIRECTORS’ REPORT
CORPORATE GOVERNANCE STATEMENT
DIRECTORS’ DECLARATION
INDEPENDENT AUDITOR’S REPORT
AUDITOR’S INDEPENDANCE DECLARATION
CONSOLIDATED INCOME STATEMENT
CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME
CONSOLIDATED BALANCE SHEET
CONSOLIDATED STATEMENT OF
CHANGES IN EQUITY
CONSOLIDATED STATEMENT OF CASH FLOWS
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
ADDITIONAL SHAREHOLDER INFORMATION
SCHEDULE OF TENEMENTS
RESOURCES AND RESERVES
CORPORATE DIRECTORY
16
16
17
40
47
48
50
52
53
54
55
56
57
105
107
119
124
Mission Statement
We strive to achieve excellence in all aspects of our business
to provide long term capital growth and dividend return to our
shareholders, a safe and rewarding work environment for our
employees, and opportunities and benefits to the people in the
communities we operate in.
About Us
Panoramic Resources Limited (ASX:PAN) (“Panoramic”) is
an S&P/ASX All Ordinaries listed Western Australian mining
company formed in 2001 for the purpose of developing the
Savannah Nickel Project in the East Kimberley. Panoramic
successfully commissioned the $65 million Savannah Project
in late 2004 and then in 2005 purchased and restarted the
Lanfranchi Nickel Project, near Kambalda. In FY2014, the
Company produced a record 22,256t contained nickel and
produced 19,301t contained nickel in FY2015.
Following the successful development of the nickel projects,
the Company diversified its resource base to include gold and
platinum group metals (PGM). The Gold Division consists of
the Gidgee Project located near Wiluna. The Gidgee Project
tenements contain a combined ~1.3M ounces of gold in
Resource. The PGM Division consists of the Panton Project,
located 60km south of the Savannah Project and the Thunder
Bay North Project in Northern Ontario, Canada, in which Rio
Tinto is earning 70% in the project by spending up to C$20
million over five years. Combined PGM Resources total 2.8M
ounces.
The Company’s vision is to broaden its exploration and
production base, with the aim of becoming a major, diversified
mining company in the S&P/ASX 100 Index. The growth path
will include developing existing resources, discovering new
ore bodies, acquiring additional projects and is being led by
an experienced exploration-to-production team with a proven
track record.
Vision - Building a multi-commodity company producing base
metals, gold and PGMs
Commitment - Maximise margins to deliver capital growth and
dividends to our shareholders
Results - A sustainable mining company targeting inclusion in
the ASX/S&P100 Index
Competent Persons
The information in this report that relates to Exploration Targets and Exploration Results is based on information compiled by John Hicks. Mr Hicks is a
member of the Australasian Institute of Mining and Metallurgy (AusIMM) and is a full-time employee and shareholder of Panoramic Resources Limited.
Mr Hicks also holds performance rights to shares in relation to Panoramic Resources Limited.
The information in this report that relates to Mineral Resources is based on information compiled by Paul Hetherington.
Mr Hetherington is a member of the Australasian Institute of Mining and Metallurgy (AusIMM) and is a full-time employee and shareholder of Panoramic
Resources Limited.
The aforementioned have sufficient experience that is relevant to the style of mineralisation and type of target/deposit under consideration and to the
activity which he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the Australian Code for Reporting of Exploration
Results, Mineral Resources and Ore Reserves. Both Mr Hicks and Mr Hetherington consent to the inclusion in the report of the matters based on the
information in the form and context in which it appears.
2 0 1 5 A N N U A L R E P O R T | P A G E 1
Chairman’s Report
Panoramic entered the 2015 financial year with an optimistic outlook on the US$ nickel price based
on consensus forecast of a tightening supply/demand balance and expectations of higher prices. We
maintained our focus on safety, productivity, exploration and adding value to our asset base. While
Savannah had an excellent year with record production, Lanfranchi fell 10% short of budget due to
reduced production in the June quarter, following some seismic activity in April. The now wholly owned
Copernicus open pit mine, south of Savannah, was brought back into production, with ore being treated
at the Savannah mill. Importantly, operating costs at both sites were steady despite the increasing depth
from which ore was mined.
The exploration effort at the two mines continued to produce
outstanding results. The allocation of capital and the design
and execution of exploration programs requires constant
refinement and control. Since Panoramic has operated at
below the ideal reserve levels for a number of years, our
exploration focus has been to increase our resource and
reserve base to secure the future of both mines.
Drilling under the 900 Fault at Savannah has confirmed
the extension of nickel mineralisation below the current
mine, while the Savannah North drilling continues to define
what is becoming a major new nickel discovery that could
significantly extend the mine life. The rapid development of
the exploration drive off the Savannah decline allowed us
to drill out the first block of the Savannah North discovery,
which resulted in reporting a maiden Resource of 3.15
million tonnes at 1.75% nickel for 55,200 tonnes contained
nickel. Drilling has been ongoing and we hope to continue to
upgrade that Resource. The next step will be to undertake a
feasibility study on mining Savannah North, with the aim of
reporting a maiden mining Reserve during December 2015.
We are excited about the potential of Savannah North given
that the potential strike length is now around 2kms. We look
forward to delivering more news on this orebody.
At Lanfranchi, with the Deacon Reserve base almost depleted
and the increased seismic activity, we ceased mining that
orebody in August 2015. Sadly, we had to reduce the staffing
level at Lanfranchi and moved the operation onto a care
and maintenance footing. On a more positive note, the
excellent work of our geological team led to the discovery of
the Lower Schmitz mineralisation, which was identified by
geophysical analysis and follow up drilling. The decision was
made to develop a decline across to the mineralised zone
to facilitate both a resource drill-out and subsequent mining
access. The access drive was completed in early September
and Resource drilling commenced in mid-September. The
Lower Schmitz discovery has the potential to allow mining
to recommence in 2016, subject to us determining a mining
Reserve and a favourable nickel price environment. The
contract with BHP Nickel West provides us with flexibility
around ore deliveries and they, like us, are also keen to see
Lanfranchi producing ore again sooner rather than later.
The nickel price has clearly disappointed us and all nickel
producers. I make the following observations in relation to the
nickel market:
•
•
The LME nickel stockpile totals 450,000 tonnes and
equates to around three months demand. Despite
market analysts forecasting a nickel price recovery
following the Indonesian government’s ban of the
export of nickel laterite ore, low grade laterite from
the Philippines appears to have replaced some of the
Indonesian supplies. This, combined with lower energy
costs (oil and coal), softer demand for stainless steel, the
uncertainty around the Chinese economy and commodity
speculators has driven the nickel price to the current
levels at which it is estimated between 50-60% of world
production is unprofitable.
The nickel price environment has proven to be
challenging for all nickel producers. In July 2014, the
nickel spot price was US$8.50/lb and the A$ was about
94 US cents, giving the Australian nickel producers a
price of around A$9.04/lb. By early September 2015,
nickel had fallen to US$4.45/lb and A$ to 71 US cents
equating to an Australian dollar nickel price of A$6.27/lb.
This represents a 50% reduction in the US$ nickel price
and a 30% fall in the A$ nickel price making it tough for
everyone producing nickel.
P A G E 2 | 2 0 1 5 A N N U A L R E P O R T
After completing the feasibility study of the Mt Henry Gold
Project (Panoramic 70%/Matsa 30%), the project was sold
to Metals X Limited for 22 million shares in that company
(Panoramic’s share 15.4 million shares), which was a good
result. We are now progressing with the sale of the Gidgee
Gold Project.
While it is both a duty and a pleasure to acknowledge the
considerable efforts of our operating and corporate people, I
do remind us all that safety is the No.1 value that underpins
our business. We can never relax in the belief that we might
have achieved a satisfactory standard and put less emphasis
on safe processes and procedures. We must continue to
place the highest value on the health and wellbeing of each
and every person who works with us.
In summary, although we experienced a tough year, we must
maintain our focus. We need to improve productivity, add to
our resource and operating base, spend capital wisely, and
never forget that it is ore reserves that are the basis for wealth
creation; they must be discovered or acquired.
On behalf of shareholders, employees and all the people who
contribute to Panoramic’s success, I thank Peter Harold, his
leadership group and all of our people for another year of
commendable effort.
Brian Phillips
Chairman
In response to this unexpected drop in the nickel price, we
have moved to restructure our operations to be cash positive
at prevailing prices. At the current price, it makes no sense
to mine Jury-Metcalfe, hence the decision to place Lanfranchi
on care and maintenance. In addition, we made the decision
to optimise production from Savannah and limit capital
development to allow us to operate on a cash positive basis.
As well as the nickel price and the Australian dollar/US
dollar exchange rate, there are other challenges facing our
business, including input costs like labour, fuel, consumables
and imported equipment. The uncertainty created by complex
taxation and industrial relations legislation is also frustrating,
however we do welcome the Federal Government’s White
Paper on development of Northern Australia. Support for
development of minerals, agriculture, forestry and water
resources which could lead to the enhancement of major
infrastructure including transport, power, social facilities and
increased population in the Kimberley region would be a
significant benefit to our Savannah operation. Encouraging
a workforce to be based in nearby Kununurra could result
in lower costs, dramatically reduced commuting time, and
improved social outcomes.
In relation to our development projects, Rio Tinto’s exploration
subsidiary in Canada exercised the option to earn a 70%
position in the combined Thunder Bay North/Escape Lake
PGM project and has commenced work on the project. At
Panton, metallurgical test work has shown we can produce
a high grade PGM concentrate and we will continue work
to confirm these results. We are also talking to other PGM
producers regarding the potential to partner with us on the
development of the Panton Project.
2 0 1 5 A N N U A L R E P O R T | P A G E 3
Managing Director’s Report
Dear Shareholder,
I would describe FY2015 as a year of mixed fortunes for
Panoramic.
• We elected not to mine the Jury-Metcalfe orebody at
Lanfranchi due to the low nickel price
On the positive side:
• Mining of the Deacon orebody ceased in August after
•
•
•
Savannah had a record year producing 8,726t on nickel
in concentrate
Resources at Savannah increased significantly to
128,800t Ni including a maiden Resource of 55,200t Ni
for Savannah North
Exploration has increased potential strike extent of the
Savannah North mineralisation to 2km
• We discovered the Lower Schmitz high-grade
mineralisation at Lanfranchi and released a Target
Resource of 275-746,000t at 5-6% Ni
• We sold our 70% interest in Mt Henry to Metals X for
15.4 million shares in Metals X
•
The Australian dollar fell to around US70c which greatly
assists us as we sell in US$
• We had a significantly improved metallurgical
breakthrough with Panton mineralisation demonstrating
we can produce a higher grade PGM concentrate
•
Rio agreed to farm into our Thunder Bay North Project
and could spend up to C$20 million over five years to
earn a 70% interest in the project
• We maintained our dividend stream with a 1c interim
dividend paid in April
On the other side of the ledger:
• We recorded a number of Lost Time Injuries which is
unacceptable
•
The US$ nickel price tracked downwards from November
2014 to current levels around US$4.50/lb
increased seismic activity and the exhaustion of the
Reserve resulting in a large portion of the Lanfranchi
workforce being made redundant
Financially, FY2015 was a tough year for us and one that
was certainly not anticipated. The rapid drop in the nickel
price from November 2014, despite general consensus that
the price would trade higher as Indonesian stockpiles of
laterite ore in China were drawn down, impacted heavily on
sales revenue. In addition, seismic activity at Lanfranchi in
April affected production in the June 2015 quarter and further
reduced revenue, which had a significant impact on the full
year results. Key financial results for the year were:
•
•
•
•
Net revenue - $199.7 million, down 16% on FY2014
reflecting lower nickel sales and the weaker nickel price
Net cash flow from operating activities - $43.5 million
before tax, down 19% on FY2014
Underlying Nickel Division EBITDA - $32.7 million, down
55% on FY2014
Net loss - $28.8 million, the second biggest loss in our
Company’s history
•
Liquid assets - $65.3 million, down 32% on FY2014
Notwithstanding the financial performance, I am very proud
of our achievements this year, especially considering
the challenging nickel price environment. The record
production result at Savannah and the exploration success
at both sites are outstanding achievements and a credit
to all concerned. Ceasing production at Lanfranchi was
sad and most unfortunate for those employees we made
redundant, however with the discovery of the Lower Schmitz
mineralisation Lanfranchi should have a future.
LME Cash Nickel Price
July 2012 to August 2015
US$ per lb
A$ per lb
d
n
u
o
p
r
e
p
$
11
10
9
8
7
6
5
4
P A G E 4 | 2 0 1 5 A N N U A L R E P O R T
FY2016 will be both a challenging and exciting year for
Panoramic. Challenging in the sense that we have set
ourselves an aggressive production target of 10,000-10,500
tonnes nickel contained at Savannah to ensure the operation
is viable at the current low nickel price. Exciting because we
have a number of real opportunities to demonstrate we have
a sustainable business. Key deliverables for FY2016 include:
Nickel Operations
•
•
•
Safety - continue to improve our performance
Savannah - meet our production guidance and complete
a Feasibility Study on mining Savannah North
Lanfranchi - drill out the Lower Schmitz mineralisation,
report a resource and re-commence mining, assuming
we can confirm a financially robust project
Gold
•
Complete the sale of Mt Henry and sell Gidgee
PGM
•
•
Panton – advance the metallurgical test work to
demonstrate we can produce a saleable PGM
concentrate
Thunder Bay North - continue to monitor Rio’s progress
under the farm-in whereby Rio can earn 70% of the
project by spending C$20 million over five years
Exploration
•
•
Savannah – grow the Resource as we continue to drill
test the strike extent of Savannah North from surface and
underground
Lanfranchi – test the strike extent of Lower Schmitz and
use the Lower Schmitz drill drive to test the strong EM
conductors down plunge of Deacon
Our People
•
Strive to retain and incentivise our people and continue
to reward them for their commitment and hard work
Corporate
• Maintain a healthy balance sheet
•
•
Pay dividends, when circumstances permit
Acquire more producing assets
In terms of the outlook for commodities and the A$ the Board
remains cautiously optimistic. The Chinese economy appears
to be slowing after 10 years of frenetic growth, however even
if their economy only grows at 5% that is still significant in
terms of the growth in demand for commodities. At current
prices, it is estimated by some analysts that between 50-60%
of global nickel production is below breakeven on a full cost
basis, however for nickel prices to rally from current levels, we
believe there needs to be some supply side response which
could happen during the second half of 2015. In relation to the
currency, we expect the A$ to continue to depreciate against
the US$, which will assist us and all Australian commodity
exporters.
In order for the business to be sustainable, the Board and
management are committed to the Ten Year Plan which is to:
•
Improve our safety culture so every employee believes
that safety is our most important value in line with our
safety mantra: Vision, Commitment, Results;
• Optimise our metal production to maximise our
margins;
• Grow the existing Resource and Reserve base to extend
the mine life of our operations;
• Maintain dividend payments subject to generating
sufficient free cash flow and taking into account future
funding requirements; and
•
Develop our pipeline of projects to become a
diversified mining house and an S&P/ASX 100 Company.
The success of our Company is primarily due to the quality
of our asset base and the dedication of our workforce and
I would like to thank the Board and all employees and
contractors for their hard work and commitment again this
year. I would also like to thank all our shareholders, other
stakeholders and our customers, BHP Nickel West and The
Jinchuan Group/Sino Mining International for their ongoing
support.
As always, I urge all our staff and contractors to adopt and
embrace our safety mission statement to ensure we get
everybody “home safely every day”.
Yours faithfully
PETER HAROLD
Managing Director
2 0 1 5 A N N U A L R E P O R T | P A G E 5
Key Points
Group
• Group FY2015 production - 19,301t Ni
• Savannah - record production of 8,726t Ni
• Sales revenue - $199.7 million
• Underlying EBITDA - $32.7 million
• Net cashflow from operating activities - $43.5 million
• Year-end cash & receivables - $65.3 million
•
Interim dividend - 1 cent fully franked paid in April 2015
• Exploration Successes
• Savannah - major upgrade in Resources
• Savannah North - maiden Resource reported
• Lower Schmitz - high-grade discovery
• Safety - focus remained on improving our performance
Last Four Years Financial Results
Description
(Units in A$ million unless otherwise stated)
Financials
A$ average cash nickel price
Total net revenue
Cost of sales before depreciation and amortisation
Underlying Nickel Division EBITDA
Depreciation and amortisation
Other net costs including income and corporate costs
Exploration and evaluation costs (greenfield)
Profit/(loss) before tax and impairment
Impairment and write-back before tax
Loss before tax
Tax benefit/(expense)
Reported net loss after tax
EPS (cents/share)
Net Assets
Cash Flow
Cashflow from operating activities before tax
Payments for property, plant, and equipment
Capitalised mine development costs
Exploration and evaluation expenditure (capital component)
Cash, term deposits and current receivables
Physicals
Group nickel production (dmt)
Group nickel sales (dmt)
FY2012
FY2013
FY2014
FY2015
$8.48/lb
$233.0
($170.7)
$7.23/lb
$181.8
($154.3)
$62.3
($51.4)
($18.3)
($6.7)
($14.1)
($7.2)
($21.3)
($3.1)
($18.2)
(8.6c)
$307.5
$38.2
($33.6)
($20.9)
($19.2)
$79.0
19,791
19,820
$27.5
($54.4)
($9.4)
($2.7)
($39.0)
($8.0)
($47.0)
$15.3
($31.7)
(12.5c)
$271.6
$23.0
($9.0)
($19.3)
($20.1)
$44.9
19,561
18,959
$7.52/lb
$238.2
($164.9)
$73.3
($59.7)
($8.4)
($3.2)
$2.0
($13.1)
($11.1)
$1.8
($9.3)
(3.1c)
$276.1
$54.0
($4.1)
($13.5)
($8.1)
$96.7
22,256
22,387
$8.34/lb
$199.7
($167.0)
$32.7
($62.1)
($10.2)
($12.9)
($52.5)
$11.9
($40.6)
$11.8
($28.8)
(9.0c)
$239.9
$43.5
($7.2)
($19.8)
($15.1)
$65.3
19,301
19,547
P A G E 6 | 2 0 1 5 A N N U A L R E P O R T
Safety
FY2015
•
•
•
LTI Frequency Rate down from 9.5 to 3.2 at 30 June 2015
Improved hazard reporting
Reduced number of total incidents reported
FY2016 Focus
•
•
•
Targeting Zero LTI’s
Roll out Principal Hazard Management Plans
Continue to update Safety Policies and management systems
PANORAMIC RESOURCES LTIFR VERSUS DEPT MINES AND PETROLEUM NICKEL INDUSTRY LTIFR
(includes Contractor LTI's)
12.00
10.00
8.00
6.00
4.00
2.00
0.00
Production
•
Solid result in FY2015
considering Lanfranchi
production below budget due
to seismic activity
PAN RES LTIFR
PAN RES LTIFR TARGET
DMP NICKEL INDUSTRY
LTIFR
Panoramic Total Nickel Production
Ni Contained in Conc/Ore
24,000
22,000
20,000
18,000
16,000
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0
8
2
9
,
7
1
8
5
4
,
7
1
7
2
0
,
7
1
1
9
7
,
9
1
1
6
5
,
9
1
6
5
2
,
2
2
1
0
3
,
9
1
1
2
9
,
1
1
7
5
0
,
3
1
2
3
5
,
9
2
1
0
,
6
2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15
Actual Production
Payable Cash Cost
A$ Ni
$7.00
$6.00
$5.00
$4.00
$3.00
$2.00
$1.00
$0.00
2 0 1 5 A N N U A L R E P O R T | P A G E 7
Operating Margin
•
$A Margin reduced due
to lower US$ Ni price and
below budget production
Cashflow
• Maintained a strong cash
balance of $54 million at 30
June 2015
Panoramic Group Payable Nickel Analysis
June Qtr 2011 to June Qtr 2015
Realised Ni Price Post
Hedging/QP Adjustments
Cash M argin Post
Hedging & QP
Adjustments
Payable Cash Cost
$16
$14
$12
$10
b
l
r
e
p
$
A
$8
$6
$4
$2
$0
Jun-11
Dec-11
Jun-12
Dec-12
Jun-13
Dec-13
Jun-14
Dec-14
$16
$14
$12
$10
$8
$6
$4
$2
b
l
r
e
p
$
A
$0
Jun-15
FY2015 Panoramic Group Cashflow Waterfall Chart
-25
57
-7
-20
2
-7
-10
64
54
120.0
100.0
)
n
o
i
l
l
i
M
$
A
(
80.0
60.0
40.0
20.0
0.0
Cumulative Cashflow
•
Cumulative cashflow
approaching $800 million
900
800
700
600
500
400
300
200
100
0
-100
Cumulative net
cashflow from
operating activities
before tax
Cumulative
dividends paid
Cumulative
equity raised
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
P A G E 8 | 2 0 1 5 A N N U A L R E P O R T
Panoramic Group EBITDA vs A$ Nickel Price
Earnings
•
FY2015 EBITDA impacted
by reduced production and
lower US$ Ni price
A$M
$180.0
$160.0
$140.0
$120.0
$100.0
$80.0
$60.0
$40.0
$20.0
$-
Dividends
•
•
•
FY2015 dividends - 1
cent fully franked
Interim, paid 2 April
2015, no final dividend
Aggregate dividends -
55.5 cents per share
Total payout - $114.3
million paid in fully
franked dividends
FY2007
FY2008
FY2009
FY2010
FY2011
FY2012
FY2013
FY2014
FY2015
EBITDA (before impairment)
A$ Nickel Price (Yearly Avgs)
Dividend
cents per share
Panoramic Dividend History
18
16
14
12
10
8
6
4
2
0
Interim Dividend (cents per share)
$20.00
6.5
Final Dividend (cents per share
A$ Nickel Price (Yearly Avgs)
12.0
5.0
7.0
10.0
2.0
4.0
2.0
1.0
$15.00
$10.00
e
c
i
r
P
l
i
e
k
c
N
$
A
$5.00
2.0
1.0
2.0
1.0
0
4
4
4
,
$-
FY2007
FY2008
FY2009
FY2010
FY2011
FY2012
FY2013
FY2014
FY2015
A$ Ni
$25.00
$20.00
$15.00
$10.00
$5.00
$-
$25.00
2 0 1 5 A N N U A L R E P O R T | P A G E 9
Nickel Division
Savannah Project
nickel, copper, cobalt in concentrate
Mining Method
Open stoping with paste fill
Processing
1.0Mtpa capacity plant
Production
Offtake
Workforce
Copernicus
SAG mill, flotation and filtering to
produce a bulk concentrate
8-10,000t Ni pa, 5-6,000t Cu pa,
350-500t Co pa
The Jinchuan Group until March
2020
~200 employees and contractors
Open pit mine 40km south of
Savannah
The Savannah Project is located 240km south of Kununurra in
the East Kimberley region of Western Australia, and consists
of a nickel sulphide orebody, underground mine, process plant
and associated infrastructure.
FY2015 Highlights
•
•
•
865,660 ore tonnes mined, up from 760,335 tonnes in
FY2014
854,794 tonnes of ore milled at an average grade of
1.18% Ni for a record total of 8,726 tonnes Ni, 5,314
tonnes Cu, 443 tonnes Co in concentrate
Savannah North Maiden Resource 3.15M tonnes @
1.75% Ni for 55,200 tonnes Ni
FY2016 Activities
• Optimise mine production from Savannah underground
and Copernicus open pit
• Maximise mill throughput and optimise recoveries
•
•
•
Continue to focus on cost reduction initiatives
Complete Savannah North mining Feasibility Study
Continue to test strike extent of Savannah North
mineralisation
Savannah North Exploration Target
Width of
Plunge extent of
mineralisation
mineralisation
Approximate
thickness of
mineralistion
Assumed
Exploration target
Exploration target
average density
grade range %Ni
tonnage range
(metres)
(metres)
(metres)
(t/m3)
Low - High
(millions tonnes)
350
350
350
600
700
800
4.0
5.0
6.0
3.8
3.8
3.8
1.5%
2.1%
1.5%
2.1%
1.5%
2.1%
3.2
4.7
6.4
Cautionary / Clarifying Statement
The Exploration Target reported here is not a Mineral Resource. The Exploration target reported uses information gained from
a combination of actual drill results from surface and underground drilling and supporting geophysical surveys. The level of
exploration carried out to date is insufficient to define a Mineral Resources. The Exploration Target reported is conceptual in
nature requiring further exploration. The planned exploration activities to further test Savannah North are provided below. It
remains uncertain if further exploration will result in the estimation of a Mineral Resources. Refer to Panoramic’s ASX Quarterly
Report for the period ended 30 June 2014 for the key assumptions and calculation methodology.
P A G E 1 0 | 2 0 1 5 A N N U A L R E P O R T
Lanfranchi Project
nickel and copper in ore
Mining Method
Processing
Open stoping with paste fill and airleg
mining
BHP Billiton Nickel West Kambalda
Concentrator
Historic Production 500-600,000tpa ore
FY2015 Highlights
•
•
•
468,491 tonnes of ore mined at an average grade of
2.26% Ni for a total of 10,575 tonnes Ni and 1,168
tonnes Cu
Discovery of Lower Schmitz high-grade mineralisation
Release of Lower Schmitz Exploration Target of 275,000
to 746,000 tonnes @ 5-6% Ni
10-12,000t Ni & 1,000t Cu pa
FY2016 Activities
Offtake
BHP Billiton Nickel West until
February 2019
The Lanfranchi Project is located 42km south of Kambalda,
Western Australia, and consists of a nickel sulphide orebody,
underground mine and associated infrastructure.
•
•
•
•
•
Complete the exploration drill drive for Lower Schmitz
(9000 drill drive)
Complete Resource drilling of Lower Schmitz high-grade
mineralised zone
Undertake a Feasibility Study on Lower Schmitz
Commence mining of Lower Schmitz, subject to
favourable A$ Ni price and Board decision to proceed
Drill test down-plunge extensions of the existing ore
channels and other high priority EM targets
Lower Schmitz Exploration Target
Zone
Width of
Plunge extent of
mineralisation
mineralisation
Approximate
thickness of
mineralistion
(metres)
(metres)
(metres)
A
B
C
90
125
125
245
325
475
3.6
3.6
3.6
Assumed
Exploration target
Exploration target
average density
grade range %Ni
tonnage range
(t/m3)
3.50
3.50
3.50
Low - High
5.0%
6.0%
(tonnes)
275,000
5.0%
6.0%
510,000
5.0%
6.0%
746,000
Cautionary / Clarifying Statement
The Exploration Target reported here is not a Mineral Resource. The Exploration target reported uses information gained from
a combination of actual drill results from surface and underground drilling and supporting geophysical surveys. The level of
exploration carried out to date is insufficient to define a Mineral Resources. The Exploration Target reported is conceptual
in nature requiring further exploration. It remains uncertain if further exploration will result in the estimation of a Mineral
Resources. Refer to Panoramic’s ASX Quarterly Report for the period ended 30 June 2014 for the key assumptions and
calculation methodology.
2 0 1 5 A N N U A L R E P O R T | P A G E 1 1
PGM Division
The Panton Project
platinum, palladium, gold
Mining
Open cut and underground
Resources
1.0Moz Pt and 1.1Moz Pd (2012 JORC)
The Panton Project is one of the largest and highest grade
PGM deposits in Australia. The Project is located in the
Kimberley region of Western Australia, 60km south of the
Savannah Project. Panoramic purchased the Panton Project
in May 2012 along with the rights to use the Panton Process,
a patented metallurgical process.
camp. Mineralisation at TBN is hosted in a mafic-ultramafic
magma conduit, named the Current Lake Intrusive Complex.
Feeders to the magma conduit may host massive sulphide
bodies in vertical pipe-like structures beneath the intrusion,
similar to that hosting the Eagle nickel deposit in Michigan.
FY2015 Highlights
•
•
The Company negotiated an Earn-in and Option to Joint
Venture Agreement with Rio Tinto Exploration Canada
Inc.
In January 2015, Rio confirmed they would proceed to
enter into the Earn-In option in which Rio could earn 70%
in TBN by spending up to C$20 million over five years
FY2016 Activities
• Monitor Rio’s exploration activities on TBN
The Panton Resource consists of high-grade platinum and
palladium mineralisation within a number of stratiform reefs
with a Resource of 14.3 Mt @ 5.2 g/t PGMs + Au (2004 JORC
Compliant).
Rio’s interest in TBN demonstrates the potential of the project
and brings Rio’s funding and world class exploration expertise
together with a history of identifying and developing major
projects around the world.
The close proximity of Panton to the Savannah Project offers
a number of capital and operating synergies not available
to previous owners, which could substantially improve
the economics of the Project. Panoramic is continuing to
investigate the use of alternative processing options to help
unlock the inherent value of the Project.
Gold Division
Gidgee Project
gold
FY2015 Highlights
• Metallurgical test work confirmed improved recoveries
and higher grade PGM concentrates can be produced
from Panton ore
FY2016 Activities
•
•
•
•
•
Confirm metallurgical test work in relation to improved
grade and recovery
Test amenability of Panton ore to beneficiation via ore
sorting
Determine potential buyers of high-grade concentrate
and seek indicative terms
Undertake a Scoping Study to determine capital and
operating costs of producing a high-grade concentrate
Commence project financing discussions with potential
customers
Thunder Bay North Project
platinum, palladium, nickel, copper
Mining
Open pit and underground
Resources
1.3Moz at 2.3g/t Au
The Gidgee Gold Project is located 640 kilometres north-east
of Perth and contains a significant tenement package with
1.3Moz of gold in Resource. The Gidgee Project covers an
area of approximately 1,200km² of the Gum Creek greenstone
belt in the Northern Goldfields and remains highly prospective
for additional gold discoveries.
FY2015 Highlights
•
•
Detailed mine planning, scheduling and cost estimations
for production of a flotation concentrate from the Wilsons
Resource
Evaluation of other work treatment plants to assist in
reducing Feasibility Study capital and operating costs
• Open pit optimisation work undertaken
• Mining Proposal was prepared and submitted to the WA
Department of Mines and Petroleum (DMP)
Mining
Open cut and underground
•
Decision to divest asset made
Resources
10.4Mt @ 1.13g/t Pt and 1.07g/t Pd
FY2016 Activities
The Thunder Bay North Project (TBN) is located 50km north-
east of Thunder Bay in northwest Ontario, Canada. The
Project is located within the Mid-continental Rift, an emerging
North American nickel-copper-platinum group metal mining
•
•
Sirona Capital appointed to assist with sale process
Targeting completion of sale by late 2015
P A G E 1 2 | 2 0 1 5 A N N U A L R E P O R T
Mt Henry Project
gold
Mining
Open pit
Resources
1.2Moz at 1.18g/t Au (2012 JORC)
Panoramic acquired a 70% interest in the Mt Henry Project
from Matsa Resources Limited (Matsa) in August 2012. The
Mt Henry Gold Project is located 20kms south of Norseman,
in Western Australia. The Project resources are all located on
granted mining leases and comprise three separate deposits
being Mt Henry, North Scotia and Selene, totalling 1.67Moz
gold.
FY2015 Highlights
•
•
•
Feasibility Study completed
Project sold to Metals X for 22 million shares in Metals X
Panoramic’s 70% interest equates to 15.4 million shares
in Metals X
FY2016 Activities
•
Settlement of the Metals X shares
Exploration
Panoramic is conducting exploration activities on its
significant tenement package in a systematic and measured
manner and continued to have good success in FY2015.
Following on from the Savannah North discovery in early
2014, Panoramic focused its exploration effort on building
upon the nickel resource base at both Lanfranchi and
Savannah. The highlight for FY2015 was the discovery at
Lanfranchi of the high-grade Lower Schmitz mineralisation
below the Schmitz orebody. At Savannah, the FY2015
highlights were:
•
•
•
The completion of the Savannah North 1570 drill drive
in April 2015 and the commencement of the Savannah
North maiden resource drill program
The doubling of the potential strike extent of the
Savannah North mineralised footprint to approximately
2km by further surface exploration drilling and down hole
electromagnetic (DHEM) surveying
The release of an increased Savannah Resource
inventory of 72,500t Ni for FY2015 to 128,800t Ni,
including an interim Resource estimate for Savannah
North of 55,200 tonnes Ni
Panoramic spent $15.4 million on exploration related activities
in FY2015, up from $11.3 million in FY2014.
Savannah and Savannah North Projects
•
The focus of FY2015 exploration related activities at
Savannah was directed towards the ongoing evaluation
of the exciting Savannah North Project and building upon
2 0 1 5 A N N U A L R E P O R T | P A G E 1 3
•
•
•
•
the Mineral Resource inventory of the Savannah Project.
At Savannah North, the Company completed an
additional four surface diamond drill holes during
FY2015, one hole to the west and three holes to the east
of Savannah North. This latest drilling in conjunction with
the associated DHEM survey data, effectively extended
the potential mineralised footprint of Savannah North a
further 1km to the west, taking the total strike length to
approximately 2km. The mineralised footprint remains
open both to the west and east
In addition to the potential increased strike length,
two of the holes drilled to the east of Savannah North
identified an entirely new highly conductive horizon with
similar geophysical properties to the Savannah North
mineralisation. The source of this new conductive horizon
is unclear and will require further drilling to determine its
origin
The Savannah North Project maiden Resource drill
program commenced in April 2015 and as at 30 June
2015, the Company announced an Interim Resource
estimate of 3.15 million tonnes at 1.75% Ni for 55,200
tonnes Ni. The Resource estimate, which covered a
strike length of approximately 300m between 5700mE
and 6000mE, represents approximately 15% of the
potential mineralised footprint of Savannah North
In addition to the Savannah North maiden resource
drill program, the Company also completed resource
definition drill programs on the Western Splay Zone
above the 900 Fault and the main Savannah orebody
below the 900 Fault. As a result of all these programs,
the total Resource Inventory at Savannah increased by
72,500 tonnes Ni to 128,800 tonnes Ni during FY2015
East Kimberley Regional Exploration
(Panoramic 100%)
•
No significant exploration was undertaken on the regional
tenements during the year due to priorities at Savannah.
Lanfranchi Project
•
•
•
Surface and underground exploration continued in
FY2015 with the focus on extending mine life by targeting
both near mine resource extensions as well as more
“greenfield” targets, mainly located on the Overturned
Tramways Dome
In November 2014, drilling down-plunge of the Schmitz
orebody confirmed the presence of a large (300m by
100m) open ended, highly conductive EM anomaly.
Drilling to target the anomaly commenced in December
2014
In January 2015, drill hole SMT373A intersected
three significant zones of high-grade “Schmitz style”
mineralisation coincident with the EM anomaly
•
•
Based on the size and strength of the EM anomaly
and the significance of the SMT373A intersections,
the Panoramic Board approved the development of
an access drive from the Deacon Decline to the Lower
Schmitz position in February 2015. The Lower Schmitz
access drive was completed in mid is September 2015
and Resource drilling commenced immediately
Drilling to test the high-grade Lower Schmitz discovery
continued to July 2015 whereupon the Company
determined, using the available drill data, an Exploration
Target for Lower Schmitz in the range of 275,000 to
746,000 tonnes and a grade of 5% to 6% Ni
Cowan Nickel Project, WA (Panoramic
holds 100% nickel rights)
•
•
Several Cowan Project priority geophysical EM targets
were tested during FY2015
A total of 5 holes were drilled for a total of 1,363m.
Drilled results were generally disappointing with sulphidic
sediments typically identified to be the source of the EM
targets anomalies
•
Testing of other targets is scheduled for FY2016
Drake Resources Exploration Alliance
(Scandinavia)
•
•
•
During FY2015, the Company withdrew from the Lokken
and Hersjo-Nordgruva projects in Norway but continued
work on the Sulitjelma Project
In August 2014, the Company completed a 70km2
airborne electromagnetic (VTEM) and magnetic survey
at Sulitjelma. Eleven VTEM targets were identified, which
was subsequently reduced to six priority drill targets
following ground truthing and final interpretation
Detail ground EM surveys were subsequently completed
over each priority drill target area in order to rank and
better define each target. The ground EM survey data
has been processed and target positions verified for drill
testing in FY2016
Sustainability and Community
Engagement
Sustainability Reporting
Panoramic has been committed to conducting its operations
in a sustainable and responsible manner since the Company
was formed in 2001. As such, we hold ourselves accountable
for our actions and our performance in the economic,
governance, environmental and social areas of our business.
We publicly report on our sustainability performance through
our Sustainability Report. Some of the material issues that
were a key focus in FY2013 and FY2014 included:
•
Business perspective - business growth and
diversification strategy, mine life of projects, leadership/
accountability and culture
• Workforce - attraction and retention, training and
development, diversity and equal opportunity
• Occupational Health and Safety - hazard and risk
management, safety culture and leadership
•
•
•
Environmental - tailings storage (Savannah), impacts on
groundwater and surface water (water discharge), mine
closure planning
Economic performance - nickel price outlook and cost
pressures
Community - local employment, community engagement
and development
•
Supply chain - supporting local suppliers
We delivered our FY2013 and FY2014 Sustainability Report
demonstrating our commitment to Sustainability Reporting
and assessing the environmental, economic and social
impacts of our activities. Our Sustainability Report can be
found on our website www.panoramicresources.com
Savannah Nickel Mine Community
Commitments
Panoramic has built and maintains strong community
relationships through engagement and honouring the
commitments we have made to local communities in the
areas in which we operate.
At our Savannah Project, our social licence to operate is
reflected in the Co-existence Agreement with the Gija people
and specifically the Purnululu-Malarngowem Traditional
Owners. This Agreement, which has been in operation
since 2007, outlines the financial, employment and training,
economic development and community benefit commitments
that Panoramic will provide and/or use its best endeavours to
achieve over the life of the Savannah Project.
The Implementation and Review Committee, comprised of
Gija Traditional Owners and Savannah Nickel Mine personnel,
oversees the Agreement. This includes the administration of
the “Spread Your Wings” community benefits programme that
provides funds to support initiatives in the local area. Since
the inception of the Co-existence Agreement, approximately
$1.2 million has been distributed to support endeavours which
target needs and improve health or education opportunities
for the Gija people of the East Kimberley.
The “Spread Your Wings” name has been adopted for the
funding initiative and features an eagle logo, a bird which has
very special significance to Gija people, to help promote the
programme and encourage community members and service
groups to apply for funds to support local initiatives and
aspirational endeavours.
In FY2015, approximately 24 projects were granted
assistance through the “Spread Your Wings” program.
P A G E 1 4 | 2 0 1 5 A N N U A L R E P O R T
Key projects included:
Goowooloem Gijam-birri (Gija Plants) Art
and Culture Project
“Spread Your Wings” contributed toward the completion
of the Warmun Art Centre’s Goowooloem Gijam-birri (Gija
Plants) project. This project has supported the production of a
portfolio of forty paintings by senior artist Shirley Purdie, video
recordings and a bi-lingual book in Gija and English which
records senior Gija people’s knowledge of the trees, grasses,
vines, berries, root vegetables and herbs that grow in their
country.
The gathering and sharing of knowledge between young and
old Gija people has occurred through bush trips that focus on
collecting and using plants for food and medicine. The project
has rekindled pride and understanding in the use of traditional
Gija foods and therapeutic treatments and provided an
enduring source of information about the traditional use and
stories of the plants that live on Gija country.
Warmun Community Response Team
“Spread Your Wings” funding was granted to the Warmun
community to form a response team made up of community
members who provide a range of services to support better
safety and wellbeing. Part of their duties include conducting
community patrols, assisting community elders, organising
recreational activities and bush trips and providing mentor
support for students at the Warmun School.
Halls Creek District High School
Attendance Incentive
Approximately 30 high school students at Halls Creek District
High School were given the opportunity to participate in the
Kimberley Cup school sport carnival in Broome through the
support of “Spread Your Wings”. As an incentive to students,
eligibility for participation in the carnival included maintaining
high levels of school attendance, positive engagement and
fundraising toward the costs associated with the event.
Doon Doon Employment and Community
Services
“Spread Your Wings” funding has assisted the Doon Doon
community in purchasing equipment, uniforms and safety
gear to provide a number of maintenance and municipal
services around the Doon Doon community. As well as
providing benefits to residents, the initiative enables
participants to access training and provide employment
opportunities.
Ngalanganpum (Warmun) School
Secondary Education Pathways
Twenty five students from Ngalangangpum (Warmun)
School have been supported through “Spread Your Wings”
in accessing educational scholarships and placements at
numerous high schools out of the community in 2015. The
grant has assisted students and their families to identify,
select and apply for enrolment at schools that suit their
interests and needs. In addition, resources were able to help
students and their parents to prepare for the major change of
leaving home and moving to boarding school.
Encouraging Aspiration and Excellence
In 2014, the Implementation and Review Committee
broadened the scope of “Spread Your Wings” funding to
allow opportunities for individual Gija people to be supported
in endeavours that encourage self-improvement, provide
inspiration for others and build community pride. “High Flyer”
grants, as they have become known, may support people who
have aspirations in areas such as:
•
•
•
•
•
employment opportunities or career development
pursuing sporting, cultural, artistic interests and
excellence
community capacity building
academic achievement
leadership and personal development
2 0 1 5 A N N U A L R E P O R T | P A G E 1 5
FY2016 Goals
SAFETY
No LTI’s
RESOURCES
Add 150,000t Ni
COSTS
Continue to reduce
across business
GROWTH
Increase nickel
reserves
GOLD
Monetise assets
PGMs
Advance Projects
FY2016 Expenditure Guidance
Exploration Expenditure
•
•
•
Savannah North - Resource definition drilling
Lower Schmitz - Resource definition drilling
$4 million in total on Group exploration activities inclusive of rents and rates
Mine Capital Expenditure
•
•
•
$5 million of mine development
$4 million on sustaining capital
$2 million on equipment finance leases
Project Studies
•
$0.2 million on Panton metallurgical test work
P A G E 1 6 | 2 0 1 5 A N N U A L R E P O R T
Directors’ Report
2 0 1 5 A N N U A L R E P O R T | P A G E 1 7
DIRECTORS’ REPORT
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2015
The directors present their report on the consolidated entity (referred to hereafter as the Group) consisting of Panoramic
Resources Limited and the entities it controlled at the end of, or during, the year ended 30 June 2015.
DIRECTORS
Brian M Phillips (Non-Executive Chairman)
AWASM-Mining, FAusIMM, MIMMM,
Appointed 27 March 2007; Non-Executive Chairman from 17 November 2011
Brian Phillips is a mining engineer who has had extensive mining industry experience in operational and management roles over
a 50 year period. Brian has worked as an executive, and on the boards of mining companies in Australia and overseas involved
with copper, gold, nickel, mineral sands and coal. He is a past President of the Victorian Chamber of Mines (now the Minerals
Council of Australia - Victorian Division).
During the past three years, Brian has also served as a director of the following listed companies:
•
Indophil Resources NL (Non-Executive Director from 1 April 2005 to 21 April 2005 and Non-Executive Chairman
from 21 April 2005 to 23 January 2015)
• White Rock Minerals Ltd (Non-Executive Chairman from 26 March 2010)*
* Denotes current directorship
Peter J Harold (Managing Director)
B.AppSc(Chem), AFAICD
Appointed 16 March 2001
Peter Harold is a process engineer with over 27 years corporate experience in the minerals industry specialising in financing,
marketing, business development and general corporate activities. Peter has extensive experience with the development and
operation of both sulphide and laterite nickel projects having been responsible for metals marketing and various corporate
functions relating to the Scuddles/Golden Grove copper lead zinc mine, Cawse nickel laterite project and the Silver Swan and Mt
Keith nickel sulphide projects. Peter held various senior management positions with Shell Australia, Australian Consolidated
Minerals Limited, Normandy Mining Limited, MPI Mines Limited and the Gutnick network of companies prior to founding
Panoramic Resources Limited (formerly Sally Malay Mining Limited) in March 2001.
During the past three years, Peter has also served as a director of the following listed companies:
•
•
Alloy Resources Limited (Non-Executive Chairman from 15 September 2005 to 30 June 2014)
Spectrum Rare Earths Limited, formerly TUC Resources Limited (Non-Executive Chairman from 1 March 2007 to 1
May 2014 and Non-Executive Director from 1 May 2014 to 30 June 2014)
Pacifico Minerals Limited (Non-Executive Director from 19 August 2013)*
•
* Denotes current directorship
Christopher D J Langdon (Non-Executive Director)
B.Com (Econ)
Appointed 4 August 2004
Christopher Langdon has over 25 years of corporate finance and management experience and has had extensive experience in
investment banking in Australia and overseas working for Wardley Australia Limited, James Capel & Co. and Samuel Montagu &
Co. specialising in cross border corporate advisory. Chris is the Chief Executive Officer of HJ Langdon & Co., a family owned
business based in Melbourne involved in the food industry.
During the past three years, Christopher has also served as a director of the following listed companies:
• Webster Limited (Non-Executive Director from 14 March 2013)*
* Denotes current directorship
P A G E 1 8 | 2 0 1 5 A N N U A L R E P O R T
DIRECTORS’ REPORTFOR THE FINANCIAL YEAR ENDED 30 JUNE 2015 DIRECTORS
Brian M Phillips (Non-Executive Chairman)
AWASM-Mining, FAusIMM, MIMMM,
Appointed 27 March 2007; Non-Executive Chairman from 17 November 2011
Brian Phillips is a mining engineer who has had extensive mining industry experience in operational and management roles over
a 50 year period. Brian has worked as an executive, and on the boards of mining companies in Australia and overseas involved
with copper, gold, nickel, mineral sands and coal. He is a past President of the Victorian Chamber of Mines (now the Minerals
Council of Australia - Victorian Division).
During the past three years, Brian has also served as a director of the following listed companies:
•
Indophil Resources NL (Non-Executive Director from 1 April 2005 to 21 April 2005 and Non-Executive Chairman
from 21 April 2005 to 23 January 2015)
• White Rock Minerals Ltd (Non-Executive Chairman from 26 March 2010)*
* Denotes current directorship
Peter J Harold (Managing Director)
B.AppSc(Chem), AFAICD
Appointed 16 March 2001
Peter Harold is a process engineer with over 27 years corporate experience in the minerals industry specialising in financing,
marketing, business development and general corporate activities. Peter has extensive experience with the development and
operation of both sulphide and laterite nickel projects having been responsible for metals marketing and various corporate
functions relating to the Scuddles/Golden Grove copper lead zinc mine, Cawse nickel laterite project and the Silver Swan and Mt
Keith nickel sulphide projects. Peter held various senior management positions with Shell Australia, Australian Consolidated
Minerals Limited, Normandy Mining Limited, MPI Mines Limited and the Gutnick network of companies prior to founding
Panoramic Resources Limited (formerly Sally Malay Mining Limited) in March 2001.
During the past three years, Peter has also served as a director of the following listed companies:
Alloy Resources Limited (Non-Executive Chairman from 15 September 2005 to 30 June 2014)
Spectrum Rare Earths Limited, formerly TUC Resources Limited (Non-Executive Chairman from 1 March 2007 to 1
May 2014 and Non-Executive Director from 1 May 2014 to 30 June 2014)
Pacifico Minerals Limited (Non-Executive Director from 19 August 2013)*
* Denotes current directorship
•
•
•
Christopher D J Langdon (Non-Executive Director)
B.Com (Econ)
Appointed 4 August 2004
Christopher Langdon has over 25 years of corporate finance and management experience and has had extensive experience in
investment banking in Australia and overseas working for Wardley Australia Limited, James Capel & Co. and Samuel Montagu &
Co. specialising in cross border corporate advisory. Chris is the Chief Executive Officer of HJ Langdon & Co., a family owned
business based in Melbourne involved in the food industry.
During the past three years, Christopher has also served as a director of the following listed companies:
• Webster Limited (Non-Executive Director from 14 March 2013)*
* Denotes current directorship
The directors present their report on the consolidated entity (referred to hereafter as the Group) consisting of Panoramic
Resources Limited and the entities it controlled at the end of, or during, the year ended 30 June 2015.
John Rowe (Non-Executive Director)
BSc (Hons), ARSM, MAusIMM
Appointed 5 December 2006
John Rowe is a geologist who has had extensive mining industry experience over a 40 year period. Until August 2006, John was
General Manager, Business Development with LionOre Australia responsible for assessing new business, divesting assets and
negotiating nickel ore and concentrate sales contracts. Prior to joining LionOre, John spent 12 years with MPI Mines Limited in
various group executive roles and was involved in the evaluation, development and production of the high grade Silver Swan
nickel sulphide project as well as the Stawell Gold Mine in Victoria.
