P
a
n
o
r
a
m
i
c
R
e
s
o
u
r
c
e
s
L
i
m
i
t
e
d
|
2
0
1
6
A
n
n
u
a
l
R
e
p
o
r
t
V I S I O N | C O M M I T M E N T | R E S U L T S
2016 ANNUAL REPORT
CONTENTS
MISSION STATEMENT
ABOUT US
KEY POINTS FOR FY2016
EXPLORATION SUCCESSES IN FY2016
OUR ACHIEVEMENTS TO-DATE
CHAIRMAN’S REPORT
MANAGING DIRECTOR’S REPORT
SAFETY
NICKEL PRODUCTION
CUMULATIVE CASHFLOW
NICKEL DIVISION
GOLD DIVISION
PGM DIVISION
EXPLORATION
FY2017 GOALS
DIRECTOR’S REPORT
CORPORATE GOVERNANCE STATEMENT
DIRECTORS’ DECLARATION
INDEPENDENT AUDITOR’S REPORT
AUDITOR’S INDEPENDENCE DECLARATION
FINANCIAL REPORT
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
2
2
3
3
3
4
6
9
9
9
10
12
13
14
17
18
41
48
49
51
52
53
54
55
56
57
58
112
114
119
124
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 aforementioned has 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. Mr Hicks consents to the inclusion in the report of the matters based on the information in the form and
context in which it appears.
2016 ANNUAL REPORT | PAGE 1
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.
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
ABOUT US
Panoramic Resources Limited (ASX:PAN) is a Western Australian mining company formed in 2001 for the purpose of developing
the Savannah Nickel Project in the East Kimberley. Panoramic successfully commissioned the 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. The Lanfranchi and Savannah Projects were
placed on care and maintenance in November 2015 and May 2016 respectively awaiting a sustained recovery in the nickel price.
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 Gum Creek Gold Project located near Wiluna which the Company
is in the process of partially divesting via an initial public offer. 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% by spending up to C$20 million over five years. Panoramic has been a consistent dividend payer and has paid out a total
of $114.3 million in fully franked dividends since 2008.
PAGE 2 | 2016 ANNUAL REPORT
KEY POINTS FOR FY2016
Group production
Savannah record production
10,864 tonnes nickel
•
•
•
9,845 tonnes nickel
6,011 tonnes copper
476 tonnes cobalt
Sales revenue
Year-end cash & receivables
$92.1 million
$28.7 million
Safety
Lost Time Injury Frequency Rate reached zero in March 2016
EXPLORATION
SUCCESSES IN FY2016
Savannah North
Lower Schmitz
Major Resource upgrade
Maiden high-grade Resource
OUR ACHIEVEMENTS
TO-DATE
Production
Resources
•
•
•
•
•
•
•
•
•
184,708 tonnes nickel
60,590 tonnes copper
4,966 tonnes cobalt
321,800 tonnes nickel
1.27 million ounces gold
1.36 million ounces platinum
1.44 million ounces palladium
83,200 tonnes copper
10,400 tonnes cobalt
Dividends paid
~$114 million
Cashflow generated from operations
$748 million (pre-tax)
EBITDA
$793 million (before impairment)
2016 ANNUAL REPORT | PAGE 3
CHAIRMAN’S
REPORT
Dear Shareholder,
As we all know, it has been a difficult twelve
months for us and other participants in the global
nickel industry. Lower forecast economic growth
rates in China, poor sentiment towards resources
and a slow response by nickel producers to curtail
production, created a perfect storm for Panoramic.
The nickel price fell to around US$3.50/lb in February 2016, a level not seen since
2003. This rapid fall confounded us, the rest of the global nickel industry and many
leading commodity forecasters. At US$3.50/lb it was reported that approximately
60% of the world’s nickel production was at/or below cash break-even.
While this situation was clearly not sustainable, we assessed the impact of a period
of lower than anticipated nickel prices on our Lanfranchi and Savannah operations
and made the separate decisions to place both assets onto care and maintenance to
preserve shareholder value. The financial impact of these decisions was significant
and resulted in a substantial loss due to a combination of lower net revenue and
asset impairments. With the support of our major shareholder Zeta Resources
and other loyal shareholders, we were able to undertake an Entitlement Offer to
significantly improve our cash balance to provide the necessary funding to maintain
the business while we are not producing.
The low metal price environment has resulted in continued restructuring across
the mining industry. Panoramic has 350 fewer employees after placing Lanfranchi
and Savannah on care and maintenance. We have retained key management with
the necessary operating and support skills to sustain the core business, complete
feasibility work and continue exploration, while holding our two mining centres on
care and maintenance.
While we made the difficult and unforeseen decisions to suspend operations at both
mines, we can record that many of the goals we set ourselves for the 2016 financial
year were achieved.
PAGE 4 | 2016 ANNUAL REPORT
FY2016 Goals
Performance
Safety – No Lost Time Injuries
9 Lost Time Injury Frequency rate dropped to zero in the March 2016 quarter
Resources – add 150,000
tonnes of nickel
9 Savannah North Resource now contains 175,100 tonnes nickel, 74,400 tonnes
copper and 12,700 tonnes cobalt (refer to ASX Announcement 24 August, 2016)
9 Maiden Resource Lower Schmitz of 6,700 tonnes nickel
Costs – continue to reduce
costs across the business
9 Payable cash costs of A$2.30/lb for the June quarter at Savannah
9 Executive salaries reduced by 10%, Director’s fees reduced by 35%
Gold – monetise our gold assets
9 Mt Henry sold for 15.225 million shares in Metals X and realised net proceeds of
$17.8 million on the sale of these shares
9 Decision to IPO the Gum Creek Gold Project
PGM – advance our two projects
9 Rio continued to explore at Thunder Bay North
9 Improved metallurgical recoveries and concentrate grades from Panton testwork
Growth – increase our nickel
reserves
9 Positive Scoping Study on Savannah North indicates that the Project could have
a +8 year mine life
Since June 2016, the nickel price has made a partial recovery,
in part due to the change of government in the Philippines and
a subsequent audit of their nickel laterite mining industry, which
resulted in the suspension of production from approximately
10% of the mines. In addition, LME stockpiles which were at
historic highs of 470,000 tonnes have fallen to around 370,000
tonnes. This is seen as a positive development by many nickel
industry analysts who consider that a continued reduction
in LME nickel stocks is one of the catalysts needed for a
sustained nickel price recovery. Furthermore, with the global
nickel demand improving, there seems to be light at the end
of the tunnel.