During the past three years, John has also served as a director of the following listed companies:
•
Evolution Mining Limited, formerly Catalpa Resources Limited, (Non-Executive Director from 12 October 2006 to 30
January 2008, Non-Executive Chairman from 30 January 2008 to 10 December 2009, and Non-Executive director
from 10 December 2009.)*
Southern Cross Goldfields Ltd (Non-Executive Director from 14 April 2010 to 23 September 2013)
•
* Denotes current directorship
COMPANY SECRETARY
Trevor R Eton
B.A (Hons)(Econ), PostGradDip (Man), AFAIM
Appointed 12 March 2003
Trevor Eton is an accountant with over 30 years of experience in corporate finance within the minerals industry. Prior to joining
the Company in 2003, he was Company Secretary and Group Financial Controller of MPI Mines Limited for 10 years. Trevor also
worked for North Kalgurli Mines Limited, Metals Exploration Limited and Australian Consolidated Minerals Limited in various
corporate finance roles from the mid 1980’s.
During the past three years, Trevor has not served as a director of any listed companies.
MEETINGS OF DIRECTORS
The number of meetings of directors (including committee meetings of directors) held during the year ended 30 June 2015, and
the number of meetings attended by each director are as follows:
Number of meetings held
Number of meetings
attended:
Brian M Philips
Peter J Harold
Christopher D J Langdon
John Rowe
Directors'
Meetings
9
Meetings of Committees
Audit
2
Remuneration
2
Environment,
Safety & Risk
2
9
9
9
9
2
-
1
2
2
-
2
2
2
2
2
2
COMMITTEE MEMBERSHIP
As at the date of this report, the Company has an Audit Committee, a Remuneration Committee, and an Environment, Safety and
Risk Committee.
Members acting on the committees of the Board during the year were:
Audit
Christopher D Langdon (c)
Brian M Phillips
John Rowe
Remuneration
Brian M Phillips (c)
Christopher D Langdon
John Rowe
Environment, Safety & Risk
Brian M Phillips (c)
Christopher D Langdon
John Rowe
Peter J Harold
(c) designates the Chairman of the Committee. The Company Secretary, Trevor Eton, acts as the Secretary on each of the committees of the
Board.
2 0 1 5 A N N U A L R E P O R T | P A G E 1 9
DIRECTORS’ REPORTFOR THE FINANCIAL YEAR ENDED 30 JUNE 2015 DIRECTORS' INTERESTS
The relevant interest of each director in the share capital as notified by the directors to the Australian Stock Exchange in
accordance with S205G(1) of the Corporations Act 2001, at the date of signing is as follows:
Name of Director
Brian M Phillips
Peter J Harold
Christopher DJ Langdon
John Rowe
PRINCIPAL ACTIVITIES
Ordinary Shares
Performance rights over
Direct
-
-
-
-
Indirect
65,555
3,490,785
43,518
65,555
ordinary shares
-
904,601
-
-
The principal activities of the consolidated entity during the course of the financial year consisted of exploration, evaluation,
development and production of mineral deposits.
The consolidated entity has four business divisions in which it operates, being:
• Nickel Division - comprising the Lanfranchi Nickel Project and the Savannah Nickel Project (including the Copernicus
Nickel Project);
• Gold Division - comprising the Gidgee Gold Project and until 31 July 2015, a 70% interest in the Mt Henry Gold Project;
•
Platinum Group Metals (PGM) Division - comprising the Thunder Bay North PGM Project and the Panton PGM Project;
and
• Australian and Overseas Exploration Division - comprising greenfield exploration activities within the two segments.
OPERATING AND FINANCIAL REVIEW
Operating Results for the Year
The Group recorded a loss after tax for the financial year ending 30 June 2015 of $28,847,000 (2014: $9,322,000).
Financial Performance
The Group's performance during the 2015 financial year and for the four previous financial years, are set out in the table below.
The financial results shown below were all prepared under International Financial Reporting Standards (IFRS).
Year Ended 30 June
2015
2014
2013
2012
2011
Revenue and other income ($'000)
Cost of production ($'000)
Royalties ($'000)
Exploration and evaluation ($'000)
Other expenses ($'000)
EBITDA (before impairment) ($'000)
Depreciation and amortisation ($'000)
Impairment/write-back of assets ($'000)
Finance costs ($'000)
Profit /(loss) before tax ($'000)
Income tax benefit (expense) ($’000)
Net profit/(loss) after tax ($'000)
Basic earnings/(loss) per share (cents)
Dividends per share (cents)
Dividends payout ratio (%)
Market capitalisation ($'000)
Closing share price ($ per share)
Return on equity (%)
200,280
(155,020)
(11,948)
(12,912)
(9,817)
10,583
(62,123)
11,864
(998)
(40,674)
11,827
(28,847)
(9.0)
1.0
-
149,462
0.465
(18.1)
239,505
(153,549)
(11,313)
(3,186)
(8,478)
62,979
(59,656)
(13,119)
(1,334)
(11,130)
1,808
(9,322)
(3.1)
2.0
-
267,489
0.83
(6.2)
185,590
(145,012)
(9,283)
(2,682)
(11,625)
16,988
(54,386)
(8,026)
(1,563)
(46,987)
15,302
(31,685)
(12.5)
1.0
-
52,135
0.20
(22.9)
233,549
(159,343)
(11,421)
(6,704)
(17,160)
38,921
(51,438)
(7,202)
(1,590)
(21,309)
3,097
(18,212)
(8.6)
2.0
-
145,616
0.61
(15.3)
254,047
(136,681)
(12,596)
(6,303)
(14,651)
83,816
(46,073)
(5,536)
(1,424)
30,783
(10,154)
20,629
10.0
6.0
60.0
362,339
1.75
20.0
Note: EBITDA (before impairment) is not shown in the Consolidated Income Statement on the accompanying notes and as such
has not been reviewed by the Company's auditor.
P A G E 2 0 | 2 0 1 5 A N N U A L R E P O R T
DIRECTORS’ REPORTFOR THE FINANCIAL YEAR ENDED 30 JUNE 2015 DIRECTORS' INTERESTS
The relevant interest of each director in the share capital as notified by the directors to the Australian Stock Exchange in
accordance with S205G(1) of the Corporations Act 2001, at the date of signing is as follows:
Name of Director
Brian M Phillips
Peter J Harold
Christopher DJ Langdon
John Rowe
PRINCIPAL ACTIVITIES
Ordinary Shares
Performance rights over
Direct
-
-
-
-
Indirect
65,555
3,490,785
43,518
65,555
ordinary shares
904,601
-
-
-
The principal activities of the consolidated entity during the course of the financial year consisted of exploration, evaluation,
development and production of mineral deposits.
• Nickel Division - comprising the Lanfranchi Nickel Project and the Savannah Nickel Project (including the Copernicus
Nickel Project);
•
and
• Gold Division - comprising the Gidgee Gold Project and until 31 July 2015, a 70% interest in the Mt Henry Gold Project;
Platinum Group Metals (PGM) Division - comprising the Thunder Bay North PGM Project and the Panton PGM Project;
• Australian and Overseas Exploration Division - comprising greenfield exploration activities within the two segments.
OPERATING AND FINANCIAL REVIEW
Operating Results for the Year
Financial Performance
The Group recorded a loss after tax for the financial year ending 30 June 2015 of $28,847,000 (2014: $9,322,000).
The Group's performance during the 2015 financial year and for the four previous financial years, are set out in the table below.
The financial results shown below were all prepared under International Financial Reporting Standards (IFRS).
Year Ended 30 June
2015
2014
2013
2012
2011
Revenue and other income ($'000)
Cost of production ($'000)
Royalties ($'000)
Exploration and evaluation ($'000)
Other expenses ($'000)
EBITDA (before impairment) ($'000)
Depreciation and amortisation ($'000)
Impairment/write-back of assets ($'000)
Finance costs ($'000)
Profit /(loss) before tax ($'000)
Income tax benefit (expense) ($’000)
Net profit/(loss) after tax ($'000)
Basic earnings/(loss) per share (cents)
Dividends per share (cents)
Dividends payout ratio (%)
Market capitalisation ($'000)
Closing share price ($ per share)
Return on equity (%)
200,280
(155,020)
(11,948)
(12,912)
(9,817)
10,583
(62,123)
11,864
(998)
(40,674)
11,827
(28,847)
(9.0)
1.0
-
0.465
(18.1)
239,505
(153,549)
(11,313)
(3,186)
(8,478)
62,979
(59,656)
(13,119)
(1,334)
(11,130)
1,808
(9,322)
(3.1)
2.0
-
0.83
(6.2)
185,590
233,549
254,047
(145,012)
(159,343)
(136,681)
(9,283)
(2,682)
(11,625)
16,988
(54,386)
(8,026)
(1,563)
(46,987)
15,302
(31,685)
(12.5)
1.0
-
52,135
0.20
(22.9)
(11,421)
(6,704)
(17,160)
38,921
(51,438)
(7,202)
(1,590)
(21,309)
3,097
(18,212)
(8.6)
2.0
-
0.61
(15.3)
(12,596)
(6,303)
(14,651)
83,816
(46,073)
(5,536)
(1,424)
30,783
(10,154)
20,629
10.0
6.0
60.0
1.75
20.0
149,462
267,489
145,616
362,339
Note: EBITDA (before impairment) is not shown in the Consolidated Income Statement on the accompanying notes and as such
has not been reviewed by the Company's auditor.
Revenue and Other Income
The Nickel Division generated $197,897,000 of revenue which was 17% down on the prior year. Sales revenue was lower from
the 13% decrease in nickel contained in concentrate/ore sold (19,547 tonnes) over the previous reporting period (22,387 tonnes),
commodity hedging gains of $2,528,000, foreign currency exchange rate losses of $8,621,000 and higher concentrator/smelter
payment deductions (reduced payability) from lower mined nickel grades at both operations. The LME spot nickel price averaged
A$8.34 per pound during the financial year, up 11% on the previous year’s equivalent LME average spot nickel price of A$7.52
per pound. However, the progressively weaker nickel price on a US$ basis, from the December 2014 quarter, resulted in
significant negative final invoice pricing (QP) adjustments being recognised during the year. Other revenue comprised interest
income of $1,772,000 and other income of $611,000 was principally from federal government grants in relation to the Jobs and
Competitiveness Program.
Cost of Production
Total aggregate direct costs of the Nickel Division were 1% higher than the previous financial year and higher on an average
payable cash per pound basis from the lower contained nickel production. Aggregate direct site costs were flat in comparison to
the previous financial period. The Group continues to seek on-going assistance from all suppliers and contractors to reduce input
costs to improve the gross sales margin at each operation. Total salaries and wages were up 7% over the period due to start-up
of mining activities at the Copernicus open-pit in October 2014.
The consolidated entity has four business divisions in which it operates, being:
Other Expenses
The majority of costs in “Other expenses” are for corporate and marketing costs ($7,992,000), which were 5% higher than the
prior year from an increase in the use and cost of consultants. The Company is continually looking for ways to reduce the cost of
managing the business.
Exploration and Evaluation Expenditure
Expenditure on greenfield exploration and evaluation was 305% higher than the previous financial year, primarily as a result of
exploration activities at both the Savannah North and Lower Schmitz exploration targets. Exploration costs are expensed to the
consolidated income statement until such time as a Resource under 2012 JORC (or oversea equivalent) has been determined
on the area of interest.
Impairment/write-back of Assets
At 31 December 2014, as a consequence of the re-commencement of mining activities at the Copernicus Nickel Project, a
$13,179,000 impairment reversal on a pre-tax basis ($9,225,000 after tax) was made to the carrying-value of the Project. Also at
the Half-Year, an impairment reversal of $1,200,000 on a pre-tax basis ($840,000 after tax) was made to the carrying-value of the
Lanfranchi Nickel Project. Both these pre-tax amounts were recognised in the consolidated income statement.
As a consequence of the decision by the Mt Henry Gold Project joint participants to divest their respective interests in the Project,
the Company re-estimated the fair value of its 70% interest in the Project at $18,000,000 as at 30 June 2015. This estimate
resulted in the carrying value of the Company’s 70% interest Mt Henry Gold Project being impaired by $2,515,000 on a pre-tax
basis ($1,761,000 after tax). The total of the pre-tax impairment charge was recognised in the consolidated income statement.
Income Tax Benefit
Tax benefit of $11,827,000 represented an effective tax benefit rate of 29%, up from the rate of 16% in the prior year. There were
no significant adjustments to the tax benefit.
REVIEW OF FINANCIAL CONDITION
Balance Sheet
Net Working Capital - current assets less current liabilities
The net working capital position of $50,644,000 was 31% lower than at the previous period end, primarily due to a 32% decrease
in cash on hand and trade and other receivables. Trade and other payables increased by 16% and included $2,672,000 for
estimated amounts owing on re-priced June 2015 quarter final customer invoices, following significant downward movements in
commodity prices priced in United States dollars after the end of the fiscal year. Current assets included an amount of
$18,000,000 for the estimated fair value of the Company’s 70% interest in the Mt Henry Gold Project, after the Project was
re-classified as an asset held for sale. The Company’s 70% interest in the Project was subsequently sold on 31 July 2015. The
sale will be reflected in the 2015/16 financial statements.
2 0 1 5 A N N U A L R E P O R T | P A G E 2 1
DIRECTORS’ REPORTFOR THE FINANCIAL YEAR ENDED 30 JUNE 2015 The operating activities of the consolidated group (including royalty payments, greenfield exploration and net of the costs of
running the Perth and Thunder Bay offices) generated cashflows after tax of $46,482,000, which was down 14% on the previous
financial year. Cashflow from operating activities included a prior year income tax refund of $2,970,000. Net cash outflow from
investing activities of $39,680,000, which was 56% higher than in the previous financial year with increased expenditure on all
investing categories.
Net Tax Balances
The net deferred tax liability of $11,342,000 was 44% lower than at the previous period end after the recognition of current year
tax losses.
Net Assets/Equity
The net asset position of the consolidated entity decreased 13% to $239,879,000, as a result of the $44,461,000 reduction in
total assets. Contributed equity reduced following the cancellation of 851,809 ordinary shares at an average share price of
$0.3909 as part of the on-market share buyback that was announced by the Company on 15 December 2014.
Capital Structure
The debt to equity ratio (borrowings on contributed equity) at 30 June 2015 was 1.8% (2014: 5.1%).
Business and Financial Risks
Exposure to movements in nickel, copper and cobalt prices and the Australian dollar exchange rate to the United States dollar
are significant business and financial risks in the Nickel Division. As a price-taker, the consolidated entity has no ability to control
the global spot prices it receives for the sales of nickel concentrate and nickel ore. Any negative commodity price movement
directly impacts the business by reducing the sales revenue the consolidated entity receives in United States dollars. Similarly,
the conversion of sales revenue received in United States dollars into Australian dollars exposes the consolidated entity to
movements in the foreign exchange rate between the Australian dollar and the United States dollar. If the Australian dollar is
stronger relative to the United States dollar at the time of conversion, the consolidated entity will receive less Australian dollar
revenue.
Hedging Policy
The consolidated entity has an active policy of limiting the exposure to nickel price risk and currency risk through limited hedging,
namely:
•
•
For nickel price risk of both the Savannah Project and the Lanfranchi Project, the policy is to hedge, when
appropriate, no more than 80% (2014: 80%) of the payable nickel forecast to be produced in any month, over a
rolling two year horizon. Any hedging is undertaken using a combination of nickel forward sales contracts and nickel
put options, with nickel call options written and sold in order to offset the cost of bought nickel put options. Of the 80%
maximum limit, the percentage of the combined nickel forward sales contracts and written nickel call options (but
excluding purchased nickel put options) is to be no more than 40% (2014: 40%) of the payable nickel forecast to be
produced in any month over the same rolling two year horizon; and
For currency risk, although not mandatory in the policy, when appropriate, sufficient foreign currency hedging on a
month to month basis, via a combination of currency forward contracts and currency put and call options, to match
the net United States dollar proceeds from nickel hedging using nickel forward sales contracts.
As at 30 June 2015, the consolidated entity had no nickel forward sales contracts and no nickel put options in place.
As at 30 June 2015, the consolidated entity had a net “in the money” position on open United States dollar denominated foreign
exchange bought put and sold call options that expire between July 2015 and December 2015 (as detailed further in Note 12 of
the Notes to the Financial Statements).
Other business risks can have an impact on the profitability of the consolidated entity. The recognition, management and control
of these risks are key elements of the enterprise-wide risk management framework which has been progressively developed and
rolled-out across the Group, as detailed in the Corporate Governance Statement on page 40.
Dividends
On 26 February 2015, the directors declared an interim fully franked dividend of 1.0 cent per share, which was paid on 2 April
2015. No final dividend has been declared for the financial year ended 30 June 2015.
P A G E 2 2 | 2 0 1 5 A N N U A L R E P O R T
DIRECTORS’ REPORTFOR THE FINANCIAL YEAR ENDED 30 JUNE 2015 investing categories.
Net Tax Balances
tax losses.
Net Assets/Equity
revenue.
Hedging Policy
namely:
The net asset position of the consolidated entity decreased 13% to $239,879,000, as a result of the $44,461,000 reduction in
total assets. Contributed equity reduced following the cancellation of 851,809 ordinary shares at an average share price of
$0.3909 as part of the on-market share buyback that was announced by the Company on 15 December 2014.
The debt to equity ratio (borrowings on contributed equity) at 30 June 2015 was 1.8% (2014: 5.1%).
Capital Structure
Business and Financial Risks
Exposure to movements in nickel, copper and cobalt prices and the Australian dollar exchange rate to the United States dollar
are significant business and financial risks in the Nickel Division. As a price-taker, the consolidated entity has no ability to control
the global spot prices it receives for the sales of nickel concentrate and nickel ore. Any negative commodity price movement
directly impacts the business by reducing the sales revenue the consolidated entity receives in United States dollars. Similarly,
the conversion of sales revenue received in United States dollars into Australian dollars exposes the consolidated entity to
movements in the foreign exchange rate between the Australian dollar and the United States dollar. If the Australian dollar is
stronger relative to the United States dollar at the time of conversion, the consolidated entity will receive less Australian dollar
The consolidated entity has an active policy of limiting the exposure to nickel price risk and currency risk through limited hedging,
•
For nickel price risk of both the Savannah Project and the Lanfranchi Project, the policy is to hedge, when
appropriate, no more than 80% (2014: 80%) of the payable nickel forecast to be produced in any month, over a
rolling two year horizon. Any hedging is undertaken using a combination of nickel forward sales contracts and nickel
put options, with nickel call options written and sold in order to offset the cost of bought nickel put options. Of the 80%
maximum limit, the percentage of the combined nickel forward sales contracts and written nickel call options (but
excluding purchased nickel put options) is to be no more than 40% (2014: 40%) of the payable nickel forecast to be
produced in any month over the same rolling two year horizon; and
•
For currency risk, although not mandatory in the policy, when appropriate, sufficient foreign currency hedging on a
month to month basis, via a combination of currency forward contracts and currency put and call options, to match
the net United States dollar proceeds from nickel hedging using nickel forward sales contracts.
As at 30 June 2015, the consolidated entity had no nickel forward sales contracts and no nickel put options in place.
Other business risks can have an impact on the profitability of the consolidated entity. The recognition, management and control
of these risks are key elements of the enterprise-wide risk management framework which has been progressively developed and
rolled-out across the Group, as detailed in the Corporate Governance Statement on page 40.
Dividends
On 26 February 2015, the directors declared an interim fully franked dividend of 1.0 cent per share, which was paid on 2 April
2015. No final dividend has been declared for the financial year ended 30 June 2015.
The operating activities of the consolidated group (including royalty payments, greenfield exploration and net of the costs of
running the Perth and Thunder Bay offices) generated cashflows after tax of $46,482,000, which was down 14% on the previous
financial year. Cashflow from operating activities included a prior year income tax refund of $2,970,000. Net cash outflow from
investing activities of $39,680,000, which was 56% higher than in the previous financial year with increased expenditure on all
REVIEW OF OPERATIONS
Nickel Division
The net deferred tax liability of $11,342,000 was 44% lower than at the previous period end after the recognition of current year
Lanfranchi Nickel Project, South Kambalda, WA
On a Group basis, the operations produced an aggregate 19,301 (2014: 22,256) tonnes of contained nickel, down 13% on the
previous financial year. The Group sold an aggregate 19,547 (2014: 22,387) tonnes of contained nickel, down 13% on the prior
year.
Physicals
(i) Produced
Ore Mined (t)
Nickel Grade (%)
Nickel in Ore (t)
(ii) Sold
Nickel in Ore (t)
2015
2014
468,491
2.26
10,575
518,273
2.66
13,775
10,611
13,794
The nickel ore is trucked and treated at BHP Billiton Nickel West's Kambalda nickel concentrator under an Ore Tolling and
Concentrate Purchase Agreement
Savannah Nickel Project, (including the Copernicus Nickel Project), East Kimberley region, WA
Physicals
(i) Produced
Ore Treated (t)
Nickel Grade (%)
Recovery (%)
Nickel in Concentrate (t)
(ii) Sold
Nickel in Concentrate (t)
2015
2014
854,794
1.18
86.4
8,726
759,150
1.29
86.6
8,481
8,936
8,593
In addition, the mine produced 5,314 (2014: 5,439) tonnes of copper and 443 (2014: 426) tonnes of cobalt. The nickel
concentrate is trucked to and shipped from the Port of Wyndham to the Jinchuan Group in China under the March 2010
Extended Concentrate Sales Agreement.
Copernicus Nickel Project, East Kimberley region, WA (Panoramic 100%)
During the December 2014 quarter, mining of the open pit recommenced, with Copernicus ore being transported to the
Savannah Nickel Project for blending and processing with Savannah ore.
Exploration and Development Projects
During the financial year, the Group continued exploring for additional Mineral Resources and Ore Reserves at each of its nickel
projects together with exploration on advanced and greenfield exploration projects within and outside Australia.
As at 30 June 2015, the consolidated entity had a net “in the money” position on open United States dollar denominated foreign
exchange bought put and sold call options that expire between July 2015 and December 2015 (as detailed further in Note 12 of
the Notes to the Financial Statements).
At the Savannah Nickel Project, the Company continued exploration activities on the Savannah North Exploration Target. On 11
August 2015, the Company released the 30 June 2015 Savannah Nickel Project Resource Inventory, including a maiden Interim
Resource estimate of 3.15 million tonnes at a nickel grade of 1.75% for 55,200 tonnes of contained nickel.
On 22 January 2015, the Company announced the discovery of the high-grade Lower Schmitz zones of mineralisation at the
Lanfranchi Nickel Project. On 6 July 2015, the Company released the Exploration Target for the Lower Schmitz zones of
mineralisation, being in the range of 275,000 to 746,000 tonnes at a nickel grade range of 5.0 to 6.0%. The announcement
included a “Cautionary Statement” that the Lower Schmitz Exploration Target was not a Mineral Resource classified under 2012
JORC.
Gold Division
Gidgee Gold Project, Murchison region, WA
Over the last three years, the Company has been undertaking a Feasibility Study (“Gidgee FS”) into the mining and treatment of
open pit ore from the Swan Bitter, Swift, Howards, Toedter, Specimen Well Mineral Resources and underground ore from the
Wilsons Mineral Resource. As part of the Gidgee Feasibility Study, in 2012/13, a 26,000 metre drilling program was undertaken
2 0 1 5 A N N U A L R E P O R T | P A G E 2 3
DIRECTORS’ REPORTFOR THE FINANCIAL YEAR ENDED 30 JUNE 2015 at Wilsons, Swan Bitter, Swift and Howards which resulted in an upgrade of the Gidgee Resources to a combined 2012 JORC
compliant Indicated Resource of 17.9Mt @ 2.3g/t Au for ~1.3 million ounces of gold.
During the financial year, further additional studies were undertaken on previous geotechnical, mining and metallurgical
information and ground gravity and airborne electromagnetic (VTEM) surveys were completed over the tenement package.
In July 2015, a decision was made to put the Project up for sale via a tender process.
Mt Henry Gold Project, Norseman, WA
Subsequent to the end of the financial year, on 31 July 2015, the Company sold its 70% interest in the Mt Henry Gold Project to
Metals X Limited. Further information is detailed in the “Matters subsequent to the end of the financial year” section on page 25.
Platinum Group Metals (PGM) Division
Thunder Bay North PGM ("TBN") Project, North-West Ontario, Canada
Following the acquisition of the advanced exploration PGM project in June 2012 and until mid-July 2014, the Company carried
out exploration on the TBN Mineral Resource and conducted detailed evaluation studies primarily focused on metallurgical
recovery.
On 30 July 2014, the Company signed an Agreement with Rio Tinto Exploration Canada Inc. (“RTEC”) which allowed RTEC to
review all existing data on the TBN Project on an exclusive basis until December 2014. On 16 January 2015, the Company
announced that RTEC had exercised its right under the Agreement by electing to spend up to C$20 million (minimum spend of
C$5 million before RTEC can withdraw) over the next five years to earn a 70% interest in the Project. During this period, RTEC
will be responsible for managing the Project and ensuring the TBN tenements are kept in good standing.
RTEC has since commenced activities on the TBN Project.
Panton PGM Project, East Kimberley, WA
The Panton PGM Project is located 60kms south of the Savannah Nickel Project. Following the acquisition of the project in May
2012, the Company reviewed the technical information contained in the 2003 Bankable Feasibility Study to better understand the
geological characteristics of the Mineral Resource.
Early in the financial year, the Company engaged GR Engineering Ltd to undertake a desktop review of previous metallurgical
testwork on Panton ore. This review highlighted other processing options to be considered and resulted in the decision to obtain
fresh ore samples for new metallurgical testwork to improve flotation performance, increase recoveries and to produce a more
saleable, higher grade PGM concentrate. Initial results have been positive and the testwork is ongoing.
Corporate
The Company is limited by shares and is domiciled and incorporated in Australia.
Significant events of the consolidated entity during the financial period of a corporate nature were as follows:
Employee Share Plan
On 30 July 2014, the Company’s shareholders approved the three year exception to ASX Listing Rule 7.1 [Issues exceeding
15% of Capital] on the annual grant of performance rights and the issue of shares on the exercise of those performance rights
under the 2010 Panoramic Resources Limited Employee Share Plan (“2010 ES Plan”), in addition to approving the grant of
FY2015 performance rights to the Company’s Managing Director, Peter Harold under the 2010 ES Plan as required under ASX
Listing Rule 10.14 [Approval required under an Employee Incentive Scheme].
On-market Share Buyback
On 15 December 2014, the Company announced its intention to conduct an on-market share buyback of up to 15.96 million
shares. At that time, the directors believed that the Company’s shares were trading at a level which was significantly
undervaluing the Company’s assets. As at the date of this report, the Company had bought back on-market 851,809 shares at an
average share price of $0.3909, with all the shares having been subsequently cancelled.
P A G E 2 4 | 2 0 1 5 A N N U A L R E P O R T
DIRECTORS’ REPORTFOR THE FINANCIAL YEAR ENDED 30 JUNE 2015 at Wilsons, Swan Bitter, Swift and Howards which resulted in an upgrade of the Gidgee Resources to a combined 2012 JORC
compliant Indicated Resource of 17.9Mt @ 2.3g/t Au for ~1.3 million ounces of gold.
The merits of this capital management initiative will continually be monitored as markets and the Company’s state of affairs
change. The on-market share buyback is currently open until 30 December 2015 and can be terminated earlier.
During the financial year, further additional studies were undertaken on previous geotechnical, mining and metallurgical
information and ground gravity and airborne electromagnetic (VTEM) surveys were completed over the tenement package.
Employees
At the end of the financial year, the Group had 413 permanent, full time employees (2014: 379).
Key Developments (Incorporating Significant Changes in the State of Affairs)
Significant changes in the state of affairs of the Consolidated Entity during the financial period were as follows:
• On 28 July 2014, the Company released an Exploration Target for the Savannah North zones of mineralisation,
being in the range of 3.2 to 6.4 million tonnes at a nickel grade range of 1.5 to 2.1%. The announcement included a
“Cautionary Statement” that the Savannah North Exploration Target was not a Mineral Resource classified under
2012 JORC.
• On 30 July 2014, the Company’s wholly owned Canadian subsidiary, Panoramic PGMs (Canada) Limited (“PANP”),
executed an “Earn-In with Option to Joint Venture Agreement” with Rio Tinto Exploration Canada Inc. (“RTEC”)
whereby RTEC, by undertaking a review of all existing data on the Thunder Bay North PGM Project (“TBN”) and by
electing to spend C$20 million over five years from 1 January 2015 including vending its single tenement, Escape
Lake, into the “TBN” tenement package, is able to earn an 70% interest in TBN and thereby enabling PANP to earn
an 30% interest in Escape Lake.
• On 22 September 2014, the Company announced that it had been issued 18,518,519 shares in GME Resources
Limited (“GME”) in relation to a $500,000 strategic placement in GME, including the execution of the “Memorandum
of Understanding (NiWest)” regarding the future exploration, development and financing of GME’s NiWest Nickel
Laterite Project located in the north-east goldfields of Western Australia.
• On 21 November 2014, the Federal Court made a Determination of native title, the consequence of which the
Company’s tenements at the Lanfranchi Nickel Project are invalid to the extent that they are inconsistent with the
continued existence, enjoyment or exercise of native title rights held by the Ngadju People. The Company
subsequently joined as a non-participating Respondent Party to the Nadju appeal proceedings.
• On 15 December 2014, the Company announced its intention to conduct an on-market share buyback of up to 15.96
million shares.
• On 15 January 2015, Rio Tinto Exploration Canada Inc. (“RTEC”) advised the Company that it was exercising its
right under the “Earn-In with Option to Joint Venture Agreement” by electing to proceed into the C$20 million Earn-In
Option Phase of the Agreement.
• On 22 January 2015, the Company announced the discovery of the high-grade Lower Schmitz zones of
mineralisation at the Lanfranchi Nickel Project.
Early in the financial year, the Company engaged GR Engineering Ltd to undertake a desktop review of previous metallurgical
testwork on Panton ore. This review highlighted other processing options to be considered and resulted in the decision to obtain
fresh ore samples for new metallurgical testwork to improve flotation performance, increase recoveries and to produce a more
saleable, higher grade PGM concentrate. Initial results have been positive and the testwork is ongoing.
Matters subsequent to the end of the financial year
Lower Schmitz Exploration Target
On 6 July 2015, the Company released an Exploration Target for the Lower Schmitz zones of mineralisation, being in the range
of 275,000 to 746,000 tonnes at a nickel grade range of 5.0 to 6.0%. The announcement included a “Cautionary Statement” that
the Lower Schmitz Exploration Target was not a Mineral Resource classified under 2012 JORC.
Sale of the Mt Henry Gold Project
On 31 July 2015, the Company announced that it had sold its 70% interest in the Mt Henry Gold Project to Metals X Limited
(“Metals X”) for 15,400,000 ordinary shares in Metals X (before a 1.5% commission which is payable in Metals X ordinary
shares). The sale is conditional upon WA Ministerial consent, Metals X receiving approval from the Foreign Investment Review
Board (FIRB) and other regulatory approvals. On 31 July 2015, Metals X’s closing share price was $1.125 per share, which
resulted in a marked-to-market unrealised loss on the Company’s net shareholding (after commission) in Metals X of $935,000. It
should be noted that the final realised gain or loss on the Company’s Metals X net shareholding will only be realised when the
shares have been sold. The sale will be reflected in the 2015/16 financial statements.
Lanfranchi Nickel Project Operational Changes
On 3 August 2015, the Company announced that operational changes at the Lanfranchi Nickel Project, scheduled for later in
2015, had been brought forward as a result of a seismic event on 29 July 2015 in the vicinity of the Deacon orebody and the
continuing weakness in the nickel price.
Gidgee Gold Project Divestment Process
On 3 August 2015, the directors resolved to commence a process to divest the Gidgee Gold Project.
2 0 1 5 A N N U A L R E P O R T | P A G E 2 5
In July 2015, a decision was made to put the Project up for sale via a tender process.
Mt Henry Gold Project, Norseman, WA
Subsequent to the end of the financial year, on 31 July 2015, the Company sold its 70% interest in the Mt Henry Gold Project to
Metals X Limited. Further information is detailed in the “Matters subsequent to the end of the financial year” section on page 25.
Platinum Group Metals (PGM) Division
Thunder Bay North PGM ("TBN") Project, North-West Ontario, Canada
Following the acquisition of the advanced exploration PGM project in June 2012 and until mid-July 2014, the Company carried
out exploration on the TBN Mineral Resource and conducted detailed evaluation studies primarily focused on metallurgical
recovery.
On 30 July 2014, the Company signed an Agreement with Rio Tinto Exploration Canada Inc. (“RTEC”) which allowed RTEC to
review all existing data on the TBN Project on an exclusive basis until December 2014. On 16 January 2015, the Company
announced that RTEC had exercised its right under the Agreement by electing to spend up to C$20 million (minimum spend of
C$5 million before RTEC can withdraw) over the next five years to earn a 70% interest in the Project. During this period, RTEC
will be responsible for managing the Project and ensuring the TBN tenements are kept in good standing.
RTEC has since commenced activities on the TBN Project.
Panton PGM Project, East Kimberley, WA
The Panton PGM Project is located 60kms south of the Savannah Nickel Project. Following the acquisition of the project in May
2012, the Company reviewed the technical information contained in the 2003 Bankable Feasibility Study to better understand the
geological characteristics of the Mineral Resource.
The Company is limited by shares and is domiciled and incorporated in Australia.
Significant events of the consolidated entity during the financial period of a corporate nature were as follows:
Corporate
Employee Share Plan
On 30 July 2014, the Company’s shareholders approved the three year exception to ASX Listing Rule 7.1 [Issues exceeding
15% of Capital] on the annual grant of performance rights and the issue of shares on the exercise of those performance rights
under the 2010 Panoramic Resources Limited Employee Share Plan (“2010 ES Plan”), in addition to approving the grant of
FY2015 performance rights to the Company’s Managing Director, Peter Harold under the 2010 ES Plan as required under ASX
Listing Rule 10.14 [Approval required under an Employee Incentive Scheme].
On-market Share Buyback
On 15 December 2014, the Company announced its intention to conduct an on-market share buyback of up to 15.96 million
shares. At that time, the directors believed that the Company’s shares were trading at a level which was significantly
undervaluing the Company’s assets. As at the date of this report, the Company had bought back on-market 851,809 shares at an
average share price of $0.3909, with all the shares having been subsequently cancelled.
DIRECTORS’ REPORTFOR THE FINANCIAL YEAR ENDED 30 JUNE 2015 Business Strategies and Prospects (incorporating likely developments and expected results)
The Company embarked on a process called “Building a Sustainable Future” in May 2013. This process was implemented to
improve the way the consolidated entity manages all areas of the Group’s activities to survive volatile commodity prices and
foreign exchange rates and to build a sustainable business. This process is ongoing with a renewed focus on cost savings and
productivity initiatives with the continued weakness in the nickel price and the suspension of ore production at the Lanfranchi
Nickel Project in July 2015.
The Company’s vision is to broaden its exploration and production base, with the aim of becoming a major, diversified mining
house in the S&P/ASX 100 Index.
The likely developments in each of the consolidated entity’s commodity divisions over the next 12 months are highlighted below.
Nickel Division
Subject to the prevailing nickel price, the consolidated entity will continue to mine and treat Savannah and Copernicus nickel
sulphide ores to produce nickel concentrate at the Savannah Process Plant. At the Lanfranchi Nickel Project, work will continue
on development of the Lower Schmitz drill drive and return airway in preparation for a Resource definition drill program on the
Lower Schmitz Exploration Target.
Subject to funding, exploration activities will continue at both nickel projects to find new areas of mineralisation and additional
Resource definition drilling will be undertaken on both the Savannah North and Lower Schmitz Exploration Targets to add to
mineable economic reserves.
Gold Division
The process to divest the Gidgee Gold Project will continue with the expectation of a successful outcome.
Platinum Group Metals (PGM) Division
The consolidated entity will continue evaluation activities on the Panton PGM Project in the East Kimberley region of Western
Australia and will monitor RTEC’s activities at the Thunder Bay North PGM Project (including RTEC’s Escape Lake tenement) in
north-west Ontario, Canada.
Further information about likely developments in the operations of the consolidated entity and the expected results of those
operations in the future financial years has not been included in this report because disclosure would be likely to result in
unreasonable prejudice to the consolidated entity.
Shares Options
At the date of signing, there are no unissued ordinary shares of the Company under Option (2014: nil).
Indemnification of Auditors
To the extent permitted by law, the Company has agreed to indemnify the auditors, Ernst & Young, as part of the terms of its audit
engagement agreement against claims by third parties arising from the audit (for an unspecified amount). No payments have
been made to indemnify Ernst & Young during or since the financial year.
Indemnification and Insurance of Directors and Officers
The Company has agreed to indemnify the directors and senior executives against all liabilities to another person (other than the
Company or a related body corporate) that may arise from their position as directors and officers of the Company, except where
the liability arises out of certain wrongful acts for which the Company has not agreed to provide indemnity. The agreement
stipulates that the Company will meet the full amount of any such liabilities including costs and expenses.
During the financial year, the Company has paid premiums of $75,300 (2014: $104,700) in respect of contracts insuring all the
directors and officers against legal costs incurred in defending proceedings. The insurance premiums relate to:
(1)
Costs and expenses incurred by the relevant officers in defending legal proceedings, both civil and criminal
and whatever the outcome; and
(2) Other liabilities that may arise from their position, with the exception of conduct involving a wilful breach of duty
or improper use of information or position to gain a personal advantage.
P A G E 2 6 | 2 0 1 5 A N N U A L R E P O R T
DIRECTORS’ REPORTFOR THE FINANCIAL YEAR ENDED 30 JUNE 2015 Business Strategies and Prospects (incorporating likely developments and expected results)
2015 REMUNERATION REPORT (AUDITED)
The Company embarked on a process called “Building a Sustainable Future” in May 2013. This process was implemented to
improve the way the consolidated entity manages all areas of the Group’s activities to survive volatile commodity prices and
foreign exchange rates and to build a sustainable business. This process is ongoing with a renewed focus on cost savings and
productivity initiatives with the continued weakness in the nickel price and the suspension of ore production at the Lanfranchi
The Company’s vision is to broaden its exploration and production base, with the aim of becoming a major, diversified mining
The likely developments in each of the consolidated entity’s commodity divisions over the next 12 months are highlighted below.
Nickel Project in July 2015.
house in the S&P/ASX 100 Index.
Nickel Division
Subject to the prevailing nickel price, the consolidated entity will continue to mine and treat Savannah and Copernicus nickel
sulphide ores to produce nickel concentrate at the Savannah Process Plant. At the Lanfranchi Nickel Project, work will continue
on development of the Lower Schmitz drill drive and return airway in preparation for a Resource definition drill program on the
Lower Schmitz Exploration Target.
Subject to funding, exploration activities will continue at both nickel projects to find new areas of mineralisation and additional
Resource definition drilling will be undertaken on both the Savannah North and Lower Schmitz Exploration Targets to add to
mineable economic reserves.
Gold Division
The process to divest the Gidgee Gold Project will continue with the expectation of a successful outcome.
Platinum Group Metals (PGM) Division
The consolidated entity will continue evaluation activities on the Panton PGM Project in the East Kimberley region of Western
Australia and will monitor RTEC’s activities at the Thunder Bay North PGM Project (including RTEC’s Escape Lake tenement) in
north-west Ontario, Canada.
Further information about likely developments in the operations of the consolidated entity and the expected results of those
operations in the future financial years has not been included in this report because disclosure would be likely to result in
unreasonable prejudice to the consolidated entity.
Shares Options
Indemnification of Auditors
To the extent permitted by law, the Company has agreed to indemnify the auditors, Ernst & Young, as part of the terms of its audit
engagement agreement against claims by third parties arising from the audit (for an unspecified amount). No payments have
been made to indemnify Ernst & Young during or since the financial year.
Indemnification and Insurance of Directors and Officers
The Company has agreed to indemnify the directors and senior executives against all liabilities to another person (other than the
Company or a related body corporate) that may arise from their position as directors and officers of the Company, except where
the liability arises out of certain wrongful acts for which the Company has not agreed to provide indemnity. The agreement
stipulates that the Company will meet the full amount of any such liabilities including costs and expenses.
During the financial year, the Company has paid premiums of $75,300 (2014: $104,700) in respect of contracts insuring all the
directors and officers against legal costs incurred in defending proceedings. The insurance premiums relate to:
(1)
Costs and expenses incurred by the relevant officers in defending legal proceedings, both civil and criminal
and whatever the outcome; and
(2) Other liabilities that may arise from their position, with the exception of conduct involving a wilful breach of duty
or improper use of information or position to gain a personal advantage.
This 2015 remuneration report outlines the remuneration arrangements in place for the directors and executives of the Company
and the Group in accordance with the Corporations Act 2001 and its Regulations (the Act). The information provided in this
remuneration report has been audited as required by section 308(3C) of the Corporations Act 2001.
For the purposes of this report, Key Management Personnel (“KMP”) of the Group are defined as those persons having authority
and responsibility for planning, directing and controlling the major activities of the Company and the Group, directly or indirectly,
including any director (whether executive or otherwise) of the parent company.
For the purposes of this report, the term ‘executive’ encompasses the managing director, senior executives and operations
managers of the Company and the Group.
(a) Directors and Key Management Personnel disclosed in this Report
(i) Directors
Brian Phillips
Peter Harold
Christopher Langdon
John Rowe
(ii) Named Executives
Trevor Eton
Terry Strong
Christopher Williams
Angus Thompson
John Hicks
Tim Mason
Mark Recklies
Tracey Ram
Chairman (Non-Executive)
Managing Director
Director (Non-Executive)
Director (Non-Executive)
Chief Financial Officer & Company Secretary
Chief Operating Officer
General Manager - Project Development & Technical Services
Executive GM - Business Development
General Manager - Exploration
Operations Manager - Lanfranchi
Operations Manager - Savannah
General Manager - Human Resources
(b) Remuneration Philosophy
The performance of the Company depends upon the quality of its directors and executives. To prosper, the Company must
attract, motivate and retain highly skilled directors and executives.
At the date of signing, there are no unissued ordinary shares of the Company under Option (2014: nil).
To this end, the Company embodies the following principles in its remuneration framework:
•
•
•
•
Provide competitive rewards to attract high calibre executives;
Link executive rewards to shareholder value and company profits;
Significant portion of executive remuneration 'at risk', dependent upon meeting pre-determined performance
benchmarks; and
Establish appropriate and demanding performance hurdles in relation to variable executive remuneration.
(c) Remuneration Committee
The Remuneration Committee of the Board of Directors of the Company is responsible for determining and reviewing
compensation arrangements for the Managing Director and the senior executive team.
The Remuneration Committee assess the appropriateness of the nature and amount of remuneration of executives on a periodic
basis by reference to relevant employment market conditions, with the overall objective of ensuring maximum stakeholder benefit
from the retention of a high quality, high performing and committed senior executive team.
(d) Remuneration Structure
In accordance with best practice corporate governance, the remuneration structure of the non-executive directors, and senior
management, is separate and distinct.
(e) Use of remuneration consultants
Where appropriate, the Remuneration Committee and the Board seek advice from independent remuneration consultants to
ensure the remuneration paid to the non-executive directors and senior management is appropriate and in line with the market.
The Company did not receive independent remuneration advice during the financial year as defined under the Corporations
Amendment (Improving Accountability on Director and Executive Remuneration).
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DIRECTORS’ REPORTFOR THE FINANCIAL YEAR ENDED 30 JUNE 2015 (f) Non-executive director remuneration policy
(i)
Fixed Remuneration
Objective
The Board seeks to set aggregate remuneration at a level which provides the Company with the ability to attract and retain
directors of the highest calibre, whilst incurring a cost which is acceptable to shareholders.
Structure
The Company's Constitution and the ASX Listing Rules specify that the aggregate remuneration of non-executive directors shall
be determined from time to time by a general meeting of shareholders. An amount not exceeding the amount determined is then
divided between the directors as agreed.
The amount of aggregate remuneration sought to be approved by shareholders and the manner in which it is apportioned
amongst directors is reviewed annually. The Board considers fees paid to non-executive directors of comparable companies
when undertaking the annual review process. Each director receives a fee for being a director of the Company. This fee is
inclusive for each Board committee on which a director sits.
The fees paid to non-executive directors for the period ending 30 June 2015 are detailed in Table 1 on page 35 of this report.
Fees for the non-executive directors are determined within an aggregate directors’ fee pool limit of $600,000, which was last
approved by shareholders on 20 November 2007.
(ii) Variable Remuneration
The Company does not reward non-executive directors with variable remuneration. Any shares in the Company that are held by
non-executive directors at the date of this report are separately purchased and held by each director and have not been issued
by the Company as part of each director’s remuneration package.
(g) Executive Remuneration
Objective
The Company aims to reward executives with a level and mix of remuneration commensurate with their position and
responsibilities within the Company so as to:
•
•
•
•
reward executives for Company, operating segment and individual performance against targets set by
reference to appropriate benchmarks;
align the interests of executives with those of shareholders;
link reward with the strategic goals and the performance of the Company; and
ensure total remuneration is competitive by market standards.
Structure
In determining the level and make-up of executive remuneration, the Remuneration Committee takes consideration of the current
market levels of remuneration for comparable executive roles.
It is the Remuneration Committee’s policy that employment contracts are entered into with the Managing Director and other key
management personnel. Details of these KMP contracts are provided on page 34.
Remuneration consists of the following key elements:
•
•
Fixed Remuneration (base salary, superannuation and non-monetary benefits);
Variable Remuneration
- Short Term Incentive Bonus (‘STIB’); and
- Long Term Incentive (‘LTI’).
The proportion of fixed remuneration and variable remuneration (potential short term and long term incentives) is established for
each senior executive by the Remuneration Committee. Table 1 on page 35 details the variable component (%) of the Group’s
KMP. STI Bonuses paid and accrued, in most cases, do not include the statutory requirement from 1 July 2009 for the payment
of employer superannuation. Where necessary, when the payment of superannuation on an individual’s STI Bonus would cause
the amount of superannuation in any financial year to exceed the applicable statutory concessional maximum superannuation
contribution limit, at the individual’s discretion, an equivalent amount of employer superannuation is added to the executive’s
base cash salary.
P A G E 2 8 | 2 0 1 5 A N N U A L R E P O R T
DIRECTORS’ REPORTFOR THE FINANCIAL YEAR ENDED 30 JUNE 2015 Objective
Structure
Structure
•
•
•
•
•
•
(f) Non-executive director remuneration policy
(i)
Fixed Remuneration
(i)
Fixed Remuneration
Objective
The Board seeks to set aggregate remuneration at a level which provides the Company with the ability to attract and retain
directors of the highest calibre, whilst incurring a cost which is acceptable to shareholders.
The level of fixed remuneration is set so as to provide a base level of remuneration which is both appropriate to the position and is
competitive in the market. Fixed remuneration is reviewed annually by the Remuneration Committee and the process consists of
a review of Company-wide, business unit and individual performance, relevant comparative remuneration in the market and
internal and, when appropriate, external advice on policies and practices. As noted above, the Remuneration Committee has
access to external advice, independent of management.
The Company's Constitution and the ASX Listing Rules specify that the aggregate remuneration of non-executive directors shall
be determined from time to time by a general meeting of shareholders. An amount not exceeding the amount determined is then
Structure
divided between the directors as agreed.
The amount of aggregate remuneration sought to be approved by shareholders and the manner in which it is apportioned
amongst directors is reviewed annually. The Board considers fees paid to non-executive directors of comparable companies
when undertaking the annual review process. Each director receives a fee for being a director of the Company. This fee is
inclusive for each Board committee on which a director sits.
Executives are given the opportunity to receive their fixed (primary) remuneration in a variety of forms including cash and fringe
benefits. It is intended that the manner of payment chosen will be optimal for the recipient without creating undue cost for the
Company.
The fixed remuneration component of the Group’s key management personnel is detailed in Table 1 on page 35.
(ii) Variable Remuneration - Short-term Incentive Bonus (STIB)
The fees paid to non-executive directors for the period ending 30 June 2015 are detailed in Table 1 on page 35 of this report.
Fees for the non-executive directors are determined within an aggregate directors’ fee pool limit of $600,000, which was last
Objective
The Company does not reward non-executive directors with variable remuneration. Any shares in the Company that are held by
non-executive directors at the date of this report are separately purchased and held by each director and have not been issued
by the Company as part of each director’s remuneration package.
approved by shareholders on 20 November 2007.
(ii) Variable Remuneration
(g) Executive Remuneration
Objective
The objective and intention of the executive STIB scheme is to encourage and provide a further incentive to executives to:
(a) maximise the financial performance of the Company on a regular and consistent basis that is also consistent
(b)
with the Company’s Core Values; and
create and maintain a culture within all levels of the Company and Group such that the Company’s Core Values
are accepted, supported and actively promoted by all the employees of the Company and Group.
The STIB scheme has been designed so as to provide sufficient incentive to the executives such that the cost to the Company is
reasonable in the circumstances.
The Company aims to reward executives with a level and mix of remuneration commensurate with their position and
responsibilities within the Company so as to:
Structure
reward executives for Company, operating segment and individual performance against targets set by
The current structure of the executive STIB scheme commenced from 1 January 2010.
reference to appropriate benchmarks;
align the interests of executives with those of shareholders;
link reward with the strategic goals and the performance of the Company; and
ensure total remuneration is competitive by market standards.
In determining the level and make-up of executive remuneration, the Remuneration Committee takes consideration of the current
market levels of remuneration for comparable executive roles.
Calculation of the STIB
The STIB is calculated annually at the end of the relevant financial year (“Relevant Financial Year”). The STIB comprises two
parts - the first part is based on the Company’s financial performance; the second part is discretionary and based on the extent to
which the Company and the Group, Managing Director, executives, and all employees have acted and performed in a manner
consistent with the Company and the Group Core Values during the Relevant Financial Year. The STIB is paid in the next
Financial Year.
It is the Remuneration Committee’s policy that employment contracts are entered into with the Managing Director and other key
management personnel. Details of these KMP contracts are provided on page 34.
STIB First Part - Cash Bonus based on Financial Performance
Remuneration consists of the following key elements:
Fixed Remuneration (base salary, superannuation and non-monetary benefits);
Variable Remuneration
- Short Term Incentive Bonus (‘STIB’); and
- Long Term Incentive (‘LTI’).
The proportion of fixed remuneration and variable remuneration (potential short term and long term incentives) is established for
each senior executive by the Remuneration Committee. Table 1 on page 35 details the variable component (%) of the Group’s
KMP. STI Bonuses paid and accrued, in most cases, do not include the statutory requirement from 1 July 2009 for the payment
of employer superannuation. Where necessary, when the payment of superannuation on an individual’s STI Bonus would cause
the amount of superannuation in any financial year to exceed the applicable statutory concessional maximum superannuation
contribution limit, at the individual’s discretion, an equivalent amount of employer superannuation is added to the executive’s
base cash salary.
A maximum Cash bonus (excluding statutory superannuation) will be paid to the executives if certain financial thresholds are met
by the Company and the Group during the Relevant Financial Year (“Cash bonus”). The maximum Cash bonus will be
calculated at the end of the Relevant Financial Year and paid in the next Financial Year using figures obtained from the audited
financial statements of the consolidated entity for the Relevant Financial Year, in accordance with the following formula:
CEXEC = the maximum Cash bonus to be paid to executives for the Relevant Financial Year;
CEXEC = [P - (E x 15%)] x 20%, where
P = Earnings Before Interest and Tax (“EBIT”) of the Company (on a consolidated basis) for the Relevant Financial Year;
E = the average of (1) the “Total Assets” line item of the audited consolidated balance sheet of the Company (on a consolidated
basis) for the Relevant Financial Year and (2) the “Total Assets” line item of the audited consolidated balance sheet of the
Company for the year immediately preceding the Relevant Financial Year. “Total Assets” includes current and non-current
assets.
STIB Second Part - Discretionary Cash Bonus based on Core Values
In addition to the first part maximum STIB Cash bonus, the Company (in the sole and absolute discretion of the Remuneration
Committee) may pay each executive on a case by case basis, a Discretionary Cash bonus (“Discretionary Cash bonus”). The
2 0 1 5 A N N U A L R E P O R T | P A G E 2 9
DIRECTORS’ REPORTFOR THE FINANCIAL YEAR ENDED 30 JUNE 2015 Discretionary Cash bonus will be determined at the end of the Relevant Financial Year and paid in the next Financial Year taking
into account the extent to which the Company, Managing Director, executives, and all employees have acted and performed in a
manner consistent with the Company’s Core Values during the Relevant Financial Year.
The Company’s Core Values are the core values of the Company as announced to the Australian Stock Exchange (“ASX”) from
time to time by the Company, which as listed in the Managing Director’s employment contract, are:
• Core Value One - to maintain and improve the Company’s safety culture so every employee believes that safety is
the Company’s most important value in line with the Company’s safety mantra: Vision, Commitment, Results:
• Core Value Two - to optimise the Company’s metal production by focus on operations and the performance of the
management team;
• Core Value Three - to maintain a programme to grow the Company’s existing resource and reserve base;
• Core Value Four - seek to acquire additional assets so the Company pursues its aim to become a diversified mining
house; and
• Core Value Five - maintain a steady return to Shareholders through dividends and/or increase in the value of the
Company’s shares.
Maximum STIB
In addition to the executive STIB scheme, and subject to the financial and operational performance of the Company and Group in
the Relevant Financial year, the Company may make discretionary STIB cash payments to the remaining employees of the
Company and Group.
To take account of the aggregation of the two annual STIB cash payments, the Remuneration Committee has set a maximum
aggregate STIB Cash pool (including statutory superannuation) for the Company and Group to be calculated at the end of the
Relevant Financial Year using figures obtained from the audited consolidated financial statements of the Company for the
Relevant Financial Year, in accordance with the following formula:
Cmax = the maximum aggregate Cash bonus to be paid to all Company and Group employees for the Relevant Financial Year;
P = Earnings Before Interest and Tax (“EBIT”) of the Company (on a consolidated basis) for the Relevant Financial Year.
Cmax = P x 5%, where
Accrued and actual executive STIB payments
Actual STIB payments granted to each executive are made in the next Financial Year (usually in October (60%) and the following
April (40%)), when the audited consolidated financial statements of the Company for the Relevant Financial Year are known and
the maximum executive STIB Cash pool (CEXEC) has been determined.
2015 Financial Year
Based on the CEXEC calculation formula and forecast consolidated financial results, no aggregate executive STIB Cash bonus
(First Part) was accrued in the 2015 consolidated financial statements. In addition, no Discretionary Cash bonus (Second Part)
has been approved for payment in relation to the 2015 financial year.
2014 Financial Year
Based on the CEXEC calculation formula and forecast consolidated financial results, no aggregate executive STIB Cash bonus
(First Part) was accrued in the 2014 consolidated financial statements. In July 2014, the Remuneration Committee determined
that the Company, Managing Director, executives, and employees acted and performed in a manner consistent with the
Company’s Core Values, with the exception of Core Value One, during the 2014 Financial Year and approved the payment, in
the 2015 Financial Year, of a Discretionary Cash bonus (Second Part) allocated on an individual-by-individual performance
basis.
The short term incentive variable remuneration component of the Group’s KMP is detailed in Table 1 on pages 35.
(iii) Variable Remuneration - Long Term Incentive (LTI)
Objective
The objective of the LTI program is to reward and incentivise executives in a manner which aligns this element of remuneration
with the creation of shareholder wealth. The Company’s performance during the 2015 financial year and for the previous four
financial years, and its impact on shareholder wealth, is summarised in the table below.
P A G E 3 0 | 2 0 1 5 A N N U A L R E P O R T
DIRECTORS’ REPORTFOR THE FINANCIAL YEAR ENDED 30 JUNE 2015
management team;
house; and
Company’s shares.
Maximum STIB
Company and Group.
Discretionary Cash bonus will be determined at the end of the Relevant Financial Year and paid in the next Financial Year taking
into account the extent to which the Company, Managing Director, executives, and all employees have acted and performed in a
manner consistent with the Company’s Core Values during the Relevant Financial Year.
The Company’s Core Values are the core values of the Company as announced to the Australian Stock Exchange (“ASX”) from
time to time by the Company, which as listed in the Managing Director’s employment contract, are:
• Core Value One - to maintain and improve the Company’s safety culture so every employee believes that safety is
the Company’s most important value in line with the Company’s safety mantra: Vision, Commitment, Results:
• Core Value Two - to optimise the Company’s metal production by focus on operations and the performance of the
• Core Value Three - to maintain a programme to grow the Company’s existing resource and reserve base;
• Core Value Four - seek to acquire additional assets so the Company pursues its aim to become a diversified mining
• Core Value Five - maintain a steady return to Shareholders through dividends and/or increase in the value of the
In addition to the executive STIB scheme, and subject to the financial and operational performance of the Company and Group in
the Relevant Financial year, the Company may make discretionary STIB cash payments to the remaining employees of the
To take account of the aggregation of the two annual STIB cash payments, the Remuneration Committee has set a maximum
aggregate STIB Cash pool (including statutory superannuation) for the Company and Group to be calculated at the end of the
Relevant Financial Year using figures obtained from the audited consolidated financial statements of the Company for the
Relevant Financial Year, in accordance with the following formula:
Cmax = the maximum aggregate Cash bonus to be paid to all Company and Group employees for the Relevant Financial Year;
Cmax = P x 5%, where
Accrued and actual executive STIB payments
Actual STIB payments granted to each executive are made in the next Financial Year (usually in October (60%) and the following
April (40%)), when the audited consolidated financial statements of the Company for the Relevant Financial Year are known and
the maximum executive STIB Cash pool (CEXEC) has been determined.
2015 Financial Year
2014 Financial Year
basis.
Objective
Based on the CEXEC calculation formula and forecast consolidated financial results, no aggregate executive STIB Cash bonus
(First Part) was accrued in the 2015 consolidated financial statements. In addition, no Discretionary Cash bonus (Second Part)
has been approved for payment in relation to the 2015 financial year.
Based on the CEXEC calculation formula and forecast consolidated financial results, no aggregate executive STIB Cash bonus
(First Part) was accrued in the 2014 consolidated financial statements. In July 2014, the Remuneration Committee determined
that the Company, Managing Director, executives, and employees acted and performed in a manner consistent with the
Company’s Core Values, with the exception of Core Value One, during the 2014 Financial Year and approved the payment, in
the 2015 Financial Year, of a Discretionary Cash bonus (Second Part) allocated on an individual-by-individual performance
The short term incentive variable remuneration component of the Group’s KMP is detailed in Table 1 on pages 35.
(iii) Variable Remuneration - Long Term Incentive (LTI)
The objective of the LTI program is to reward and incentivise executives in a manner which aligns this element of remuneration
with the creation of shareholder wealth. The Company’s performance during the 2015 financial year and for the previous four
financial years, and its impact on shareholder wealth, is summarised in the table below.
Year Ended 30 June
Revenue and other income ($'000)
Cost of production ($'000)
Royalties ($'000)
Exploration and evaluation ($'000)
Other expenses ($'000)
Depreciation and amortisation ($'000)
Impairment/write-back of assets ($'000)
Finance costs ($'000)
Profit /(loss) before tax ($'000)
Income tax benefit (expense) (‘000)
Net profit/(loss) after tax ($'000)
Basic earnings/(loss) per share (cents)
Dividends per share (cents)
Dividends payout ratio (%)
Market capitalisation ($'000)
Closing share price ($ per share)
Return on equity (%)
2015
200,280
(155,020)
(11,948)
(12,912)
(9,817)
(62,123)
11,864
(998)
(40,674)
11,827
(28,847)
(9.0)
1.0
-
149,462
0.465
(18.1)
2014
239,505
(153,549)
(11,313)
(3,186)
(8,478)
(59,656)
(13,119)
(1,334)
(11,130)
1,808
(9,322)
(3.1)
2.0
-
267,489
0.83
(6.2)
2013
185,590
(145,012)
(9,283)
(2,682)
(11,625)
(54,386)
(8,026)
(1,563)
(46,987)
15,302
(31,685)
(12.5)
1.0
-
52,135
0.20
(22.9)
2012
233,549
(159,343)
(11,421)
(6,704)
(17,160)
(51,438)
(7,202)
(1,590)
(21,309)
3,097
(18,212)
(8.6)
2.0
-
145,616
0.61
(15.3)
2011
254,047
(136,681)
(12,596)
(6,303)
(14,651)
(46,073)
(5,536)
(1,424)
30,783
(10,154)
20,629
10.0
6.0
60.0
362,339
1.75
20.0
From 1 July 2014, LTI grants to executives are delivered in the form of performance rights to shares issued under the 2010
Panoramic Resources Limited Employee Share Plan (“2010 ES Plan”), which was re-approved by the Company’s shareholders
on 30 July 2014 for ASX Listing Rule purposes.
Under the structure, executives and senior employees will be invited each year to receive a new grant of performance rights to
shares every year under the 2010 ES Plan, such that the LTI grant will now form a key component of their remuneration package.
The LTI dollar value that senior executives and other senior employees will be entitled to receive is set at a fixed percentage of
their annual Fixed Remuneration (base salary plus statutory superannuation) and will range from 35% to 100% of Fixed
Remuneration depending on level and seniority. The number of performance rights to shares to be granted is determined by
dividing the LTI dollar value by the fair value (“FV”) of one performance right (as determined by an independent valuer). For the
FY2015 grant of performance rights, except for the Managing Director, the FV at 1 July 2014 was externally determined at $0.67.
P = Earnings Before Interest and Tax (“EBIT”) of the Company (on a consolidated basis) for the Relevant Financial Year.
Performance Conditions
Performance rights will vest subject to meeting service and performance conditions as defined below:
• 75% of the performance rights will be performance tested against the relative total shareholder return (“TSR”) measure over a
3 year period; and
• 25% of the performance rights will be performance tested against the reserve/resource growth over a 3 year period.
The performance conditions above that were endorsed by the Board and subsequently approved by shareholders on 30 July
2014, were chosen as they matched similar split performance conditions used in LTI Plans of other ASX listed resource
companies.
The Company’s TSR will be measured at the end of each financial year against a customised peer group, which for the FY2015
grant of performance rights for the 3 year period commencing 1 July 2014, comprised the following companies:
- Aditya Birla Minerals Limited
- Altona Mining Limited
- Aurelia Metals Limited
- CuDeco Limited
- Heron Resources Limited
- Hillgrove Resources Limited
- Hot Chili Ltd
- Indophil Resources NL
- Mincor Resources NL
- Rex Minerals Limited
- Sandfire Resources NL
- Sirius Resources NL
- Poseidon Nickel Limited
- Western Areas Ltd
The following table sets out the vesting outcome based on the Company’s relative TSR performance:
Relative TSR Rank
Below 50% percentile
At or above the 50th percentile but below the 75th
percentile
At or above 75th percentile
% of Performance Rights
No Performance Rights vesting
50% to 99% vesting (pro-rata on a straight–line basis) of
the Performance Rights
100% of Performance Rights vesting
The second performance hurdle is the Company’s metal reserve/resource growth net of depletion. Broadly, the quantum of the
increase in reserves/resources will determine the number of performances rights to vest.
2 0 1 5 A N N U A L R E P O R T | P A G E 3 1
DIRECTORS’ REPORTFOR THE FINANCIAL YEAR ENDED 30 JUNE 2015
The following table sets out the vesting outcome based on the Company’s metal reserve/resource growth performance:
Reserves and Resources Growth Performance
Reserves and Resources depleted
Reserves and Resources maintained
Reserves and Resources grown by up to 30%
Reserves and Reserves grown by 30% or more
% of Performance Rights vesting
No Performance Rights vesting
50% vesting of the Performance Rights
Between 50% and 100% vesting (pro-rata on a straight–line
basis) of the Performance Rights
100% of Performance Rights vesting
There will be no retesting of performance hurdles. It is only if one or both of these performance hurdles are passed and the 3 year
service condition is met that the performance rights can be exercised into Shares.
No Hedging Contracts on LTI Grants
The Company does not permit executives to enter into contracts to hedge their exposure to options or performance rights to
shares granted as part of their remuneration package. This policy is strictly enforced by the Managing Director under the
Company’s Share Trading Policy detailed in the Corporate Governance Statement on page 40.
Table 3 on pages 36 to 38 provides details of performance rights to shares granted as compensation to the Managing Director
and the named executives.
(h) Employment contracts
(i)
Non-Executive Chairman
The Non-Executive Chairman, Brian Phillips, commenced in his role on 17 November 2011 under the following terms:
•
•
•
Brian Phillips may resign from his position and thus terminate his directorship on written notice.
The Company must provide 6 months written notice or provide payment in lieu of the notice period ($80,798), based
on the fixed component of Brian Phillips’ remuneration if termination is initiated by the Company, except where
termination is from serious misconduct.
The Company may terminate his directorship at any time without notice if serious misconduct has occurred. In this
situation, the Non-Executive Chairman is only entitled to that portion of remuneration which is fixed, and only up to
the date of termination.
(ii) Non-Executive Directors
All other non-executive directors conduct their duties under the following terms:
•
•
A non-executive director may resign from his position and thus terminate this contract on written notice.
The Company may terminate a directorship by providing 6 months’ written notice or provide payment in lieu of the
notice period (based on the fixed component of the non-executive director’s remuneration) if termination is initiated
by the Company, except where termination is from serious misconduct.
Non-Executive Director
Christopher Langdon
John Rowe
Amount payable on
termination
$56,315
$56,315
•
The Company may terminate a directorship at any time without notice if serious misconduct has occurred. Where
termination with such cause occurs the non-executive director is only entitled to that portion of remuneration which is
fixed, and only up to the date of termination.
(iii) Managing Director
The Managing Director, Peter Harold, is employed under a contract that commenced on 1 January 2010. The key features of his
employment contract (Contract) are:
•
•
The term of the Contract was initially for a minimum of 12 months, and is now able to be terminated on 6 months
notice from Peter Harold, and on 12 months notice from the Company. Termination is immediate (with no payment in
lieu of notice) under certain events. Since 1 January 2011, the fixed remuneration per annum of Peter Harold’s
Contract is subject to review on an annual basis.
The Company may make STIB payments to Peter Harold, firstly, up to a maximum of 75% of Peter Harold’s fixed
remuneration per annum under the First Part (Financial Performance) of the executive STIB scheme, and secondly,
up to a maximum of 25% of Peter Harold’s fixed remuneration per annum under the discretionary Second Part (Core
P A G E 3 2 | 2 0 1 5 A N N U A L R E P O R T
DIRECTORS’ REPORTFOR THE FINANCIAL YEAR ENDED 30 JUNE 2015 The following table sets out the vesting outcome based on the Company’s metal reserve/resource growth performance:
Reserves and Resources Growth Performance
Reserves and Resources depleted
Reserves and Resources maintained
% of Performance Rights vesting
No Performance Rights vesting
50% vesting of the Performance Rights
Reserves and Resources grown by up to 30%
Between 50% and 100% vesting (pro-rata on a straight–line
Reserves and Reserves grown by 30% or more
basis) of the Performance Rights
100% of Performance Rights vesting
There will be no retesting of performance hurdles. It is only if one or both of these performance hurdles are passed and the 3 year
service condition is met that the performance rights can be exercised into Shares.
No Hedging Contracts on LTI Grants
The Company does not permit executives to enter into contracts to hedge their exposure to options or performance rights to
shares granted as part of their remuneration package. This policy is strictly enforced by the Managing Director under the
Company’s Share Trading Policy detailed in the Corporate Governance Statement on page 40.
Table 3 on pages 36 to 38 provides details of performance rights to shares granted as compensation to the Managing Director
and the named executives.
(h) Employment contracts
(i)
Non-Executive Chairman
the date of termination.
(ii) Non-Executive Directors
The Non-Executive Chairman, Brian Phillips, commenced in his role on 17 November 2011 under the following terms:
Brian Phillips may resign from his position and thus terminate his directorship on written notice.
The Company must provide 6 months written notice or provide payment in lieu of the notice period ($80,798), based
on the fixed component of Brian Phillips’ remuneration if termination is initiated by the Company, except where
termination is from serious misconduct.
The Company may terminate his directorship at any time without notice if serious misconduct has occurred. In this
situation, the Non-Executive Chairman is only entitled to that portion of remuneration which is fixed, and only up to
All other non-executive directors conduct their duties under the following terms:
A non-executive director may resign from his position and thus terminate this contract on written notice.
The Company may terminate a directorship by providing 6 months’ written notice or provide payment in lieu of the
notice period (based on the fixed component of the non-executive director’s remuneration) if termination is initiated
by the Company, except where termination is from serious misconduct.
Non-Executive Director
Christopher Langdon
John Rowe
Amount payable on
termination
$56,315
$56,315
•
The Company may terminate a directorship at any time without notice if serious misconduct has occurred. Where
termination with such cause occurs the non-executive director is only entitled to that portion of remuneration which is
fixed, and only up to the date of termination.
(iii) Managing Director
The Managing Director, Peter Harold, is employed under a contract that commenced on 1 January 2010. The key features of his
employment contract (Contract) are:
The term of the Contract was initially for a minimum of 12 months, and is now able to be terminated on 6 months
notice from Peter Harold, and on 12 months notice from the Company. Termination is immediate (with no payment in
lieu of notice) under certain events. Since 1 January 2011, the fixed remuneration per annum of Peter Harold’s
Contract is subject to review on an annual basis.
The Company may make STIB payments to Peter Harold, firstly, up to a maximum of 75% of Peter Harold’s fixed
remuneration per annum under the First Part (Financial Performance) of the executive STIB scheme, and secondly,
up to a maximum of 25% of Peter Harold’s fixed remuneration per annum under the discretionary Second Part (Core
•
•
•
•
•
•
•
Values) of the executive STIB scheme. The Cash bonus under the First Part (Financial Performance) of the
executive STIB scheme will be calculated at the end of the Relevant Financial Year using figures obtained from the
audited consolidated financial statements of the Company for the Relevant Financial Year, in accordance with the
following formula:
CPH = the Cash bonus to be paid to Peter Harold for the Relevant Financial Year;
CPH = [P (E x 15%)] x 2.5%, where
P = Earnings Before Interest and Tax (“EBIT”) of the Company (on a consolidated basis) for the Relevant Financial Year;
E = the average of (1) the “Total Assets” line item of the audited consolidated balance sheet of the Company (on a
consolidated basis) for the Relevant Financial Year and (2) the “Total Assets” line item of the audited consolidated balance
sheet of the Company for the year immediately preceding the Relevant Financial Year. “Total Assets” includes current and
non-current assets.
•
•
•
•
Peter Harold may resign from his position and thus terminate the Contract by giving 6 months written notice. Any
vested unlisted options not exercised, if applicable, will be forfeited 4 weeks after notice of resignation. Peter Harold
will not receive any accrued benefits of the executive STIB scheme in the event that he gives notice.
Peter Harold accrues 5 weeks of annual leave entitlements per year and 13 weeks of long serve leave entitlements
for every 10 years of service.
If the Company terminates Peter Harold’s Contract, other than lawfully in accordance with its terms, Peter Harold will
be entitled to be paid his accrued First Part (Financial Performance) executive STIB at the time notice of the
termination is given based on the calculated STIB at the end of the previous quarter in the Relevant Financial Year,
up to the maximum of 75% of Peter Harold’s fixed remuneration per annum. Any payment of a Cash bonus under
the Second Part (Core Values) of the executive STIB scheme will be at the discretion of the Remuneration
Committee. If Peter Harold works out the whole or any part of his notice period, he will be entitled to his accrued First
Part (Financial Performance) executive STIB during the period after the notice is given until such time as he stops
working.
If there is a Change of Control Event, Peter Harold will be entitled to paid his accrued First Part (Financial
Performance) executive STIB at the time of the Change of Control based on the calculated STIB at the end of the
previous quarter in the Relevant Financial Year, up to the maximum of 75% of Peter Harold’s fixed remuneration per
annum. Any payment of a Cash bonus under the Second Part (Core Values) of the executive STIB scheme will be at
the discretion of the Board of Directors. If the Board of Directors is unable to determine for any reason the accrued
and discretionary benefits to Peter Harold under the executive STIB scheme, Peter Harold will be entitled to be paid
an accrued STIB based on 100% of Peter Harold’s fixed remuneration per annum.
• From 1 July 2014 for the granting of performance rights to shares at zero cost under the 2010 ES Plan, subject to
shareholder approval each year, Peter Harold will be entitled to receive 100% of his annual Fixed Remuneration in
performance rights to shares. On 30 July 2014 at a General Meeting of shareholders, Peter Harold was granted
904,601 FY2015 performance rights at zero cost under the 2010 ES Plan. The FV of each performance right on 30
July 2014 was externally determined at $0.71
•
•
•
Prior to 1 July 2014, Peter Harold was granted a fixed allocation of performance rights at zero cost over two tranches
under the 2010 ES Plan. The vesting date of Tranche 1 of performance rights was 1 July 2013 and the vesting
date of Tranche 2 of performance rights was 31 December 2013. The performance conditions for the
vesting of each of these two Tranches of performance rights were not satisfied and lapsed with no shares
in the Company being allotted to Peter Harold. As a result, no actual value was received by Peter Harold.
If Peter Harold is terminated after a Change of Control of the Company, other than lawfully in accordance with its
terms, then, the Company may determine in its sole and absolute discretion, the manner in which granted
performance rights will be dealt with, including (but not limited to) allowing Peter Harold to exercise all or a proportion
of their performance rights within such time as determined, after which the performance rights will lapse.
The terms and conditions of the FY2015 performance rights under the 2010 ES Plan are provided from page 30.
2 0 1 5 A N N U A L R E P O R T | P A G E 3 3
DIRECTORS’ REPORTFOR THE FINANCIAL YEAR ENDED 30 JUNE 2015 (iv) Other Named Executives
All other named executives are employed under individual open common law employment contracts. These executives and the
commencement date of their contracts are as follows:
Named Executive
Trevor Eton
Terry Strong
Angus Thomson
Christopher Williams
John Hicks
Tracey Ram
Tim Mason
Mark Recklies
Date of Current Employment
Contract
8 January 2013
6 February 2013
8 January 2013
6 February 2013
14 March 2014
1 January 2013
7 May 2014
23 January 2013
Position
Chief Financial Officer & Company Secretary
Chief Operating Officer
Executive GM - Business Development
General Manager - Project Dev' & Tech Services
General Manager - Exploration
General Manager - Human Resources
Operations Manager - Lanfranchi Project
Operations Manager - Savannah Project
The common key features of the above named executives’ employment contracts are:
•
•
•
•
•
•
•
Each may resign from his position and thus terminate his contract by giving 3 months written notice. Any vested
unlisted options not exercised will be forfeited 4 weeks from the date of resignation.
The Company may terminate a named executive’s employment contract by providing 4 months written notice or
provide payment based on each named executive’s fixed remuneration per annum in lieu of the notice period. In the
event of a termination in employment through a Change in Control of the Company, the Company will provide 6
months written notice or provide payment based on each named executive’s fixed remuneration per annum in lieu of
notice.
The Company may terminate the contract at any time without notice if serious misconduct has occurred. When
termination with such cause occurs, the named executive is only entitled to that portion of remuneration which is
fixed, and only up to the date that notice of termination is given. On termination with such cause, any unvested
options or LTI grants in the form of performance rights will immediately be forfeited. Any vested unlisted options not
exercised within 4 weeks of such notice of termination will be forfeited.
If a named executive is terminated after a Change of Control of the Company, other than lawfully in accordance with
its terms, then, the Company may determine in its sole and absolute discretion, the manner in which granted
performance rights will be dealt with, including (but not limited to) allowing the named executive to exercise all or a
proportion of their performance rights within such time as determined, after which the performance rights will lapse.
Each named executive accrues 4 weeks of annual leave entitlements per year and 13 weeks of long serve leave
entitlements for every 10 years of service.
From 1 July 2014 for the granting of performance rights to shares at zero cost under the 2010 ES Plan, each named
executive, depending on level and seniority, will be entitled to receive 35% to 75% of their annual Fixed
Remuneration in performance rights. Each of the named executives were granted FY2015 performance rights at
zero cost under the 2010 ES Plan, are shown in Table 3 on page 37. The terms and conditions of FY2015 LTI grants
under the 2010 ES Plan are provided from page 30:
Prior to 1 July 2014, the named executives were granted a fixed allocation of performance rights at zero cost over
two tranches under the 2010 ES Plan. The vesting date of Tranche 1 of performance rights was 1 July 2013
and the vesting date of Tranche 2 of performance rights was 31 December 2013. The performance
conditions for the vesting of each of these two Tranches of performance rights were not satisfied and
lapsed with no shares in the Company being allotted to the named executives. As a result, no actual value
was received by each of the named executive.
P A G E 3 4 | 2 0 1 5 A N N U A L R E P O R T
DIRECTORS’ REPORTFOR THE FINANCIAL YEAR ENDED 30 JUNE 2015
(iv) Other Named Executives
All other named executives are employed under individual open common law employment contracts. These executives and the
commencement date of their contracts are as follows:
Named Executive
Contract
Position
Date of Current Employment
Trevor Eton
Terry Strong
Angus Thomson
Christopher Williams
John Hicks
Tracey Ram
Tim Mason
Mark Recklies
8 January 2013
6 February 2013
8 January 2013
6 February 2013
14 March 2014
1 January 2013
7 May 2014
23 January 2013
Chief Financial Officer & Company Secretary
Chief Operating Officer
Executive GM - Business Development
General Manager - Project Dev' & Tech Services
General Manager - Exploration
General Manager - Human Resources
Operations Manager - Lanfranchi Project
Operations Manager - Savannah Project
The common key features of the above named executives’ employment contracts are:
•
•
•
•
Each may resign from his position and thus terminate his contract by giving 3 months written notice. Any vested
unlisted options not exercised will be forfeited 4 weeks from the date of resignation.
The Company may terminate a named executive’s employment contract by providing 4 months written notice or
provide payment based on each named executive’s fixed remuneration per annum in lieu of the notice period. In the
event of a termination in employment through a Change in Control of the Company, the Company will provide 6
months written notice or provide payment based on each named executive’s fixed remuneration per annum in lieu of
notice.
•
The Company may terminate the contract at any time without notice if serious misconduct has occurred. When
termination with such cause occurs, the named executive is only entitled to that portion of remuneration which is
fixed, and only up to the date that notice of termination is given. On termination with such cause, any unvested
options or LTI grants in the form of performance rights will immediately be forfeited. Any vested unlisted options not
exercised within 4 weeks of such notice of termination will be forfeited.
•
If a named executive is terminated after a Change of Control of the Company, other than lawfully in accordance with
its terms, then, the Company may determine in its sole and absolute discretion, the manner in which granted
performance rights will be dealt with, including (but not limited to) allowing the named executive to exercise all or a
proportion of their performance rights within such time as determined, after which the performance rights will lapse.
Each named executive accrues 4 weeks of annual leave entitlements per year and 13 weeks of long serve leave
entitlements for every 10 years of service.
From 1 July 2014 for the granting of performance rights to shares at zero cost under the 2010 ES Plan, each named
executive, depending on level and seniority, will be entitled to receive 35% to 75% of their annual Fixed
Remuneration in performance rights. Each of the named executives were granted FY2015 performance rights at
zero cost under the 2010 ES Plan, are shown in Table 3 on page 37. The terms and conditions of FY2015 LTI grants
under the 2010 ES Plan are provided from page 30:
•
Prior to 1 July 2014, the named executives were granted a fixed allocation of performance rights at zero cost over
two tranches under the 2010 ES Plan. The vesting date of Tranche 1 of performance rights was 1 July 2013
and the vesting date of Tranche 2 of performance rights was 31 December 2013. The performance
conditions for the vesting of each of these two Tranches of performance rights were not satisfied and
lapsed with no shares in the Company being allotted to the named executives. As a result, no actual value
was received by each of the named executive.
$
-
-
-
$
-
-
-
(i) Details of Remuneration
Table 1: Remuneration of Directors and Executives Officers
The remuneration in Table 1 of each named person is the total of fixed remuneration (base salary, superannuation and
non-monetary benefits) and variable remuneration (short term and long term incentives).
Excluding the cash component of remuneration, the total remuneration shown is the amount expensed by the Company and
does not, in every case, represent what each named individual ultimately received in cash.
2015
Name
Non-executive
directors
C D J Langdon
J Rowe
B M Phillips
Executive directors
P J Harold
Executives
T R Eton
T J Strong
C J Williams
J D Hicks
M A Recklies
T S Mason
A Thompson
T M Ram
Short-term benefits
Cash
salary and
fees
Bonus
(a)
$
112,630
112,630
161,597
$
-
-
-
Other
$
4,555
4,555
4,555
553,500
151,217
11,210
66,948
300,600
302,250
300,600
230,000
261,250
220,000
230,000
172,321
30,000
43,125
-
30,000
30,000
30,000
30,000
22,500
11,210
4,555
4,555
11,210
4,555
4,555
10,985
10,985
31,407
32,811
28,557
24,700
27,669
23,750
24,700
18,508
2,957,377 366,842
87,487
279,050
Post
employment
benefits
Super-
annuation
Retirement
Benefits
Share
based
payments
Rights to
shares
(b)
Termination /
Resignation
payments
$
-
-
-
-
-
-
-
-
-
-
-
-
$
-
-
-
-
201,290
63,935
63,935
42,623
32,613
37,044
31,195
48,919
16,874
538.426
$
-
-
-
-
-
-
-
-
-
-
-
-
Total
$
117,185
117,185
166,152
-
984,165
437,152
446,675
376,335
328,523
360,518
309,500
344,604
241,188
4,229,182
Performance
related
%
-
-
-
36
21
24
11
19
19
20
23
16
21
(a) Cash bonuses paid are in relation to the 2014 financial year
(b) Includes the non-cash amortisation expense for the period of the FY2015 LTI performance rights to shares
2014
Name
Short-term benefits
Post
employment
benefits
Cash
salary and
fees
Bonus
Other
Super-
annuation
Retirement
Benefits
Share
based
payments
Rights to
shares
(a)/(b)
Termination /
Resignation
payments
$
$
$
Non-executive
directors
C D J Langdon
J Rowe
B M Phillips
Executive directors
P J Harold
Executives
T R Eton
T J Strong
C J Williams
J D Hicks
M A Recklies
T S Mason
A Thompson (c)
T M Ram (d)
112,630
112,630
161,597
553,500
300,600
283,500
300,600
224,563
261,250
220,000
190,379
175,550
2,896,799
-
-
-
-
-
-
-
-
-
-
-
-
-
$
-
-
-
-
-
-
-
-
-
-
-
-
-
$
-
-
-
120,442
66,042
44,215
66,042
44,215
8,955
5,597
8,030
8,030
371,568
$
-
-
-
-
-
-
-
-
-
-
-
-
-
4,555
4,555
4,555
10,683
51,199
10,683
4,555
4,555
10,683
4,555
4,555
10,458
10,458
27,806
26,224
27,806
20,341
24,166
20,350
17,610
16,238
84,850
231,740
Total
$
117,185
117,185
166,152
735,824
405,131
358,494
399,003
299,802
298,926
250,502
226,477
210,276
3,584,957
Performance
related
%
-
-
-
16
16
12
17
15
3
2
4
4
10
(a) Includes the non-cash amortisation expense of Tranche 1 of the 2010 LTI performance rights to shares, which subsequently lapsed with no benefit to the holder on 1
July 2013
(b) Includes the non-cash amortisation expense of Tranche 2 of the 2010 LTI performance rights to shares, which subsequently lapsed with no benefit to the holder on
31 December 2013
(c) From 19 July 2013
(d) From 19 July 2013
2 0 1 5 A N N U A L R E P O R T | P A G E 3 5
DIRECTORS’ REPORTFOR THE FINANCIAL YEAR ENDED 30 JUNE 2015
(j) Details of share based compensation and bonuses
Securities granted as part of remuneration during the year
Table 2 : Securities granted as part of remuneration during the year
Options - 2014/15
No options were granted during 2014/15.
Performance Rights to Shares - 2014/15
Performance rights to shares granted as compensation to key management personnel are shown in Table 3 on page 38.
Options - 2013/14
No options were granted during 2013/14.
Performance Rights to Shares - 2013/14
No performance rights to shares were granted during 2013/14.
The FV of one performance right is determined using a Binomial valuation model (for non-market vesting conditions) and a
Monte Carlo simulation model (for market vesting conditions), that takes into account the share price at grant date and expected
price volatility of the underlying Share, the expected dividend yield and the risk-free rate for the term of the right at the date of
grant.
There were no ordinary shares issued to key management personnel on the exercise of securities during the financial year and
there have been no ordinary shares issued to key management personnel on the exercise of securities since 30 June 2015.
(a) Equity instrument disclosures relating to key management personnel
Securities provided as remuneration
Details of securities provided as remuneration are shown in Table 3. The terms and conditions of the securities are provided from
page 30.
Security holdings
The number of securities over ordinary shares in the company held during the financial year by each director of Panoramic
Resources Limited and other key management personnel of the Group, including their personally related parties are provided in
the following table. In the table provided, performance rights to shares are separately identified.
Table 3 : Securities holdings of directors and specified executives
2015
Performance Rights
Directors of Panoramic Resources
Limited
P J Harold
Other key management personnel of
the Group
T R Eton
T J Strong
C J Williams
J D Hicks
M A Recklies
T S Mason
A S Thomson
T M Ram
Balance at
start of the
year
Granted as
compen-
sation
Exercised
Other
changes
Balance at
end of the
year
Vested and
exercisable Unvested
-
-
-
-
-
-
-
-
-
-
904,601
368,459
368,459
245,640
187,948
213,484
179,776
281,922
97,243
2,847,532
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
904,601
368,459
368,459
245,640
187,948
213,484
179,776
281,922
97,243
2,847,532
-
-
-
-
-
-
-
-
-
-
904,601
368,459
368,459
245,640
187,948
213,484
179,776
281,922
97,243
2,847,532
P A G E 3 6 | 2 0 1 5 A N N U A L R E P O R T
DIRECTORS’ REPORTFOR THE FINANCIAL YEAR ENDED 30 JUNE 2015 (j) Details of share based compensation and bonuses
Securities granted as part of remuneration during the year
Table 2 : Securities granted as part of remuneration during the year
Options - 2014/15
No options were granted during 2014/15.
Performance Rights to Shares - 2014/15
Options - 2013/14
No options were granted during 2013/14.
Performance Rights to Shares - 2013/14
Performance rights to shares granted as compensation to key management personnel are shown in Table 3 on page 38.
No performance rights to shares were granted during 2013/14.
The FV of one performance right is determined using a Binomial valuation model (for non-market vesting conditions) and a
Monte Carlo simulation model (for market vesting conditions), that takes into account the share price at grant date and expected
price volatility of the underlying Share, the expected dividend yield and the risk-free rate for the term of the right at the date of
grant.
There were no ordinary shares issued to key management personnel on the exercise of securities during the financial year and
there have been no ordinary shares issued to key management personnel on the exercise of securities since 30 June 2015.
(a) Equity instrument disclosures relating to key management personnel
Securities provided as remuneration
Details of securities provided as remuneration are shown in Table 3. The terms and conditions of the securities are provided from
page 30.
Security holdings
The number of securities over ordinary shares in the company held during the financial year by each director of Panoramic
Resources Limited and other key management personnel of the Group, including their personally related parties are provided in
the following table. In the table provided, performance rights to shares are separately identified.
Table 3 : Securities holdings of directors and specified executives
2015
Performance Rights
Directors of Panoramic Resources
Other key management personnel of
Limited
P J Harold
the Group
T R Eton
T J Strong
C J Williams
J D Hicks
M A Recklies
T S Mason
A S Thomson
T M Ram
Balance at
start of the
year
Granted as
compen-
sation
Balance at
end of the
Vested and
Other
changes
Exercised
year
exercisable Unvested
904,601
904,601
-
-
-
-
-
-
-
-
-
-
904,601
368,459
368,459
245,640
187,948
213,484
179,776
281,922
97,243
2,847,532
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
368,459
368,459
245,640
187,948
213,484
179,776
281,922
97,243
-
-
-
-
-
-
-
-
-
-
368,459
368,459
245,640
187,948
213,484
179,776
281,922
97,243
2,847,532
2,847,532
2014
Performance Rights
Directors of Panoramic Resources
Limited
P J Harold
Other key management personnel of
the Group
T R Eton
T J Strong
C J Williams
J D Hicks
T M Ram
M A Recklies
T S Mason
A S Thomson
Balance at
start of the
year
Granted as
compen-
sation
Exercised
Other
changes #
Balance at
end of the
year
Vested and
exercisable Unvested
520,000
-
-
(520,000)
-
-
295,000
197,500
295,000
197,500
40,000
40,000
25,000
40,000
1,650,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(295,000)
(197,500)
(295,000)
(197,500)
(40,000)
(40,000)
(25,000)
(40,000)
(1,650,000)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
# Other changes relate to performance rights where performance hurdles were not achieved
Share holdings
The numbers of shares in the Company held during the financial year by each director of Panoramic Resources Limited
and other key management personnel of the Group, including their personally related parties, are set out below. There
were no shares granted during the reporting period as remuneration.
2015
Balance at
the start of
the year
Received during
the year on the
exercise of options
Received on
vesting of rights to
deferred shares
Other
changes
during the
year
Balance at
end of the
year
Name
Directors of Panoramic Resources Limited
Ordinary shares
P J Harold
C D J Langdon
J Rowe
B M Philips
Other key management personnel of the Group
Ordinary shares
T R Eton
T J Strong
A S Thomson
C J Williams
J D Hicks
T M Ram
M A Recklies
T S Mason
2014
3,490,785
43,518
65,555
65,555
100,000
188,000
-
155,000
204,500
-
100,000
1,560
4,414,473
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3,490,785
43,518
65,555
65,555
(50,000)
-
-
-
-
-
-
-
(50,000)
50,000
188,000
-
155,000
204,500
-
100,000
1,560
4,364,473
Balance at
the start of
the year
Received during
the year on the
exercise of options
Received on
vesting of rights to
deferred shares
Other
changes
during the
year#
Balance at
end of the
year
Name
Directors of Panoramic Resources Limited
Ordinary shares
P J Harold
C D J Langdon
J Rowe
B M Philips
Other key management personnel of the Group
Ordinary shares
T R Eton
T J Strong
C J Williams
M A Recklies
J D Hicks
T S Mason
3,490,785
25,000
10,000
10,000
100,000
188,000
155,000
100,000
204,500
1,560
4,284,845
2 0 1 5 A N N U A L R E P O R T | P A G E 3 7
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
18,518
55,555
55,555
3,490,785
43,518
65,555
65,555
-
-
-
-
-
-
129,628
100,000
188,000
155,000
100,000
204,500
1,560
4,414,473
DIRECTORS’ REPORTFOR THE FINANCIAL YEAR ENDED 30 JUNE 2015 # Other changes represent the participation in the January 2014 share purchase plan.
All equity transactions with key management personnel other than those arising from the exercise of options or performance
rights to shares have been entered into on terms and conditions no more favourable that those the Group would have adopted if
dealing at arm's length.
Securities granted and exercised as part of remuneration for the year ended 30 June 2015 and 30 June 2014
2015
(i) Performance Rights
P J Harold
T R Eton
T J Strong
C J Williams
J D Hicks
M A Recklies
A S Thomson
T S Mason
T M Ram
Value of securities
granted during the
year
$
Value of securities
exercised during
the year
$
Value of securities
lapsed during the
year
$
Remuneration
consisting of
securities for the
year
$
606,083
224,760
224,760
149,840
114,648
130,225
171,972
109,663
59,318
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
43.6%
37.6%
37.0%
31.0%
27.9%
28.7%
36.8%
28.3%
20.9%
Note: the value for each performance right to a share granted in 2014/15 to P J. Harold is $0.71 (the fair value (FV) determined on 30 July 2014).
The value for each performance right to a share granted in 2014/15 to the other named executives is $0.67 (the fair value (FV) determined on 1
July 2014)
2014
(i) Performance Rights
P J Harold
T R Eton
T J Strong
C J Williams
J D Hicks
M A Recklies
R J Thorburn
T S Mason
Value of securities
granted during the
year
$
Value of securities
exercised during
the year
$
Value of securities
lapsed during the
year
$
Remuneration
consisting of
securities for the
year
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
836,545
403,791
270,336
403,791
270,336
54,752
54,752
34,219
-
-
-
-
-
-
-
-
Note: the value of performance rights to shares lapsed includes the value of the securities that did not vest and in the case of employees having
left the Company during the period, the total value of securities foregone. The fair value of a lapsed security is based on the share price at the date
the right to the security lapsed.
There were no alterations to the terms and conditions of securities granted as remuneration since their grant date.
There were no forfeitures during the period.
There were no loans to directors or other key management personnel at any time during the year ended 30 June 2015. There
were no transactions involving key management personnel other than compensation and transaction concerning shares and
performance rights to shares as discussed in the remuneration report.
This marks the end of the 2015 Remuneration Report.
P A G E 3 8 | 2 0 1 5 A N N U A L R E P O R T
DIRECTORS’ REPORTFOR THE FINANCIAL YEAR ENDED 30 JUNE 2015 # Other changes represent the participation in the January 2014 share purchase plan.
ENVIRONMENTAL REGULATION
All equity transactions with key management personnel other than those arising from the exercise of options or performance
rights to shares have been entered into on terms and conditions no more favourable that those the Group would have adopted if
dealing at arm's length.
The Group’s operations are subject to significant environmental regulations under both Commonwealth and State
legislation in relation to its mining and exploration activities. The Group’s management monitors compliance with the
relevant environmental legislation. The directors are not aware of any breaches of the legislation during the period
covered by this report.
Securities granted and exercised as part of remuneration for the year ended 30 June 2015 and 30 June 2014
ROUNDING OF AMOUNTS
Value of securities
Value of securities
Value of securities
granted during the
exercised during
lapsed during the
securities for the
Remuneration
consisting of
the year
year
$
(i) Performance Rights
2015
P J Harold
T R Eton
T J Strong
C J Williams
J D Hicks
M A Recklies
A S Thomson
T S Mason
T M Ram
July 2014)
2014
P J Harold
T R Eton
T J Strong
C J Williams
J D Hicks
M A Recklies
R J Thorburn
T S Mason
year
$
606,083
224,760
224,760
149,840
114,648
130,225
171,972
109,663
59,318
-
-
-
-
-
-
-
-
$
-
-
-
-
-
-
-
-
-
$
-
-
-
-
-
-
-
-
year
$
43.6%
37.6%
37.0%
31.0%
27.9%
28.7%
36.8%
28.3%
20.9%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
year
$
836,545
403,791
270,336
403,791
270,336
54,752
54,752
34,219
Note: the value for each performance right to a share granted in 2014/15 to P J. Harold is $0.71 (the fair value (FV) determined on 30 July 2014).
The value for each performance right to a share granted in 2014/15 to the other named executives is $0.67 (the fair value (FV) determined on 1
Value of securities
Value of securities
Value of securities
granted during the
exercised during
lapsed during the
securities for the
year
$
the year
Remuneration
consisting of
year
$
(i) Performance Rights
The amounts contained in this report and in the financial report have been rounded to the nearest $1,000 (where rounding is
applicable) under the option available to the Company under ASIC Class Order 98/0100. The Company is an entity to which the
Class Order applies.
AUDITOR'S INDEPENDENCE DECLARATION
Section 307C of the Corporations Act 2001 requires our auditors, Ernst & Young, to provide the directors of Panoramic
Resources Limited with an Independence Declaration in relation to the audit of the financial report for the year ended 30 June
2015. This Independence Declaration is attached to the Directors’ Report and forms a part of the Directors’ Report.
LEGAL MATTERS
In November 2014, the Federal Court made a Determination of native title in favour of the Ngadju People, the
consequence of which is that the Company’s tenements at the Lanfranchi Nickel Project are invalid to the extent that they
are inconsistent with the continued existence, enjoyment or exercise of native title rights held by the Ngadju People.
The Determination has been appealed by some of the Respondents to the Determination and the Company has been
joined as a non-participating Respondent Party to the Ngadju appeal proceedings, which are continuing as at the date of
this report.
NON-AUDIT SERVICES
The following non-audit services were provided by the entity’s auditor, Ernst & Young. The directors are satisfied that the
provision of non-audit 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 service provided means that auditor independence was not
compromised.
Ernst & Young received or are due to receive the following amounts for the provision of non-audit services:
Tax Compliance and other services of $221,890 (including $167,390 in relation to a review on prior period income tax returns)
Signed in accordance with a resolution of the directors.
Note: the value of performance rights to shares lapsed includes the value of the securities that did not vest and in the case of employees having
left the Company during the period, the total value of securities foregone. The fair value of a lapsed security is based on the share price at the date
the right to the security lapsed.
There were no alterations to the terms and conditions of securities granted as remuneration since their grant date.
There were no forfeitures during the period.
There were no loans to directors or other key management personnel at any time during the year ended 30 June 2015. There
were no transactions involving key management personnel other than compensation and transaction concerning shares and
performance rights to shares as discussed in the remuneration report.
This marks the end of the 2015 Remuneration Report.
Peter Harold
Managing Director
Perth, 28 August 2015
2 0 1 5 A N N U A L R E P O R T | P A G E 3 9
DIRECTORS’ REPORTFOR THE FINANCIAL YEAR ENDED 30 JUNE 2015 CORPORATE GOVERNANCE STATEMENT
The Board of Directors of Panoramic Resources Limited (“the Board”) is responsible for the corporate governance of the
Company. The Board guides and monitors the business and affairs of Panoramic Resources Limited on behalf of the
shareholders by whom they are elected and to whom they are accountable. The Company’s Corporate Governance Statement
(“Statement”) outlines the main corporate governance practices in place throughout the financial year, which comply with the
Australian Stock Exchange (“ASX”) Corporate Governance Council’s (“CGC”) Third Edition (March 2014) of the “Corporate
Governance Principles and Recommendations (“the Recommendations”), unless otherwise stated.
As required under ASX Listing Rule 4.10.3, the Company makes the following Board approved disclosures in relation to each of
the Recommendations as at 30 June 2015.
PRINCIPLE 1: LAY FOUNDATIONS FOR MANAGEMENT AND OVERSIGHT
Primary Role of the Board
The Board’s primary role is the protection and enhancement of long-term shareholder value.
Board Operation
To ensure the Board is well equipped to discharge its responsibilities, as substitute for a Board Charter it has established written
guidelines for the operation of the Board. A written guide on the roles of the Board and committees sets out the overriding
functions and responsibility of the Board, while a second guide sets out more specific guidelines on the statutory roles and on the
separate duties of the Managing Director to the rest of the Board. In addition, Article 11 of the Company’s Constitution (November
2008) (“Constitution”) details the specific powers and duties of directors as empowered on them by the Company’s shareholders.
All these documents can be accessed on the Company’s website at www.panoramicresources.com under the Corporate
Governance section.
Board Processes
The Board is responsible for the overall Corporate Governance of the Company including the strategic direction, establishing
goals for executive management and monitoring the achievement of these goals. The Board has established a framework for the
management of the Company and its controlled entities, a framework which divides the functions of running the Company
between the Board, the Managing Director and the senior executives. The Board has put in place a system of internal control, a
pro-active business risk management process, and has the task of monitoring financial performance and the establishment of
appropriate ethical standards. The agenda for meetings of the Board is prepared by the Managing Director. Standard items
include the project reports, financial reports, strategic matters, governance and compliance. Submissions are circulated in
advance. Senior executives are regularly involved in Board discussions.
The Company Secretary of the Company is directly accountable to the Board, through the Chairman, on all matters to do with the
proper functioning of the Board.
Roles of Management and the Evaluation of Management Performance
The Managing Director and the senior executives are ultimately responsible and accountable for the day to day running of the
Company and for implementing the strategic objectives and operating within the risk appetite set by the Board. The Board
regularly reviews the division of functions between the Board and the senior executives. The Board has in place a performance
appraisal and remuneration system for the Managing Director and senior executives designed to enhance performance and
Management performance is reviewed on an annual basis at the end of each calendar year and as appropriate. The last
performance appraisal of the Managing Director and senior executives was undertaken by the Remuneration Committee in April
2015. The criterion for the evaluation of the Managing Director and of each executive is their performance against key
performance indicators, behavior and effectiveness in role. In addition, the Board monitors and evaluates the performance of the
Managing Director and senior executives as appropriate.
Appointment of Directors and Management
The Company has in place an appropriate organisational and management structure to ensure the day to day running of the
Company is undertaken in an effective and efficient manner and to ensure the Company has the right mix of skills and resources
to implement and achieve the Board’s corporate and strategic objectives. The Board and the Managing Director regularly reviews
this structure to determine that it is appropriate and “fit for purpose” and if necessary make changes in the number of roles and
personnel.
The directors and senior executives have a clear understanding of their duties, roles and responsibilities and of the expectations
of them, as contained within a written agreement agreed and signed by the Company and each director and senior executive.
P A G E 4 0 | 2 0 1 5 A N N U A L R E P O R T
CORPORATE GOVERNANCE STATEMENT The Board of Directors of Panoramic Resources Limited (“the Board”) is responsible for the corporate governance of the
Company. The Board guides and monitors the business and affairs of Panoramic Resources Limited on behalf of the
shareholders by whom they are elected and to whom they are accountable. The Company’s Corporate Governance Statement
(“Statement”) outlines the main corporate governance practices in place throughout the financial year, which comply with the
Australian Stock Exchange (“ASX”) Corporate Governance Council’s (“CGC”) Third Edition (March 2014) of the “Corporate
Governance Principles and Recommendations (“the Recommendations”), unless otherwise stated.
As required under ASX Listing Rule 4.10.3, the Company makes the following Board approved disclosures in relation to each of
the Recommendations as at 30 June 2015.
PRINCIPLE 1: LAY FOUNDATIONS FOR MANAGEMENT AND OVERSIGHT
The Board’s primary role is the protection and enhancement of long-term shareholder value.
To ensure the Board is well equipped to discharge its responsibilities, as substitute for a Board Charter it has established written
guidelines for the operation of the Board. A written guide on the roles of the Board and committees sets out the overriding
functions and responsibility of the Board, while a second guide sets out more specific guidelines on the statutory roles and on the
separate duties of the Managing Director to the rest of the Board. In addition, Article 11 of the Company’s Constitution (November
2008) (“Constitution”) details the specific powers and duties of directors as empowered on them by the Company’s shareholders.
All these documents can be accessed on the Company’s website at www.panoramicresources.com under the Corporate
Primary Role of the Board
Board Operation
Governance section.
Board Processes
The Board is responsible for the overall Corporate Governance of the Company including the strategic direction, establishing
goals for executive management and monitoring the achievement of these goals. The Board has established a framework for the
management of the Company and its controlled entities, a framework which divides the functions of running the Company
between the Board, the Managing Director and the senior executives. The Board has put in place a system of internal control, a
pro-active business risk management process, and has the task of monitoring financial performance and the establishment of
appropriate ethical standards. The agenda for meetings of the Board is prepared by the Managing Director. Standard items
include the project reports, financial reports, strategic matters, governance and compliance. Submissions are circulated in
advance. Senior executives are regularly involved in Board discussions.
The Company Secretary of the Company is directly accountable to the Board, through the Chairman, on all matters to do with the
proper functioning of the Board.
Roles of Management and the Evaluation of Management Performance
The Managing Director and the senior executives are ultimately responsible and accountable for the day to day running of the
Company and for implementing the strategic objectives and operating within the risk appetite set by the Board. The Board
regularly reviews the division of functions between the Board and the senior executives. The Board has in place a performance
appraisal and remuneration system for the Managing Director and senior executives designed to enhance performance and
Management performance is reviewed on an annual basis at the end of each calendar year and as appropriate. The last
performance appraisal of the Managing Director and senior executives was undertaken by the Remuneration Committee in April
2015. The criterion for the evaluation of the Managing Director and of each executive is their performance against key
performance indicators, behavior and effectiveness in role. In addition, the Board monitors and evaluates the performance of the
Managing Director and senior executives as appropriate.
Appointment of Directors and Management
The Company has in place an appropriate organisational and management structure to ensure the day to day running of the
Company is undertaken in an effective and efficient manner and to ensure the Company has the right mix of skills and resources
to implement and achieve the Board’s corporate and strategic objectives. The Board and the Managing Director regularly reviews
this structure to determine that it is appropriate and “fit for purpose” and if necessary make changes in the number of roles and
personnel.
The directors and senior executives have a clear understanding of their duties, roles and responsibilities and of the expectations
of them, as contained within a written agreement agreed and signed by the Company and each director and senior executive.
The Board reviews its composition as required to ensure that the Board has the appropriate mix of commercial, financial and
mining skills, technical expertise, industry experience, and diversity (including, but not limited to gender and age) for which the
Board is looking to achieve in its membership. When a vacancy exists, for whatever reason, or where it is considered that the
Board would benefit from the services of a new director with particular skills, candidates with the appropriate experience,
expertise and diversity are considered. Under the direction and supervision of the Chair, appropriate background checks are
undertaken of each candidate as to the person’s character, experience, education, criminal record and bankruptcy history. Each
incumbent director is encouraged, and given the opportunity to meet with each candidate on a one to one basis. The full Board
then appoints the most suitable candidate who must stand for election at the next general meeting of shareholders. For the
meeting, shareholders are given sufficient information of the new director, including but not limited to biographical details, other
listed directorships currently held and in the case of a director standing for election for the first time, advice that appropriate
background checks have been undertaken.
Diversity Policy
The Company has in place a Diversity Policy which provides the written framework and objectives for achieving a work
environment that values and utilises the contributions of employees with diverse backgrounds, experiences, and perspectives,
irrespective of gender, age, ethnicity and cultural background. The Board is responsible for developing, where possible,
measurable objectives and strategies to support the framework and objectives of the Diversity Policy. The Remuneration
Committee is responsible for monitoring the progress of the measurable objectives through various monitoring, evaluation and
reporting mechanisms.
Apart from participation rates established for indigenous employment at the Savannah nickel project prescribed under the 2007
Savannah Co-Existence Agreement (and as reported below), the Board has not determined measurable objectives on gender
diversity across the workplace and at the Board level. In the coming financial year, the Board is to continue to oversee the
development of new programs to achieve a broader pool of skilled and experienced senior management and Board candidates,
and if deemed appropriate, identify future and targeted measurable objectives and strategies on gender diversity.
Pursuant to Recommendation 1.5 of the Recommendations, the Company discloses the following information as at the date of
this report:
• Percentage of women and men employed within the Group - women: 10%; men: 90%;
• Percentage of women and men employed as a senior executive - women: 8%; men: 92%;
• Percentage of women and men employed at the Board level - women: nil; men: 100%; and
• Percentage of indigenous employees at the Savannah nickel project - 13% (objective by November 2015: 30%)
The Company has defined an employee who is a senior executive as a person who is a “senior manager” as defined in Section 9
(Definitions) of the Corporations Act 2001, namely a person who is at the highest management level of the Company who
“makes, or participates in making decisions that affect the whole, or a substantial part, of the business of the corporation; or has
the capacity to affect significantly the corporation’s financial standing”. The performance appraisal of a senior executive is
performed by the Managing Director and the Remuneration Committee.
The Diversity Policy can be accessed on the Company’s website at www.panoramicresources.com under the Corporate
Governance section.
Performance Assessment of the Board, its Committees and Individual Directors
Currently, there is no formal performance appraisal system in place for Board performance on a director by director basis. At a
meeting of directors in May 2015, time was set aside in which each director gave a performance appraisal on the Board as a
whole and on themselves. The Board has agreed to conduct these performance appraisals on a regular basis while the search
for a suitable formal performance appraisal system is undertaken. Membership of the Audit Committee by non-executive
directors is initially for a three year period, with an annual renewal review thereafter with performance being one criteria in order to
retain office.
PRINCIPLE 2: STRUCTURE THE BOARD TO ADD VALUE
Board Composition
The composition of the Board is determined using the following principles:
•
•
The Board currently comprises four directors. Under Article 10 of the Company’s Constitution, this number may
be increased to a maximum of ten directors where it is required due to a commercial alliance, or felt that
additional expertise is required in specific areas, or when an outstanding candidate is identified;
The Board should comprise directors with a broad range of expertise with an emphasis on commercial,
exploration, mining and project development related experience; and
• Directors appointed by the Board are subject to election by shareholders at the following annual general
meeting and thereafter directors (other than the Managing Director) are subject to re-election at least every
three years. The tenure of executive directors is linked to their holding of executive office.
2 0 1 5 A N N U A L R E P O R T | P A G E 4 1
CORPORATE GOVERNANCE STATEMENT The name, position, independence classification, qualification, skills and length of service of each director of the Company in
office at the date of the Statement is:
Name
Position
Independence
Classification
Brian M Phillips
Chairman
Independent
Peter J Harold
Managing Director
not rated
Christopher DJ
Langdon
John Rowe
Non-Executive
Director
Non-Executive
Director
Independent
Independent
Qualification/Skills
Mine Engineer,
general mining
Process Engineer,
project development
Investment Banker,
banking and
commercial
Geologist, general
mining
Service (yrs)
8
14
11
9
Nomination committee
Due to the size of the Board and the small senior executive team, the Board has determined there is no benefit, at this time, of
establishing a nomination committee. The functions of the nomination committee are performed by the Board as a whole, when
required, using the principles for setting the composition of the Board.
Directors' Independence
The composition of the Board is considered to be appropriate for a Company that has a sustainable producing business and is
active in acquiring and developing new projects. As at the date of this statement, the majority of non-executive directors, including
the Chairman, are considered independent of management, have no interest, position, association or relationship that would
compromise their independence and directly or indirectly, individually hold less than 5% of the issued ordinary shares of the
Company. A review of the independence criteria detailed in Recommendation 2.3 of the Recommendations in relation to each
non-executive directors is made on a regular basis and when appropriate.
Director Education
The non-executive directors are given every opportunity to gain a better understanding of the business, the industry, and the
environment within which the Company operates, and are given access to continuing education opportunities to update and
enhance their skills and knowledge. Directors visit each mining operation at least once a year, and meet with executives on a
regular basis to enable directors to maintain an understanding of the roles and responsibilities of executives and of the culture
and values within the Company.
Conflict of Interest
In accordance with Section 191 of the Corporations Act 2001 and Article 10.13 of the Company’s Constitution, directors must
keep the Board advised, on an ongoing basis, of any interest that could potentially conflict with those of the Company. Where the
Board believes that a significant conflict exists, the director concerned does not receive the relevant board papers and is not
present at the meeting whilst the item is considered.
Independent professional advice
Each director has the right of access to all relevant Company information and to the Company’s executives and, subject to prior
consultation with the Chairman, may seek independent professional advice at the Company’s expense. A copy of the advice
received by the director is made available to all other members of the Board.
Board Committees
To facilitate the execution of its responsibilities, the Board’s Committees provide a forum for a more detailed analysis of key
issues. Each Committee is entitled to the resources and information it requires to carry out its duties, including direct access to
advisors and employees. Membership of the current Committees of the Panoramic Board and the number of times each
Committee met during the financial year are set out in the Directors’ Report. The names and functions of each Committee is set
out below:
• Audit Committee
The Audit Committee consists of all non-executive directors and is chaired by an independent director who is not the Chairman of
the Board. The Audit Committee is to oversee the financial reporting process to ensure the balance, transparency and integrity of
published financial information. The Audit Committee is also to review: the effectiveness of internal controls, recommendation
and the appointment and assessing the performance of the external auditor; the Company’s process for monitoring compliance
with laws and regulations affecting financial reporting and, if applicable, its code of business conduct. The Audit Committee
operates under an Audit Committee Charter that is reviewed by the Committee and is re-approved or changed by the full Board
on a bi-annual basis.
P A G E 4 2 | 2 0 1 5 A N N U A L R E P O R T
CORPORATE GOVERNANCE STATEMENT The name, position, independence classification, qualification, skills and length of service of each director of the Company in
office at the date of the Statement is:
Name
Position
Qualification/Skills
Service (yrs)
Independence
Classification
Brian M Phillips
Chairman
Independent
Peter J Harold
Managing Director
not rated
Christopher DJ
Langdon
John Rowe
Non-Executive
Director
Non-Executive
Director
Independent
Independent
mining
Mine Engineer,
general mining
Process Engineer,
project development
Investment Banker,
banking and
commercial
Geologist, general
8
14
11
9
Due to the size of the Board and the small senior executive team, the Board has determined there is no benefit, at this time, of
establishing a nomination committee. The functions of the nomination committee are performed by the Board as a whole, when
required, using the principles for setting the composition of the Board.
Nomination committee
Directors' Independence
The composition of the Board is considered to be appropriate for a Company that has a sustainable producing business and is
active in acquiring and developing new projects. As at the date of this statement, the majority of non-executive directors, including
the Chairman, are considered independent of management, have no interest, position, association or relationship that would
compromise their independence and directly or indirectly, individually hold less than 5% of the issued ordinary shares of the
Company. A review of the independence criteria detailed in Recommendation 2.3 of the Recommendations in relation to each
non-executive directors is made on a regular basis and when appropriate.
The non-executive directors are given every opportunity to gain a better understanding of the business, the industry, and the
environment within which the Company operates, and are given access to continuing education opportunities to update and
enhance their skills and knowledge. Directors visit each mining operation at least once a year, and meet with executives on a
regular basis to enable directors to maintain an understanding of the roles and responsibilities of executives and of the culture
Director Education
and values within the Company.
Conflict of Interest
In accordance with Section 191 of the Corporations Act 2001 and Article 10.13 of the Company’s Constitution, directors must
keep the Board advised, on an ongoing basis, of any interest that could potentially conflict with those of the Company. Where the
Board believes that a significant conflict exists, the director concerned does not receive the relevant board papers and is not
present at the meeting whilst the item is considered.
Independent professional advice
Each director has the right of access to all relevant Company information and to the Company’s executives and, subject to prior
consultation with the Chairman, may seek independent professional advice at the Company’s expense. A copy of the advice
received by the director is made available to all other members of the Board.
To facilitate the execution of its responsibilities, the Board’s Committees provide a forum for a more detailed analysis of key
issues. Each Committee is entitled to the resources and information it requires to carry out its duties, including direct access to
advisors and employees. Membership of the current Committees of the Panoramic Board and the number of times each
Committee met during the financial year are set out in the Directors’ Report. The names and functions of each Committee is set
Board Committees
out below:
• Audit Committee
The Audit Committee consists of all non-executive directors and is chaired by an independent director who is not the Chairman of
the Board. The Audit Committee is to oversee the financial reporting process to ensure the balance, transparency and integrity of
published financial information. The Audit Committee is also to review: the effectiveness of internal controls, recommendation
and the appointment and assessing the performance of the external auditor; the Company’s process for monitoring compliance
with laws and regulations affecting financial reporting and, if applicable, its code of business conduct. The Audit Committee
operates under an Audit Committee Charter that is reviewed by the Committee and is re-approved or changed by the full Board
on a bi-annual basis.
• Remuneration Committee
The Remuneration Committee consists of all non-executive directors and is chaired by an independent director. The role of the
Remuneration Committee is to review remuneration packages and policies applicable to the Managing Director, other executive
directors (if applicable) and senior executives and to monitor the scope and currency of the Company’s Diversity Policy. The
remuneration of executive directors is determined by reference to relevant employment market conditions and of the attainment
of defined Company goals. The remuneration of senior executives is determined by the Remuneration Committee based on
recommendations provided by the Managing Director. Remuneration levels are competitively set to attract the most qualified and
experienced directors and senior executives. The Remuneration Committee obtains independent advice on the appropriateness
of remuneration packages.
There is increased transparency and accountability in remuneration matters as required in the Improving Accountability on
Director and Executive Remuneration Bill 2011. There are now rules for engaging remuneration consultants and on reporting
specific information about remuneration consultants in the audited Remuneration Report in the Directors’ Report. The
Company’s audited 2015 Remuneration Report includes these reporting obligations.
Further details on the Committee and of remuneration arrangements in place for the directors and executives are set out in the
Directors’ Report.
Environment, Safety and Risk Committee
•
The Environment, Safety and Risk Committee consist of all directors and is chaired by an independent director. The role of the
Environment, Safety and Risk Committee is to oversee and monitor the effectiveness of the Group’s strategies and systems to
ensure that the Company complies with external and internally accepted standards for the impact of business activities on the
environment, the safety and wellbeing of employees, and on the control and management of the key risks facing the business.
Where possible, the Committee meets during Board visits to the mining operations whereby the members of the Committee are
able to directly inter face with the senior managers responsible for environmental issues, occupational health and safety and the
control and mitigation of non-financial risks. The Committee also nominates a non-executive director to attend and be actively
involved in the Group’s safety conferences. The Committee operates under an Environment, Safety and Risk Committee Charter
that is reviewed by the committee and is re-approved or changed by the full Board on a bi-annual basis.
The Committee Charter can be accessed on the Company’s website at www.panoramicresources.com under the Corporate
Governance section.
PRINCIPLE 3: ACT ETHICALLY AND RESPONSIBLY
All directors, executives, managers and employees are expected to act with the utmost integrity, honesty and objectivity, striving
at all times to enhance the performance and reputation of the Company and its controlled entities.
Code of Conduct
The Company has established a written Code of Conduct which outlines the culture, practices, expected conduct, values and
behavior to be displayed by all employees in upholding the integrity, reputation and accountability of the Company and its
controlled entities in the work environment and in the interactions with the Company’s various stakeholders. Certain practices are
necessary to comply with Federal and Western Australian State industrial legislation and the Corporations Law. The Code of
Conduct has a clear responsibility and accountability of employees for reporting and investigating reports of unethical practices
by reference to specific rules and policies such as the rules for trading in the Company securities, and the policy on
discrimination, harassment and bullying.
This code can be accessed on the Company’s website at www.panoramicresources.com under the Corporate Governance
section.
Trading in Company securities by directors, officers and employees
The Company has in place a fit-for-purpose Share Trading Policy for the trading in Company securities by directors, key
management personnel, officers and employees as required under ASX Listing Rule 12.12. The Policy is worded to ensure
compliance with Section 1043A of the Corporations Law (on insider trading), Part 2D.1 of the Corporations Act 2001 (on the
proper duties in relation to the use of inside information), and ASX Listing Rules 3.19A, 12.9, 12.10, and 12.11 and updated
Guidance Note 27 (January 2015). The Managing Director and the Company Secretary have been appointed to ensure that the
following rules for the trading in Company’s securities are strictly adhered to:
•
•
•
•
Trading in Company securities is only permitted following the notification of the intention to trade by submitting a
Notification Form with the Managing Director and dealing is not to occur until a receipt of confirmation is received
from the Managing Director or, in the case of the Managing Director, from the Chairman;
Trading in Company securities is prohibited at any time when in possession of unpublished information, which if
generally available, might materially affect the price or value of those securities;
Trading in Company securities is prohibited during specified prohibited periods, known as black-out periods;
Active trading in Company securities, which involves frequent and regular trading in those securities with a view to
derive profit related income from that activity, is prohibited;
The entering into contracts to hedge exposure to equity-based remuneration, is prohibited; and
•
• Only in exceptional circumstances, can approval be obtained in advance from the Managing Director, or in the case
of a director, from the other directors, to trade outside the specified prohibited periods.
2 0 1 5 A N N U A L R E P O R T | P A G E 4 3
CORPORATE GOVERNANCE STATEMENT On an annual basis in December, the Company Secretary circulates to all employees via email, the start and finish dates for the
next calendar year’s black-out periods. To monitor compliance with the policy and to give assurance to the Board on compliance
with the rules of the Share Trading Policy, the Company Secretary keeps records of the confirmations permitting a trade in the
Company’s securities in strict adherence with the rules.
This Share Trading Policy can be accessed on the Company’s website at www.panoramicresources.com under the Corporate
Governance section.
Discrimination, Harassment and Bullying Policy
The Company is committed to providing a work environment that is safe, fair and free from discrimination, harassment and
bullying for all employees of the Company. All employees are encouraged to follow adopted procedures allowing concerns or
instances of illegal conduct or malpractice to be raised in good faith without being subjected to victimisation, harassment or
discriminatory treatment, and to have such concerns or instances properly investigated. The Policy provides a mechanism by
which all employees can confidentially report improper conduct without fear of discrimination. This policy document can be
accessed on the Company's website at www.panoramicresources.com under the Corporate Governance section.
Privacy Policy
The Company has in place a Privacy Policy which deals with the collection, use, storage and disclosure of information of
personal information about an individual who can be identified or who may be reasonably identified by the information. Where
sensitive information is collected and stored, the information must not be collected unless the individual consents to collection
and the Company is authorised to collect the information by law. The Policy sets out the obligations surrounding the integrity of
personal information, security measures, how an individual can access their information and seek correction to it, and make
complaint to if necessary.
This Privacy Policy can be accessed on the Company’s website at www.panoramicresources.com under the Corporate
Governance section.
PRINCIPLE 4: SAFEGUARD INTEGRITY IN CORPORATE REPORTING
The Managing Director and Chief Financial Officer are required to state in writing to the Audit Committee and the Board that the
Company’s and Group’s financial reports present a true and fair view, in all material aspects, of the Company’s and Group’s
financial condition and that operational results are in accordance with relevant accounting standards. Pursuant to Section 295A
of the Corporations Act 2001, the Managing Director and the Chief Financial Officer are required to provide written certification to
the Board, at both the end of the Half-Year and the Full-Year reporting periods, that the Company’s financial reports are based on
a sound system of risk management and internal control and that the system is operating effectively.
The Audit Committee reviews all final draft external financial reports with the external auditor and makes recommendations on
their adequacy to the Board prior to their release to shareholders, investors and other public forums. There is regular
communication between the Audit Committee, management and external auditor. In accordance with Section 324DA of the
Corporations Act 2001, the audit partner of the external auditor is required to be rotated after five successive financial years. It is
the role of the Audit Committee to select the new audit engagement partner as nominated by the external partner after
considering each nominated individual’s experience, reputation and independence.
In addition, in the absence of an internal audit function, the Audit Committee reviews, assists and assesses the adequacy of the
Company’s internal control and financial risk management systems, accounting and business policies.
PRINCIPLES 5 : MAKE TIMELY AND BALANCED DISCLOSURE
Continuous Disclosure and Shareholder Communication
The Company is committed to providing relevant up to date information to its shareholders and the broader investment
community in accordance with the continuous disclosure requirements under the ASX Listing Rules and the Corporations Law.
The Company has a Continuous Disclosure Policy that all shareholders and investors have equal access to the Company's
information. This policy has been updated and approved by the full Board to comply with the May 2013 amendments to ASX
Listing Rule 3.1 and Guidance Note 8 of the Recommendations. This document and all material announcements provided to the
ASX can be accessed on the Company’s website at www.panoramicresources.com.
The Company has appointed the Company Secretary to oversee the continuous disclosure practices of the Company and its
controlled entities. His responsibilities include:
• Reviewing all statutory regulatory or tender reports submitted to or made by the Company and its controlled entities,
and to report or recommend to the Board as appropriate;
Ensuring compliance with continuous disclosure requirements;
•
• Overseeing and coordinating the disclosure of information to the ASX, analysts, brokers, shareholders, the media
•
and public; and
Educating directors and staff of the Company’s and Group’s disclosure policies and procedures and raising
awareness of the principles of the underlying continuous disclosure.
P A G E 4 4 | 2 0 1 5 A N N U A L R E P O R T
CORPORATE GOVERNANCE STATEMENT On an annual basis in December, the Company Secretary circulates to all employees via email, the start and finish dates for the
next calendar year’s black-out periods. To monitor compliance with the policy and to give assurance to the Board on compliance
with the rules of the Share Trading Policy, the Company Secretary keeps records of the confirmations permitting a trade in the
Company’s securities in strict adherence with the rules.
This Share Trading Policy can be accessed on the Company’s website at www.panoramicresources.com under the Corporate
Governance section.
Discrimination, Harassment and Bullying Policy
The Company is committed to providing a work environment that is safe, fair and free from discrimination, harassment and
bullying for all employees of the Company. All employees are encouraged to follow adopted procedures allowing concerns or
instances of illegal conduct or malpractice to be raised in good faith without being subjected to victimisation, harassment or
discriminatory treatment, and to have such concerns or instances properly investigated. The Policy provides a mechanism by
which all employees can confidentially report improper conduct without fear of discrimination. This policy document can be
accessed on the Company's website at www.panoramicresources.com under the Corporate Governance section.
Privacy Policy
complaint to if necessary.
Governance section.
The Company has in place a Privacy Policy which deals with the collection, use, storage and disclosure of information of
personal information about an individual who can be identified or who may be reasonably identified by the information. Where
sensitive information is collected and stored, the information must not be collected unless the individual consents to collection
and the Company is authorised to collect the information by law. The Policy sets out the obligations surrounding the integrity of
personal information, security measures, how an individual can access their information and seek correction to it, and make
This Privacy Policy can be accessed on the Company’s website at www.panoramicresources.com under the Corporate
PRINCIPLE 4: SAFEGUARD INTEGRITY IN CORPORATE REPORTING
The Managing Director and Chief Financial Officer are required to state in writing to the Audit Committee and the Board that the
Company’s and Group’s financial reports present a true and fair view, in all material aspects, of the Company’s and Group’s
financial condition and that operational results are in accordance with relevant accounting standards. Pursuant to Section 295A
of the Corporations Act 2001, the Managing Director and the Chief Financial Officer are required to provide written certification to
the Board, at both the end of the Half-Year and the Full-Year reporting periods, that the Company’s financial reports are based on
a sound system of risk management and internal control and that the system is operating effectively.
The Audit Committee reviews all final draft external financial reports with the external auditor and makes recommendations on
their adequacy to the Board prior to their release to shareholders, investors and other public forums. There is regular
communication between the Audit Committee, management and external auditor. In accordance with Section 324DA of the
Corporations Act 2001, the audit partner of the external auditor is required to be rotated after five successive financial years. It is
the role of the Audit Committee to select the new audit engagement partner as nominated by the external partner after
considering each nominated individual’s experience, reputation and independence.
In addition, in the absence of an internal audit function, the Audit Committee reviews, assists and assesses the adequacy of the
Company’s internal control and financial risk management systems, accounting and business policies.
PRINCIPLES 5 : MAKE TIMELY AND BALANCED DISCLOSURE
Continuous Disclosure and Shareholder Communication
The Company is committed to providing relevant up to date information to its shareholders and the broader investment
community in accordance with the continuous disclosure requirements under the ASX Listing Rules and the Corporations Law.
The Company has a Continuous Disclosure Policy that all shareholders and investors have equal access to the Company's
information. This policy has been updated and approved by the full Board to comply with the May 2013 amendments to ASX
Listing Rule 3.1 and Guidance Note 8 of the Recommendations. This document and all material announcements provided to the
ASX can be accessed on the Company’s website at www.panoramicresources.com.
The Company has appointed the Company Secretary to oversee the continuous disclosure practices of the Company and its
controlled entities. His responsibilities include:
• Reviewing all statutory regulatory or tender reports submitted to or made by the Company and its controlled entities,
and to report or recommend to the Board as appropriate;
Ensuring compliance with continuous disclosure requirements;
• Overseeing and coordinating the disclosure of information to the ASX, analysts, brokers, shareholders, the media
•
•
and public; and
Educating directors and staff of the Company’s and Group’s disclosure policies and procedures and raising
awareness of the principles of the underlying continuous disclosure.
PRINCIPLES 6: RESPECT THE RIGHTS OF SECURITY HOLDERS
Continuous Disclosure and Shareholder Communication
The Board in adopting a Continuous Disclosure Policy ensures that shareholders are provided with up to date Company
information. Communication to shareholders is facilitated by the production of the annual report, quarterly reports, public
announcements, and the posting of policies, and ASX releases immediately after their disclosure to the ASX, on the Company’s
website. All shareholders are given the option to receive communications from, and send communications to, the Company and
Share Registry electronically. In addition, all shareholders are encouraged to attend the Annual General Meeting and use the
opportunity to ask questions to management following the Managing Director’s presentation. The Company makes every
endeavour to respond to the most commonly asked questions. The external auditor attends the meeting and is available to
answer questions in relation to the conduct of the audit.
PRINCIPLE 7: RECOGNISE AND MANAGE RISK
The Board believes that risk management and compliance are fundamental to sound management and that oversight of such
matters is an important responsibility of the Board. The Company has significantly changed the risk management framework
through the progressive development of an enterprise-wide software database on the inherent risks and risk mitigation strategies
identified across all functions of the business, including occupational, health, safety and environment (OHS&E). This Board
sanctioned approach is in accordance with Australian/New Zealand Standard for Risk Management (AS/NZS 4360 2004) and is
aligned to the control framework for enterprise risk management prepared by the Committee of Sponsoring Organisations of the
Treadway Commission (COSO) in 2001. The framework involved the Company undertaking a comprehensive review in 2011/12
of the different elements across the various financial, administrative and operational functions at the Company’s mine sites and
Perth office and in identifying the risks inherent in each element and the appropriate risk management internal controls, systems
and response procedures to mitigate their impact on strategic, operational and financial performance. For example, there are a
number of risks the Company’s sites are exposed to that are both common to the mining industry and unique due to location such
as, but not limited to:
•
•
•
•
•
•
exposure to fluctuations in commodity prices and the United States currency foreign exchange rate;
customer declaration of force majeure;
health, safety, industrial and environment matters;
production capacity;
future delivery against committed financial derivatives; and
regulatory constraints, compliance, the impact of climate change and natural disasters.
The 2011/12 review also examined the effectiveness of internal controls, systems and response procedures that were in place in
previous years. This comprehensive review on each element and function across the Group, including the setting of various risk
appetite tolerance thresholds by senior management was completed in mid-2012, followed by approval by the full Board of the
Risk Management Guideline (August 2012) which detailed on the enterprise wide risk management framework and the process,
roles and responsibilities for conducting each new comprehensive review.
In 2014/15, the Company conducted a new comprehensive review using the procedures set down in the Risk Management
Guideline, including the re-setting of various risk appetite tolerance thresholds by senior management, which resulted in the
production of new Risk Appetite Statements (May 2015), Risk Management Policy (May 2015) and an updated Risk
Management Guideline (“Guideline”) that was approved by the full Board in June 2015. A condensed version of the updated
Guideline is available on the Company’s website at www.panoramicresources.com.
The Board has established a committee of the Board, the Environment, Safety and Risk Committee, which is chaired by an
independent director. All directors of the Board are also members of the Committee. The number of times the Committee met
during the financial year is contained in the Directors’ Report. The Committee’s Charter (November 2013) states that the
Committee will oversee the Company’s management of financial and non-financial risks at the operations in accordance with the
established risk management framework while always taking into account the Company’s legal obligations set by the Federal
and State statutory law makers on, but not limited to, environment, employment and occupational health and safety.
There are strict Company-wide compliance reporting requirements under the Guideline that require each department
head/function manager on an annual basis to review their risk registers to determine the level of compliance (from zero to 100%)
using a risk matrix score for impact, tolerance and opportunity, thereby ensuring that either a risk(s) has not developed a higher
risk profile, or outlining monitoring and corrective measures to reduce the risk(s) to an acceptable level. Using this information,
each operations manager is required to complete and provide a Project Risk Summary and Compliance Report during the
Full-Year audit process.
The reporting and control mechanisms, together with the assurances of the Environment, Safety and Risk and Audit
Committees, in the absence of an internal audit function, support the written certification at the end of the Half-Year and Full-Year
reporting periods, in accordance with Section 295A of the Corporations Act 2001 given by the Managing Director and the Chief
Financial Officer to the Board certifying that the Company’s financial reports are based on a sound system of risk management
and internal control and that the system is operating effectively.
2 0 1 5 A N N U A L R E P O R T | P A G E 4 5
CORPORATE GOVERNANCE STATEMENT PRINCIPLE 8: REMUNERATE FAIRLY AND RESPONSIBLY
Board Remuneration
The total annual remuneration paid to non-executive directors may not exceed the limit set by the shareholders at an annual
general meeting (currently $600,000). The remuneration of the non-executive directors is fixed rather than variable.
Executive Remuneration
The Board has established a committee of the Board, the Remuneration Committee. The Remuneration Committee provides
recommendations and direction for the Company’s remuneration practices. The Committee ensures that a significant proportion
of each executive’s remuneration is linked to his or her performance and the Company’s performance. Performance reviews are
conducted regularly to determine the proportion of remuneration that will be at ‘risk’ for the upcoming year. The Company’s
executives can participate in a performance share rights plan that is linked to the Company’s performance (on both a relative
share price and resources and reserves growth basis) against its peers in the resources industry. The Committee also ensures
that there is no discrimination on remuneration in respect to gender.
Further details in relation to director and executive remuneration are set out in the 2015 Remuneration Report on pages 27 to 38.
P A G E 4 6 | 2 0 1 5 A N N U A L R E P O R T
CORPORATE GOVERNANCE STATEMENT DIRECTORS’ DECLARATION
PRINCIPLE 8: REMUNERATE FAIRLY AND RESPONSIBLY
In accordance with a resolution of the directors of Panoramic Resources Limited, I state that:
The total annual remuneration paid to non-executive directors may not exceed the limit set by the shareholders at an annual
general meeting (currently $600,000). The remuneration of the non-executive directors is fixed rather than variable.
Board Remuneration
Executive Remuneration
The Board has established a committee of the Board, the Remuneration Committee. The Remuneration Committee provides
recommendations and direction for the Company’s remuneration practices. The Committee ensures that a significant proportion
of each executive’s remuneration is linked to his or her performance and the Company’s performance. Performance reviews are
conducted regularly to determine the proportion of remuneration that will be at ‘risk’ for the upcoming year. The Company’s
executives can participate in a performance share rights plan that is linked to the Company’s performance (on both a relative
share price and resources and reserves growth basis) against its peers in the resources industry. The Committee also ensures
that there is no discrimination on remuneration in respect to gender.
Further details in relation to director and executive remuneration are set out in the 2015 Remuneration Report on pages 27 to 38.
1. In the directors' opinion:
(a)
the financial statements and notes set out on pages 52 to 104 are in accordance with the Corporations Act 2001,
including:
(i)
(ii)
giving a true and fair view of the Consolidated entity’s financial position as at 30 June 2015 and of its
performance for the year ended on that date; and
complying with Accounting Standards (including the Australian Accounting Interpretations) and
Corporations Regulations 2001.
(b)
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 to the directors in accordance with
sections 295A of the Corporations Act 2001 for the financial period ending 30 June 2015.
3. In the opinion of the directors, as at the date of this declaration, there are reasonable grounds to believe that the members of
the Closed Group identified in note 31 will be able to meet any obligations or liabilities to which they are or may become subject,
by virtue of the Deed of Cross Guarantee.
On behalf of the Board
Peter Harold
Managing Director
Perth
28 August 2015
2 0 1 5 A N N U A L R E P O R T | P A G E 4 7
DIRECTORS’ DECLARATION INDEPENDENT AUDITOR’S REPORT
P A G E 4 8 | 2 0 1 5 A N N U A L R E P O R T
INDEPENDENT AUDITOR’S REPORT
2 0 1 5 A N N U A L R E P O R T | P A G E 4 9
AUDITOR’S INDEPENDANCE DECLARATION
P A G E 5 0 | 2 0 1 5 A N N U A L R E P O R T
Financial Report
2 0 1 5 A N N U A L R E P O R T | P A G E 5 1
DIRECTORS’ DECLARATION CONSOLIDATED INCOME STATEMENT
CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 30 JUNE 2015
FOR THE YEAR ENDED 30 JUNE 2015
Revenue
Cost of sales of goods
Gross margin on sale of goods
Other income
Other
Exploration and evaluation expenditure
Mark to market of derivatives
Impairment of assets
Share based payments
Finance costs
Loss before income tax
Income tax benefit
Loss for the year
Loss for the year is attributable to:
Owners of Panoramic Resources Limited
Notes
3
5
4
5
14, 16
5
6
2015
$'000
199,669
(228,766)
(29,097)
611
(7,714)
(12,912)
(1,739)
11,864
(689)
(998)
(40,674)
11,827
(28,847)
2014
$'000
238,210
(224,106)
14,104
1,295
(8,361)
(3,196)
(83)
(13,119)
(436)
(1,334)
(11,130)
1,808
(9,322)
(28,847)
(9,322)
Cents
Cents
Loss per share attributable to the ordinary equity holders of the
Company:
Basic loss per share
Diluted loss per share
35
35
(9.0)
(9.0)
(3.1)
(3.1)
P A G E 5 2 | 2 0 1 5 A N N U A L R E P O R T
CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 30 JUNE 2015
Revenue
Cost of sales of goods
Gross margin on sale of goods
Other income
Other
Exploration and evaluation expenditure
Mark to market of derivatives
Impairment of assets
Share based payments
Finance costs
Loss before income tax
Income tax benefit
Loss for the year
Loss for the year is attributable to:
Owners of Panoramic Resources Limited
Notes
3
5
4
5
5
6
14, 16
2015
$'000
199,669
(228,766)
(29,097)
611
(7,714)
(12,912)
(1,739)
11,864
(689)
(998)
(40,674)
11,827
(28,847)
2014
$'000
238,210
(224,106)
14,104
1,295
(8,361)
(3,196)
(83)
(13,119)
(436)
(1,334)
(11,130)
1,808
(9,322)
(28,847)
(9,322)
Cents
Cents
Loss per share attributable to the ordinary equity holders of the
Company:
Basic loss per share
Diluted loss per share
35
35
(9.0)
(9.0)
(3.1)
(3.1)
CONSOLIDATED STATEMENT OF
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2015
FOR THE YEAR ENDED 30 JUNE 2015
Loss for the year
Other comprehensive income
Items that may reclassified to profit or loss
Changes in fair value of available-for-sale financial assets, net of tax
Changes in fair value of cash flow hedges, net of tax
Exchange differences on translation of foreign operations
Blank
Items that will not be reclassified to profit or loss
Impairment of assets charged against revaluation reserve, net of tax
Other comprehensive loss for the year, net of tax
Total comprehensive loss for the year
Total comprehensive loss for the year is attributable to:
Owners of Panoramic Resources Limited
Notes
25(a)
25(a)
25(a)
25(a)
2015
$'000
(28,847)
231
10
1,668
-
1,909
(26,938)
2014
$'000
(9,322)
183
(10)
884
(3,598)
(2,541)
(11,863)
(26,938)
(11,863)
The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes
2 0 1 5 A N N U A L R E P O R T | P A G E 5 3
CONSOLIDATED BALANCE SHEET
CONSOLIDATED BALANCE SHEET
FOR THE YEAR ENDED 30 JUNE 2015
FOR THE YEAR ENDED 30 JUNE 2015
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Derivative financial instruments
Prepayments
Assets classified as held for sale
Total current assets
Non-current assets
Available-for-sale financial assets
Exploration and evaluation
Development properties
Mine properties
Property, plant and equipment
Other non-current assets
Total non-current assets
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Borrowings
Derivative financial instruments
Provisions
Total current liabilities
Non-current liabilities
Borrowings
Deferred tax liabilities
Provisions
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Contributed equity
Reserves
Retained earnings
Total equity
Notes
7
8
9
12
11
10
13
16
16
16
14
17
18
19
12
20
21
22
23
2015
$'000
54,055
11,235
12,910
178
1,187
18,000
97,565
858
113,794
53,564
11,542
51,806
36
231,600
329,165
35,628
2,855
-
8,438
46,921
68
11,342
30,955
42,365
89,286
2014
$'000
64,055
32,670
17,209
926
1,343
-
116,203
528
122,736
57,820
12,431
63,379
529
257,423
373,626
30,732
4,138
728
7,373
42,971
4,007
20,102
30,425
54,534
97,505
24
25(a)
239,879
276,121
158,941
45,564
35,374
159,276
42,966
73,879
239,879
276,121
The above consolidated balance sheet should be read in conjunction with the accompanying notes
P A G E 5 4 | 2 0 1 5 A N N U A L R E P O R T
CONSOLIDATED BALANCE SHEET
FOR THE YEAR ENDED 30 JUNE 2015
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Prepayments
Derivative financial instruments
Assets classified as held for sale
Total current assets
Non-current assets
Available-for-sale financial assets
Exploration and evaluation
Development properties
Mine properties
Property, plant and equipment
Other non-current assets
Total non-current assets
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Derivative financial instruments
Borrowings
Provisions
Total current liabilities
Non-current liabilities
Borrowings
Deferred tax liabilities
Provisions
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Contributed equity
Reserves
Retained earnings
Total equity
Notes
7
8
9
12
11
10
13
16
16
16
14
17
18
19
12
20
21
22
23
2015
$'000
54,055
11,235
12,910
178
1,187
18,000
97,565
858
113,794
53,564
11,542
51,806
36
231,600
329,165
35,628
2,855
-
8,438
46,921
68
11,342
30,955
42,365
89,286
2014
$'000
64,055
32,670
17,209
926
1,343
-
116,203
528
122,736
57,820
12,431
63,379
529
257,423
373,626
30,732
4,138
728
7,373
42,971
4,007
20,102
30,425
54,534
97,505
24
25(a)
239,879
276,121
158,941
45,564
35,374
159,276
42,966
73,879
239,879
276,121
The above consolidated balance sheet should be read in conjunction with the accompanying notes
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2 0 1 5 A N N U A L R E P O R T | P A G E 5 5
CONSOLIDATED STATEMENT OF CASH FLOWS
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2015
FOR THE YEAR ENDED 30 JUNE 2015
Cash flows from operating activities
Receipts from customers (inclusive of goods and services tax)
Payments to suppliers and employees (inclusive of goods and services tax)
Interest paid
Income tax refund
Payments for exploration and evaluation expense
Net cash inflow from operating activities
Cash flows from investing activities
Payments for property, plant and equipment
Payments for available-for-sale financial assets
Payment of development costs
Payments for exploration
Payments for mineral properties
Proceeds from cash backed bonds
Proceeds from sale of property, plant and equipment
Proceeds from sale of available-for-sale financial assets
Interest received
Net cash (outflow) from investing activities
Cash flows from financing activities
Proceeds from issues of shares and other equity securities
Payments for shares bought back
Share issue transaction costs
Repayment of borrowings
Dividends paid to company's shareholders
Net cash inflow (outflow) from financing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
Cash and cash equivalents at end of year
Notes
2015
$'000
2014
$'000
218,330
(164,118)
(378)
2,970
(10,322)
46,482
(7,195)
(500)
(19,836)
(15,122)
-
500
-
709
1,764
224,084
(166,325)
(537)
-
(3,245)
53,977
(4,090)
-
(13,507)
(8,060)
(529)
-
47
-
630
(39,680)
(25,509)
-
(336)
-
(6,808)
(9,658)
(16,802)
(10,000)
64,055
54,055
15,927
-
(830)
(2,771)
-
12,326
40,794
23,261
64,055
33
26
7
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
ANNUAL REPORT 2015 PANORAMIC RESOURCES LIMITED 38
P A G E 5 6 | 2 0 1 5 A N N U A L R E P O R T
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2015
Cash flows from operating activities
Receipts from customers (inclusive of goods and services tax)
Payments to suppliers and employees (inclusive of goods and services tax)
Interest paid
Income tax refund
Payments for exploration and evaluation expense
Net cash inflow from operating activities
Cash flows from investing activities
Payments for property, plant and equipment
Payments for available-for-sale financial assets
Payment of development costs
Payments for exploration
Payments for mineral properties
Proceeds from cash backed bonds
Proceeds from sale of property, plant and equipment
Proceeds from sale of available-for-sale financial assets
Interest received
Net cash (outflow) from investing activities
Cash flows from financing activities
Proceeds from issues of shares and other equity securities
Payments for shares bought back
Share issue transaction costs
Repayment of borrowings
Dividends paid to company's shareholders
Net cash inflow (outflow) from financing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
Cash and cash equivalents at end of year
Notes
2015
$'000
2014
$'000
218,330
(164,118)
(378)
2,970
(10,322)
46,482
(7,195)
(500)
(19,836)
(15,122)
500
709
1,764
-
-
-
-
(336)
(6,808)
(9,658)
(16,802)
(10,000)
64,055
54,055
224,084
(166,325)
(537)
(3,245)
53,977
(4,090)
(13,507)
(8,060)
(529)
47
630
15,927
(830)
(2,771)
12,326
40,794
23,261
64,055
-
-
-
-
-
-
33
26
7
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
30 JUNE 2015
1 Summary of significant accounting policies
The financial report of Panoramic Resources Limited (the Parent or the Company) and its subsidiaries (the Group) for the year
ended 30 June 2015 was authorised for issue in accordance with a resolution of the directors on 28 August 2015.
Panoramic Resources Limited (the Parent) is a for profit company limited by shares incorporated and domiciled in Australia
whose shares are publicly traded on the Australian Stock Exchange. The Group's principal place of business is Level 9, 553 Hay
Street, Perth WA 6000.
The principal activities of the Group during the course of the financial year consisted of exploration, evaluation, development, and
production of mineral deposits.
(a) Basis of preparation
The financial report is a general purpose financial report, which has been prepared in accordance with the requirements of the
Corporations Act 2001 and Australian Accounting Standards. The financial report has also been prepared on a historical cost
basis, except for derivative financial instruments, trade receivables and available-for-sale investments, which have been
measured at fair value.
(b) New accounting standards and interpretations
The financial report complies with Australian Accounting Standards and International Financial Reporting Standards (IFRS) as
issued by International Accounting Standards Board.
(i) Changes in accounting policies and disclosures
The accounting policies adopted are consistent with those of the previous financial year except as follows:
(39,680)
(25,509)
The Company has adopted the following new and amended Australian Accounting Standards and AASB interpretations as of 1
July 2014:
• AASB 2012-3 Amendments to Australian Accounting Standards - Offsetting Financial Assets and Financial Liabilities
AASB 2012-3 adds application guidance to AASB 132 Financial Instruments: Presentation to address inconsistencies identified
in applying some of the offsetting criteria of AASB 132, including clarifying the meaning of "currently has a legally enforceable
right of set-off" and that some gross settlement systems may be considered equivalent to net settlement.
The adoption of AASB 2012-3 had no effect on the financial position or performance of the Group.
• Interpretation 21 Levies
This Interpretation confirms that a liability to pay a levy is only recognised when the activity that triggers the payment occurs.
Applying the going concern assumption does not create a constructive obligation.
The adoption of Interpretation 21 had no effect on the financial position or performance of the Group.
• AASB 2013-3 Amendments to AASB 136 - Recoverable Amount Disclosures for Non-Financial Assets
AASB 2013-3 amends the disclosure requirements in AASB 136 Impairment of Assets. The amendments include the
requirement to disclose additional information about the fair value measurement when the recoverable amount of impaired
assets is based on fair value less costs of disposal.
The adoption of AASB 2013-3 had no effect on the financial position or performance of the Group.
• AASB 2013-4 Amendments to Australian Accounting Standards - Novation of Derivatives and Continuation of Hedge
Accounting [AASB 139]
AASB 2013-4 amends AASB 139 to permit the continuation of hedge accounting in specified circumstances where a derivative,
which has been designated as a hedging instrument, is novated from one counterparty to a central counterparty as a
consequence of laws or regulations.
ANNUAL REPORT 2015 PANORAMIC RESOURCES LIMITED 38
2 0 1 5 A N N U A L R E P O R T | P A G E 5 7
The adoption of AASB 2013-4 had no effect on the financial position or performance of the Group.
• AASB 1031 Materiality
The revised AASB 1031 is an interim standard that cross-references to other Standards and the Framework (issued December
2013) that contain guidance on materiality.
AASB 1031 will be withdrawn when references to AASB 1031 in all Standards and Interpretations have been removed.
AASB 2014-1 Part C issued in June 2014 makes amendments to eight Australian Accounting Standards to delete their
references to AASB 1031. The amendments are effective from 1 July 2014.
The adoption of AASB 1031 had no effect on the financial position or performance of the Group.
• AASB 2013-9 Amendments to Australian Accounting Standards - Conceptual Framework, Materiality and Financial
Instruments
The Standard contains three main parts and makes amendments to a number of Standards and Interpretations.
The Company has adopted Part A & B of this standard.
Part A of AASB 2013-9 makes consequential amendments arising from the issuance of AASB CF 2013-1.
Part B makes amendments to particular Australian Accounting Standards to delete references to AASB 1031 and also makes
minor editorial amendments to various other standards.
The adoption of AASB 2013-9 had no effect on the financial position or performance of the Group.
• AASB 2014-1 Part A -Annual Improvements 2010-2012 Cycle
AASB 2014-1 Part A: This standard sets out amendments to Australian Accounting Standards arising from the issuance by the
International Accounting Standards Board (IASB) of International Financial Reporting Standards (IFRSs) Annual
Improvements to IFRSs 2010-2012 Cycle and Annual Improvements to IFRSs 2011-2013 Cycle.
Annual Improvements to IFRSs 2010-2012 Cycle addresses the following items:
- AASB 2 - Clarifies the definition of 'vesting conditions' and 'market condition' and introduces the definition of 'performance
condition' and 'service condition'.
- AASB 3 - Clarifies the classification requirements for contingent consideration in a business combination by removing all
references to AASB 137.
- AASB 8 - Requires entities to disclose factors used to identify the entity's reportable segments when operating segments have
been aggregated. An entity is also required to provide a reconciliation of total reportable segment assets to the entity's total
assets.
- AASB 116 & AASB 138 - Clarifies that the determination of accumulated depreciation does not depend on the selection of the
valuation technique and that it is calculated as the difference between the gross and net carrying amounts.
- AASB 124 - Defines a management entity providing KMP services as a related party of the reporting entity. The amendments
added an exemption from the detailed disclosure requirements in paragraph 17 of AASB 124 Related Party Disclosures for
KMP services provided by a management entity. Payments made to a management entity in respect of KMP services should
be separately disclosed.
The adoption of AASB 2014-1 Part A-Annual Improvements 2010-2012 Cycle had no effect on the financial position or
performance of the Group.
• AASB 2014-1 Part A -Annual Improvements 2011-2013 Cycle
Annual Improvements to IFRSs 2011-2013 Cycle addresses the following items:
- AASB 13 - Clarifies that the portfolio exception in paragraph 52 of AASB 13 applies to all contracts within the scope of AASB
139 or AASB 9, regardless of whether they meet the definitions of financial assets or financial liabilities as defined in AASB 132.
- AASB 140 - Clarifies that judgment is needed to determine whether an acquisition of investment property is solely the
acquisition of an investment property or whether it is the acquisition of a group of assets or a business combination in the scope
of AASB 3 that includes an investment property. That judgment is based on guidance in AASB 3.
The adoption of AASB 2014-1 Part A -Annual Improvements 2011-2013 Cycle had no effect on the financial position or
performance of the Group.
(ii) Accounting Standards and Interpretations issued but not yet effective
• AASB 9 Financial Instruments, effective 1 July 2018
AASB 9 (December 2014) is a new standard which replaces AASB 139. This new version supersedes AASB 9 issued in
December 2009 (as amended) and AASB 9 (issued in December 2010) and includes a model for classification and
measurement, a single, forward-looking ‘expected loss’ impairment model and a substantially-reformed approach to hedge
accounting.
AASB 9 is effective for annual periods beginning on or after 1 January 2018. However, the Standard is available for early
adoption. The own credit changes can be early adopted in isolation without otherwise changing the accounting for financial
instruments.
P A G E 5 8 | 2 0 1 5 A N N U A L R E P O R T
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS30 JUNE 2015
The adoption of AASB 2013-4 had no effect on the financial position or performance of the Group.
• AASB 1031 Materiality
The revised AASB 1031 is an interim standard that cross-references to other Standards and the Framework (issued December
2013) that contain guidance on materiality.
AASB 1031 will be withdrawn when references to AASB 1031 in all Standards and Interpretations have been removed.
AASB 2014-1 Part C issued in June 2014 makes amendments to eight Australian Accounting Standards to delete their
references to AASB 1031. The amendments are effective from 1 July 2014.
The adoption of AASB 1031 had no effect on the financial position or performance of the Group.
• AASB 2013-9 Amendments to Australian Accounting Standards - Conceptual Framework, Materiality and Financial
Instruments
The Standard contains three main parts and makes amendments to a number of Standards and Interpretations.
The Company has adopted Part A & B of this standard.
Part A of AASB 2013-9 makes consequential amendments arising from the issuance of AASB CF 2013-1.
Part B makes amendments to particular Australian Accounting Standards to delete references to AASB 1031 and also makes
minor editorial amendments to various other standards.
The adoption of AASB 2013-9 had no effect on the financial position or performance of the Group.
• AASB 2014-1 Part A -Annual Improvements 2010-2012 Cycle
AASB 2014-1 Part A: This standard sets out amendments to Australian Accounting Standards arising from the issuance by the
International Accounting Standards Board (IASB) of International Financial Reporting Standards (IFRSs) Annual
Improvements to IFRSs 2010-2012 Cycle and Annual Improvements to IFRSs 2011-2013 Cycle.
condition' and 'service condition'.
references to AASB 137.
assets.
Annual Improvements to IFRSs 2010-2012 Cycle addresses the following items:
- AASB 2 - Clarifies the definition of 'vesting conditions' and 'market condition' and introduces the definition of 'performance
- AASB 3 - Clarifies the classification requirements for contingent consideration in a business combination by removing all
- AASB 8 - Requires entities to disclose factors used to identify the entity's reportable segments when operating segments have
been aggregated. An entity is also required to provide a reconciliation of total reportable segment assets to the entity's total
- AASB 116 & AASB 138 - Clarifies that the determination of accumulated depreciation does not depend on the selection of the
valuation technique and that it is calculated as the difference between the gross and net carrying amounts.
- AASB 124 - Defines a management entity providing KMP services as a related party of the reporting entity. The amendments
added an exemption from the detailed disclosure requirements in paragraph 17 of AASB 124 Related Party Disclosures for
KMP services provided by a management entity. Payments made to a management entity in respect of KMP services should
be separately disclosed.
performance of the Group.
The adoption of AASB 2014-1 Part A-Annual Improvements 2010-2012 Cycle had no effect on the financial position or
• AASB 2014-1 Part A -Annual Improvements 2011-2013 Cycle
Annual Improvements to IFRSs 2011-2013 Cycle addresses the following items:
- AASB 13 - Clarifies that the portfolio exception in paragraph 52 of AASB 13 applies to all contracts within the scope of AASB
139 or AASB 9, regardless of whether they meet the definitions of financial assets or financial liabilities as defined in AASB 132.
- AASB 140 - Clarifies that judgment is needed to determine whether an acquisition of investment property is solely the
acquisition of an investment property or whether it is the acquisition of a group of assets or a business combination in the scope
of AASB 3 that includes an investment property. That judgment is based on guidance in AASB 3.
The adoption of AASB 2014-1 Part A -Annual Improvements 2011-2013 Cycle had no effect on the financial position or
performance of the Group.
(ii) Accounting Standards and Interpretations issued but not yet effective
• AASB 9 Financial Instruments, effective 1 July 2018
AASB 9 (December 2014) is a new standard which replaces AASB 139. This new version supersedes AASB 9 issued in
December 2009 (as amended) and AASB 9 (issued in December 2010) and includes a model for classification and
measurement, a single, forward-looking ‘expected loss’ impairment model and a substantially-reformed approach to hedge
AASB 9 is effective for annual periods beginning on or after 1 January 2018. However, the Standard is available for early
adoption. The own credit changes can be early adopted in isolation without otherwise changing the accounting for financial
accounting.
instruments.
Classification and measurement
AASB 9 includes requirements for a simpler approach for classification and measurement of financial assets compared with the
requirements of AASB 139. There are also some changes made in relation to financial liabilities.
The main changes are described below.
Financial assets
a. Financial assets that are debt instruments will be classified based on (1) the objective of the entity's business model for
managing the financial assets; (2) the characteristics of the contractual cash flows.
b. Allows an irrevocable election on initial recognition to present gains and losses on investments in equity instruments that
are not held for trading in other comprehensive income. Dividends in respect of these investments that are a return on
investment can be recognised in profit or loss and there is no impairment or recycling on disposal of the instrument.
c. Financial assets can be designated and measured at fair value through profit or loss at initial recognition if doing so
eliminates or significantly reduces a measurement or recognition inconsistency that would arise from measuring assets or
liabilities, or recognising the gains and losses on them, on different bases.
Financial liabilities
Changes introduced by AASB 9 in respect of financial liabilities are limited to the measurement of liabilities designated at fair
value through profit or loss (FVPL) using the fair value option.
Where the fair value option is used for financial liabilities, the change in fair value is to be accounted for as follows:
- The change attributable to changes in credit risk are presented in other comprehensive income (OCI)
- The remaining change is presented in profit or loss
AASB 9 also removes the volatility in profit or loss that was caused by changes in the credit risk of liabilities elected to be
measured at fair value. This change in accounting means that gains or losses attributable to changes in the entity’s own credit
risk would be recognised in OCI. These amounts recognised in OCI are not recycled to profit or loss if the liability is ever
repurchased at a discount.
Impairment
The final version of AASB 9 introduces a new expected-loss impairment model that will require more timely recognition of
expected credit losses. Specifically, the new Standard requires entities to account for expected credit losses from when
financial instruments are first recognised and to recognise full lifetime expected losses on a more timely basis.
Hedge accounting
Amendments to AASB 9 (December 2009 & 2010 editions and AASB 2013-9) issued in December 2013 included the new
hedge accounting requirements, including changes to hedge effectiveness testing, treatment of hedging costs, risk
components that can be hedged and disclosures.
Consequential amendments were also made to other standards as a result of AASB 9, introduced by AASB 2009-11 and
superseded by AASB 2010-7, AASB 2010-10 and AASB 2014-1 - Part E.
AASB 2014-7 incorporates the consequential amendments arising from the issuance of AASB 9 in Dec 2014.
AASB 2014-8 limits the application of the existing versions of AASB 9 (AASB 9 (December 2009) and AASB 9 (December
2010)) from 1 February 2015 and applies to annual reporting periods beginning on after 1 January 2015.
• AASB 2014-3 Amendments to Australian Accounting Standards - Accounting for Acquisitions of Interests in Joint Operations
[AASB 1 & AASB 11], effective 1 July 2016
AASB 2014-3 amends AASB 11 Joint Arrangements to provide guidance on the accounting for acquisitions of interests in joint
operations in which the activity constitutes a business. The amendments require:
(a) the acquirer of an interest in a joint operation in which the activity constitutes a business, as defined in AASB 3 Business
Combinations, to apply all of the principles on business combinations accounting in AASB 3 and other Australian
Accounting Standards except for those principles that conflict with the guidance in AASB 11; and
(b) the acquirer to disclose the information required by AASB 3 and other Australian Accounting Standards for business
combinations.
This Standard also makes an editorial correction to AASB 11
• AASB 2014-4 Clarification of Acceptable Methods of Depreciation and Amortisation (Amendments to AASB 116 and AASB
138), effective 1 July 2016
AASB 116 Property Plant and Equipment and AASB 138 Intangible Assets both establish the principle for the basis of
depreciation and amortisation as being the expected pattern of consumption of the future economic benefits of an asset.
The IASB has clarified that the use of revenue-based methods to calculate the depreciation of an asset is not appropriate
because revenue generated by an activity that includes the use of an asset generally reflects factors other than the
consumption of the economic benefits embodied in the asset.
2 0 1 5 A N N U A L R E P O R T | P A G E 5 9
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS30 JUNE 2015
The amendment also clarified that revenue is generally presumed to be an inappropriate basis for measuring the consumption
of the economic benefits embodied in an intangible asset. This presumption, however, can be rebutted in certain limited
circumstances.
• AASB 15 Revenue from Contracts with Customers, effective 1 July 2017
AASB 15 Revenue from Contracts with Customers replaces the existing revenue recognition standards AASB 111
Construction Contracts, AASB 118 Revenue and related Interpretations (Interpretation 13 Customer Loyalty Programmes,
Interpretation 15 Agreements for the Construction of Real Estate, Interpretation 18 Transfers of Assets from Customers,
Interpretation 131 Revenue-Barter Transactions Involving Advertising Services and Interpretation 1042 Subscriber Acquisition
Costs in the Telecommunications Industry). AASB 15 incorporates the requirements of IFRS 15 Revenue from Contracts with
Customers, issued by the International Accounting Standards Board (IASB) and developed jointly with the US Financial
Accounting Standards Board (FASB).
AASB 15 specifies the accounting treatment for revenue arising from contracts with customers (except for contracts within the
scope of other accounting standards such as leases or financial instruments).The core principle of AASB 15 is that an entity
recognises revenue to depict the transfer of promised goods or services to customers in an amount that reflects the
consideration to which the entity expects to be entitled in exchange for those goods or services. An entity recognises revenue in
accordance with that core principle by applying the following steps:
(a) Step 1: Identify the contract(s) with a customer
(b) Step 2: Identify the performance obligations in the contract
(c) Step 3: Determine the transaction price
(d) Step 4: Allocate the transaction price to the performance obligations in the contract
(e) Step 5: Recognise revenue when (or as) the entity satisfies a performance obligation
Currently, AASB 15 is effective for annual reporting periods commencing on or after 1 January 2017. Early application is
permitted. (Note A)
AASB 2014-5 incorporates the consequential amendments to a number Australian Accounting Standards (including
Interpretations) arising from the issuance of AASB 15.
• AASB 2014-9 Amendments to Australian Accounting Standards - Equity Method in Separate Financial Statements, effective 1
July 2016
AASB 2014-9 amends AASB 127 Separate Financial Statements, and consequentially amends AASB 1 First-time Adoption of
Australian Accounting Standards and AASB 128 Investments in Associates and Joint Ventures, to allow entities to use the
equity method of accounting for investments in subsidiaries, joint ventures and associates in their separate financial
statements.
AASB 2014-9 also makes editorial corrections to AASB 127.
AASB 2014-9 applies to annual reporting periods beginning on or after 1 January 2016. Early adoption permitted.
• AASB 2014-10 Amendments to Australian Accounting Standards - Sale or Contribution of Assets between an Investor and its
Associate or Joint Venture, effective 1 July
AASB 2014-10 amends AASB 10 Consolidated Financial Statements and AASB 128 to address an inconsistency between the
requirements in AASB 10 and those in AASB 128 (August 2011), in dealing with the sale or contribution of assets between an
investor and its associate or joint venture. The amendments require:
(a) a full gain or loss to be recognised when a transaction involves a business (whether it is housed in a subsidiary or not); and
(b) a partial gain or loss to be recognised when a transaction involves assets that do not constitute a business, even if these
assets are housed in a subsidiary.
AASB 2014-10 also makes an editorial correction to AASB 10.
AASB 2014-10 applies to annual reporting periods beginning on or after 1 January 2016. Early adoption permitted.
• AASB 2015-1 Amendments to Australian Accounting Standards - Annual Improvements to Australian Accounting Standards
2012-2014 Cycle, effective 1 July 2016
The subjects of the principal amendments to the Standards are set out below:
AASB 5 Non-current Assets Held for Sale and Discontinued Operations:
- Changes in methods of disposal - where an entity reclassifies an asset (or disposal group) directly from being held for
distribution to being held for sale (or visa versa), an entity shall not follow the guidance in paragraphs 27-29 to account for this
change.
P A G E 6 0 | 2 0 1 5 A N N U A L R E P O R T
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS30 JUNE 2015
The amendment also clarified that revenue is generally presumed to be an inappropriate basis for measuring the consumption
of the economic benefits embodied in an intangible asset. This presumption, however, can be rebutted in certain limited
circumstances.
• AASB 15 Revenue from Contracts with Customers, effective 1 July 2017
AASB 15 Revenue from Contracts with Customers replaces the existing revenue recognition standards AASB 111
Construction Contracts, AASB 118 Revenue and related Interpretations (Interpretation 13 Customer Loyalty Programmes,
Interpretation 15 Agreements for the Construction of Real Estate, Interpretation 18 Transfers of Assets from Customers,
Interpretation 131 Revenue-Barter Transactions Involving Advertising Services and Interpretation 1042 Subscriber Acquisition
Costs in the Telecommunications Industry). AASB 15 incorporates the requirements of IFRS 15 Revenue from Contracts with
Customers, issued by the International Accounting Standards Board (IASB) and developed jointly with the US Financial
Accounting Standards Board (FASB).
AASB 15 specifies the accounting treatment for revenue arising from contracts with customers (except for contracts within the
scope of other accounting standards such as leases or financial instruments).The core principle of AASB 15 is that an entity
recognises revenue to depict the transfer of promised goods or services to customers in an amount that reflects the
consideration to which the entity expects to be entitled in exchange for those goods or services. An entity recognises revenue in
accordance with that core principle by applying the following steps:
(a) Step 1: Identify the contract(s) with a customer
(b) Step 2: Identify the performance obligations in the contract
(c) Step 3: Determine the transaction price
(d) Step 4: Allocate the transaction price to the performance obligations in the contract
(e) Step 5: Recognise revenue when (or as) the entity satisfies a performance obligation
Currently, AASB 15 is effective for annual reporting periods commencing on or after 1 January 2017. Early application is
permitted. (Note A)
AASB 2014-5 incorporates the consequential amendments to a number Australian Accounting Standards (including
Interpretations) arising from the issuance of AASB 15.
July 2016
statements.
AASB 2014-9 amends AASB 127 Separate Financial Statements, and consequentially amends AASB 1 First-time Adoption of
Australian Accounting Standards and AASB 128 Investments in Associates and Joint Ventures, to allow entities to use the
equity method of accounting for investments in subsidiaries, joint ventures and associates in their separate financial
AASB 2014-9 also makes editorial corrections to AASB 127.
AASB 2014-9 applies to annual reporting periods beginning on or after 1 January 2016. Early adoption permitted.
• AASB 2014-10 Amendments to Australian Accounting Standards - Sale or Contribution of Assets between an Investor and its
Associate or Joint Venture, effective 1 July
AASB 2014-10 amends AASB 10 Consolidated Financial Statements and AASB 128 to address an inconsistency between the
requirements in AASB 10 and those in AASB 128 (August 2011), in dealing with the sale or contribution of assets between an
investor and its associate or joint venture. The amendments require:
(a) a full gain or loss to be recognised when a transaction involves a business (whether it is housed in a subsidiary or not); and
(b) a partial gain or loss to be recognised when a transaction involves assets that do not constitute a business, even if these
assets are housed in a subsidiary.
AASB 2014-10 also makes an editorial correction to AASB 10.
AASB 2014-10 applies to annual reporting periods beginning on or after 1 January 2016. Early adoption permitted.
• AASB 2015-1 Amendments to Australian Accounting Standards - Annual Improvements to Australian Accounting Standards
2012-2014 Cycle, effective 1 July 2016
The subjects of the principal amendments to the Standards are set out below:
AASB 5 Non-current Assets Held for Sale and Discontinued Operations:
- Changes in methods of disposal - where an entity reclassifies an asset (or disposal group) directly from being held for
distribution to being held for sale (or visa versa), an entity shall not follow the guidance in paragraphs 27-29 to account for this
change.
AASB 7 Financial Instruments: Disclosures:
- Servicing contracts - clarifies how an entity should apply the guidance in paragraph 42C of AASB 7 to a servicing contract to
decide whether a servicing contract is ‘continuing involvement’ for the purposes of applying the disclosure requirements in
paragraphs 42E-42H of AASB 7.
- Applicability of the amendments to AASB 7 to condensed interim financial statements - clarify that the additional disclosure
required by the amendments to AASB 7 Disclosure-Offsetting Financial Assets and Financial Liabilities is not specifically
required for all interim periods. However, the additional disclosure is required to be given in condensed interim financial
statements that are prepared in accordance with AASB 134 Interim Financial Reporting when its inclusion would be required by
the requirements of AASB 134.
AASB 119 Employee Benefits:
- Discount rate: regional market issue - clarifies that the high quality corporate bonds used to estimate the discount rate for
post-employment benefit obligations should be denominated in the same currency as the liability. Further it clarifies that the
depth of the market for high quality corporate bonds should be assessed at the currency level.
AASB 134 Interim Financial Reporting:
- Disclosure of information ‘elsewhere in the interim financial report’ - amends AASB 134 to clarify the meaning of disclosure of
information ‘elsewhere in the interim financial report’ and to require the inclusion of a cross-reference from the interim financial
statements to the location of this information.
• AASB 2015-2 Amendments to Australian Accounting Standards - Disclosure Initiative: Amendments to AASB 101, effective 1
July 2016
The Standard makes amendments to AASB 101 Presentation of Financial Statements arising from the IASB’s Disclosure
Initiative project. The amendments are designed to further encourage companies to apply professional judgment in determining
what information to disclose in the financial statements. For example, the amendments make clear that materiality applies to the
whole of financial statements and that the inclusion of immaterial information can inhibit the usefulness of financial disclosures.
The amendments also clarify that companies should use professional judgment in determining where and in what order
information is presented in the financial disclosures.
• AASB 2015-3Amendments to Australian Accounting Standards arising from the Withdrawal of AASB 1031 Materiality, effective
• AASB 2014-9 Amendments to Australian Accounting Standards - Equity Method in Separate Financial Statements, effective 1
1 July 2015
The Standard completes the AASB’s project to remove Australian guidance on materiality from Australian Accounting
Standards.
Impact of the above standards is yet to be determined.
(c) Basis of consolidation
The consolidated financial statements comprise the financial statements of the Group and its subsidiaries as at 30 June 2015.
Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has
the ability to affect those returns through its power over the investee. Specifically, the Group controls an investee if and only if the
Group has:
• Power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee)
• Exposure, or rights, to variable returns from its involvement with the investee, and
• The ability to use its power over the investee to affect its returns
When the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and
circumstances in assessing whether it has power over an investee, including:
• The contractual arrangement with the other vote holders of the investee
• Rights arising from other contractual arrangements
• The Group’s voting rights and potential voting rights
The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or
more of the three elements of control. Consolidation of a subsidiary begins when the Group obtains control over the subsidiary
and ceases when the Group loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or
disposed of during the year are included in the statement of comprehensive income from the date the Group gains control until
the date the Group ceases to control the subsidiary.
Profit or loss and each component of other comprehensive income (OCI) are attributed to the equity holders of the parent of the
Group and to the non-controlling interests, even if this results in the non-controlling interests having a deficit balance. When
necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the
Group’s accounting policies. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to
transactions between members of the Group are eliminated in full on consolidation.
2 0 1 5 A N N U A L R E P O R T | P A G E 6 1
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS30 JUNE 2015
A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. If the Group
loses control over a subsidiary, it:
• De-recognises the assets (including goodwill) and liabilities of the subsidiary
• De-recognises the carrying amount of any non-controlling interests
• De-recognises the cumulative translation differences recorded in equity
• Recognises the fair value of the consideration received
• Recognises the fair value of any investment retained
• Recognises any surplus or deficit in profit or loss
• Reclassifies the parent’s share of components previously recognised in OCI to profit or loss or retained earnings, as
appropriate, as would be required if the Group had directly disposed of the related assets or liabilities
(d) Significant accounting judgements, estimates and assumptions
In the process of applying the Group's accounting policies, management has made the following judgements, and estimations
which have the most significant effect on the amounts recognised in the financial statements.
(i) Determination of mineral resources and ore reserves
The Group estimates its mineral resources and ore reserves in accordance with the Australian Code for Reporting of Exploration
Results, Mineral Resources and Ore Reserves 2004 (the ‘JORC code’) as a minimum standard. The information on mineral
resources and ore reserves were prepared by or under the supervision of Competent Persons as defined in the JORC code. The
amounts presented are based on the mineral resources and ore reserves determined under the JORC code.
There are numerous uncertainties inherent in estimating mineral resources and ore reserves and assumptions that are valid at
the time of estimation may change significantly when new information becomes available. Significant judgement is required in
assessing the available reserves. Factors that must be considered in determining reserves and resources are the Company's
history of converting resources to reserves and the relevant time frame, market and future developments.
Changes in the forecast prices of commodities, foreign currency exchange rates, production costs or recovery rates may change
the economic status of reserves and may ultimately result in the reserves being restated. Such changes in reserves could impact
on depreciation and amortisation rates, asset carrying values and provisions for decommissioning and restoration.
(ii)
Impairment of capitalised exploration and evaluation expenditure
The Group assesses impairment of all assets at each reporting date by evaluating conditions specific to the Group and to the
particular asset that may lead to impairment. If an impairment trigger exists, the recoverable amount of the asset is determined.
The future recoverability of capitalised exploration and evaluation expenditure is dependent on a number of factors, including
whether the Group decides to exploit the related lease itself or, if not, whether it successfully recovers the related exploration and
evaluation asset through sale.
Factors which could impact the future recoverability include the level of proved and probable reserves and mineral resources,
future technological changes which could impact the cost of mining, future legal changes (including changes to environmental
restoration obligations) and changes to commodity prices.
To the extent that capitalised exploration and evaluation is determined not to be recoverable in the future, this will reduce profits
and net assets in the period in which this determination is made.
In addition, exploration and evaluation expenditure is capitalised if activities in the area of interest have not yet reached a stage
which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves. To the extent that it
is determined in the future that this capitalised expenditure should be written off, this will reduce profits and net assets in the
period in which this determination is made.
Capitalised exploration and evaluation expenditure that suffered an impairment are tested for possible reversal of the impairment
whenever events or changes in circumstances indicate that the impairment may have reversed.
(iii) Impairment of capitalised mine development expenditure and mine properties
The Group assesses impairment of all assets at each reporting date by evaluating conditions specific to the Group and to the
particular asset that may lead to impairment. If an impairment trigger exists, the recoverable amount of the asset is determined.
The future recoverability of capitalised mine development expenditure and mine properties is dependent on a number of factors,
including the level of proved, probable and inferred mineral resources, future technological changes which could impact the cost
of mining, future legal changes (including changes to environmental restoration obligations) and changes to commodity prices.
To the extent that capitalised mine development expenditure and mine properties is determined not to be recoverable in the
future, this will reduce profits and net assets in the period in which this determination is made.
(iv) Impairment of property, plant and equipment
The Group assesses impairment of all assets at each reporting date by evaluating conditions specific to the Group and to the
particular asset that may lead to impairment. If an impairment trigger exists, the recoverable amount of the asset is determined.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS30 JUNE 2015
A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. If the Group
loses control over a subsidiary, it:
Where a review for impairment is conducted, the recoverable amount is assessed by reference to the higher of ‘value in use’
(being the net present value of expected future cash flows of the relevant cash-generating unit) and ‘fair value less costs to sell’.
• De-recognises the assets (including goodwill) and liabilities of the subsidiary
• De-recognises the carrying amount of any non-controlling interests
• De-recognises the cumulative translation differences recorded in equity
• Recognises the fair value of the consideration received
• Recognises the fair value of any investment retained
• Recognises any surplus or deficit in profit or loss
• Reclassifies the parent’s share of components previously recognised in OCI to profit or loss or retained earnings, as
appropriate, as would be required if the Group had directly disposed of the related assets or liabilities
(d) Significant accounting judgements, estimates and assumptions
In the process of applying the Group's accounting policies, management has made the following judgements, and estimations
which have the most significant effect on the amounts recognised in the financial statements.
(i) Determination of mineral resources and ore reserves
The Group estimates its mineral resources and ore reserves in accordance with the Australian Code for Reporting of Exploration
Results, Mineral Resources and Ore Reserves 2004 (the ‘JORC code’) as a minimum standard. The information on mineral
resources and ore reserves were prepared by or under the supervision of Competent Persons as defined in the JORC code. The
amounts presented are based on the mineral resources and ore reserves determined under the JORC code.
There are numerous uncertainties inherent in estimating mineral resources and ore reserves and assumptions that are valid at
the time of estimation may change significantly when new information becomes available. Significant judgement is required in
assessing the available reserves. Factors that must be considered in determining reserves and resources are the Company's
history of converting resources to reserves and the relevant time frame, market and future developments.
Changes in the forecast prices of commodities, foreign currency exchange rates, production costs or recovery rates may change
the economic status of reserves and may ultimately result in the reserves being restated. Such changes in reserves could impact
on depreciation and amortisation rates, asset carrying values and provisions for decommissioning and restoration.
(ii)
Impairment of capitalised exploration and evaluation expenditure
The Group assesses impairment of all assets at each reporting date by evaluating conditions specific to the Group and to the
particular asset that may lead to impairment. If an impairment trigger exists, the recoverable amount of the asset is determined.
The future recoverability of capitalised exploration and evaluation expenditure is dependent on a number of factors, including
whether the Group decides to exploit the related lease itself or, if not, whether it successfully recovers the related exploration and
evaluation asset through sale.
Factors which could impact the future recoverability include the level of proved and probable reserves and mineral resources,
future technological changes which could impact the cost of mining, future legal changes (including changes to environmental
restoration obligations) and changes to commodity prices.
To the extent that capitalised exploration and evaluation is determined not to be recoverable in the future, this will reduce profits
and net assets in the period in which this determination is made.
In addition, exploration and evaluation expenditure is capitalised if activities in the area of interest have not yet reached a stage
which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves. To the extent that it
is determined in the future that this capitalised expenditure should be written off, this will reduce profits and net assets in the
period in which this determination is made.
Capitalised exploration and evaluation expenditure that suffered an impairment are tested for possible reversal of the impairment
whenever events or changes in circumstances indicate that the impairment may have reversed.
(iii) Impairment of capitalised mine development expenditure and mine properties
The Group assesses impairment of all assets at each reporting date by evaluating conditions specific to the Group and to the
particular asset that may lead to impairment. If an impairment trigger exists, the recoverable amount of the asset is determined.
The future recoverability of capitalised mine development expenditure and mine properties is dependent on a number of factors,
including the level of proved, probable and inferred mineral resources, future technological changes which could impact the cost
of mining, future legal changes (including changes to environmental restoration obligations) and changes to commodity prices.
To the extent that capitalised mine development expenditure and mine properties is determined not to be recoverable in the
future, this will reduce profits and net assets in the period in which this determination is made.
(iv) Impairment of property, plant and equipment
The Group assesses impairment of all assets at each reporting date by evaluating conditions specific to the Group and to the
particular asset that may lead to impairment. If an impairment trigger exists, the recoverable amount of the asset is determined.
In determining value in use, future cash flows are based on:
• Estimates of the quantities of ore reserves and mineral resources for which there is a high degree of confidence of economic
extraction;
• Future production levels;
• Future commodity prices; and
• Future cash costs of production and capital expenditure.
Variations to the expected future cash flows, and the timing thereof, could result in significant changes to any impairment losses
recognised, if any, which could in turn impact future financial results.
Property, plant and equipment that suffered an impairment are tested for possible reversal of the impairment whenever events or
changes in circumstances indicate that the impairment may have reversed. Refer to Note14 : Non-current assets - Property,
plant and equipment for further information.
(v) Provisions for decommissioning and rehabilitation costs
Decommissioning and rehabilitation costs are a normal consequence of mining, and the majority of this expenditure is incurred at
the end of a mine’s life. In determining an appropriate level of provision consideration is given to the expected future costs to be
incurred, the timing of these expected future costs (largely dependent on the life of the mine), and the estimated future level of
inflation.
The ultimate cost of decommissioning and rehabilitation is uncertain and costs can vary in response to many factors including
changes to the relevant legal requirements, the emergence of new restoration techniques, discount rates or experience at other
mine sites. The expected timing of expenditure can also change, for example in response to changes in reserves or to production
rates.
The carrying amount of the provision as at 30 June 2015 was $30.184 million (2014: $29.584 million). The Group estimates that
the costs would be realised towards the end of the respective mine lives and calculates the provision using the DCF method
based on expected costs to be incurred to rehabilitate the disturbed area. These costs are discounted at 3.5%.
Changes to any of the estimates could result in significant changes to the level of provisioning required, which would in turn
impact future financial results.
(vi) Share-based payment transactions
The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity
instruments at the date at which they are granted. The fair value is determined by a Black Scholes model and a Binomial model,
using the assumptions detailed in note 36.
(e) Revenue recognition
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be
reliably measured. Revenue is measured at consideration received or receivable. The following specific recognition criteria must
also be met before revenue is recognised:
(i) Sale of concentrates/ore
A sale is recorded when risk and reward of ownership of the concentrates/ore has passed to the buyer.
(ii)
Interest income
Revenue is recognised as interest accrues using the effective interest method. This is a method of calculating the amortised cost
of a financial asset and allocating the interest income over the relevant period using the effective interest rate, which is the rate
that exactly discounts estimated future cash receipts through the expected life of the financial asset to the net carrying amount of
the financial asset.
(iii) Dividends
Dividends are recognised as revenue when the right to receive payment is established.
(f) Borrowing costs
Borrowing costs include interest, amortisation of discounts or premiums relating to borrowings, amortisation of ancillary costs
incurred in connection with arrangement of borrowings, finance charges in respect of finance leases and foreign currency
exchange differences net of the effect of hedges of borrowings.
Borrowing costs are expensed as incurred unless they relate to qualifying assets. Qualifying assets are assets that take more
than twelve months to get ready for their intended use or sale. In these circumstances, borrowing costs are capitalised to the
costs of the assets. Where funds are borrowed specifically for the acquisition, construction or production of a qualifying asset, the
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS30 JUNE 2015
amount of borrowing costs capitalised is those incurred in relation to that borrowing, net of any interest earned on those
borrowings. Where funds are borrowed generally, borrowing costs are capitalised using a weighted average capitalisation rate to
the extent that they relate to the qualifying asset.
Exploration and evaluation expenditure carried forward relating to areas of interest which have not reached a stage permitting
reliable assessment of economic benefits are not qualifying assets.
(g) Leases
Finance leases, which transfer to the Group substantially all the risks and benefits incidental to ownership of the leased item, are
capitalised at the inception of the lease at the fair value of the leased property or, if lower, at the present value of the minimum
lease payments.
Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate
of interest on the remaining balance of the liability. Finance charges are charged directly against income.
Capitalised leased assets are depreciated over the shorter of the estimated useful life of the asset or the lease term.
Operating lease payments are recognised as an expense in the income statement on a straight-line basis over the lease term.
(h) Cash and cash equivalents
Cash on hand and in banks and short-term deposits are stated at nominal value.
For the purpose of the Statement of Cash Flows, cash includes cash on hand and in the banks short-term deposits with an
original maturity not exceeding three months and if greater than three months, principal amounts can be redeemed in full with
interest payable at the same cash rate from inception as per the agreement with each bank, net of bank overdrafts.
(i) Term deposits
Term deposits are stated at nominal value. These deposits have original maturity of three months or more.
(j) Trade receivables
(i) Nickel concentrate
Mining revenue from nickel concentrate sales exported from the Savannah Nickel Project is recognised at its provisional price on
the day the product has been shipped from port. 100% of the provisional value is payable in approximately 7 working days from
the issue of a provisional invoice. At each reporting date, provisional priced nickel is marked to market based on the forward
selling price for the quotational period stipulated in the contract until the quotational period expires and change in fair value is
recognised as revenue. Increments and decrements in the final measured contained nickel in nickel concentrate delivered to the
customer are brought to account upon presentation of the final invoice. Receivables are carried at fair value.
(ii) Nickel ore
Mining revenue from Lanfranchi nickel ore delivered to the Kambalda concentrator is recognised at its provisional price net of the
amount goods and services tax (GST) payable to the taxation authority. 70% of the provisional invoice is payable one month after
issue. Revenue is recognised based on the estimated fair value of the consideration receivable. At each reporting date,
provisional priced nickel is marked to market based on the forward selling price for the quotational period stipulated in the
contract until the quotational period expires and change in fair value is recognised as revenue. Receivables are carried at fair
value.
(iii) Other receivables
Receivables from related parties are recognised and carried at the nominal amount due. Interest is taken up as income on an
accrual basis.
(k)
Inventories
(i) Raw materials and stores, work in progress and finished goods
Inventories are valued at the lower of cost (determined based on weighted average cost) and net realisable value.
Costs incurred in bringing inventory to its present location and condition are accounted for as follows:
• ore stocks - cost of direct mining and a proportion of site overheads; and
• concentrates and work in progress - cost of direct mining, processing, transport and labour and a proportion of site overheads.
Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the
estimated costs necessary to make the sale. Cost of parts and consumables is accounted for using average cost.
(ii) Spares for production
Inventories of consumable supplies and spare parts expected to be used in production are valued at weighted average cost.
Obsolete or damaged inventories of such items are valued at net realisable value.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS30 JUNE 2015
amount of borrowing costs capitalised is those incurred in relation to that borrowing, net of any interest earned on those
borrowings. Where funds are borrowed generally, borrowing costs are capitalised using a weighted average capitalisation rate to
the extent that they relate to the qualifying asset.
Exploration and evaluation expenditure carried forward relating to areas of interest which have not reached a stage permitting
reliable assessment of economic benefits are not qualifying assets.
(l) Derivative financial instruments and hedging
The Group uses derivatives such as United States dollar nickel and copper forward sales contracts, United States dollar nickel
options, United States denominated currency options and United States denominated forward currency sales contracts to
manage its risks associated with foreign currencies and commodity prices fluctuations. These derivative financial instruments are
stated at fair value.
(g) Leases
lease payments.
Finance leases, which transfer to the Group substantially all the risks and benefits incidental to ownership of the leased item, are
capitalised at the inception of the lease at the fair value of the leased property or, if lower, at the present value of the minimum
Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate
of interest on the remaining balance of the liability. Finance charges are charged directly against income.
Capitalised leased assets are depreciated over the shorter of the estimated useful life of the asset or the lease term.
Operating lease payments are recognised as an expense in the income statement on a straight-line basis over the lease term.
(h) Cash and cash equivalents
Cash on hand and in banks and short-term deposits are stated at nominal value.
For the purpose of the Statement of Cash Flows, cash includes cash on hand and in the banks short-term deposits with an
original maturity not exceeding three months and if greater than three months, principal amounts can be redeemed in full with
interest payable at the same cash rate from inception as per the agreement with each bank, net of bank overdrafts.
Term deposits are stated at nominal value. These deposits have original maturity of three months or more.
Mining revenue from nickel concentrate sales exported from the Savannah Nickel Project is recognised at its provisional price on
the day the product has been shipped from port. 100% of the provisional value is payable in approximately 7 working days from
the issue of a provisional invoice. At each reporting date, provisional priced nickel is marked to market based on the forward
selling price for the quotational period stipulated in the contract until the quotational period expires and change in fair value is
recognised as revenue. Increments and decrements in the final measured contained nickel in nickel concentrate delivered to the
customer are brought to account upon presentation of the final invoice. Receivables are carried at fair value.
Mining revenue from Lanfranchi nickel ore delivered to the Kambalda concentrator is recognised at its provisional price net of the
amount goods and services tax (GST) payable to the taxation authority. 70% of the provisional invoice is payable one month after
issue. Revenue is recognised based on the estimated fair value of the consideration receivable. At each reporting date,
provisional priced nickel is marked to market based on the forward selling price for the quotational period stipulated in the
contract until the quotational period expires and change in fair value is recognised as revenue. Receivables are carried at fair
(i) Term deposits
(j) Trade receivables
(i) Nickel concentrate
(ii) Nickel ore
value.
(iii) Other receivables
accrual basis.
(k)
Inventories
(i) Raw materials and stores, work in progress and finished goods
Inventories are valued at the lower of cost (determined based on weighted average cost) and net realisable value.
Costs incurred in bringing inventory to its present location and condition are accounted for as follows:
• ore stocks - cost of direct mining and a proportion of site overheads; and
• concentrates and work in progress - cost of direct mining, processing, transport and labour and a proportion of site overheads.
Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the
estimated costs necessary to make the sale. Cost of parts and consumables is accounted for using average cost.
(ii) Spares for production
Inventories of consumable supplies and spare parts expected to be used in production are valued at weighted average cost.
Obsolete or damaged inventories of such items are valued at net realisable value.
Derivatives are not held for speculative purposes.
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured
to their fair value at each reporting date. The resulting gain or loss is recognised in profit or loss immediately unless the derivative
is designated and effective as a cash flow hedging instrument, in which event, the timing of the recognition in profit or loss
depends on the nature of the hedge relationship.
A hedge of the foreign currency risk and commodity price risk of a firm commitment is accounted for as a cash flow hedge.
At the inception of a hedge relationship, the Group formally designates and documents the hedge relationship to which the Group
wishes to apply hedge accounting and the risk management objective and strategy for undertaking the hedge. The
documentation includes identification of the hedging instrument, the hedged item or transaction, the nature of the risk being
hedged and how the entity will assess the hedging instrument’s effectiveness in offsetting the exposure to changes in the hedged
item’s fair value or cash flows attributable to the hedged risk. Such hedges are expected to be highly effective in achieving
offsetting changes in the fair value or cash flows and are assessed on an ongoing basis to determine that they actually have been
highly effective throughout the financial reporting periods for which they were designated.
The hedges that meet the strict criteria for hedge accounting are accounted for as follows:
(i) Cash flow hedges
Cash flow hedges are hedges of the Group’s exposure to variability in cash flows that is attributable to a particular risk associated
with a highly probable forecast transaction and that could affect profit and loss. The effective portion of changes in the fair value of
derivatives that are designated and qualify as cash flow hedges are deferred in equity. The gain or loss relating to the ineffective
portion is recognised immediately in the income statement.
Amounts deferred in equity are recycled in the income statement in the periods when the hedged item is recognised in the
income statement.
Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated, or exercised, or no longer qualifies
for hedge accounting. At that time, any cumulative gain or loss deferred in equity at that time remains in equity and is recognised
when the forecast transaction is ultimately recognised in the income statement. When a forecast transaction is no longer
expected to occur, the cumulative gain or loss that was deferred in equity is recognised immediately in the income statement.
The Group tests each of the designated cash flow hedges for effectiveness at the inception of the hedge and then at each
reporting date both prospectively and retrospectively using the dollar offset method. This is done by comparing the changes in
the present value of the cash flow arising from hedged forecast sale at the forward rate, compared to changes in the fair value of
the forward contract. Measurement of the cash flow changes is based on the respective forward curve over the hedge horizon.
At each balance sheet date, the Group measures ineffectiveness using the ratio offset method. For cash flow hedges if the risk is
over-hedged, the ineffective portion is taken immediately to the income/expense in the income statement.
(ii) Derivatives that do not qualify for hedge accounting
Certain derivative instruments do not qualify for hedge accounting. Changes in the fair value of any derivative instruments that do
not qualify for hedge accounting are recognised immediately in the income statement.
Receivables from related parties are recognised and carried at the nominal amount due. Interest is taken up as income on an
(m) Foreign currency translation
Both the functional and presentation currency of Panoramic Resources Limited and its Australian subsidiaries is Australian
dollars (AUD).
(i) Transactions and balances
Transactions in foreign currencies are initially recorded by the Group’s entities at their respective functional currency spot rates at
the date the transaction first qualifies for recognition.
Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency spot rates of exchange
at the reporting date.
Differences arising on settlement or translation of monetary items are recognised in profit or loss with the exception of monetary
items that are designated as part of the hedge of the Group’s net investment of a foreign operation. These are recognised in other
comprehensive income until the net investment is disposed of, at which time, the cumulative amount is reclassified to profit or
2 0 1 5 A N N U A L R E P O R T | P A G E 6 5
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS30 JUNE 2015
loss. Tax charges and credits attributable to exchange differences on those monetary items are also recorded in other
comprehensive income.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at
the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the
exchange rates at the date when the fair value is determined. The gain or loss arising on translation of non-monetary items
measured at fair value is treated in line with the recognition of gain or loss on change in fair value of the item (i.e., translation
differences on items whose fair value gain or loss is recognised in other comprehensive income or profit or loss are also
recognised in other comprehensive income or profit or loss, respectively).
(ii) Group companies
On consolidation, the assets and liabilities of foreign operations are translated into dollars at the rate of exchange prevailing at the
reporting date and their statements of profit or loss are translated at exchange rates prevailing at the dates of the transactions.
The exchange differences arising on translation for consolidation are recognised in other comprehensive income. On disposal of
a foreign operation, the component of other comprehensive income relating to that particular foreign operation is recognised in
profit or loss.
(n) Investments and other financial assets
(i) Available-for-sale financial assets
After initial recognition available-for-sale investments are measured at fair value with gains or losses being recognised as a
separate component of equity until the investment is derecognised or until the investment is determined to be impaired, at which
time the cumulative gain or loss previously reported in equity is recognised in profit or loss.
The fair value of investments that are actively traded in organised financial markets is determined by reference to quoted market
bid prices at the close of business on the balance sheet date.
Investments which are not classified as held for trading or held to maturity are treated as available-for-sale financial assets.
(o) Income tax
Current tax assets and liabilities for the current and prior periods 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
substantively enacted by the balance sheet date.
Deferred income tax is provided on all temporary differences at the balance sheet date between the tax bases of assets and
liabilities and their carrying amounts for financial reporting purposes.
Deferred income tax liabilities are recognised for all taxable temporary differences:
• except where the deferred income tax liability arises from the initial recognition of an asset or liability in a transaction that is not a
business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and
• in respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint
ventures, except where the timing of the reversal of the temporary differences can be controlled and it is probable that the
temporary differences will not reverse in the foreseeable future.
Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax assets and
unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary
differences, and the carry-forward of unused tax assets and unused tax losses can be utilised:
• except where the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition of
an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the
accounting profit nor taxable profit or loss; and
• in respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint
ventures, deferred tax assets are only recognised to the extent that it is probable that the temporary differences will reverse in
the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.
The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the extent that it is no
longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised.
Unrecognised deferred tax assets and liabilities are reassessed at each balance sheet date and reduced to the extent that it is no
longer probable that future taxable profit will allow the deferred tax asset to be utilised.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is
realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the
balance sheet date.
Income taxes relating to items recognised directly in equity are recognised in equity and not in profit or loss.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS30 JUNE 2015
Deferred tax assets and deferred tax 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.
Tax consolidation legislation
Panoramic Resources Limited and its wholly-owned Australian controlled entities have implemented the tax consolidation
legislation.
The head entity, Panoramic Resources Limited, and the controlled entities in the tax consolidated group account for their own
current and deferred tax amounts. These tax amounts are measured as if each entity in the tax consolidated group continues to
be a standalone taxpayer in its own right.
In addition to its own current and deferred tax amounts, Panoramic Resources Limited also recognises the current tax liabilities
(or assets) and the deferred tax assets arising from unused tax losses and unused tax credits assumed from controlled entities in
the tax consolidated group.
Assets or liabilities arising under tax funding agreements with the tax consolidated entities are recognised as amounts receivable
from or payable to other entities in the Company.
Any difference between the amounts assumed and amounts receivable or payable under the tax funding agreement are
recognised as a contribution to (or distribution from) wholly-owned tax consolidated entities.
(p) Other taxes
Revenue, expenses and assets are recognised net of the amount of GST except:
• where the GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the
GST is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and
• receivables and payables are stated with the amount of GST included.
The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in
the balance sheet.
Current tax assets and liabilities for the current and prior periods 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
substantively enacted by the balance sheet date.
Cash flows are included in the Statement of Cash Flows on a gross basis and the GST component of cash flows arising from
investing and financing activities, which is recoverable from, or payable to, the taxation authority, are classified as operating cash
flows.
Deferred income tax is provided on all temporary differences at the balance sheet date between the tax bases of assets and
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority.
(q) Property, plant and equipment
Items of plant and equipment are stated at cost less accumulated depreciation and any impairment in value. The cost of plant
and equipment constructed for and by the consolidated entity, where applicable, includes the cost of materials and direct labour.
The proportion of overheads and other incidental costs directly attributable to its construction are also capitalised to the cost of
plant and equipment.
Costs incurred on plant and equipment subsequent to initial acquisition are capitalised when it is probable that future economic
benefits, in excess of the originally assessed performance of the asset will flow to the consolidated entity in future years. Where
these costs represent separate components of a complex asset, they are accounted for as separate assets and are separately
depreciated over their useful lives. Costs incurred on plant and equipment that do not meet the criteria for capitalisation are
expensed as incurred.
loss. Tax charges and credits attributable to exchange differences on those monetary items are also recorded in other
comprehensive income.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at
the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the
exchange rates at the date when the fair value is determined. The gain or loss arising on translation of non-monetary items
measured at fair value is treated in line with the recognition of gain or loss on change in fair value of the item (i.e., translation
differences on items whose fair value gain or loss is recognised in other comprehensive income or profit or loss are also
recognised in other comprehensive income or profit or loss, respectively).
(ii) Group companies
On consolidation, the assets and liabilities of foreign operations are translated into dollars at the rate of exchange prevailing at the
reporting date and their statements of profit or loss are translated at exchange rates prevailing at the dates of the transactions.
The exchange differences arising on translation for consolidation are recognised in other comprehensive income. On disposal of
a foreign operation, the component of other comprehensive income relating to that particular foreign operation is recognised in
profit or loss.
(n) Investments and other financial assets
(i) Available-for-sale financial assets
After initial recognition available-for-sale investments are measured at fair value with gains or losses being recognised as a
separate component of equity until the investment is derecognised or until the investment is determined to be impaired, at which
time the cumulative gain or loss previously reported in equity is recognised in profit or loss.
The fair value of investments that are actively traded in organised financial markets is determined by reference to quoted market
bid prices at the close of business on the balance sheet date.
Investments which are not classified as held for trading or held to maturity are treated as available-for-sale financial assets.
(o) Income tax
liabilities and their carrying amounts for financial reporting purposes.
Deferred income tax liabilities are recognised for all taxable temporary differences:
• except where the deferred income tax liability arises from the initial recognition of an asset or liability in a transaction that is not a
business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and
• in respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint
ventures, except where the timing of the reversal of the temporary differences can be controlled and it is probable that the
temporary differences will not reverse in the foreseeable future.
Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax assets and
unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary
differences, and the carry-forward of unused tax assets and unused tax losses can be utilised:
• except where the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition of
an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the
accounting profit nor taxable profit or loss; and
• in respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint
ventures, deferred tax assets are only recognised to the extent that it is probable that the temporary differences will reverse in
the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.
The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the extent that it is no
longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised.
Unrecognised deferred tax assets and liabilities are reassessed at each balance sheet date and reduced to the extent that it is no
longer probable that future taxable profit will allow the deferred tax asset to be utilised.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is
realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the
balance sheet date.
Income taxes relating to items recognised directly in equity are recognised in equity and not in profit or loss.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS30 JUNE 2015
(i) Depreciation and amortisation
Depreciation and amortisation is calculated on a straight line basis over the estimated useful lives of the asset. The estimated
useful lives used for each class of asset are as follows:
Office equipment
Office furniture and fittings
3 - 4 years
5 years
Plant and equipment under hire purchase
over the lease term
Plant and equipment under finance lease
Process plant and buildings
over the lease term
lesser of life of mine and life of asset
(ii) Impairment
The carrying values of plant and equipment are reviewed for impairment when events or changes in circumstances indicate the
carrying value may not be recoverable.
If any such indication exists and where the carrying values exceed the estimated recoverable amount, the assets or
cash-generating units are written down to their recoverable amount.
For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the
cash-generating unit to which the asset belongs.
The recoverable amount of plant and equipment is the greater of fair value less costs to sell and value in use. In assessing value
in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current
market assessments of the time value of money and the risks specific to the asset.
Property, plant and equipment that suffered an impairment are tested for possible reversal of the impairment whenever events or
changes in circumstances indicate that the impairment may have reversed.
(iii) Derecognition and disposal
An item of property, plant and equipment is derecognised upon disposal or when no further future economic benefits are
expected from its use or disposal.
Any gain or loss arising on derecognition of the asset (calculated as the difference between net disposal proceeds and the
carrying amount of the asset) is included in profit or loss in the year the asset is derecognised.
(r) Exploration, evaluation, development, mine properties and rehabilitation expenditure
(i) Exploration and evaluation expenditure
Expenditure on exploration and evaluation is accounted for in accordance with the ‘area of interest’ method.
Exploration and evaluation expenditure is capitalised provided the rights to tenure of the area of interest is current and the
exploration and evaluation activities are expected to be recouped through successful development and exploitation of the area
or, alternatively, by its sale.
Exploration and evaluation in the area of interest that have not at the reporting date reached a stage which permits a reasonable
assessment of the existence or otherwise of economically recoverable reserves, and active and significant operations in, or
relating to, the area of interest are expensed as incurred.
When the technical feasibility and commercial viability of extracting a mineral resource have been demonstrated then any
capitalised exploration and evaluation expenditure is reclassified as capitalised mine development. Prior to reclassification,
capitalised exploration and evaluation is assessed for impairment.
Impairment
The carrying value of capitalised exploration expenditure is assessed for impairment at the cash-generating unit level whenever
facts and circumstances suggest that the carrying amount of the asset may exceed its recoverable amount.
The recoverable amount of capitalised exploration and evaluation expenditure is the higher of fair value less costs to sell and
value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax
discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.
For an asset that does not generate largely independent cash inflows, recoverable amount is determined for the cash-generating
unit in which the asset belongs, unless the asset’s value in use can be estimated to be close to its fair value.
An impairment exists when the carrying amount of an asset or cash-generating unit exceeds its estimated recoverable amount.
The asset or cash-generating unit is then written down to its recoverable amount. Any impairment losses are recognised in the
income statement.
Capitalised exploration and evaluation expenditure that suffered an impairment are tested for possible reversal of the impairment
whenever events or changes in circumstances indicate that the impairment may have reversed.
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Depreciation and amortisation is calculated on a straight line basis over the estimated useful lives of the asset. The estimated
(i) Depreciation and amortisation
useful lives used for each class of asset are as follows:
Office equipment
Office furniture and fittings
Plant and equipment under hire purchase
Plant and equipment under finance lease
Process plant and buildings
3 - 4 years
5 years
over the lease term
over the lease term
lesser of life of mine and life of asset
(ii) Impairment
The carrying values of plant and equipment are reviewed for impairment when events or changes in circumstances indicate the
carrying value may not be recoverable.
If any such indication exists and where the carrying values exceed the estimated recoverable amount, the assets or
cash-generating units are written down to their recoverable amount.
For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the
cash-generating unit to which the asset belongs.
The recoverable amount of plant and equipment is the greater of fair value less costs to sell and value in use. In assessing value
in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current
market assessments of the time value of money and the risks specific to the asset.
(iii) Derecognition and disposal
expected from its use or disposal.
An item of property, plant and equipment is derecognised upon disposal or when no further future economic benefits are
Any gain or loss arising on derecognition of the asset (calculated as the difference between net disposal proceeds and the
carrying amount of the asset) is included in profit or loss in the year the asset is derecognised.
(r) Exploration, evaluation, development, mine properties and rehabilitation expenditure
(i) Exploration and evaluation expenditure
Expenditure on exploration and evaluation is accounted for in accordance with the ‘area of interest’ method.
Exploration and evaluation expenditure is capitalised provided the rights to tenure of the area of interest is current and the
exploration and evaluation activities are expected to be recouped through successful development and exploitation of the area
or, alternatively, by its sale.
Exploration and evaluation in the area of interest that have not at the reporting date reached a stage which permits a reasonable
assessment of the existence or otherwise of economically recoverable reserves, and active and significant operations in, or
relating to, the area of interest are expensed as incurred.
When the technical feasibility and commercial viability of extracting a mineral resource have been demonstrated then any
capitalised exploration and evaluation expenditure is reclassified as capitalised mine development. Prior to reclassification,
capitalised exploration and evaluation is assessed for impairment.
Impairment
The carrying value of capitalised exploration expenditure is assessed for impairment at the cash-generating unit level whenever
facts and circumstances suggest that the carrying amount of the asset may exceed its recoverable amount.
The recoverable amount of capitalised exploration and evaluation expenditure is the higher of fair value less costs to sell and
value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax
discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.
For an asset that does not generate largely independent cash inflows, recoverable amount is determined for the cash-generating
unit in which the asset belongs, unless the asset’s value in use can be estimated to be close to its fair value.
(ii) Mine development expenditure
Mine development expenditure represents the costs incurred in preparing mines for production, and includes stripping and waste
removal costs incurred before production commences. These costs are capitalised to the extent they are expected to be
recouped through successful exploitation of the related mining leases. Once production commences, these costs are amortised
using the units of production method based on the estimated economically recoverable reserves to which they relate or are
written off if the mine property is abandoned.
Impairment
The carrying value of capitalised mine development is assessed for impairment whenever facts and circumstances suggest that
the carrying amount of the asset may exceed its recoverable amount.
The recoverable amount of capitalised mine development expenditure is the higher of fair value less costs to sell and value in
use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate
that reflects current market assessments of the time value of money and the risks specific to the asset.
For an asset that does not generate largely independent cash inflows, recoverable amount is determined for the cash-generating
unit in which the asset belongs, unless the asset’s value in use can be estimated to be close to its fair value.
An impairment exists when the carrying amount of an asset or cash-generating unit exceeds its estimated recoverable amount.
The asset or cash-generating unit is then written down to its recoverable amount. Any impairment losses are recognised in the
income statement.
Capitalised mine development expenditure that suffered an impairment are tested for possible reversal of the impairment
whenever events or changes in circumstances indicate that the impairment may have reversed.
Property, plant and equipment that suffered an impairment are tested for possible reversal of the impairment whenever events or
changes in circumstances indicate that the impairment may have reversed.
(iii) Mine properties
Mine properties expenditure represents the cost incurred in the acquisition of a mining lease, and represents the excess of the
cost of acquisition over the fair value of the net identifiable assets of the acquired mining lease at the date of acquisition. These
costs are capitalised to the extent they are expected to be recouped through successful exploitation of the related mining leases
Once production commences, these costs are amortised using the units of production method based on the estimated
economically recoverable reserves to which they relate or are written off if the mine property is abandoned.
Impairment
The carrying value of capitalised mine properties is assessed for impairment whenever facts and circumstances suggest that the
carrying amount of the asset may exceed its recoverable amount.
The recoverable amount of capitalised mine properties expenditure is the higher of fair value less costs to sell and value in use. In
assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that
reflects current market assessments of the time value of money and the risks specific to the asset.
For an asset that does not generate largely independent cash inflows, recoverable amount is determined for the cash-generating
unit in which the asset belongs, unless the asset’s value in use can be estimated to be close to its fair value.
An impairment exists when the carrying amount of an asset or cash-generating unit exceeds its estimated recoverable amount.
The asset or cash-generating unit is then written down to its recoverable amount. Any impairment losses are recognised in the
income statement.
Mine property expenditure that suffered an impairment are tested for possible reversal of the impairment whenever events or
changes in circumstances indicate that the impairment may have reversed.
(iv) Provisions for decomissioning and rehabilitation
The Group is required to decommission and rehabilitate mines and processing sites at the end of their producing lives to a
condition acceptable to the relevant authorities.
The expected cost of any approved decommissioning or rehabilitation program, discounted to its net present value, is provided in
the period in which obligation arise. The cost is capitalised when it gives rise to future benefits, whether the rehabilitation activity is
expected to occur over the life of the operation or at the time of closure. Over time, the liability is increased for the change in net
present value based on a risk adjusted pre-tax discount rate appropriate to the risk inherent in the liability. The unwinding of the
discount is included in financing cost. Expected decommissioning and rehabilitation costs are based on the discounted value of
the estimated future cost of detailed plans prepared for each site. Where there is a change in the expected decommissioning and
restoration costs, the value of the provision and any related asset are adjusted and the effect is recognised in the income
statement on a prospective basis over the remaining life of the operation.
An impairment exists when the carrying amount of an asset or cash-generating unit exceeds its estimated recoverable amount.
The asset or cash-generating unit is then written down to its recoverable amount. Any impairment losses are recognised in the
(s)
Impairment of non-financial assets
income statement.
Capitalised exploration and evaluation expenditure that suffered an impairment are tested for possible reversal of the impairment
whenever events or changes in circumstances indicate that the impairment may have reversed.
The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication
exists, or when annual impairment testing for an asset is required, the Group makes an estimate of the asset’s recoverable
amount. An asset’s recoverable amount is the higher of its fair value less costs to sell and its value in use and determined for an
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS30 JUNE 2015
individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or
groups of assets and the asset’s value in use cannot be estimated to be close to its fair value. In such cases the asset is tested for
impairment as part of the cash-generating unit to which it belongs. When the carrying amount of an asset or cash-generating unit
exceeds its recoverable amount, the asset or cash-generating unit is considered impaired and is written down to its recoverable
amount.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre tax discount rate that
reflects current market assessments of the time value of money and the risks specific to the asset. Impairment losses relating to
continuing operations are recognised in those expense categories consistent with the function of the impaired asset unless the
asset is carried at revalued amount (in which case the impairment loss is treated as a revaluation decrease).
An assessment is also made at each reporting date as to whether there is any indication that previously recognised impairment
losses may no longer exist or may have decreased. If such indication exists, the recoverable amount is estimated. A previously
recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset’s
recoverable amount since the last impairment loss was recognised. If that is the case the carrying amount of the asset is
increased to its recoverable amount. That increased amount cannot exceed the carrying amount that would be determined, net
of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in profit and
loss unless the asset is carried at revalued amount, in which case the reversal is treated as a revaluation increase. After such a
reversal the depreciation charge is adjusted in future periods to allocate the asset’s revised carrying amount, less any residual
value, on a systematic basis over its remaining useful life.
Non-financial assets that suffered an impairment are tested for possible reversal of the impairment whenever events or changes
in circumstances indicate that the impairment may have reversed.
(t) Trade and other payables
Trade payables and other payables are carried at amortised costs 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.
(u) Interest-bearing loans and borrowings
All loans and borrowings are initially recognised at cost, being the fair value of the consideration received net of issue costs
associated with the borrowing.
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective
interest method. Amortised cost is calculated by taking into account any issue costs, and any discount or premium on settlement.
Gains and losses are recognised in the income statement when the liabilities are derecognised and as well as through the
amortisation process.
(v) Provisions
Provisions are recognised when the economic entity has a present obligation (legal or constructive) to make a future sacrifice of
economic benefits to other entities as a result of past transactions or other past events, it is probable that a future sacrifice of
economic benefits will be required and a reliable estimate can be made of the amount of the obligation.
When the Group expects some or all of a provision to be reimbursed, for example under an insurance contract, the
reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. The expense relating to
any provision is presented in the income statement net of any reimbursement.
The effect of the time value of money is material and provisions are determined by discounting the expected future cash flows at
a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to
the liability.
Where discounting is used, the increase in the provision due to the passage of time is recognised as a borrowing cost.
(w) Employee benefits
(i) Short term benefits
Liabilities for short term benefits expected to be wholly settled within 12 months of the reporting date are recognised in other
payables in respect of employees services up to the reporting date. They 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 are
measured at the rates paid or payable.
(ii) Long service leave
The liability for long service leave is recognised in the provision for employee benefits and measured as the present value of
expected future payments to be made in respect of services provided by employees up to the reporting date using the projected
unit credit method. 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 of corporate bond rate with
terms of maturity and currencies that match, as closely as possible, the estimated future cash outflows.
P A G E 7 0 | 2 0 1 5 A N N U A L R E P O R T
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individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or
groups of assets and the asset’s value in use cannot be estimated to be close to its fair value. In such cases the asset is tested for
impairment as part of the cash-generating unit to which it belongs. When the carrying amount of an asset or cash-generating unit
exceeds its recoverable amount, the asset or cash-generating unit is considered impaired and is written down to its recoverable
amount.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre tax discount rate that
reflects current market assessments of the time value of money and the risks specific to the asset. Impairment losses relating to
continuing operations are recognised in those expense categories consistent with the function of the impaired asset unless the
asset is carried at revalued amount (in which case the impairment loss is treated as a revaluation decrease).
An assessment is also made at each reporting date as to whether there is any indication that previously recognised impairment
losses may no longer exist or may have decreased. If such indication exists, the recoverable amount is estimated. A previously
recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset’s
recoverable amount since the last impairment loss was recognised. If that is the case the carrying amount of the asset is
increased to its recoverable amount. That increased amount cannot exceed the carrying amount that would be determined, net
of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in profit and
loss unless the asset is carried at revalued amount, in which case the reversal is treated as a revaluation increase. After such a
reversal the depreciation charge is adjusted in future periods to allocate the asset’s revised carrying amount, less any residual
value, on a systematic basis over its remaining useful life.
Non-financial assets that suffered an impairment are tested for possible reversal of the impairment whenever events or changes
in circumstances indicate that the impairment may have reversed.
Trade payables and other payables are carried at amortised costs 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
(t) Trade and other payables
in respect of the purchase of these goods and services.
(u) Interest-bearing loans and borrowings
All loans and borrowings are initially recognised at cost, being the fair value of the consideration received net of issue costs
associated with the borrowing.
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective
interest method. Amortised cost is calculated by taking into account any issue costs, and any discount or premium on settlement.
Gains and losses are recognised in the income statement when the liabilities are derecognised and as well as through the
amortisation process.
(v) Provisions
Provisions are recognised when the economic entity has a present obligation (legal or constructive) to make a future sacrifice of
economic benefits to other entities as a result of past transactions or other past events, it is probable that a future sacrifice of
economic benefits will be required and a reliable estimate can be made of the amount of the obligation.
When the Group expects some or all of a provision to be reimbursed, for example under an insurance contract, the
reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. The expense relating to
any provision is presented in the income statement net of any reimbursement.
The effect of the time value of money is material and provisions are determined by discounting the expected future cash flows at
a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to
Where discounting is used, the increase in the provision due to the passage of time is recognised as a borrowing cost.
the liability.
(w) Employee benefits
(i) Short term benefits
measured at the rates paid or payable.
(ii) Long service leave
Liabilities for short term benefits expected to be wholly settled within 12 months of the reporting date are recognised in other
payables in respect of employees services up to the reporting date. They 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 are
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 using the projected
unit credit method. 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 of corporate bond rate with
terms of maturity and currencies that match, as closely as possible, the estimated future cash outflows.
(iii) Share-based payments
Equity-settled transactions
The Group provides benefits to employees (including executive directors) of the Group in the form of share based payment
transactions, whereby employees render services in exchange for rights over shares (‘equity-settled transactions’).
The cost of these equity-settled transactions with employees is measured by reference to the fair value at the date at which they
are granted. The fair value is determined using a Monte-Carlo simulation model.
In valuing equity-settled transactions, no account is taken of any performance conditions, other than conditions linked to the price
of shares of Panoramic Resources Limited if applicable.
The cost of equity-settled transactions is recognised, together with the corresponding increase in reserve, over the period in
which the performance conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the
award (‘vesting date’).
The cumulative expense recognised for equity-settled transactions at each reporting date until vesting date reflects:
(i)
the extent to which the vesting period has expired; and
(ii) the number of awards that, in the opinion of the directors of the Group, will ultimately vest.
This opinion is formed based on the best available information at balance date. No adjustment is made for the likelihood of
market performance conditions being met as the effect of these conditions is included in the determination of fair value at grant
date. The income statement charge or credit for a period represents the movement in cumulative expense recognised as at the
beginning and end of that period. There is a corresponding entry to equity.
No expense is recognised for awards that do not ultimately vest, except for awards where vesting is conditional upon a market
condition.
If the terms of an equity-settled award are modified, as a minimum an expense is recognised as if the terms had not been
modified. In addition, an expense is recognised for any modification that increases the total fair value of the share-based payment
arrangement, or is otherwise beneficial to the employee, as measured at the date of modification.
If an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet
recognised for the award is recognised immediately. However, if a new award is substituted for the cancelled award and
designated as a replacement award on the date that it is granted, the cancelled and new award are treated as if they were a
modification of the original award, as described in the previous paragraph.
The dilutive effect, if any, of outstanding options is reflected as additional share dilution in the computation of earnings per share.
(iv) Bonus plans
The Company recognises a liability and an expense for bonuses based on a formula that takes into consideration the profit
attributable to the Company's shareholders after certain adjustments. The Company recognises a provision where contractually
obliged or where there is a past practice that has created a constructive obligation.
(x) Contributed equity
Incremental costs directly attributable to the issue of new shares for the acquisition of a business are deducted from equity and
not expensed as an acquisition related cost.
(y) Dividends
Provision is made for the amount of any dividend declared, being appropriately authorised and no longer at the discretion of the
entity, on or before the end of the financial year but not distributed at balance date.
(z) Earnings per share
Basic earnings per share is calculated as net profit attributable to members of the Parent, adjusted to exclude any costs of
servicing equity (other than dividends) and preference share dividends, divided by the weighted average number of ordinary
shares, adjusted for any bonus element.
Diluted earnings per share is calculated as net profit attributable to members of the Parent, adjusted for:
• costs of servicing equity (other than dividends) and preference share dividends;
• other non-discretionary changes in revenues or expenses during the period that would result from the dilution of potential
ordinary shares;
divided by the weighted average number of ordinary shares and dilutive potential ordinary shares, adjusted for any bonus
element.
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(aa) Business combinations
Business combinations are accounted for using the acquisition method. The consideration transferred in a business combination
shall be measured at fair value, which shall be calculated as the sum of the acquisition date fair values of the assets transferred
by the acquirer, the liabilities incurred by the acquirer to former owners of the acquiree and the equity issued by the acquirer, and
the amount of any non-controlling interest in the acquiree. For each business combination, the acquirer measures the
non-controlling interest in the acquiree either at fair value or at the proportionate share of the acquiree's identifiable net assets.
Acquisition-related costs are expensed as incurred.
When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and
designation in accordance with the contractual terms, economic conditions, the Group’s operating or accounting policies and
other pertinent conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts by
the acquiree.
If the business combination is achieved in stages, the acquisition date fair value of the acquirer's previously held equity interest in
the acquiree is remeasured at fair value as at the acquisition date through profit or loss.
Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date. Subsequent
changes to the fair value of the contingent consideration which is deemed to be an asset or liability will be recognised in
accordance with AASB 139 either in profit or loss or in other comprehensive income. If the contingent consideration is classified
as equity, it shall not be remeasured.
Business combinations prior to 1 July 2009 were accounted for using the purchase method.
(ab) Government grants
Government grants are recognised where there is reasonable assurance that the grant will be received and all attached
conditions will be complied with. When the grant relates to an expense item, it is recognised as income on a systematic basis
over the periods that the related costs, for which it is intended to compensate, are expensed. When the grant relates to an asset,
it is recognised as income in equal amounts over the expected useful life of the related asset.
(ac) Joint Operations
The Group’s recognises its interest in joint operations in:
- Assets, including its share of any assets held jointly
- Liabilities, including its share of any liabilities incurred jointly
- Revenue from the sale of its share of the output arising from the joint operation
- Share of the revenue from the sale of the output by the joint operation
- Expenses, including its share of any expenses incurred jointly
2 Segment information
(a) Business segments
The Group has identified its operating segments based on the internal reports that are reviewed and used by the executive
management team (the chief operating decision makers) in assessing performance and in determining the allocation of
resources.
The reportable segments are based on aggregated operating segments determined by the similarity of the products produced
and sold, as these are the sources of the Group's major risks and have the most effect on the rates of return.
The Group has identified five operating segments being: (1) Nickel, the aggregation of the Savannah Nickel Project, Lanfranchi
Nickel Project and Copernicus Nickel Project; (2) Gold, the Gidgee Gold Project and Mt Henry Gold Project; (3) Platinum Group
Metals, the Thunder Bay North PGM Project and Panton PGM Project; (4) Australian Exploration; and (5) Overseas Exploration.
Nickel
The Savannah Nickel Project, the Copernicus Nickel Project and the Lanfranchi Nickel Project both mine nickel ore. At the
Savannah Nickel Project and the Copernicus Nickel Project, nickel concentrate is produced and sold to the one customer Sino
Nickel Pty Ltd (a company owned by the Jinchuan Group Limited (60%) and Sino Mining International Limited (40%)). At the
Lanfranchi Nickel Project, nickel ore is delivered and sold to the one customer BHP Billiton Nickel West Pty Ltd.
Gold
The 100% owned and operated Gidgee Gold Project is located 640kms northeast of Perth in Western Australia, and was
purchased by the Company in January 2011. The Company refurbished the site’s village and administration areas and
commenced exploration and evaluation activities from July 2011.
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(aa) Business combinations
Business combinations are accounted for using the acquisition method. The consideration transferred in a business combination
shall be measured at fair value, which shall be calculated as the sum of the acquisition date fair values of the assets transferred
by the acquirer, the liabilities incurred by the acquirer to former owners of the acquiree and the equity issued by the acquirer, and
the amount of any non-controlling interest in the acquiree. For each business combination, the acquirer measures the
non-controlling interest in the acquiree either at fair value or at the proportionate share of the acquiree's identifiable net assets.
Acquisition-related costs are expensed as incurred.
When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and
designation in accordance with the contractual terms, economic conditions, the Group’s operating or accounting policies and
other pertinent conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts by
the acquiree.
If the business combination is achieved in stages, the acquisition date fair value of the acquirer's previously held equity interest in
the acquiree is remeasured at fair value as at the acquisition date through profit or loss.
Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date. Subsequent
changes to the fair value of the contingent consideration which is deemed to be an asset or liability will be recognised in
accordance with AASB 139 either in profit or loss or in other comprehensive income. If the contingent consideration is classified
as equity, it shall not be remeasured.
Business combinations prior to 1 July 2009 were accounted for using the purchase method.
(ab) Government grants
Government grants are recognised where there is reasonable assurance that the grant will be received and all attached
conditions will be complied with. When the grant relates to an expense item, it is recognised as income on a systematic basis
over the periods that the related costs, for which it is intended to compensate, are expensed. When the grant relates to an asset,
it is recognised as income in equal amounts over the expected useful life of the related asset.
(ac) Joint Operations
The Group’s recognises its interest in joint operations in:
- Assets, including its share of any assets held jointly
- Liabilities, including its share of any liabilities incurred jointly
- Revenue from the sale of its share of the output arising from the joint operation
- Share of the revenue from the sale of the output by the joint operation
- Expenses, including its share of any expenses incurred jointly
2 Segment information
(a) Business segments
The Group has identified its operating segments based on the internal reports that are reviewed and used by the executive
management team (the chief operating decision makers) in assessing performance and in determining the allocation of
The reportable segments are based on aggregated operating segments determined by the similarity of the products produced
and sold, as these are the sources of the Group's major risks and have the most effect on the rates of return.
The Group has identified five operating segments being: (1) Nickel, the aggregation of the Savannah Nickel Project, Lanfranchi
Nickel Project and Copernicus Nickel Project; (2) Gold, the Gidgee Gold Project and Mt Henry Gold Project; (3) Platinum Group
Metals, the Thunder Bay North PGM Project and Panton PGM Project; (4) Australian Exploration; and (5) Overseas Exploration.
The Savannah Nickel Project, the Copernicus Nickel Project and the Lanfranchi Nickel Project both mine nickel ore. At the
Savannah Nickel Project and the Copernicus Nickel Project, nickel concentrate is produced and sold to the one customer Sino
Nickel Pty Ltd (a company owned by the Jinchuan Group Limited (60%) and Sino Mining International Limited (40%)). At the
Lanfranchi Nickel Project, nickel ore is delivered and sold to the one customer BHP Billiton Nickel West Pty Ltd.
resources.
Nickel
Gold
The 100% owned and operated Gidgee Gold Project is located 640kms northeast of Perth in Western Australia, and was
purchased by the Company in January 2011. The Company refurbished the site’s village and administration areas and
commenced exploration and evaluation activities from July 2011.
In May 2012, the Company acquired the Wilsons Gold Project from Apex Minerals Limited. The Wilsons Gold Project is within
trucking distance of the existing Gidgee processing facility which is under care and maintenance. The Wilsons Gold Project
acquisition forms part of the Gidgee Gold Project. The combined mineral Resource of Gidgee, following the acquisition of
Wilsons and upgrade of the Howards and Heron South Resources in October 2012, has increased to over one million ounces.
In August 2012, the Company finalised an agreement with Matsa Resources Limited to acquire a 70% equity interest in the Mt
Henry Gold Project. The Mt Henry Gold Project comprises of three deposits being Mt Henry, North Scotia and Selene. The
Project is located on the southern end of the Norseman - Wiluna Greenstone belt.
Platinum Group Metals (PGM)
In July 2012, the Company finalised the acquisition of Magma Metals Limited by way of an off market takeover bid. Magma’s
principal project, the Thunder Bay North PGM Project, is located in northwest Ontario, Canada. Since acquisition, the Company
has commenced evaluation studies to re-optimise the mining method and mineral processing route contained in the previous
2011 Preliminary Economic Assessment (PEA). In January 2015, Rio Exploration Canada Inc. (RTEC), having completed its
review of all existing data on TBN, exercised a right under the "Earn In with Option to Joint Venture Agreement (July 2014)" by
electing to proceed into the Earn-In option phase.
In May 2012, the Company executed an agreement with Platinum Australia Limited to purchase the Panton PGM Project. The
Panton Project is located 60km north of Halls Creek, in the East Kimberley Region of Western Australia. The Company will
continue to develop the asset through the optimisation of the project’s mining and processing options.
Australian and Overseas Exploration
The Group's primary exploration and evaluation activities cover the regional areas of Western Australia. The Group is also party
to joint agreements to conduct overseas exploration and evaluation activities in Scandanavia.
The Group's Exploration Manager is responsible for budgets and expenditure by the Group's exploration team. The exploration
division does not normally derive any income. Should a project generated by the exploration division commence generating
income or lead to the construction or acquisition of a mining operation, that operation would then be disaggregated from the
exploration and become a separate reportable segment.
Accounting policies
Segment information is prepared in conformity with the accounting policies of the entity as disclosed in note 1 and Accounting
Standard AASB 8 Operating Segments.
Segment revenues, expenses, assets and liabilities are those that are directly attributable to a segment and the relevant portion
that can be allocated to the segment on a reasonable basis. Segment assets include all assets used by a segment and consist
primarily of operating cash, receivables, inventories, derivative financial instruments, property, plant and equipment and
development and mine properties. Segment liabilities consist primarily of trade and other creditors, employee benefits, derivative
financial instruments, finance leases and borrowings and provision for rehabilitation.
(b) Operating business segments
2015
Sales to external customers
Other revenue
Total segment revenue
Total segment results
Total segment assets
Total segment liabilities
(Reversal of)/ impairment of assets (Note
10,14,16)
Depreciation and amortisation
Mark to market of derivatives
Exploration and evaluation written off
Interest expense
Interest income
Nickel
$'000
Gold
$'000
Platinum
Group
Metals
$'000
Australian
Exploration
$'000
Overseas
Exploration
$'000
197,897
1,310
199,207
(26,268)
186,635
74,379
(14,379)
61,799
1,739
1,465
977
(1,276)
-
2
2
(3,387)
75,186
28,880
2,515
34
-
-
-
(2)
-
1
1
(494)
42,706
1,291
-
-
-
-
-
(1)
-
-
-
(634)
26,587
46
-
-
-
-
-
-
-
-
-
(743)
17
(10)
-
-
-
-
-
-
Total
$'000
197,897
1,313
199,210
(31,526)
331,131
104,586
(11,864)
61,833
1,739
1,465
977
(1,279)
2 0 1 5 A N N U A L R E P O R T | P A G E 7 3
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS30 JUNE 2015
2014
Sales to external customers
Other revenue
Total segment revenue
Total segment results
Total segment assets
Total segment liabilities
Impairment of assets (a)
Depreciation and amortisation
Mark to market of derivatives
Interest expense
Interest income
Nickel
$'000
237,459
577
238,036
(390)
240,083
74,669
(552,398)
18,259
59,243
83
1,310
(577)
Gold
$'000
-
10
10
(948)
75,390
29,441
(103,893)
-
-
-
-
(10)
Platinum
Group
Metals
$'000
-
15
15
(578)
39,533
1,321
(40,291)
-
106
-
-
(15)
Australian
Exploration
$'000
Overseas
Exploration
$'000
-
-
-
(628)
20,826
80
(20,278)
-
-
-
-
-
-
-
-
(313)
2
(10)
321
-
-
-
-
-
Total
$'000
237,459
602
238,061
(2,857)
375,834
105,501
(716,539)
18,259
59,349
83
1,310
(602)
(a) An impairment loss of $18.259 million was recognised in 2014 to reduce the carrying amount of the property, plant and equipment, mine
development and mine properties to recoverable amount. Of this amount, $13.119 million was recognised in the income statement and $5.140
was recognised in the mineral properties revaluation reserve
(c) Other segment information
(i) Segment revenue
Segment revenue reconciles to total revenue from continuing operations as follows:
Total segment revenue
Unallocated revenue
Consolidated revenue (note 3)
2015
$'000
199,210
459
199,669
2014
$'000
238,061
149
238,210
The amount of its revenue from external customers in Australia is $77.452 million (2014: $122.869 million), and the total revenue
from external customers in China is $120.445 million (2014: $114.590 million).
Segment revenues are allocated based on the country in which the customer is located. Sales to external customers exclude
hedging gains and losses, transport, port and shipping charges, and therefore the amounts will not agree to the revenue from
continuing operations as shown in the consolidated income statement.
The Group has two major customers, one to which it delivers nickel concentrate and the other, nickel ore. The Group's most
significant client accounts for $120.445 million (2014: $114.590 million) of external revenue. The next most significant client
accounts for $77.452 million (2014: $122.869 million) of revenue.
(ii) Segment results
A reconciliation of segment results to loss for the year is provided as follows:
Segment results
Corporate charges
Income tax benefit
Loss for the year
(iii) Segment assets
Reportable segments' assets are reconciled to total assets as follows:
Segment assets
Intersegment eliminations
Deferred tax asset
Unallocated assets
Total assets as per the consolidated balance sheet
2015
$'000
(31,526)
(9,148)
11,827
(28,847)
2015
$'000
331,131
(27,675)
17,563
8,146
329,165
2014
$'000
(2,857)
(8,273)
1,808
(9,322)
2014
$'000
375,834
(20,528)
11,955
6,365
373,626
P A G E 7 4 | 2 0 1 5 A N N U A L R E P O R T
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS30 JUNE 2015
2014
Sales to external customers
Other revenue
Total segment revenue
Total segment results
Total segment assets
Total segment liabilities
Impairment of assets (a)
Depreciation and amortisation
Mark to market of derivatives
Interest expense
Interest income
Platinum
Group
Metals
$'000
Australian
Overseas
Exploration
Exploration
$'000
$'000
Nickel
$'000
237,459
577
238,036
(390)
240,083
74,669
18,259
59,243
83
1,310
(577)
Gold
$'000
-
10
10
(948)
75,390
29,441
-
-
-
-
-
15
15
(578)
39,533
1,321
106
-
-
-
(10)
(15)
Total
$'000
237,459
602
238,061
(2,857)
375,834
105,501
(716,539)
18,259
59,349
83
1,310
(602)
(313)
(10)
321
-
-
-
2
-
-
-
-
-
(628)
20,826
80
-
-
-
-
-
-
-
-
(552,398)
(103,893)
(40,291)
(20,278)
was recognised in the mineral properties revaluation reserve
(c) Other segment information
(i) Segment revenue
Segment revenue reconciles to total revenue from continuing operations as follows:
Total segment revenue
Unallocated revenue
Consolidated revenue (note 3)
The amount of its revenue from external customers in Australia is $77.452 million (2014: $122.869 million), and the total revenue
from external customers in China is $120.445 million (2014: $114.590 million).
Segment revenues are allocated based on the country in which the customer is located. Sales to external customers exclude
hedging gains and losses, transport, port and shipping charges, and therefore the amounts will not agree to the revenue from
continuing operations as shown in the consolidated income statement.
The Group has two major customers, one to which it delivers nickel concentrate and the other, nickel ore. The Group's most
significant client accounts for $120.445 million (2014: $114.590 million) of external revenue. The next most significant client
accounts for $77.452 million (2014: $122.869 million) of revenue.
(ii) Segment results
A reconciliation of segment results to loss for the year is provided as follows:
Segment results
Corporate charges
Income tax benefit
Loss for the year
(iii) Segment assets
Reportable segments' assets are reconciled to total assets as follows:
Segment assets
Intersegment eliminations
Deferred tax asset
Unallocated assets
Total assets as per the consolidated balance sheet
2015
$'000
199,210
459
199,669
2014
$'000
238,061
149
238,210
2015
$'000
(31,526)
(9,148)
11,827
(28,847)
2015
$'000
331,131
(27,675)
17,563
8,146
329,165
2014
$'000
(2,857)
(8,273)
1,808
(9,322)
2014
$'000
375,834
(20,528)
11,955
6,365
373,626
The total of non-current assets located in Australia is $205.040 million (2014: $222.812 million), and the total of these non-current
assets located in Canada is $36.171 million (2014: $33.557 million). Non-current assets for this purpose consist of property, plant
and equipment, exploration and evaluation, development and mine properties.
(a) An impairment loss of $18.259 million was recognised in 2014 to reduce the carrying amount of the property, plant and equipment, mine
development and mine properties to recoverable amount. Of this amount, $13.119 million was recognised in the income statement and $5.140
3 Revenue
(iv) Segment liabilities
Reportable segments' liabilities are reconciled to total liabilities as follows:
Segment liabilities
Intersegment eliminations
Unallocated liabilities
Total liabilities as per the consolidated balance sheet
Sales revenue
Sale of goods
Other revenue
Interest income
4 Other income
Net gain on sale of available-for-sale financial assets
Government grants
Sundry income
5 Expenses
Loss before income tax includes the following specific
expenses:
Cost of sales of goods
Cost of production
Royalties
Depreciation - property, plant and equipment
Amortisation - deferred development costs
Amortisation - mine properties
Finance costs
Interest and finance charges paid/payable
Unwinding of discount - rehabilitation
Rental expense relating to operating leases
Minimum lease payments
2 0 1 5 A N N U A L R E P O R T | P A G E 7 5
2015
$'000
104,586
(16,689)
1,389
89,286
2014
$'000
105,501
(9,529)
1,533
97,505
2015
$'000
2014
$'000
197,897
237,459
1,772
199,669
751
238,210
2015
$'000
209
363
39
611
2015
$'000
155,020
11,948
21,614
33,800
6,384
228,766
398
600
998
1,452
1,452
2014
$'000
-
1,236
59
1,295
2014
$'000
153,549
11,313
20,182
31,589
7,473
224,106
665
669
1,334
1,386
1,386
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS30 JUNE 2015
Derivative financial instruments
Mark to market of derivatives instruments which are not in an effective hedge
relationship
Other
Corporate and marketing costs
Net (gain)/loss on disposal of property, plant and equipment
Depreciation - property, plant and equipment not used in production
Depreciation - finance lease and hire purchase assets not used in production
Net foreign currency exchange (gain)/loss
Breakdown of employee benefits expenses
Salaries and wages
Payroll tax
Superannuation
Others
Share based payments expense
6 Income tax benefit
(a)
Income tax benefit
Relating to origination and reversal of temporary differences in current year
Adjustments for current tax of prior periods
Adjustments in relation to research and development
(b) Numerical reconciliation of income tax benefit to prima facie tax
Loss from continuing operations before income tax benefit
Tax benefit at the Australian tax rate of 30.0% (2014 - 30.0%)
Tax effect of amounts which are not deductible (taxable) in calculating
taxable income:
Foreign exploration
Entertainment
Share based payments
Inherited deductions on consolidation
Capital gain
Deferred tax on investment not recognised
Rehab Provision - additional acquisition amount
Adjustments for current tax of prior years
Adjustments in relation to research and development
Tax (profit)/ losses relating to foreign subsidiary not booked
Acquisition expenses not deductible for tax
Income tax benefit
2015
$'000
1,739
1,739
7,992
32
278
47
(635)
7,714
42,232
2,814
4,494
6,069
689
56,298
2015
$'000
(11,927)
491
(391)
(11,827)
2015
$'000
(40,674)
(12,202)
1
4
207
(84)
63
448
(31)
491
(391)
(331)
(2)
(11,827)
52,501
2014
$'000
83
83
7,646
(20)
230
182
323
8,361
39,526
2,707
3,942
4,235
436
50,846
2014
$'000
(3,086)
1,854
(576)
(1,808)
2014
$'000
(11,130)
(3,339)
4
6
131
(171)
-
(79)
-
1,854
(576)
291
71
(1,808)
12,938
P A G E 7 6 | 2 0 1 5 A N N U A L R E P O R T
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS30 JUNE 2015
Derivative financial instruments
Mark to market of derivatives instruments which are not in an effective hedge
relationship
Other
Corporate and marketing costs
Net (gain)/loss on disposal of property, plant and equipment
Depreciation - property, plant and equipment not used in production
Depreciation - finance lease and hire purchase assets not used in production
Net foreign currency exchange (gain)/loss
Breakdown of employee benefits expenses
Salaries and wages
Payroll tax
Superannuation
Others
Share based payments expense
6 Income tax benefit
(a)
Income tax benefit
Relating to origination and reversal of temporary differences in current year
Adjustments for current tax of prior periods
Adjustments in relation to research and development
(b) Numerical reconciliation of income tax benefit to prima facie tax
Loss from continuing operations before income tax benefit
Tax benefit at the Australian tax rate of 30.0% (2014 - 30.0%)
Tax effect of amounts which are not deductible (taxable) in calculating
taxable income:
Foreign exploration
Entertainment
Share based payments
Inherited deductions on consolidation
Capital gain
Deferred tax on investment not recognised
Rehab Provision - additional acquisition amount
Adjustments for current tax of prior years
Adjustments in relation to research and development
Tax (profit)/ losses relating to foreign subsidiary not booked
Acquisition expenses not deductible for tax
Income tax benefit
2015
$'000
1,739
1,739
7,992
32
278
47
(635)
7,714
42,232
2,814
4,494
6,069
689
56,298
2015
$'000
(11,927)
491
(391)
(11,827)
2015
$'000
(40,674)
(12,202)
1
4
207
(84)
63
448
(31)
491
(391)
(331)
(2)
(11,827)
52,501
2014
$'000
83
83
7,646
(20)
230
182
323
8,361
39,526
2,707
3,942
4,235
436
50,846
2014
$'000
(3,086)
1,854
(576)
(1,808)
2014
$'000
(11,130)
(3,339)
4
6
-
-
131
(171)
(79)
1,854
(576)
291
71
(1,808)
12,938
(c) Amounts recognised through other comprehensive income
Relating to financial instruments
Relating to equity securities available for sale
Relating to asset revaluation reserve
(d) Amounts recognised directly in equity
Relating to capital raising
(e) Tax losses
Unused tax losses for which no deferred tax asset has been recognised:
Capital losses
Income tax losses transferred to Panoramic Resources Limited from
Magma Metals Limited on tax consolidation
Foreign tax losses
Potential tax benefit @ 30%
(f) Unrecognised temporary differences
Temporary difference for which a deferred tax asset has not been recognised:
Foreign currency translation
Investments at fair value
Employee benefits
Provisions
Depreciation
Unrecognised deferred tax liabilities relating to the above temporary differences
7 Current assets - Cash and cash equivalents
Cash at bank and in hand
Deposits at call
(a) Reconciliation to cash at the end of the year
2015
$'000
4
99
-
103
(1)
2015
$'000
1,789
23,695
826
7,893
2015
$'000
1,172
39
-
-
3,031
4,242
1,273
2015
$'000
25,421
28,634
54,055
2014
$'000
(4)
79
(1,542)
(1,467)
(249)
2014
$'000
1,789
23,695
1,397
8,064
2014
$'000
757
-
70
7
3,027
3,861
1,577
2014
$'000
30,725
33,330
64,055
The above figures are reconciled to cash and cash equivalents at the end of the financial year as shown in the statement of cash
flows as follows:
Balances as above
(b) Cash at bank and on hand
2015
$'000
2014
$'000
54,055
64,055
Generally cash at bank earns interest at floating rates based on daily bank deposit rates. The weighted average interest rate
achieved for the year was 1.5% (2014: 2.6%).
(c) Deposits at call
Short term deposits are made of varying maturities not exceeding three months and earn interest at the respective short term
deposit rates. If short term deposits have original maturity greater than three months, principal amounts can be redeemed in full
2 0 1 5 A N N U A L R E P O R T | P A G E 7 7
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS30 JUNE 2015
with interest payable at the same cash rate from inception as per the agreement with each bank, net of bank overdrafts. The
weighted average interest rate achieved for the year was 3.5% (2014: 3.6%).
(d) Fair value
The carrying amount for cash and cash equivalents equals the fair value.
8 Current assets - Trade and other receivables
Trade receivables
Other receivables
(a) Trade receivables
2015
$'000
8,119
3,116
11,235
2014
$'000
28,726
3,944
32,670
Trade receivables are non interest bearing and are generally on 30-90 day terms.
Trade receivables are marked to market based on the forward selling price from the date a provisional invoice is prepared until
the presentation of a final invoice to the customer, known as the quotational period (QP). Accordingly, trade receivables are
carried at fair value.
The amount of derivative embedded within provisionally priced sales at 30 June 2015 was $2.744 million (2014: $12.765 million)
and the amount of fair value changes recognised in the income statement was $10.021 million (2014: $7.746 million)
All receivables are current and not past due.
(b) Other receivables
These amounts relate to receivables for goods and services tax, diesel fuel rebates and sundry items. Interest may be charged at
commercial rates where the terms of repayments exceed six months. Collateral is not normally obtained.
(c) Foreign currency exchange rate and interest rate risk
The balance of trade receivables is exposed to movements in USD/AUD exchange rates and spot commodity prices.
All trade receivables were non interest bearing in 2014 and 2015.
Information on foreign currency exchange and interest rate risk is provided in note 38.
(d) Fair value and credit risk
Trade receivables are marked to market based on the forward selling price from the date a provisional invoice is prepared until
the presentation of a final invoice to the customer, known as the quotational period (QP). Accordingly, trade receivables are
carried at fair value.
Information on credit risk is provided in note 38.
9 Current assets - Inventories
Spares for production
- at cost
- at net realisable value
Nickel ore stocks on hand
- at net realisable value
Concentrate stocks on hand
- at net realiseable value
2015
$'000
10,126
-
1,516
1,268
12,910
2014
$'000
9,504
801
885
6,019
17,209
10 Current assets - Assets classified as held for sale
On 14 May 2015, the Company announced the decision by the Board of Directors to divest of the Company’s 70% interest in the
Mt Henry Gold Project. Subsequent to the end of the financial year, on 31 July 2015, the Company sold its 70% interest in the Mt
Henry Gold Project to Metals X Limited. Further information is detailed in the Note 32 “Events occurring after the reporting
period”. At the balance date, the project was classified as an asset held for sale. The major classes of assets of the Mt Henry
Gold Project classified as held for sale consists of exploration and evaluation properties amounting to $18 million as at 30 June
2015 (2014: nil).
P A G E 7 8 | 2 0 1 5 A N N U A L R E P O R T
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS30 JUNE 2015
with interest payable at the same cash rate from inception as per the agreement with each bank, net of bank overdrafts. The
weighted average interest rate achieved for the year was 3.5% (2014: 3.6%).
(d) Fair value
The carrying amount for cash and cash equivalents equals the fair value.
8 Current assets - Trade and other receivables
2015
$'000
8,119
3,116
11,235
2014
$'000
28,726
3,944
32,670
Trade receivables
Other receivables
(a) Trade receivables
Trade receivables are non interest bearing and are generally on 30-90 day terms.
Trade receivables are marked to market based on the forward selling price from the date a provisional invoice is prepared until
the presentation of a final invoice to the customer, known as the quotational period (QP). Accordingly, trade receivables are
carried at fair value.
The amount of derivative embedded within provisionally priced sales at 30 June 2015 was $2.744 million (2014: $12.765 million)
and the amount of fair value changes recognised in the income statement was $10.021 million (2014: $7.746 million)
All receivables are current and not past due.
(b) Other receivables
These amounts relate to receivables for goods and services tax, diesel fuel rebates and sundry items. Interest may be charged at
commercial rates where the terms of repayments exceed six months. Collateral is not normally obtained.
(c) Foreign currency exchange rate and interest rate risk
The balance of trade receivables is exposed to movements in USD/AUD exchange rates and spot commodity prices.
All trade receivables were non interest bearing in 2014 and 2015.
Information on foreign currency exchange and interest rate risk is provided in note 38.
(d) Fair value and credit risk
Trade receivables are marked to market based on the forward selling price from the date a provisional invoice is prepared until
the presentation of a final invoice to the customer, known as the quotational period (QP). Accordingly, trade receivables are
carried at fair value.
Information on credit risk is provided in note 38.
9 Current assets - Inventories
Spares for production
- at cost
- at net realisable value
Nickel ore stocks on hand
- at net realisable value
Concentrate stocks on hand
- at net realiseable value
2015
$'000
10,126
-
1,516
1,268
12,910
2014
$'000
9,504
801
885
6,019
17,209
10 Current assets - Assets classified as held for sale
On 14 May 2015, the Company announced the decision by the Board of Directors to divest of the Company’s 70% interest in the
Mt Henry Gold Project. Subsequent to the end of the financial year, on 31 July 2015, the Company sold its 70% interest in the Mt
Henry Gold Project to Metals X Limited. Further information is detailed in the Note 32 “Events occurring after the reporting
period”. At the balance date, the project was classified as an asset held for sale. The major classes of assets of the Mt Henry
Gold Project classified as held for sale consists of exploration and evaluation properties amounting to $18 million as at 30 June
2015 (2014: nil).
Immediately before the classification of Mt Henry Gold Project as assets held for sale, the recoverable amount was estimated for
the exploration and evaluation and an impairment loss was identified. Following the classification, a write-down of $2.515 million
was recognised on 30 June 2015 to reduce the carrying amount of the assets in the project to their fair value. This impairment
loss was recognised in the consolidated income statement.
11 Current assets - Prepayments
Prepayments
12 Derivative financial instruments
Current assets
Commodity put options
Forward foreign currency exchange put options
Diesel Call Options
Total current derivative financial instrument assets
Current liabilities
Foreign currency exchange call options
Commodity call options
Total current derivative financial instrument liabilities
Total derivative financial instrument assets (liabilities)
(a)
Instruments used by the group
2015
$'000
1,187
2014
$'000
1,343
2015
$'000
2014
$'000
-
-
178
178
-
-
-
178
385
541
-
926
173
555
728
198
The Group is party to derivative financial instruments in the normal course of business in order to hedge exposure to fluctuations
in commodity prices and foreign currency exchange rates in accordance with the Group financial risk management policies (refer
to note 38).
The Group uses a number of methodologies to determine the fair value of derivatives. These techniques include comparing
contracted rates to market rates with the same length of maturity to determine the value of forward contracts and use of option
pricing models to value put options. The principal inputs to valuation techniques are listed below:
- Commodity prices
- Interest rates
- Foreign currency exchange rates
- Price volatilities
- Discount rates
Commodity prices, interest rates and foreign currency exchange rates are determined by reference to published / observable
prices.
(b) Commodity Hedges
In order to protect against price movements, the Group from time to time enters into commodity forward contracts, put options
and zero cost option collars.
These contracts have been designated as cashflow hedges and are timed to mature when sales are scheduled to occur.
2 0 1 5 A N N U A L R E P O R T | P A G E 7 9
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS30 JUNE 2015
Consolidated
Nickel Sell Call Options
Not later than one year
Nickel Buy Put Options
Not later than one year
Tonnes Hedged
30 June 2015
Average USD
Price
30 June 2015
Tonnes Hedged
30 June 2014
Average USD
Price
30 June 2014
-
-
-
-
700
975
20,929
16,160
The portion of the gain or loss on the hedging instrument that is determined to be an effective hedge is recognised directly in
equity. When the cash flows occur, the Company adjusts the initial measurement of the component recognised in the income
statement by the related amount deferred in equity.
Consolidated
Litres
30 June 2015
Average USD Price
30 June 2015
Litres
30 June 2014
Average USD Price
30 June 2014
Diesel Buy Call Options
Not later than one year
6,180,000
0.52
-
-
The fair value gain and loss on the Diesel Buy Call Options are recognised in the income statement.
(c) Foreign Currency Hedges
In order to protect against price movements, the Group has entered into foreign currency forward exchange contracts and put
and written call options.
These contracts have been designated as cashflow hedges and are timed to mature when receipts are scheduled to be received.
Consolidated
USD Hedged
30 June 2015
Average Rate
30 June 2015
USD Hedged
30 June 2014
Average Rate
30 June 2014
Foreign Currency Exchange Calls
Not later than one year
Foreign Currency Exchange Puts
Not later than one year
-
-
-
-
57,000,000
77,000,000
0.88
0.95
The portion of the gain or loss on the hedging instrument that determined to be an effective hedge is recognised directly in equity.
When the cash flows occur, the Company adjusts the initial measurement of the component recognised in the income statement
by the related amount deferred in equity.
(d) Risk exposures
Information about the Company's exposure to credit risk, foreign currency exchange and interest rate risk is provided in note 38.
The maximum exposure to credit risk at the reporting date is the carrying amount of each class of derivative financial assets
mentioned above.
(e) Offsetting of financial instruments
The Group presents assets and liabilities on a gross basis. Derivative financial instruments entered into by the Group are subject
to enforceable master netting arrangements such as International Swaps and Derivatives Association (ISDA) master netting
agreement. In certain circumstances, for example, when a credit event such as a default occurs, all outstanding transactions
under an ISDA agreement are terminated. The termination value is assessed and only single net amount is payable in settlement
of all transactions.
The amounts set out in the table above represent the derivative financial assets and liabilities of the Group that are subject to the
above arrangements and are presented on a gross basis.
P A G E 8 0 | 2 0 1 5 A N N U A L R E P O R T
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS30 JUNE 2015
Consolidated
Nickel Sell Call Options
Not later than one year
Nickel Buy Put Options
Not later than one year
-
-
-
-
-
-
-
-
The portion of the gain or loss on the hedging instrument that is determined to be an effective hedge is recognised directly in
equity. When the cash flows occur, the Company adjusts the initial measurement of the component recognised in the income
statement by the related amount deferred in equity.
Consolidated
Litres
Average USD Price
Litres
Average USD Price
30 June 2015
30 June 2015
30 June 2014
30 June 2014
Diesel Buy Call Options
Not later than one year
6,180,000
0.52
-
-
The fair value gain and loss on the Diesel Buy Call Options are recognised in the income statement.
(c) Foreign Currency Hedges
and written call options.
In order to protect against price movements, the Group has entered into foreign currency forward exchange contracts and put
These contracts have been designated as cashflow hedges and are timed to mature when receipts are scheduled to be received.
Consolidated
USD Hedged
30 June 2015
Average Rate
30 June 2015
USD Hedged
30 June 2014
Average Rate
30 June 2014
57,000,000
77,000,000
0.88
0.95
Foreign Currency Exchange Calls
Not later than one year
Foreign Currency Exchange Puts
Not later than one year
by the related amount deferred in equity.
(d) Risk exposures
mentioned above.
(e) Offsetting of financial instruments
The portion of the gain or loss on the hedging instrument that determined to be an effective hedge is recognised directly in equity.
When the cash flows occur, the Company adjusts the initial measurement of the component recognised in the income statement
Information about the Company's exposure to credit risk, foreign currency exchange and interest rate risk is provided in note 38.
The maximum exposure to credit risk at the reporting date is the carrying amount of each class of derivative financial assets
The Group presents assets and liabilities on a gross basis. Derivative financial instruments entered into by the Group are subject
to enforceable master netting arrangements such as International Swaps and Derivatives Association (ISDA) master netting
agreement. In certain circumstances, for example, when a credit event such as a default occurs, all outstanding transactions
under an ISDA agreement are terminated. The termination value is assessed and only single net amount is payable in settlement
of all transactions.
The amounts set out in the table above represent the derivative financial assets and liabilities of the Group that are subject to the
above arrangements and are presented on a gross basis.
Average USD
Average USD
Tonnes Hedged
Price
Tonnes Hedged
Price
30 June 2015
30 June 2015
30 June 2014
30 June 2014
13 Non-current assets - Available-for-sale financial assets
Available-for-sale financial assets include the following classes of financial assets:
700
975
20,929
16,160
Listed securities
Equity securities
At beginning of year
Additions
Disposal proceeds
Net gain on sale
Losses from impairment
Fair value gain/(loss) recognised in other comprehensive income
At end of year
2015
$'000
858
2015
$'000
528
500
(709)
209
-
330
858
2014
$'000
528
2014
$'000
67
200
-
-
-
261
528
Available-for-sale investments consist of investments in ordinary shares, and therefore have no fixed maturity date or coupon
rate.
The fair value of listed available for sale investments has been determined directly by reference to published price quotations in
an active market.
In July 2014 and September 2014, the Company sold a total of 1.5 million shares in Thundelarra Exploration Limited and
recognised a gain on sale of $0.084 million.
In July 2014 and September 2014, the Company sold a total of 2.857 million shares in Poseidon Nickel Limited and recognised a
gain on sale of $0.125 million.
14 Non-current assets - Property, plant and equipment
Plant and equipment
Deemed cost
Accumulated depreciation and impairment
Leased plant & equipment
Cost
Accumulated depreciation
Construction in progress
Cost
Accumulated impairment
2015
$'000
2014
$'000
204,629
(168,633)
35,996
194,170
(148,221)
45,949
8,626
(7,026)
1,600
14,210
-
14,210
51,806
14,251
(8,249)
6,002
11,997
(569)
11,428
63,379
2 0 1 5 A N N U A L R E P O R T | P A G E 8 1
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS30 JUNE 2015
Plant and
equipment
$'000
Leased plant
and equipment
$'000
Construction
in progress
$'000
45,949
2,000
5,050
(32)
(154)
(19,468)
2,673
(22)
35,996
204,629
(168,633)
35,996
61,665
526
3,870
(27)
(17,246)
(2,816)
(23)
45,949
194,170
(148,221)
45,949
6,002
-
(1,929)
-
-
(2,473)
-
-
1,600
8,626
(7,026)
1,600
9,181
-
122
-
(3,301)
-
-
6,002
14,251
(8,249)
6,002
11,428
5,343
(3,121)
(9)
-
-
569
-
14,210
14,210
-
14,210
11,910
3,830
(4,312)
-
-
-
-
11,428
11,997
(569)
11,428
Total
$'000
63,379
7,343
-
(41)
(154)
(21,941)
3,242
(22)
51,806
227,465
(175,659)
51,806
82,756
4,356
(320)
(27)
(20,547)
(2,816)
(23)
63,379
220,418
(157,039)
63,379
Year ended 30 June 2015
Opening net book amount
Additions
Transfer (to) from other asset class
Disposals
Write off to profit and loss
Depreciation charge
Impairment reversal
Foreign currency exchange adjustments
Closing net book amount
At 30 June 2015
Deemed cost
Accumulated depreciation and impairment
Net book amount
Year ended 30 June 2014
Opening net book amount
Additions
Transfer (to) from other asset class
Disposals
Depreciation charge
Impairment
Foreign currency exchange adjustments
Closing net book amount
At 30 June 2014
Deemed cost
Accumulated depreciation and impairment
Net book amount
(a) Reversal of Impairment of assets
Savannah Nickel Project
The recoverable amount of the each mine operation at the cash generating unit level has been determined based on a value in
use calculation using cash flow projections based on financial budgets covering the life of each project incorporating current
market assumptions approved by the Company's Directors. A discount rate of 14.86% (2014: 15%) pretax was used in the
calculation of the assets' recoverable amount. Market assumptions on the nickel price and Australian Dollar (AUD) to US Dollar
(USD) exchange rate were also used in the calculation. The nickel price per pound used ranged from USD5.92 to USD9.88 and
AUD:USD exchange rate used ranged from USD0.70 to USD0.77 over the life of each project.
Copernicus Nickel Project
At 31 December 2014, an impairment reversal of $3.036 million was recognised to increase the carrying amount of plant and
equipment to their recoverable amount. This has been recognised in the income statement.
Lanfranchi Nickel Project
At 31 December 2014, an impairment reversal of $0.206 million was recognised to increase the carrying amount of plant and
equipment to their recoverable amount. This has been recognised in the income statement.
At 30 June 2015, an external party was engaged to estimate the recoverable amount of the project. As a result, no impairment
was recognised as the carrying value of the property, plant and equipment in the project approximate the fair value estimated.
The fair value of the Lanfranchi Nickel Project was determined based on comparable market transactions. The fair value
methodology adopted is categorised as Level 3 in the fair value hierarchy.
In 2014, an impairment loss of $2.816 million was recognised to reduce the carrying amount of the plant and equipment to
recoverable amount. This was recognised in the income statement.
P A G E 8 2 | 2 0 1 5 A N N U A L R E P O R T
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS30 JUNE 2015
Plant and
Leased plant
Construction
equipment
and equipment
in progress
$'000
45,949
2,000
5,050
(32)
(154)
(19,468)
2,673
(22)
35,996
204,629
(168,633)
35,996
61,665
526
3,870
(27)
(17,246)
(2,816)
(23)
45,949
194,170
(148,221)
45,949
1,600
14,210
$'000
6,002
(1,929)
(2,473)
8,626
(7,026)
1,600
9,181
122
(3,301)
-
-
-
-
-
-
-
-
-
$'000
11,428
5,343
(3,121)
(9)
569
14,210
14,210
11,910
3,830
(4,312)
-
-
-
-
-
-
-
-
Total
$'000
63,379
7,343
-
(41)
(154)
(21,941)
3,242
(22)
51,806
227,465
(175,659)
51,806
82,756
4,356
(320)
(27)
(20,547)
(2,816)
(23)
63,379
6,002
11,428
14,251
(8,249)
6,002
11,997
(569)
11,428
220,418
(157,039)
63,379
Year ended 30 June 2015
Opening net book amount
Additions
Disposals
Transfer (to) from other asset class
Write off to profit and loss
Depreciation charge
Impairment reversal
Foreign currency exchange adjustments
Closing net book amount
At 30 June 2015
Deemed cost
Accumulated depreciation and impairment
Net book amount
Year ended 30 June 2014
Opening net book amount
Additions
Disposals
Depreciation charge
Impairment
Transfer (to) from other asset class
Foreign currency exchange adjustments
Closing net book amount
At 30 June 2014
Deemed cost
Net book amount
Accumulated depreciation and impairment
(a) Reversal of Impairment of assets
Savannah Nickel Project
The recoverable amount of the each mine operation at the cash generating unit level has been determined based on a value in
use calculation using cash flow projections based on financial budgets covering the life of each project incorporating current
market assumptions approved by the Company's Directors. A discount rate of 14.86% (2014: 15%) pretax was used in the
calculation of the assets' recoverable amount. Market assumptions on the nickel price and Australian Dollar (AUD) to US Dollar
(USD) exchange rate were also used in the calculation. The nickel price per pound used ranged from USD5.92 to USD9.88 and
AUD:USD exchange rate used ranged from USD0.70 to USD0.77 over the life of each project.
At 31 December 2014, an impairment reversal of $3.036 million was recognised to increase the carrying amount of plant and
equipment to their recoverable amount. This has been recognised in the income statement.
Copernicus Nickel Project
Lanfranchi Nickel Project
At 31 December 2014, an impairment reversal of $0.206 million was recognised to increase the carrying amount of plant and
equipment to their recoverable amount. This has been recognised in the income statement.
At 30 June 2015, an external party was engaged to estimate the recoverable amount of the project. As a result, no impairment
was recognised as the carrying value of the property, plant and equipment in the project approximate the fair value estimated.
The fair value of the Lanfranchi Nickel Project was determined based on comparable market transactions. The fair value
methodology adopted is categorised as Level 3 in the fair value hierarchy.
In 2014, an impairment loss of $2.816 million was recognised to reduce the carrying amount of the plant and equipment to
recoverable amount. This was recognised in the income statement.
(b) Non-current assets pledged as security
Lease liabilities are effectively secured as the rights to the leased assets recognised in the financial statements revert to the
lessor in the event of default. The carrying amounts of assets pledged as security for current and non-current borrowings are
$1.600 million (2014: $6.002 million).
Included in the balances of plant and equipment are assets of Donegal Resources Pty Ltd over which two mortgages were
granted as security in relation to a rehabilitation bank guarantee.
15 Non-current assets - Deferred tax assets
The balance comprises temporary differences attributable to:
Tax losses
Employee benefits
Provisions
Foreign currency exchange
Financial instruments at fair value
Trading stock
Research and development tax offset
Business related costs
Set-off of deferred tax liabilities pursuant to set-off provisions (note 22)
Net deferred tax assets
Movements:
Opening balance
Charged/credited:
- to profit or loss
2015
$'000
16,561
2,765
9,395
-
-
492
4,091
431
33,735
(33,735)
-
2014
$'000
11,525
2,465
9,083
536
213
452
3,700
238
28,212
(28,212)
-
28,212
35,525
5,523
33,735
(7,313)
28,212
16 Non-current assets - Exploration and evaluation, development and mine properties
Mine development expenditure
Deemed cost
Accumulated amortisation and impairment
Exploration and evaluation
Deemed cost
Blank
Mine (mineral) properties
Deemed cost
Accumulated amortisation and impairment
2015
$'000
2014
$'000
353,720
(300,156)
53,564
329,869
(272,049)
57,820
113,794
122,736
95,415
(83,873)
11,542
178,900
95,415
(82,984)
12,431
192,987
2 0 1 5 A N N U A L R E P O R T | P A G E 8 3
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS30 JUNE 2015
Mine
Development
Expenditure
$'000
Exploration
and Evaluation
$'000
Mine
(Mineral)
Properties
$'000
Year ended 30 June 2015
Opening net book amount
Expenditure incurred
Reclass to assets held for sale
Transfer to/(from) other asset class
Amortisation charge
Impairment
Written off to profit and loss
Closing net book amount
At 30 June 2015
Deemed cost
Accumulated amortisation and impairment
Net book amount
Year ended 30 June 2014
Opening net book amount
Expenditure incurred
Transfer to/(from) other asset class
Amortisation charge
Impairment
Closing net book amount
At 30 June 2014
Deemed cost
Accumulated amortisation and impairment
Net book amount
57,820
19,887
-
4,014
(33,800)
5,643
-
53,564
353,720
(300,156)
53,564
80,941
11,186
5,421
(32,213)
(7,515)
57,820
329,869
(272,049)
57,820
122,736
17,052
(18,000)
(4,014)
-
(2,515)
(1,465)
113,794
113,794
-
113,794
115,266
12,891
(5,421)
-
-
122,736
122,736
-
122,736
Total
$'000
192,987
36,939
(18,000)
-
(40,184)
8,623
(1,465)
178,900
12,431
-
-
-
(6,384)
5,495
-
11,542
95,415
(83,873)
11,542
562,929
(384,029)
178,900
26,678
530
-
(6,848)
(7,929)
12,431
222,885
24,607
-
(39,061)
(15,444)
192,987
95,415
(82,984)
12,431
548,020
(355,033)
192,987
The ultimate recoupment of costs carried forward for exploration and evaluation expenditure is dependent on the successful
development and commercial exploitation or the sale of the respective mining areas.
Acquisition of exploration and mineral properties
During 2014, the Company acquired the remaining 22% interest in Copernicus Nickel Mines Project. An amount of $0.530 million
was recognised in relation to this acquisition.
(a) Reversal of impairment of assets
Savannah Nickel Project
The recoverable amount of the each mine operation at the cash generating unit level has been determined based on a value in
use calculation using cash flow projections based on financial budgets covering the life of each project incorporating current
market assumptions approved by the Company's Directors. The cash generating unit comprise of the plant and equipment, mine
development and mine properties. A discount rate of 14.86% (2014: 15%) pretax was used in the calculation of the assets'
recoverable amount. Market assumptions on the nickel price and Australian Dollar (AUD) to US Dollar (USD) exchange rate
were also used in the calculation. The nickel price per pound used ranged from USD5.92 to USD9.88 and AUD:USD exchange
rate used ranged from USD0.70 to USD0.77 over the life of each project.
Copernicus Nickel Project
At 31 December 2014, an impairment reversal of $10.144 million was recognised to increase the carrying amount of mine
development and mine properties to their recoverable amount. An amount of $10.144 million has been recognised in the income
statement.
Lanfranchi Nickel Project
At 31 December 2014, an impairment reversal of $0.994 million was recognised to increase the carrying amount of mine
development and mine properties to their recoverable amount. An amount of $0.994 million has been recognised in the income
statement.
At 30 June 2015, an external party was engaged to re-estimate the recoverable amount of the project. As a result, no impairment
was recognised as the carrying value of the mine development and mine properties in the project approximate the fair value
estimated. The fair value of the Lanfranchi Nickel Project was determined based on comparable market transactions. The fair
value methodology adopted is categorised as Level 3 in the fair value hierarchy.
P A G E 8 4 | 2 0 1 5 A N N U A L R E P O R T
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS30 JUNE 2015
Mine
Development
Exploration
Expenditure
and Evaluation
$'000
$'000
Mine
(Mineral)
Properties
$'000
57,820
19,887
-
-
4,014
(33,800)
5,643
53,564
353,720
(300,156)
53,564
80,941
11,186
5,421
(32,213)
(7,515)
57,820
329,869
(272,049)
57,820
122,736
17,052
(18,000)
(4,014)
(2,515)
(1,465)
113,794
113,794
113,794
115,266
12,891
(5,421)
122,736
122,736
122,736
-
-
-
-
-
Total
$'000
192,987
36,939
(18,000)
-
(40,184)
8,623
(1,465)
178,900
222,885
24,607
-
(39,061)
(15,444)
192,987
12,431
-
-
-
-
(6,384)
5,495
11,542
26,678
530
-
(6,848)
(7,929)
12,431
95,415
(83,873)
11,542
562,929
(384,029)
178,900
95,415
(82,984)
12,431
548,020
(355,033)
192,987
Year ended 30 June 2015
Opening net book amount
Expenditure incurred
Reclass to assets held for sale
Transfer to/(from) other asset class
Amortisation charge
Impairment
Written off to profit and loss
Closing net book amount
At 30 June 2015
Deemed cost
Accumulated amortisation and impairment
Transfer to/(from) other asset class
Net book amount
Year ended 30 June 2014
Opening net book amount
Expenditure incurred
Amortisation charge
Impairment
Closing net book amount
At 30 June 2014
Deemed cost
Net book amount
Accumulated amortisation and impairment
Acquisition of exploration and mineral properties
was recognised in relation to this acquisition.
(a) Reversal of impairment of assets
Savannah Nickel Project
The ultimate recoupment of costs carried forward for exploration and evaluation expenditure is dependent on the successful
development and commercial exploitation or the sale of the respective mining areas.
The recoverable amount of the each mine operation at the cash generating unit level has been determined based on a value in
use calculation using cash flow projections based on financial budgets covering the life of each project incorporating current
market assumptions approved by the Company's Directors. The cash generating unit comprise of the plant and equipment, mine
development and mine properties. A discount rate of 14.86% (2014: 15%) pretax was used in the calculation of the assets'
recoverable amount. Market assumptions on the nickel price and Australian Dollar (AUD) to US Dollar (USD) exchange rate
were also used in the calculation. The nickel price per pound used ranged from USD5.92 to USD9.88 and AUD:USD exchange
rate used ranged from USD0.70 to USD0.77 over the life of each project.
At 31 December 2014, an impairment reversal of $10.144 million was recognised to increase the carrying amount of mine
development and mine properties to their recoverable amount. An amount of $10.144 million has been recognised in the income
At 31 December 2014, an impairment reversal of $0.994 million was recognised to increase the carrying amount of mine
development and mine properties to their recoverable amount. An amount of $0.994 million has been recognised in the income
Copernicus Nickel Project
statement.
Lanfranchi Nickel Project
statement.
In 2014, an impairment loss of $15.444 million was recognised to reduce the carrying amount of the mine development and mine
properties to recoverable amount. Of this amount, $10.303 million was recognised in the income statement and $5.140 million
was recognised in the mineral properties revaluation reserve. The asset revaluation reserve account was created when the
Group increased its holding in Lanfranchi from 75% to 100% in 2009 which required a revaluation of the original asset in
accordance with the purchase method of accounting to business combination applied at the time.
(b) Impairment losses recognised
Mt Henry Gold Project
On 14 May 2015, the Company announced the decision by the Board of Directors to put the Mt Henry Gold Project up for sale via
a tender process. Subsequent to the end of the financial year, on 31 July 2015, the Company sold its 70% interest in the Mt
Henry Gold Project to Metals X Limited. Further information is detailed in the Note “Events occurring after the reporting period”. At
the balance date, the project was classified as an asset held for sale. The major classes of assets of the Mt Henry Gold Project
classified as held for sale consists of exploration and evaluation properties amounting to $18 million as at 30 June 2015 (2014:
nil).
Immediately before the classification of Mt Henry Gold Project as assets held for sale, the recoverable amount was estimated for
the exploration and evaluation and an impairment loss was identified. Following the classification, a write-down of $2.515 million
was recognised on 30 June 2015 to reduce the carrying amount of the assets in the project to their fair value. This impairment
loss was recognised in the consolidated income statement.
17 Non-current assets - Other non-current assets
Others
2015
$'000
36
36
2014
$'000
529
529
Cash backed bonds of $0.036 million (2014: $0.529 million) are placed with a financial institution in respect to Copernicus Nickel
Mines' miscellaneous mining licences.
During 2014, the Company acquired the remaining 22% interest in Copernicus Nickel Mines Project. An amount of $0.530 million
18 Current liabilities - Trade and other payables
Trade payables
Accrued expenses
Amounts owing on estimated final customer invoices
2015
$'000
18,876
14,080
2,672
35,628
Trade payables are non-interest bearing and are normally settled on 30 day terms.
Due to the short term nature of these payables, their carrying value is assumed to approximate their fair value.
19 Current liabilities - Borrowings
Secured
Lease liabilities (note 29)
Other loans
Total secured current borrowings
(a) Risk exposures
2015
$'000
2,063
792
2,855
2014
$'000
16,904
13,828
-
30,732
2014
$'000
3,185
953
4,138
At 30 June 2015, an external party was engaged to re-estimate the recoverable amount of the project. As a result, no impairment
was recognised as the carrying value of the mine development and mine properties in the project approximate the fair value
estimated. The fair value of the Lanfranchi Nickel Project was determined based on comparable market transactions. The fair
value methodology adopted is categorised as Level 3 in the fair value hierarchy.
Details of the Group's exposure to risks arising from current and non-current borrowings are set out in note 38.
(b) Fair value disclosures
Details of the fair value of borrowings for the Group are set out in note 38.
2 0 1 5 A N N U A L R E P O R T | P A G E 8 5
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS30 JUNE 2015
(c) Security and fair value disclosures
Details the Group's security relating to non-current borrowings are set out in note 21.
20 Current liabilities - Provisions
Employee benefits - long service leave
Employee benefits - annual leave
2015
$'000
3,170
5,268
8,438
2014
$'000
2,674
4,699
7,373
The current provision for long service leave includes all unconditional entitlements where employees have completed the
required period of service. Where employees have not yet completed the required period of service, their pro rata entitlement is
recognised as a non-current provision for long service leave.
21 Non-current liabilities - Borrowings
Secured
Lease liabilities (note 29)
(a) Assets pledged as security
2015
$'000
68
2014
$'000
4,007
Finance lease liabilities are effectively secured as the rights to the leased assets recognised in the financial statements revert to
the lessor in the event of default.
The carrying amounts of assets pledged as security for current and non-current borrowings are $1.600 million (2014: $6.002
million).
(b) Other loans
Finance lease liabilities
Finance lease liabilities have an average term of 4 years (2014: 3 years). The average discount rate implicit in the hire purchase
liability is 7.23% (2014: 7.03%). Secured finance lease liabilities are secured by a charge over the asset.
Financing facilities available
At reporting date, there is a rehabilitation performance bond facility available. The performance bond facilty is $2.0 million (2014:
$10.5 million) with a drawdown amount at reporting date of $1.8 million (2014: $7.3 million) and $0.2 million (2014: $3.2 million)
available to be used.
(c)
Interest rate risk exposures
The following table sets out the Company's exposure to interest rate risk, including the contractual repricing dates and the
effective weighted average interest rate by maturity periods.
2015
Fixed interest rate
Floating
interest
rate
1 year or
less
Over 1 to
2 years
Over 2 to
3 years
Over 3 to
4 years
Non
interest
bearing
$'000
$'000
$'000
$'000
$'000
$'000
Total
$'000
Trade and other payables (note 18)
Lease liabilities (notes 19 and 21)
Weighted average interest rate
-
-
-
-
1,885
1,885
-%
7.17%
-
68
68
-
-
-
-
-
-
-
-
35,628
178
35,628
2,131
35,806
37,759
-%
N/A
P A G E 8 6 | 2 0 1 5 A N N U A L R E P O R T
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS30 JUNE 2015
(c) Security and fair value disclosures
Details the Group's security relating to non-current borrowings are set out in note 21.
20 Current liabilities - Provisions
Employee benefits - long service leave
Employee benefits - annual leave
The current provision for long service leave includes all unconditional entitlements where employees have completed the
required period of service. Where employees have not yet completed the required period of service, their pro rata entitlement is
recognised as a non-current provision for long service leave.
21 Non-current liabilities - Borrowings
2015
$'000
3,170
5,268
8,438
2015
$'000
68
2014
$'000
2,674
4,699
7,373
2014
$'000
4,007
Finance lease liabilities are effectively secured as the rights to the leased assets recognised in the financial statements revert to
The carrying amounts of assets pledged as security for current and non-current borrowings are $1.600 million (2014: $6.002
Secured
Lease liabilities (note 29)
(a) Assets pledged as security
the lessor in the event of default.
million).
(b) Other loans
Finance lease liabilities
Financing facilities available
available to be used.
(c)
Interest rate risk exposures
2014
Fixed interest rate
Trade and other payables (note 18)
Lease liabilities (notes 19 and 21)
Floating
interest
rate
1 year or
less
Over 1 to
2 years
Over 2 to
3 years
Over 3 to
4 years
Non
interest
bearing
$'000
$'000
$'000
$'000
$'000
$'000
Total
$'000
-
-
-
-
3,185
3,185
-
3,375
3,375
-
454
454
-
-
-
30,732
178
30,732
7,192
30,910
37,924
Weighted average interest rate
-%
7.01%
6.92%
6.47%
-%
N/A
(d) Fair value
The carrying amounts and fair values of borrowings at balance date are:
On-balance sheet (i)
Non-traded financial liabilities
Lease liabilities
(i) On-balance sheet
2015
Carrying
amount
$'000
Fair value
$'000
2014
Carrying
amount
$'000
Fair value
$'000
2,131
2,131
2,131
2,131
7,192
7,192
7,192
7,192
The fair value of borrowings is based upon market prices where a market exists or by discounting the expected future cash flows
by the current interest rates for liabilities with similar risk profiles.
Finance lease liabilities have an average term of 4 years (2014: 3 years). The average discount rate implicit in the hire purchase
liability is 7.23% (2014: 7.03%). Secured finance lease liabilities are secured by a charge over the asset.
22 Non-current liabilities - Deferred tax liabilities
At reporting date, there is a rehabilitation performance bond facility available. The performance bond facilty is $2.0 million (2014:
$10.5 million) with a drawdown amount at reporting date of $1.8 million (2014: $7.3 million) and $0.2 million (2014: $3.2 million)
The following table sets out the Company's exposure to interest rate risk, including the contractual repricing dates and the
effective weighted average interest rate by maturity periods.
2015
Fixed interest rate
Floating
rate
$'000
interest
1 year or
Over 1 to
Over 2 to
Over 3 to
less
2 years
3 years
4 years
$'000
$'000
$'000
$'000
$'000
Non
interest
bearing
Total
$'000
Trade and other payables (note 18)
Lease liabilities (notes 19 and 21)
Weighted average interest rate
-
-
-
-
1,885
1,885
-%
7.17%
-
68
68
-
-
-
-
-
-
-
-
35,628
178
35,628
2,131
35,806
37,759
-%
N/A
The balance comprises temporary differences attributable to:
Financial instruments at fair value
Inventories
Borrowing costs capitalised
Accrued income
Exploration and evaluation, development expenditure and mine properties
Deferred tax liability recognised on tax consolidation
QP adjustment
Foreign exchange
Set-off of deferred tax liabilities pursuant to set-off provisions (note 15)
Net deferred tax liabilities
Movements:
Opening balance
Charged/credited:
- profit or loss
- to other comprehensive income
- directly to equity
2015
$'000
1,078
3,530
3
180
39,965
-
120
201
45,077
(33,735)
11,342
2014
$'000
1,239
3,544
3
141
41,810
1,577
-
-
48,314
(28,212)
20,102
48,314
59,152
(3,340)
-
103
45,077
(9,122)
(1,467)
(249)
48,314
2 0 1 5 A N N U A L R E P O R T | P A G E 8 7
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS30 JUNE 2015
23 Non-current liabilities - Provisions
Employee benefits - long service leave
Rehabilitation
2015
$'000
771
30,184
30,955
2014
$'000
841
29,584
30,425
A provision for rehabilitation is recognised in relation to the mining activities for costs such as reclamation, waste site closure,
plant closure and other costs associated with the rehabilitation of a mining site. Estimates of the rehabilitation are based on the
anticipated technology and legal requirements and future costs, which have been discounted to their present value. In
determining the restoration provision, the entity has assumed no significant changes will occur in the relevant Federal and State
legislations in relation to rehabilitation of such mines in the future. Refer to note1(d)(v) for inputs used in determining the provision
for rehabilitation.
(a) Movements in provisions
Movements in each class of provision during the financial year, other than employee benefits, are set out below:
2015
Carrying amount at start of year
- unwinding of discount
Carrying amount at end of year
2014
Carrying amount at start of year
- unwinding of discount
- additional provisions recognised through asset acquisition
Carrying amount at end of year
Rehabilitation
$'000
29,584
600
30,184
Rehabilitation
$'000
28,812
669
103
29,584
In May 2014, additional rehabilitation and restoration provision was recognised in relation the acquisition of the remaining 21.99%
interest in the Copernicus Nickel Mines Project.
24 Contributed equity
(a) Share capital
Ordinary shares
Ordinary shares - fully paid
2015
Shares
2014
Shares
2015
$'000
2014
$'000
321,424,015
322,275,824
158,941
159,276
P A G E 8 8 | 2 0 1 5 A N N U A L R E P O R T
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS30 JUNE 2015
A provision for rehabilitation is recognised in relation to the mining activities for costs such as reclamation, waste site closure,
plant closure and other costs associated with the rehabilitation of a mining site. Estimates of the rehabilitation are based on the
anticipated technology and legal requirements and future costs, which have been discounted to their present value. In
determining the restoration provision, the entity has assumed no significant changes will occur in the relevant Federal and State
legislations in relation to rehabilitation of such mines in the future. Refer to note1(d)(v) for inputs used in determining the provision
Movements in each class of provision during the financial year, other than employee benefits, are set out below:
2015
$'000
771
30,184
30,955
2014
$'000
841
29,584
30,425
Rehabilitation
$'000
29,584
600
30,184
$'000
28,812
669
103
29,584
Employee benefits - long service leave
Rehabilitation
for rehabilitation.
(a) Movements in provisions
Carrying amount at start of year
- unwinding of discount
Carrying amount at end of year
2015
2014
24 Contributed equity
(a) Share capital
Ordinary shares
Ordinary shares - fully paid
23 Non-current liabilities - Provisions
(b) Movements in ordinary share capital
Date
Details
1 July 2013
1 October 2013
11 November 2013
13 November 2013
20 December 2013
20 December 2013
29 January 2014
Opening balance
Share Buy-back
Share Buy-back
Share Buy-back
Share Buy-back
Share Issue
Share Issue
Transaction costs, net of tax
30 June 2014
Balance
1 July 2014
12 January 2015
13 January 2015
14 January 2015
16 January 2015
Opening balance
Share Buy-back
Share Buy-back
Share Buy-back
Share Buy-back
Transaction costs, net of tax
30 June 2015
Balance
Number of
shares
Issue/
Redemption
price
$'000
260,676,416
2,608,716
17,000,000
14,800,000
13,000,000
11,200,000
2,990,692
-
322,275,824
322,275,824
(113,594)
(308,200)
(301,967)
(128,048)
-
321,424,015
$0.24
$0.27
$0.27
$0.27
$0.27
$0.27
$0.39
$0.39
$0.39
$0.38
143,309
621
4,590
3,996
3,510
3,024
808
(581)
159,276
159,276
(44)
(121)
(118)
(49)
(2)
158,941
Carrying amount at start of year
- unwinding of discount
- additional provisions recognised through asset acquisition
Carrying amount at end of year
In May 2014, additional rehabilitation and restoration provision was recognised in relation the acquisition of the remaining 21.99%
interest in the Copernicus Nickel Mines Project.
Rehabilitation
(c) Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company in proportion to the
number of and amounts paid on the shares held.
Ordinary shares entitle their holder to one vote, either in person or by proxy, at a meeting of the Company.
(d) Capital management
When managing capital, management's objective is to ensure the entity continues as a going concern as well as to maintain
optimal returns to shareholders and benefits for other stakeholders. Management also aims to maintain a capital structure that
ensures the lowest cost of capital available to the entity.
Management are constantly adjusting the capital structure to take advantage of favourable costs of capital or high returns on
assets. As the market is constantly changing, management may change the amount of dividends to be paid to shareholders,
return capital to shareholders, issue new shares or sell assets to reduce debt.
2015
Shares
2014
Shares
2015
$'000
2014
$'000
Management monitor capital through the gearing ratio (total borrowings / contributed equity). The debt to equity ratio (borrowings
on equity interest in shareholders’ equity) at 30 June 2015 was 1.84% (2014: 5.11%).
321,424,015
322,275,824
158,941
159,276
The Group has put in place a Group Cash Management Policy to ensure that up to 180 days (2014: 180 days) excess cash
holdings are invested with a range of institutions that have sufficient financial strength to ensure the security of the investment.
(Refer to note 38 Financial risk management)
The Group is not subject to any externally imposed capital requirements.
Management consider that the total equity of the Group (contributed equity, reserves and retained earnings) plus borrowings
(current and non-current) is what it manages as capital. At 30 June 2015 this was $242,802,000 (2014: $284,266,000).
2 0 1 5 A N N U A L R E P O R T | P A G E 8 9
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS30 JUNE 2015
25 Reserves
(a) Reserves
Mineral properties revaluation reserve
Available-for-sale financial assets
Cash flow hedge reserve
Share-based payments
Foreign currency translation
Movements:
Mineral properties revaluation reserve
Opening balance
Impairment
Deferred tax
Balance 30 June
Available-for-sale financial assets
Opening balance
Revaluation - gross
Deferred tax
Balance 30 June
Cash flow hedge reserve
Opening balance
Remeasurement of cash flow hedges, net of tax
Reclassification to profit or loss, net of tax
Balance 30 June
Share-based payments
Opening balance
Employee share plan expense - charged to the consolidated entity
Balance 30 June
Foreign currency translation
Opening balance
Currency translation differences arising during the year
Balance 30 June
(b) Nature and purpose of reserves
(i) Asset revaluation reserve
2015
$'000
23,117
414
-
20,459
1,574
45,564
2015
$'000
23,117
-
-
23,117
183
329
(98)
414
(10)
-
10
-
19,770
689
20,459
(94)
1,668
1,574
2014
$'000
23,117
183
(10)
19,770
(94)
42,966
2014
$'000
26,715
(5,140)
1,542
23,117
-
261
(78)
183
-
(10)
-
(10)
19,334
436
19,770
(978)
884
(94)
Panoramic increased the Group’s holding in Lanfranchi from 75% to 100% in 2009. This required a revaluation of the original
interest. The asset revaluation reserve resulted from the increase in the fair value of the original interest.
(ii) Share-based payments reserve
The share based payments reserve is used to record the value of share based payments provided to employees as part of their
remuneration. The reserve is also used to record share based payments provided to third parties as part of the acquisition of an
entity.
(iii) Available-for-sale investments revaluation reserve
This reserve comprises the cumulative net change in the fair value of available for sale financial assets until the investment is
derecognised or impaired.
(iv) Cash flow hedge reserve
This reserve records the portion of the gain or loss on a hedging instrument in a cash flow hedge that is determined to be an
effective hedge.
P A G E 9 0 | 2 0 1 5 A N N U A L R E P O R T
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS30 JUNE 2015
25 Reserves
(a) Reserves
Mineral properties revaluation reserve
Available-for-sale financial assets
Cash flow hedge reserve
Share-based payments
Foreign currency translation
Mineral properties revaluation reserve
Movements:
Opening balance
Impairment
Deferred tax
Balance 30 June
Available-for-sale financial assets
Opening balance
Revaluation - gross
Deferred tax
Balance 30 June
Cash flow hedge reserve
Opening balance
Remeasurement of cash flow hedges, net of tax
Reclassification to profit or loss, net of tax
Balance 30 June
Share-based payments
Opening balance
Balance 30 June
Foreign currency translation
Opening balance
Balance 30 June
Currency translation differences arising during the year
Employee share plan expense - charged to the consolidated entity
2015
$'000
23,117
414
-
20,459
1,574
45,564
2015
$'000
23,117
-
-
23,117
183
329
(98)
414
(10)
10
-
-
19,770
689
20,459
(94)
1,668
1,574
2014
$'000
23,117
183
(10)
19,770
(94)
42,966
2014
$'000
26,715
(5,140)
1,542
23,117
-
261
(78)
183
-
-
(10)
(10)
19,334
436
19,770
(978)
884
(94)
Panoramic increased the Group’s holding in Lanfranchi from 75% to 100% in 2009. This required a revaluation of the original
interest. The asset revaluation reserve resulted from the increase in the fair value of the original interest.
The share based payments reserve is used to record the value of share based payments provided to employees as part of their
remuneration. The reserve is also used to record share based payments provided to third parties as part of the acquisition of an
entity.
(iii) Available-for-sale investments revaluation reserve
This reserve comprises the cumulative net change in the fair value of available for sale financial assets until the investment is
(b) Nature and purpose of reserves
(i) Asset revaluation reserve
(ii) Share-based payments reserve
derecognised or impaired.
(iv) Cash flow hedge reserve
effective hedge.
This reserve records the portion of the gain or loss on a hedging instrument in a cash flow hedge that is determined to be an
(v) Foreign currency translation
The foreign currency translation reserve is used to record exchange differences arising from the translation of the financial
statements of foreign subsidiaries.
26 Dividends
(a) Ordinary shares
Final dividend for the year ended 30 June 2014 of 2 cents per fully paid ordinary share
paid on 26 September 2014, fully franked based on tax paid @ 30%. No final dividend
was paid for the year ended 30 June 2013.
Interim dividend for the half year ended 31 December 2014 of 1 cent per fully paid
ordinary share paid on 2 April 2015, fully franked based on tax paid @ 30%. No interim
dividend was paid for the half year ended 31 December 2013.
Total dividends provided for or paid
(b) Dividends not recognised at the end of the reporting period
No dividend has been declared since the end of the reporting period. In 2014, the
directors declared a final dividend of 2 cents per fully paid ordinary share, fully franked
based on tax paid at 30%.
(c) Franked dividends
No final dividend has been recommended after 30 June 2015.
2015
$'000
6,445
3,213
9,658
2014
$'000
-
-
-
2015
$'000
2014
$'000
-
6,445
Consolidated entity
2015
$'000
2014
$'000
Franking credits available for subsequent reporting periods
11,116
18,226
The tax rate at which paid dividends have been franked is 30% (2014: 30%).
Dividends proposed will be franked at the rate of 30% (2014: 30%).
27 Remuneration of auditors
Amounts received or due and receivable by Ernst & Young for:
Audit and review of financial statements
Other services in relation to the Company and other entity of the consolidated entity
:
Tax compliance and other services
2015
$
2014
$
198,095
209,708
-
-
221,890
419,985
210,357
420,065
28 Guarantees and contingencies
(a) Guarantees
At 30 June 2015, the Company had bank guarantees with a financial institution with a face value of $0.709 million (2014: $0.709
million) in respect to the leasing of the office space in the Perth CBD.
Controlled entities
Under the terms of Deeds of Cross Guarantee with several finance institutions, the Company has agreed to become a
covenantor with Savannah Nickel Mines Pty, Cherish Metals Pty Ltd and Donegal Resource Pty Ltd in regards to indebtedness
2 0 1 5 A N N U A L R E P O R T | P A G E 9 1
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS30 JUNE 2015
and liabilities resulting from the lease and hire purchase of mobile equipment and mine buildings. As at reporting date, the Closed
Group has lease liabilities amounting to $2.131 million (2014: $7.192 million).
The Company has guaranteed the bank facilities of controlled entities.
(b) Contingent assets
In the directors' opinion there are no contingent assets as at the date of signing this report.
29 Commitments
(a) Capital commitments
Capital expenditure contracted for at the reporting date but not recognised as liabilities is as follows:
Property, plant and equipment
Not later than one year - acquisition of new plant and equipment
Mineral tenements expenditure commitments
Not later than one year
Later than one year but not later than five years
Later than five years
(b) Lease commitments: group as lessee
(i) Finance leases
2015
$'000
2,469
2,469
4,049
14,165
38,640
56,854
2014
$'000
5,932
5,932
2,859
30,409
40,075
73,343
Future minimum lease payments under finance leases together with the present value of the net minimum lease payments are
as follows:
Commitments in relation to finance leases are payable as follows:
Within one year
Later than one year but not later than five years
Less future finance lease charges
Present value of minimum lease payments
Representing lease liabilities:
Current (note 19)
Non-current (note 21)
(c) Operating lease commitments as lessee
(i) Power Supply
2015
$'000
2,039
178
2,217
(86)
2,131
2,063
68
2,131
2014
$'000
3,589
4,179
7,768
(576)
7,192
3,185
4,007
7,192
The diesel powered power station at the Savannah Nickel project was purpose built by an outside party to supply electricity under
a commercial Power Generation & Distribution Agreement, dated 5 April 2004. This Agreement has been extended to 30 June
2015. The arrangement to supply electricity has been determined as an operating lease in accordance with AASB 17 Leases.
Operating lease payments are recognised as an expense in the statement of comprehensive income on a straight line basis over
the lease term.
Future minimum rentals payable under this operating lease are unable to be determined as electricity supply payments to the
outside party are variable.
P A G E 9 2 | 2 0 1 5 A N N U A L R E P O R T
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS30 JUNE 2015
and liabilities resulting from the lease and hire purchase of mobile equipment and mine buildings. As at reporting date, the Closed
(ii) Corporate office
Group has lease liabilities amounting to $2.131 million (2014: $7.192 million).
The Company has guaranteed the bank facilities of controlled entities.
In the directors' opinion there are no contingent assets as at the date of signing this report.
(b) Contingent assets
29 Commitments
(a) Capital commitments
Capital expenditure contracted for at the reporting date but not recognised as liabilities is as follows:
Future minimum lease payments under finance leases together with the present value of the net minimum lease payments are
Property, plant and equipment
Not later than one year - acquisition of new plant and equipment
Mineral tenements expenditure commitments
Not later than one year
Later than one year but not later than five years
Later than five years
(b) Lease commitments: group as lessee
(i) Finance leases
as follows:
Commitments in relation to finance leases are payable as follows:
Within one year
Later than one year but not later than five years
Less future finance lease charges
Present value of minimum lease payments
Representing lease liabilities:
Current (note 19)
Non-current (note 21)
(c) Operating lease commitments as lessee
(i) Power Supply
2015
$'000
2,469
2,469
4,049
14,165
38,640
56,854
2015
$'000
2,039
178
2,217
(86)
2,131
2,063
68
2,131
2014
$'000
5,932
5,932
2,859
30,409
40,075
73,343
2014
$'000
3,589
4,179
7,768
(576)
7,192
3,185
4,007
7,192
The diesel powered power station at the Savannah Nickel project was purpose built by an outside party to supply electricity under
a commercial Power Generation & Distribution Agreement, dated 5 April 2004. This Agreement has been extended to 30 June
2015. The arrangement to supply electricity has been determined as an operating lease in accordance with AASB 17 Leases.
Operating lease payments are recognised as an expense in the statement of comprehensive income on a straight line basis over
Future minimum rentals payable under this operating lease are unable to be determined as electricity supply payments to the
the lease term.
outside party are variable.
The Group has a commercial lease on its corporate office premises. This is a non-cancellable lease expiring 28 February 2019.
Future minimum rentals payable under non-cancellable operating leases at 30 June 2015 are as follows:
Within one year
Later than one year and not later than five years
(d) Operating lease commitments as lessor
(i) Corporate office
2015
$'000
1,500
3,607
5,107
2014
$'000
1,358
5,006
6,364
The Group sub-leases its excess corporate office space to third parties under non-cancellable operating leases expiring within
two to five years.
Future minimum rentals receivable under non-cancellable operating leases at 30 June 2015 are as follows:
Commitments for minimum lease receipts in relation to non-cancellable operating
leases are as follows:
Within one year
Later than one year but not later than five years
(e) Remuneration commitments
2015
$'000
378
707
1,085
2015
$'000
2014
$'000
792
3,167
3,959
2014
$'000
Commitments for the payment of salaries and other remuneration under long-term
employment contracts in existence at the reporting date but not recognised as liabilities,
payable:
Within one year
1,233
1,231
30 Subsidiaries and transactions with non-controlling interests
(a) Significant investments in subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of the following principal subsidiaries in
accordance with the accounting policy described in note 1(c):
Name of entity
incorporation Class of shares
Equity holding
Country of
Cherish Metals Pty Ltd *
Pindan Exploration Company Pty Ltd
SMY Copernicus Pty Ltd**
Copernicus Nickel Mine Pty Ltd
Donegal Resources Pty Ltd
Donegal Lanfranchi Pty Ltd
Lanfranchi Nickel Mines Pty Ltd
Panoramic Gold Pty Ltd
Pindan (USA) Inc.
Pindan (Finland) Exploration Ltd
Panoramic Copper Pty Ltd
Panton Sill Pty Ltd
Mt Henry Gold Pty Ltd
Mt Henry Mines Pty Ltd
Magma Metals Pty Limited
Greenstone Metals Ltd
Panoramic PGM's (Canada) Ltd
Panoramic Nickel Pty Ltd
Panoramic PGMs Pty Ltd
Savannah Nickel Mines Pty Ltd ***
2 0 1 5 A N N U A L R E P O R T | P A G E 9 3
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
USA
Finland
Australia
Australia
Australia
Australia
Australia
Australia
Canada
Australia
Australia
Australia
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
2015
%
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
2014
%
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS30 JUNE 2015
*
**
***
Cherish Metals Pty Ltd is the holder of 100 shares (of 100 shares) in Lanfranchi Nickel Mines Pty Ltd (LNM) at
a cost of $0.10 per share. LNM is incorporated in Australia and acts as the Operator of the Lanfranchi nickel
mine (formerly known as the Lanfranchi Joint Venture). For further information refer to note 31.
SMY Copernicus Pty Ltd is the holder of 10 shares in Copernicus Nickel Mines Pty Ltd (CNM) at a cost of
$0.10 per share. CNM is incorporated in Australia and acts as the Operator of the Copernicus nickel mine
(formerly known as the Copernicus Joint Venture).
Savannah Nickel Mines Pty Ltd is the holder of 1 share in SMY Copernicus Pty Ltd at a cost of $1.00.
Refer to note 31 for details on deed of cross guarantee signed between certain subsidiaries and Panoramic Resources Limited.
31 Deed of cross guarantee
Pursuant to Class Order 98/1418, relief has been granted to Savannah Nickel Mines Pty Ltd, Cherish Metals Pty Ltd and
Donegal Resources Pty Ltd from the Corporations Act 2001 requirements for preparation, audit and lodgement of its financial
report.
As a condition of the Class Order, Panoramic Resources Limited and Savannah Nickel Mines Pty Ltd (the "Closed Group"),
entered into a Deed of Cross Guarantee on 29 June 2005. The effect of the deed is that Panoramic Resources Limited has
guaranteed to pay any deficiency in the event of winding up of its controlled entity or if it does not meet its obligation under the
terms of overdrafts, loans, leases or other liabilities subject to the guarantee. The controlled entity has also given a similar
guarantee in the event that Panoramic Resources Limited is wound up or it does not meet its obligation under the terms of
overdrafts, loans, leases or other liabilities subject to the guarantee.
On 23 June 2009, Cherish Metals Pty Ltd and Donegal Resources Pty Ltd joined as parties to the Deed of Cross Guarantee. As
at reporting date, the "Closed Group" comprised Panoramic Resources Limited, Savannah Nickel Mines Pty Ltd, Cherish Metals
Pty Ltd and Donegal Resources Pty Ltd.
(a) Consolidated income statement, statement of comprehensive income and summary of movements in
consolidated retained earnings
Set out below is a consolidated income statement, a consolidated statement of comprehensive income and a summary of
movements in consolidated retained earnings for the year ended 30 June 2015 of the closed group consisting of Panoramic
Resources Limited, Savannah Nickel Mines Pty Ltd, Cherish Metals Pty Ltd and Donegal Resources Pty Ltd.
Consolidated income statement
Loss before income tax
Income tax benefit
Loss for the year
Retained earnings at the beginning of the financial year
Loss for the year
Dividends provided for or paid
Retained earnings at the end of the financial year
2015
$'000
(45,095)
13,878
(31,217)
2015
$'000
107,015
(31,217)
(9,658)
66,140
2014
$'000
(8,634)
2,782
(5,852)
2014
$'000
112,867
(5,852)
-
107,015
P A G E 9 4 | 2 0 1 5 A N N U A L R E P O R T
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS30 JUNE 2015
*
**
Cherish Metals Pty Ltd is the holder of 100 shares (of 100 shares) in Lanfranchi Nickel Mines Pty Ltd (LNM) at
a cost of $0.10 per share. LNM is incorporated in Australia and acts as the Operator of the Lanfranchi nickel
mine (formerly known as the Lanfranchi Joint Venture). For further information refer to note 31.
SMY Copernicus Pty Ltd is the holder of 10 shares in Copernicus Nickel Mines Pty Ltd (CNM) at a cost of
$0.10 per share. CNM is incorporated in Australia and acts as the Operator of the Copernicus nickel mine
(formerly known as the Copernicus Joint Venture).
***
Savannah Nickel Mines Pty Ltd is the holder of 1 share in SMY Copernicus Pty Ltd at a cost of $1.00.
Refer to note 31 for details on deed of cross guarantee signed between certain subsidiaries and Panoramic Resources Limited.
31 Deed of cross guarantee
Pursuant to Class Order 98/1418, relief has been granted to Savannah Nickel Mines Pty Ltd, Cherish Metals Pty Ltd and
Donegal Resources Pty Ltd from the Corporations Act 2001 requirements for preparation, audit and lodgement of its financial
report.
As a condition of the Class Order, Panoramic Resources Limited and Savannah Nickel Mines Pty Ltd (the "Closed Group"),
entered into a Deed of Cross Guarantee on 29 June 2005. The effect of the deed is that Panoramic Resources Limited has
guaranteed to pay any deficiency in the event of winding up of its controlled entity or if it does not meet its obligation under the
terms of overdrafts, loans, leases or other liabilities subject to the guarantee. The controlled entity has also given a similar
guarantee in the event that Panoramic Resources Limited is wound up or it does not meet its obligation under the terms of
overdrafts, loans, leases or other liabilities subject to the guarantee.
On 23 June 2009, Cherish Metals Pty Ltd and Donegal Resources Pty Ltd joined as parties to the Deed of Cross Guarantee. As
at reporting date, the "Closed Group" comprised Panoramic Resources Limited, Savannah Nickel Mines Pty Ltd, Cherish Metals
Pty Ltd and Donegal Resources Pty Ltd.
consolidated retained earnings
(a) Consolidated income statement, statement of comprehensive income and summary of movements in
Set out below is a consolidated income statement, a consolidated statement of comprehensive income and a summary of
movements in consolidated retained earnings for the year ended 30 June 2015 of the closed group consisting of Panoramic
Resources Limited, Savannah Nickel Mines Pty Ltd, Cherish Metals Pty Ltd and Donegal Resources Pty Ltd.
Consolidated income statement
Loss before income tax
Income tax benefit
Loss for the year
Retained earnings at the beginning of the financial year
Loss for the year
Dividends provided for or paid
Retained earnings at the end of the financial year
2015
$'000
(45,095)
13,878
(31,217)
2015
$'000
107,015
(31,217)
(9,658)
66,140
2014
$'000
(8,634)
2,782
(5,852)
2014
$'000
112,867
(5,852)
-
107,015
(b) Consolidated balance sheet
Set out below is a consolidated balance sheet as at 30 June 2015 of the closed group consisting of Panoramic Resources
Limited, Savannah Nickel Mines Pty Ltd, Cherish Metals Pty Ltd and Donegal Resources Pty Ltd.
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Derivatives
Total current assets
Non-current assets
Receivables
Available-for-sale investments
Property, plant and equipment
Deferred exploration and evaluation expenditure
Development properties
Deferred tax asset
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Interest-bearing loans and borrowings
Derivatives
Provisions
Total current liabilities
Non-current liabilities
Interest-bearing loans and borrowings
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Reserves
Retained earnings
Total equity
2015
$'000
53,787
12,325
12,887
178
79,177
95,006
831
44,851
24,734
44,405
12,361
222,188
301,365
35,364
2,855
-
8,337
46,556
68
20,463
20,531
67,087
234,278
124,154
43,984
66,140
234,278
2014
$'000
63,720
33,748
17,185
926
115,579
89,891
435
58,543
14,895
61,208
141
225,113
340,692
30,096
4,138
728
7,271
42,233
4,007
19,939
23,946
66,179
274,513
124,489
43,008
107,015
274,512
32 Events occurring after the reporting period
Lower Schmitz Exploration Target
On 6 July 2015, the Company released an Exploration Target for the Lower Schmitz zones of mineralisation, being in the range
of 275,000 to 746,000 tonnes at a nickel grade range of 5.0 to 6.0%. The announcement included a “Cautionary Statement” that
the Lower Schmitz Exploration Target was not a Mineral Resource classified under 2012 JORC.
Sale of the Mt Henry Gold Project
On 31 July 2015, the Company announced that it had sold its 70% interest in the Mt Henry Gold Project to Metals X Limited
(“Metals X”) for 15,400,000 ordinary shares in Metals X (before a 1.5% commission which is payable in Metals X ordinary
shares). The sale is conditional upon WA Ministerial consent, Metals X receiving approval from the Foreign Investment Review
Board (FIRB) and other regulatory approvals. The sale will be reflected in the 2015/16 financial statements.
Lanfranchi Nickel Project Operational Changes
On 3 August 2015, the Company announced that operational changes at the Lanfranchi Nickel Project, scheduled for later in
2015, had been brought forward as a result of a seismic event on 29 July 2015 in the vicinity of the Deacon orebody and the
continuing weakness in the nickel price.
Gidgee Gold Project Divestment Process
On 3 August 2015, the directors resolved to commence a process to divest the Gidgee Gold Project.
2 0 1 5 A N N U A L R E P O R T | P A G E 9 5
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS30 JUNE 2015
33 Reconciliation of loss for the year to net cash inflow (outflow) from operating activities
2014
$'000
2015
$'000
Loss for the year
Depreciation and amortisation of property, plant and equipment
Amortisation of development costs
Amortisation of mine properties
Impairment of assets
Net gain on sale on investment
Net gain on sale of non-current assets
Share based payments
Interest income
Unrealised gain on foreign currency exchange
Exploration and evaluation written off
Change in operating assets and liabilities:
(Increase)/decrease in trade debtors and others
Decrease in prepayments
Increase in trade creditors
Decrease/(increase) in inventories
(Increase)/decrease in derivative financial instruments
Increase in provisions
Decrease in deferred tax assets
(Decrease) in deferred tax liabilities
Net cash inflow from operating activities
34 Non-cash investing and financing activities
Shares issued as part of payments for exploration expenditure
35 Loss per share
(a) Basic loss per share
From continuing operations attributable to the ordinary equity holders of the Company
Total basic loss per share attributable to the ordinary equity holders of the
Company
(b) Diluted loss per share
From continuing operations attributable to the ordinary equity holders of the Company
Total diluted loss per share attributable to the ordinary equity holders of the
Company
(c) Reconciliation of loss used in calculating loss per share
Basic loss per share
Loss from continuing operations
Loss attributable to the ordinary equity holders of the Company used in
calculating basic loss per share
Diluted loss per share
Loss from continuing operations
Loss attributable to the ordinary equity holders of the Company used in
calculating diluted loss per share
(d) Weighted average number of shares used as denominator
(28,847)
21,941
33,800
6,384
(11,864)
(209)
32
689
(1,772)
-
1,465
21,434
1,741
5,186
4,298
34
1,026
(102)
(8,754)
46,482
2015
$'000
-
2015
Cents
(9.0)
(9.0)
2015
Cents
(9.0)
(9.0)
2015
$'000
(28,847)
(28,847)
(28,847)
(28,847)
(9,322)
20,547
31,589
7,473
13,119
-
(20)
436
(751)
(1,596)
-
(11,201)
153
4,191
724
(425)
868
175
(1,983)
53,977
2014
$'000
621
2014
Cents
(3.1)
(3.1)
2014
Cents
(3.1)
(3.1)
2014
$'000
(9,322)
(9,322)
(9,322)
(9,322)
Weighted average number of ordinary shares used as the denominator in calculating
basic and diluted loss per share
2015
Number
2014
Number
321,882,993
304,201,649
Due to losses in 2015, performance rights for 3,306,777 potential shares are not considered dilutive.
P A G E 9 6 | 2 0 1 5 A N N U A L R E P O R T
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS30 JUNE 2015
Loss for the year
Depreciation and amortisation of property, plant and equipment
Amortisation of development costs
Amortisation of mine properties
Impairment of assets
Net gain on sale on investment
Net gain on sale of non-current assets
Share based payments
Interest income
Unrealised gain on foreign currency exchange
Exploration and evaluation written off
Change in operating assets and liabilities:
(Increase)/decrease in trade debtors and others
Decrease in prepayments
Increase in trade creditors
Decrease/(increase) in inventories
(Increase)/decrease in derivative financial instruments
Increase in provisions
Decrease in deferred tax assets
(Decrease) in deferred tax liabilities
Net cash inflow from operating activities
34 Non-cash investing and financing activities
Shares issued as part of payments for exploration expenditure
35 Loss per share
(a) Basic loss per share
From continuing operations attributable to the ordinary equity holders of the Company
Total basic loss per share attributable to the ordinary equity holders of the
Company
(b) Diluted loss per share
From continuing operations attributable to the ordinary equity holders of the Company
Total diluted loss per share attributable to the ordinary equity holders of the
Company
(c) Reconciliation of loss used in calculating loss per share
Loss attributable to the ordinary equity holders of the Company used in
Basic loss per share
Loss from continuing operations
calculating basic loss per share
Diluted loss per share
Loss from continuing operations
Loss attributable to the ordinary equity holders of the Company used in
calculating diluted loss per share
(d) Weighted average number of shares used as denominator
Weighted average number of ordinary shares used as the denominator in calculating
basic and diluted loss per share
2015
Number
2014
Number
321,882,993
304,201,649
Due to losses in 2015, performance rights for 3,306,777 potential shares are not considered dilutive.
2015
$'000
(28,847)
21,941
33,800
6,384
(11,864)
(209)
32
689
(1,772)
-
1,465
1,741
5,186
4,298
34
1,026
(102)
(8,754)
46,482
2015
$'000
-
2015
Cents
(9.0)
(9.0)
2015
Cents
(9.0)
(9.0)
2015
$'000
(28,847)
(28,847)
(28,847)
(28,847)
2014
$'000
(9,322)
20,547
31,589
7,473
13,119
(20)
436
(751)
(1,596)
-
-
153
4,191
724
(425)
868
175
(1,983)
53,977
2014
$'000
621
2014
Cents
(3.1)
(3.1)
2014
Cents
(3.1)
(3.1)
2014
$'000
(9,322)
(9,322)
(9,322)
(9,322)
33 Reconciliation of loss for the year to net cash inflow (outflow) from operating activities
36 Share-based payments
(a) Performance Shares
Employee Share Plan (ESP)
On 30 July 2014, the Company’s shareholders approved a three year exemption to ASX Listing Rule 7.1 [Issues exceeding 15%
of Capital] on the annual grant of performance rights and the issue of shares on the exercise of those performance rights under
the 2010 Panoramic Resources Limited Employee Share Plan (“2010 ES Plan”). Under a new structure from 1 July 2014,
executives and senior employees will be invited each year to receive a new grant of performance rights under the 2010 ES Plan.
The long term incentive (LTI) dollar value that executives and senior employees will be entitled to receive each year is set at a
fixed percentage of their annual Fixed Remuneration (base salary plus statutory superannuation) and will range from 35% to
100% of Fixed Remuneration depending on level and seniority. The number of performance rights to be granted each year is
determined by dividing the LTI dollar by the fair value (FV) of one performance right on 1 July (as determined by an independent
valuer).
21,434
(11,201)
Each annual grant of performance rights will vest subject to meeting service and performance conditions as defined below:
- 75% of the performance rights will be performance tested against the relative total shareholder return (TSR) of a customised
peer group over a 3 year period; and
- 25% of the performance rights will be performance tested against the reserve/resource growth over a 3 year period, net of
depletion.
For FY2015, a total of 3,306,777 performance rights were calculated to be granted to executives and senior employees. To
determine the number of FY2015 performance grants at 1 July 2014, a weighted average FV of $0.67 was externally determined
using a Monte-Carlo simulation pricing model for the first TSR performance condition and a binomial pricing model was used for
the second reserve/resource growth test. The FY2015 performance rights were subsequently granted on two different dates and
a new FV was externally determined using the same pricing methodology described above on each date to calculate the fair
value to be expensed over a 3 year performance period from 1 July 2014:
Grant
date
Vesting
date
Expiry
date
Balance at
start of the
year
Granted
during the
year
Exercised
during the
year
Expired
during the
year
Forfeited
during the
year
Balance at
the end of
the year
Vested and
exercisable
at end of the
year
Consolidated 2015
12/09/14 30/06/17 01/07/17
01/07/14 30/06/17 01/07/17
Total
Weighted average exercise
price
Number Number Number Number
Number
Number
Number
-
-
-
$-
2,402,176
904,601
3,306,777
$-
-
-
-
$-
-
-
-
$-
-
-
-
$-
2,402,176
904,601
3,306,777
$-
-
-
-
$-
Grant
date
Vesting
date
Expiry
date
Balance at
start of the
year
Granted
during the
year
Exercised
during the
year
Expired
during the
year
Forfeited
during the
year
Balance at
the end of
the year
Vested and
exercisable
at end of the
year
Consolidated 2014
03/09/10 01/07/12 02/07/12
03/09/10 31/12/13 01/01/14
01/12/10 01/07/12 02/07/12
01/12/10 31/12/13 01/01/14
Total
Weighted average exercise
price
Number Number Number Number
Number
Number
Number
-
520,000
-
1,470,000
1,990,000
-
-
-
-
-
-
-
-
-
-
-
(520,000)
-
(1,470,000)
(1,990,000)
$-
$-
$-
$-
-
-
-
-
-
$-
-
-
-
-
-
$-
-
-
-
-
-
$-
The weighted average remaining contractual life of performance shares outstanding at the end of the period was 2 years (2014:
nil).
2 0 1 5 A N N U A L R E P O R T | P A G E 9 7
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS30 JUNE 2015
Fair value of Performance Shares
The fair value of each performance share was estimated on the grant date utilising the assumptions underlying the Black Scholes
methodology to produce a Monte Carlo simulation model which allowed for the incorporation of the Total Shareholder Return
(TSR) hurdles that was to be met before the Share Based Payment vest in the holder.
Shares issued under the plan
Grant date
Vesting date
Share price at grant date
Risk free rate
Dividend yield
Volatility
Fair value - TRS
Fair value - Reserve/Resource
Growth
FY2015 Performance Grants
FY2015 Performance Grants
2,402,176
12/09/2014
30/06/2017
$0.83
2.83%
904,601
1/07/2014
30/06/2017
$0.83
2.71%
2% pa in year 1 and 4% pa thereafter
2% pa in year 1 and 4% pa thereafter
71%
$0.56
$0.76
71%
$0.63
$0.79
(b) Expenses arising from share-based payment transactions
The cost of equity-settled transactions is recognised, together with the corresponding increase in reserve, over the period in
which performance conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the option
(‘vesting date’).
The cumulative expense recognised for equity settled transactions at each reporting date until vesting date reflects:
(i) the extent to which the vesting period has expired; and
(ii) the number of options that, in opinion of the directors of the consolidated entity, will ultimately vest. This opinion is formed
based on the best available information at balance date. No adjustment is made for the likelihood of market performance
conditions being met as the effect of these conditions is included in the determination of fair value at grant date.
No expense is recognised for options that do not ultimately vest, except for options where vesting is conditional upon a market
condition.
The dilutive effect, if any, of outstanding options is reflected as additional share dilution in the computation of earnings per share.
Total expenses arising from share based payment transactions recognised during the period as part of employee benefit
expense were as follows:
(i) Performance shares under employee share plan amount to $0.689 million (2014: $0.436 million).
P A G E 9 8 | 2 0 1 5 A N N U A L R E P O R T
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS30 JUNE 2015
Fair value of Performance Shares
The fair value of each performance share was estimated on the grant date utilising the assumptions underlying the Black Scholes
methodology to produce a Monte Carlo simulation model which allowed for the incorporation of the Total Shareholder Return
(TSR) hurdles that was to be met before the Share Based Payment vest in the holder.
FY2015 Performance Grants
FY2015 Performance Grants
Shares issued under the plan
Share price at grant date
Grant date
Vesting date
Risk free rate
Dividend yield
Volatility
Fair value - TRS
Fair value - Reserve/Resource
Growth
2,402,176
12/09/2014
30/06/2017
$0.83
2.83%
71%
$0.56
$0.76
904,601
1/07/2014
30/06/2017
$0.83
2.71%
71%
$0.63
$0.79
2% pa in year 1 and 4% pa thereafter
2% pa in year 1 and 4% pa thereafter
(b) Expenses arising from share-based payment transactions
The cost of equity-settled transactions is recognised, together with the corresponding increase in reserve, over the period in
which performance conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the option
(‘vesting date’).
The cumulative expense recognised for equity settled transactions at each reporting date until vesting date reflects:
(i) the extent to which the vesting period has expired; and
(ii) the number of options that, in opinion of the directors of the consolidated entity, will ultimately vest. This opinion is formed
based on the best available information at balance date. No adjustment is made for the likelihood of market performance
conditions being met as the effect of these conditions is included in the determination of fair value at grant date.
No expense is recognised for options that do not ultimately vest, except for options where vesting is conditional upon a market
condition.
The dilutive effect, if any, of outstanding options is reflected as additional share dilution in the computation of earnings per share.
Total expenses arising from share based payment transactions recognised during the period as part of employee benefit
expense were as follows:
37 Parent entity financial information
(a) Summary financial information
The individual financial statements for the Parent entity show the following aggregate amounts:
Balance sheet
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Shareholders' equity
Contributed equity
Reserves
Retained earnings
Capital and reserves attributable to owners of Panoramic Resources Limited
Loss for the year
Total comprehensive income
2015
$'000
6,545
97,660
104,205
1,335
55
1,390
2014
$'000
5,453
111,314
116,767
1,503
30
1,533
(311,225)
(348,768)
161,071
20,867
(79,123)
102,815
(3,389)
(3,389)
161,406
19,902
(66,073)
115,235
(5,854)
(5,854)
(b) Guarantees entered into by the parent entity
The parent entity has given financial guarantees in respect of:
(i) leases of subsidiaries amounting to $1.600 million (2014: $6.002 million);
(ii) the bank facilities of a subsidiary amounting to $0.250 million (2014: $0.686 million); and
(iii) a rehabilitation bank guarantee of a subsidiary amounting to $2.0 million (2014: $10.5 million).
No liability was recognised by the parent entity or the consolidated entity in relation to these guarantees, as the fair value of the
guarantees is immaterial.
There are cross guarantees given by Panoramic Resources Limited, Savannah Nickel Mines Pty Ltd, Cherish Metals Pty Ltd and
Donegal Resources Pty Ltd as described in note 31. No deficiencies of assets exist in any of these companies.
No liability was recognised by the parent entity or the Group in relation to the cross guarantees.
(i) Performance shares under employee share plan amount to $0.689 million (2014: $0.436 million).
(c) Contingent liabilities of the parent entity
The parent entity and Group had contingent liabilities at 30 June 2015 in respect of a bank guarantee put in place with a financial
institution with a face value of $0.709 million (2014: $0.709 million) in respect to the leasing of the office space in Perth CBD.
38 Financial risk management
The Group’s principal financial instruments comprise receivables, payables, finance leases, hire purchase contracts, cash and
derivatives.
The Group manages its exposure to key financial risks, including interest rate and currency risk in accordance with the Group’s
financial risk management policy. The objective of the policy is to support the delivery of the Group’s financial targets whilst
protecting future financial security.
To manage exposure to commodity prices and exchange rates the Group uses derivative instruments, principally forward sales
contracts and put and call options. The purpose is to manage the commodity price and currency rate risks arising from the
Group’s operations. These derivatives provide economic hedges and qualify for hedge accounting and are based on limits set by
the Board. The main risks arising from the Group's financial instruments are foreign currency risk, interest rate risk, commodity
price risk, credit risk and liquidity risk. The Group uses different methods to measure and manage different types of risks to which
it is exposed. These include monitoring levels of exposure to commodity prices, interest rate and foreign currency exchange risk
and assessments of market forecasts for commodity prices and foreign exchange. Ageing analyses and monitoring of specific
credit allowances are undertaken to manage credit risk. Liquidity risk is monitored through the development of future rolling cash
flow forecasts.
The Board reviews and agrees policies for managing each of these risks as summarised below.
Primary responsibility for the identification and control of financial risks rests with the Audit Committee under the authority of the
Board. The Board reviews and agrees policies for managing each of the risks identified below, including the setting of limits for
2 0 1 5 A N N U A L R E P O R T | P A G E 9 9
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS30 JUNE 2015
hedging cover of commodity prices, foreign currency and interest rate risk, credit allowances and future cash flow forecast
projections.
(a) Foreign currency exchange rate risk
The Group has transactional currency exposures. Such exposure arises from sales or purchases in a currency other than the
entity’s functional currency. Approximately 100% of the Group’s sales are denominated in United States Dollars (USD), whilst
most of the costs are denominated in Australian Dollars. The Group’s functional currency is Australian Dollars (AUD).
The Group’s profit and loss and balance sheet can be affected significantly by movements in the AUD:USD exchange rate. The
Group seeks to mitigate the effect of its net foreign currency exposure by using derivative instruments, principally forward foreign
currency exchange rate contracts and put and call options.
It is the Group’s policy to enter into derivative instruments to hedge foreign currency exposure once the likelihood of such
exposure is highly probable and to negotiate the terms of the hedge derivatives to exactly match the terms of the hedged item to
maximise hedge effectiveness. The Group will follow its current policy of matching and hedging up to 80% of sales revenues in
USD.
Information about the Group's foreign currency exchange rate contracts is provided in note 12.
As 30 June 2015, the Group had the following exposure to USD foreign currency that is not designated in cashflow hedges:
Cash at bank
Trade receivables
Trade payables
Net exposure
Sensitivity
2015
$'000
20,150
8,442
(2,674)
25,918
2014
$'000
16,982
20,272
-
37,254
The following sensitivity is based on the foreign currency risk exposures in existence at the balance sheet date. The +/- 10%
(2014: +/- 10%) sensitivity is based on reasonably possible changes, over a financial year, using an observed range of actual
historical rates, for the AUD to the USD, for the preceding 5 years and management's expectation of future movements.
At 30 June 2015, had the USD moved, as illustrated in the table below, with all other variables held constant, post tax profit and
equity would have been affected as follows:
Judgements of reasonably possible movements
Impact on post-tax profit
Impact on equity
AUD to USD +10% (2014: +10%)
AUD to USD -10% (2014: -10%)
2015
'000
2014
'000
1,253
(1,025)
971
(2,022)
2015
'000
-
-
2014
'000
1,204
241
Management believes the reporting date risk exposures are representative of the risk inherent in the financial instruments.
(b) Interest rate risk
The Group has in place a Cash Management Policy to ensure that up to 180 days (2014: 180 days) excess cash holdings are
invested with a range of institutions that have sufficient financial strength to ensure the security of the investments. The Group
policy is to reduce and manage cash flow interest rate risk by ensuing a timely reduction in debt obligations through scheduled
debt repayments and non-scheduled debt repayments when excess cash is available.
Cash at bank and in hand
2015
2014
Weighted
average
interest rate
%
1.9%
Weighted
average
interest rate
%
2.5%
Balance
$'000
25,421
Balance
$'000
30,725
The following sensitivity is based on the interest rate risk exposures in existence at the reporting date. The sensitivity used is +/-
75 basis points (2014: +/- 75) which is based on reasonably, possible changes, over a financial year, using the observed range of
actual historical Australian short term deposit rate movements over the last 3 years and management's expectation of future
movements.
P A G E 1 0 0 | 2 0 1 5 A N N U A L R E P O R T
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS30 JUNE 2015
projections.
(a) Foreign currency exchange rate risk
The Group has transactional currency exposures. Such exposure arises from sales or purchases in a currency other than the
entity’s functional currency. Approximately 100% of the Group’s sales are denominated in United States Dollars (USD), whilst
most of the costs are denominated in Australian Dollars. The Group’s functional currency is Australian Dollars (AUD).
The Group’s profit and loss and balance sheet can be affected significantly by movements in the AUD:USD exchange rate. The
Group seeks to mitigate the effect of its net foreign currency exposure by using derivative instruments, principally forward foreign
currency exchange rate contracts and put and call options.
It is the Group’s policy to enter into derivative instruments to hedge foreign currency exposure once the likelihood of such
exposure is highly probable and to negotiate the terms of the hedge derivatives to exactly match the terms of the hedged item to
maximise hedge effectiveness. The Group will follow its current policy of matching and hedging up to 80% of sales revenues in
USD.
Information about the Group's foreign currency exchange rate contracts is provided in note 12.
As 30 June 2015, the Group had the following exposure to USD foreign currency that is not designated in cashflow hedges:
2015
$'000
20,150
8,442
(2,674)
25,918
2014
$'000
16,982
20,272
-
37,254
Cash at bank
Trade receivables
Trade payables
Net exposure
Sensitivity
The following sensitivity is based on the foreign currency risk exposures in existence at the balance sheet date. The +/- 10%
(2014: +/- 10%) sensitivity is based on reasonably possible changes, over a financial year, using an observed range of actual
historical rates, for the AUD to the USD, for the preceding 5 years and management's expectation of future movements.
At 30 June 2015, had the USD moved, as illustrated in the table below, with all other variables held constant, post tax profit and
equity would have been affected as follows:
Judgements of reasonably possible movements
Impact on post-tax profit
Impact on equity
2015
'000
2014
'000
1,253
(1,025)
971
(2,022)
2015
'000
-
-
2014
'000
1,204
241
AUD to USD +10% (2014: +10%)
AUD to USD -10% (2014: -10%)
(b) Interest rate risk
Management believes the reporting date risk exposures are representative of the risk inherent in the financial instruments.
The Group has in place a Cash Management Policy to ensure that up to 180 days (2014: 180 days) excess cash holdings are
invested with a range of institutions that have sufficient financial strength to ensure the security of the investments. The Group
policy is to reduce and manage cash flow interest rate risk by ensuing a timely reduction in debt obligations through scheduled
debt repayments and non-scheduled debt repayments when excess cash is available.
Cash at bank and in hand
2015
2014
Weighted
average
interest rate
%
1.9%
Weighted
average
interest rate
%
2.5%
Balance
$'000
25,421
Balance
$'000
30,725
The following sensitivity is based on the interest rate risk exposures in existence at the reporting date. The sensitivity used is +/-
75 basis points (2014: +/- 75) which is based on reasonably, possible changes, over a financial year, using the observed range of
actual historical Australian short term deposit rate movements over the last 3 years and management's expectation of future
movements.
hedging cover of commodity prices, foreign currency and interest rate risk, credit allowances and future cash flow forecast
Sensitivity
At 30 June 2015
Financial assets
Cash and cash equivalents
Total increase/
(decrease)
At 30 June 2014
Financial assets
Cash and cash equivalents
Total increase/
(decrease)
(c) Fair value measurements
Carrying
amount
$'000
25,421
Carrying
amount
$'000
30,725
Interest rate risk
-0.75%
Equity
$'000
-
-
Profit
$'000
6
6
Interest rate risk
-0.75%
Equity
$'000
-
-
Profit
$'000
2
2
Profit
$'000
(6)
(6)
Profit
$'000
(2)
(2)
+0.75%
Equity
$'000
-
-
+0.75%
Equity
$'000
-
-
The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure
purposes.
Disclosure of fair value measurements is by level of the following fair value measurement hierarchy:
(a) quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1);
(b)
inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (as
prices) or indirectly (derived from prices) (level 2); and
inputs for the asset or liability that are not based on observable market data (unobservable inputs) (level 3).
(c)
At 30 June 2015, the Group does not have any level 3 instruments.
The following table presents the fair value measurement hierarchy of the Group's assets and liabilities at 30 June 2015 and 30
June 2014:
At 30 June 2015
Assets
Financial assets at fair value through
profit or loss:
Derivative instruments
Equity securities
Receivables
Total assets
Liabilities
Financial liabilities for which fair values are disclosed:
Lease liabilities
Total liabilities
Level 1
$'000
Level 2
$'000
Level 3
$'000
-
858
-
858
-
-
178
-
8,119
8,297
2,131
2,131
-
-
-
-
-
-
Total
$'000
178
858
8,119
9,155
2,131
2,131
2 0 1 5 A N N U A L R E P O R T | P A G E 1 0 1
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS30 JUNE 2015
At 30 June 2014
Assets
Financial assets at fair value through
profit or loss:
Derivative instruments
Equity securities
Receivables
Total assets
Liabilities
Financial liabilities at fair value through profit or loss:
Derivative instruments
Financial liabilities for which fair values are
disclosed:
Lease liabilities
Total liabilities
Level 1
$'000
Level 2
$'000
Level 3
$'000
Total
$'000
-
528
-
528
-
-
-
926
-
28,726
29,652
728
7,192
7,920
-
-
-
-
-
-
-
926
528
28,726
30,180
728
7,192
7,920
The available-for-sale financial assets are traded in active markets. Their fair value is based on quoted market prices at the end of
the reporting period. These instruments are included in level 1.
The fair value of derivative financial instruments that are not traded in an active market (for example, over-the-counter
derivatives) is determined using valuation techniques. The Company uses a variety of methods and makes assumptions that are
based on market conditions existing at the end of each reporting period. These techniques include comparing contracted rates to
market rates with the same length of maturity to determine the value of forward contracts and use of option pricing models to
value put options. These instruments are included in level 2. In the circumstances where a valuation technique for these
instruments is based on significant unobservable inputs, such instruments are included in level 3.
The fair value of finance lease is estimated by discounting future cashflows using rates currently available to debt on similar
terms, credit risk and remaining maturities.
(d) Commodity Price Risk
The Group's exposure to nickel prices is very high as approximately 80-85% of total revenue comes from the sale of nickel.
Nickel is sold on the basis of nickel prices quoted on the London Metal Exchange (LME).
The Group's profit and loss account and balance sheet can be affected significantly by movements in nickel prices on the LME.
The Group seeks to mitigate the effect of its nickel prices exposure by using derivative instruments, principally forward sales
contracts and put and call options. The limits of hedging are set by the Board.
The following table summarises the sensitivity of the Group's financial assets and financial liabilities to commodity price risk. The
+/- 30% (2014: +/- 30%) sensitivity is based on reasonably possible changes, over a financial year, using the observed range of
actual historical prices for the preceding 5 year period and management's expectation of future movements.
At 30 June 2015
Financial assets
Accounts receivable
Total increase/
(decrease)
At 30 June 2014
Financial assets
Accounts receivable
Total increase/
(decrease)
Commodity price risk
-30%
+30%
Gross
exposure
$'000
Profit
$'000
Other
equity
$'000
Profit
$'000
Other
equity
$'000
8,442
(4,151)
(4,151)
-
-
4,151
4,151
Commodity price risk
-30%
+30%
Gross
exposure
$'000
Profit
$'000
Equity
$'000
Profit
$'000
Equity
$'000
28,693
(9,340)
(9,340)
-
-
9,340
9,340
-
-
-
-
P A G E 1 0 2 | 2 0 1 5 A N N U A L R E P O R T
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS30 JUNE 2015
Financial assets at fair value through
At 30 June 2014
Assets
profit or loss:
Derivative instruments
Equity securities
Receivables
Total assets
Liabilities
Financial liabilities at fair value through profit or loss:
Derivative instruments
Financial liabilities for which fair values are
disclosed:
Lease liabilities
Total liabilities
Level 1
$'000
Level 2
$'000
Level 3
$'000
Total
$'000
528
528
-
-
-
-
-
926
-
28,726
29,652
728
7,192
7,920
-
-
-
-
-
-
-
926
528
28,726
30,180
728
7,192
7,920
The available-for-sale financial assets are traded in active markets. Their fair value is based on quoted market prices at the end of
the reporting period. These instruments are included in level 1.
The fair value of derivative financial instruments that are not traded in an active market (for example, over-the-counter
derivatives) is determined using valuation techniques. The Company uses a variety of methods and makes assumptions that are
based on market conditions existing at the end of each reporting period. These techniques include comparing contracted rates to
market rates with the same length of maturity to determine the value of forward contracts and use of option pricing models to
value put options. These instruments are included in level 2. In the circumstances where a valuation technique for these
instruments is based on significant unobservable inputs, such instruments are included in level 3.
The fair value of finance lease is estimated by discounting future cashflows using rates currently available to debt on similar
terms, credit risk and remaining maturities.
(d) Commodity Price Risk
(e) Credit risk
Credit risk arises from the financial assets of the Group, which comprise cash and cash equivalents, trade and other receivables
and derivative instruments.
The Group’s maximum exposures to credit risk at reporting date in relation to each class of recognised financial assets, other
than derivatives, is the carrying amount of these assets as indicated in the balance sheet.
In relation to derivative financial instruments, credit risk arises from the potential failure of counterparties to meet their obligations
under the contract or arrangement. The Group‘s maximum credit risk exposure in relation to net settled derivatives is the total
mark to market gain, should counterparts not honour their obligations. In case of gross-settled derivatives, the maximum
exposure is the notional value. Gross-settled derivatives are held with financial institutions with sound credit rating.
The Group does not hold any credit derivatives to offset its credit exposure. The Group trades only with recognised, creditworthy
third parties, and as such collateral is not requested nor is it the Group's policy to securities its trade and other receivables.
The Group has a concentration of credit risk in that it depends on two major customers for a significant volume of revenue.
Under the Group's risk management framework, each customer is analysed individually for creditworthiness on an ongoing basis
in order to minimise the risk of default. The Group believes that both its customers are of sound creditworthiness as evidenced by
the compliance with the off-take agreement's payment terms over the life of each project.
(f) Equity price risk
The Group is exposed To equity securities Price risk. This arises from investments held by the Group and classified on the
balance sheet as available-for-sale. The fair value of these investments are based on quoted market prices.
The Group holds investments of shares in several listed entities who are either joint venture partners or potential joint venture
partners. The Board has not reacted to short-term price fluctuations as it has a medium to long term view on these investments.
These investments represent less than 1% (2014: 1%) of total assets and have yet to generate any revenue.
The following sensitivity is based on the equity price risk exposures in existence at the reporting date. The sensitivity used is +/-
30% which is based on reasonably, possible changes, over a financial year, based on the share price fluctuations of the last 12
months and management's expectation of future movements.
The Group's exposure to nickel prices is very high as approximately 80-85% of total revenue comes from the sale of nickel.
Nickel is sold on the basis of nickel prices quoted on the London Metal Exchange (LME).
Sensitivity
The Group's profit and loss account and balance sheet can be affected significantly by movements in nickel prices on the LME.
The Group seeks to mitigate the effect of its nickel prices exposure by using derivative instruments, principally forward sales
contracts and put and call options. The limits of hedging are set by the Board.
The following table summarises the sensitivity of the Group's financial assets and financial liabilities to commodity price risk. The
+/- 30% (2014: +/- 30%) sensitivity is based on reasonably possible changes, over a financial year, using the observed range of
actual historical prices for the preceding 5 year period and management's expectation of future movements.
Impact on post-tax profit
2014
$'000
2015
$'000
Impact on equity
2014
$'000
2015
$'000
Available-for-sale financial investment +30%
(2014: +30%)
Available-for-sale financial investment -30%
(2014: -30%)
-
-
-
-
180
(180)
111
(111)
At 30 June 2015
Financial assets
Accounts receivable
Total increase/
(decrease)
At 30 June 2014
Financial assets
Accounts receivable
Total increase/
(decrease)
Commodity price risk
-30%
+30%
Gross
exposure
$'000
Profit
$'000
Other
equity
$'000
Profit
$'000
Other
equity
$'000
Commodity price risk
-30%
+30%
Gross
exposure
$'000
Profit
$'000
Equity
$'000
Profit
$'000
Equity
$'000
8,442
(4,151)
(4,151)
28,693
(9,340)
(9,340)
-
-
-
-
4,151
4,151
9,340
9,340
-
-
-
-
(g) Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability of funding when
necessary and the ability to close-out market positions.
The Group’s objective is to maintain a balance between continuity of funding and flexibility through the use of bank loans (when
required), finance leases and committed available credit lines.
The Group monitors on a regular basis rolling forecasts of liquidity on the basis of expected cash flow.
The Group has in place a Group Cash Management Policy to ensure that up to 180 days (2014: 180 days) excess cash holdings
are invested with a range of institutions that have sufficient financial strength to ensure the security of the investment. This policy
is reviewed and approved by the Board on an annual basis. When bank loans are used, the Group’s policy is to reduce and
manage cash flow interest rate risk by ensuing a timely reduction in debt obligations through scheduled debt repayments and non
scheduled debt repayments when excess cash is available.
2 0 1 5 A N N U A L R E P O R T | P A G E 1 0 3
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS30 JUNE 2015
Maturities of financial liabilities
The tables below analyse the Group’s financial liabilities, net and gross settled derivative financial instruments into relevant
maturity groupings based on the remaining period at the reporting date to the contractual maturity date. The amounts disclosed in
the table are the contractual undiscounted cash flows.
Contractual maturities of financial liabilities
At 30 June 2015
Non-derivatives
Trade payables
Borrowings
Finance lease liabilities
Total non-derivatives
Derivatives
Commodity put options - outflow
Contractual maturities of financial liabilities
At 30 June 2014
Non-derivatives
Trade payables
Borrowings
Finance lease liabilities
Total non-derivatives
Derivatives
Commodity put options - outflow
Foreign currency exchange call options - (inflow)
Foreign currency exchange put options - outflow
Commodity call options - (inflow)
Total derivatives
Less than
1 year
$'000
Between 1
and 5
years
$'000
Total
contrac-
tual
cash
flows
$'000
Carrying
amount
(assets)/
liabilities
$'000
35,628
806
2,039
38,473
-
-
-
178
178
-
35,628
-
2,213
37,841
35,628
792
2,131
38,551
-
178
Less than 1
year
$'000
Between
1 and 5
years
$'000
Total
contrac-
tual
cash
flows
$'000
Carrying
amount
(assets)/
liabilities
$'000
30,732
973
3,589
35,294
-
-
4,179
4,179
30,732
973
7,768
39,473
-
-
-
(14)
(14)
-
-
-
-
-
-
-
-
(14)
(14)
30,732
953
7,192
38,877
385
(173)
541
(555)
198
P A G E 1 0 4 | 2 0 1 5 A N N U A L R E P O R T
ADDITIONAL SHAREHOLDER INFORMATION
Panoramic Resources Limited shares are listed on the Australian Stock Exchange Limited. The Company’s ASX code is
Substantial Shareholders (Holding Not Less Than 5%)
Total Number of Voting Shares in Panoramic Resources
Percentage of Total Number
Limited in which the Substantial Shareholders and its
of Voting Shares (%)
Associates Hold Relevant Interests
103,384,399
35,931,688
34,107,920
21,845,651
32.16
11.18
10.61
6.80
Stock Exchange Listing
PAN.
As at 30 September 2015,
Name of Shareholder
JP Morgan Nominees Australia Limited
HSBC Custody Nominees (Australia) Limited
Citicorp Nominees Pty Limited
National Nominees Limited
Class of Shares and Voting Rights
a.
b.
At 30 September 2015, there were 5,009 holders of 321,424,015 fully-paid Ordinary shares of the Company. The voting
rights attaching to the Ordinary shares are in accordance with the Company’s Constitution being that:
each Shareholder entitled to vote may vote in person or by proxy, attorney or Representative;
on a show of hands, every person present who is a Shareholder or a proxy, attorney or Representative of a
shareholder has one vote; and
c.
on a poll, every person present who is a Shareholder or a proxy, attorney or Representative of a Shareholder shall, in
respect of each fully-paid share held by him, or in respect of which he is appointed a proxy, attorney or Representative
have one vote for the share, but in respect of partly-paid shares, shall have such number of votes as bears the
proportion which the paid amount (not credited) is of the total amounts paid and payable (excluding amounts credited).
There are no voting rights attached to the options in the Company. Voting rights will be attached to the issued Ordinary
At 30 September 2015, the number of parcels of shares with a value of less than $500 was 1,275.
shares when options have been exercised.
Unmarketable Shares
Distribution of Shareholders
As at 30 September 2015
Number of Shares Held
Number of Shareholders
Number of Fully Paid Shares
1-1,000
1,001-5,000
5,001-10,000
10,001-100,000
100,001- and over
Total:
812
1,964
848
1,242
143
5,009
483,654
5,462,594
6,969,409
39,530,810
268,977,548
321,424,015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS30 JUNE 2015
Contractual maturities of financial liabilities
At 30 June 2015
Non-derivatives
Trade payables
Borrowings
Finance lease liabilities
Total non-derivatives
Derivatives
Commodity put options - outflow
Contractual maturities of financial liabilities
At 30 June 2014
Non-derivatives
Trade payables
Borrowings
Finance lease liabilities
Total non-derivatives
Derivatives
Commodity put options - outflow
Foreign currency exchange call options - (inflow)
Foreign currency exchange put options - outflow
Commodity call options - (inflow)
Total derivatives
Total
tual
cash
flows
$'000
35,628
2,213
37,841
-
-
Between 1
Less than
1 year
$'000
and 5
years
$'000
contrac-
Carrying
amount
(assets)/
liabilities
$'000
35,628
806
2,039
38,473
-
178
178
35,628
792
2,131
38,551
178
Between
Less than 1
1 and 5
year
$'000
years
$'000
contrac-
Carrying
Total
tual
cash
flows
$'000
amount
(assets)/
liabilities
$'000
30,732
973
3,589
35,294
-
-
-
(14)
(14)
4,179
4,179
30,732
973
7,768
39,473
-
-
-
(14)
(14)
30,732
953
7,192
38,877
385
(173)
541
(555)
198
-
-
-
-
-
-
-
-
-
-
Maturities of financial liabilities
Stock Exchange Listing
The tables below analyse the Group’s financial liabilities, net and gross settled derivative financial instruments into relevant
maturity groupings based on the remaining period at the reporting date to the contractual maturity date. The amounts disclosed in
the table are the contractual undiscounted cash flows.
Panoramic Resources Limited shares are listed on the Australian Stock Exchange Limited. The Company’s ASX code is
PAN.
Substantial Shareholders (Holding Not Less Than 5%)
ADDITIONAL SHAREHOLDER INFORMATION
ADDITIONAL SHAREHOLDER INFORMATION
AS AT 30 SEPTEMBER 2015
As at 30 September 2015,
Name of Shareholder
JP Morgan Nominees Australia Limited
HSBC Custody Nominees (Australia) Limited
Citicorp Nominees Pty Limited
National Nominees Limited
Class of Shares and Voting Rights
Total Number of Voting Shares in Panoramic Resources
Limited in which the Substantial Shareholders and its
Associates Hold Relevant Interests
Percentage of Total Number
of Voting Shares (%)
103,384,399
35,931,688
34,107,920
21,845,651
32.16
11.18
10.61
6.80
At 30 September 2015, there were 5,009 holders of 321,424,015 fully-paid Ordinary shares of the Company. The voting
rights attaching to the Ordinary shares are in accordance with the Company’s Constitution being that:
a.
b.
c.
each Shareholder entitled to vote may vote in person or by proxy, attorney or Representative;
on a show of hands, every person present who is a Shareholder or a proxy, attorney or Representative of a
shareholder has one vote; and
on a poll, every person present who is a Shareholder or a proxy, attorney or Representative of a Shareholder shall, in
respect of each fully-paid share held by him, or in respect of which he is appointed a proxy, attorney or Representative
have one vote for the share, but in respect of partly-paid shares, shall have such number of votes as bears the
proportion which the paid amount (not credited) is of the total amounts paid and payable (excluding amounts credited).
There are no voting rights attached to the options in the Company. Voting rights will be attached to the issued Ordinary
shares when options have been exercised.
Unmarketable Shares
At 30 September 2015, the number of parcels of shares with a value of less than $500 was 1,275.
Distribution of Shareholders
As at 30 September 2015
Number of Shares Held
Number of Shareholders
Number of Fully Paid Shares
1-1,000
1,001-5,000
5,001-10,000
10,001-100,000
100,001- and over
Total:
812
1,964
848
1,242
143
5,009
483,654
5,462,594
6,969,409
39,530,810
268,977,548
321,424,015
2 0 1 5 A N N U A L R E P O R T | P A G E 1 0 5
ADDITIONAL SHAREHOLDER INFORMATION
AS AT 30 SEPTEMBER 2015
Listing of 20 Largest Shareholders
As at 30 September 2015
Name of Ordinary Shareholder
Number of Shares Held
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
J P MORGAN NOMINEES AUSTRALIA LIMITED
103,384,399
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
CITICORP NOMINEES PTY LIMITED
NATIONAL NOMINEES LIMITED
UBS NOMINEES PTY LTD
BNP PARIBAS NOMS PTY LTD
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