Application of rigorous optimisation of capital and operating
costs will define the nickel price that will support restarting the
Savannah mine and development of Savannah North. Reducing
the major cost inputs including energy, personnel and logistics
are areas where potential savings in operating costs could be
achieved. Panoramic has the foundation for creating a long
term operating presence in the Kimberley, with the potential
to develop our Panton PGM project utilising the Savannah
infrastructure. Indeed, there are other mineral resources
located close to Savannah which may be economic to develop
using the existing Savannah facilities. As has been previously
mentioned, the creation of a “Kimberley Hub” for the production
of base metals and PGMs remains a development option.
I acknowledge the tough decisions that Peter Harold and
his management group have had to make, and thank them
for placing Panoramic in a sound position to benefit from
the eventual rebound in the nickel price. I also thank all our
employees for their dedication and hard work and send best
wishes to those that have left us.
In closing, although we have experienced a tough 24
months, I believe that we can look forward to better times as
commodity prices recover. This would be assisted by a return
in business confidence if our government can elucidate and
introduce consistent policies that give confidence in making
long term investment decisions. In the meantime, we are
working hard to add to and grow our resource and reserve
base which is the foundation on which Panoramic’s future is
based.
Yours sincerely,
Brian Phillips
Chairman
2016 ANNUAL REPORT | PAGE 5
MANAGING
DIRECTOR’S
REPORT
Dear Shareholder,
FY2016 was an unexpectedly tough year for the Company,
due to the decade low US$ nickel price. We were compelled
to make decisions to secure the assets for better times in the
nickel price cycle.
At Lanfranchi, mining of the Deacon orebody was scheduled
to be completed during the December 2015 quarter after which
time the plan was to transition to mining the Jury-Metcalfe
orebody. After a number of seismic events, it was decided to
cease mining the remaining ore at Deacon, slightly ahead of
schedule, in August 2015. At that time, the US$ nickel price
had dropped to around US$4.00/lb making the extraction of
the Jury-Metcalfe orebody sub-economic. As a consequence,
most of the loyal Lanfranchi workforce was made redundant,
while a small number were transferred to Savannah and the
balance remained to complete the exploration drive down to
Lower Schmitz.
LME US$ Nickel Price
July 2002 to August 2016
b
L
r
e
p
$
S
U
22.00
17.00
12.00
7.00
2.00
2
0
-
l
u
J
3
0
-
l
u
J
4
0
-
l
u
J
5
0
-
l
u
J
6
0
-
l
u
J
7
0
-
l
u
J
8
0
-
l
u
J
9
0
-
l
u
J
0
1
-
l
u
J
1
1
-
l
u
J
2
1
-
l
u
J
3
1
-
l
u
J
4
1
-
l
u
J
5
1
-
l
u
J
6
1
-
l
u
J
Having placed Lanfranchi on care and maintenance and faced
with a continually softening nickel price, we then reviewed the
economics of operating at Savannah and made the decision in
January 2016 to move that operation onto care and maintenance
pending a sustainable recovery in the nickel price.
These decisions were the most difficult the Board has had
to make in the fifteen year history of the Company. It was
particularly tough on our loyal employees and shareholders,
suppliers and other stakeholders. We would especially like to
acknowledge and thank the 350 employees who were made
redundant over the year for their dedication and hard work.
Many of these employees were with the business for over ten
years. We wish all of our former employees well in their future
endeavours.
The financial impact of placing both operations onto care
and maintenance in the same year was significant as it
required substantial working capital to cover the one off costs
associated with transitioning the business from operating
to advanced development. These costs, together with the
softening nickel price and the impact this had on revenue,
including $11.8 million of negative quotational period nickel
pricing adjustments, were the major contributors to the net
cash outflow of $42.8 million for the financial year. Net cash
from investing activities was $1.7 million after we received
$17.8 million from the sale of 15.225 million Metals X Limited
shares being the consideration for the sale of our 70% interest
PAGE 6 | 2016 ANNUAL REPORT
in the Mt Henry Gold Project. The change in operating status
also required us to make a $42.3 million impairment charge
against the carrying value of the nickel assets. Moreover, the
carrying value of the Gum Creek Gold Project was impaired by
$41.8 million at 31 December 2015 as it was our intention to
sell that asset prior to the gold price staging a strong recovery
in the second half of the financial year and our plans for that
asset changing. The combination of these significant one-off
termination and impairment charges and the lower revenue,
led to a $144.4 million after tax loss.
While the financial performance of the past twelve months
was the result of some unprecedented events, it is important
to reflect on the contribution both nickel operations have
made to the Company. Over a twelve year period, Savannah
milled 8.5 million tonnes at an average grade of 1.29% nickel,
0.65% copper and 0.06% cobalt to produce 1.22 million
tonnes of concentrate containing 94,600 tonnes nickel,
53,000 tonnes copper and 5,000 tonnes cobalt. In FY2016,
Savannah achieved a record production year of 9,316 tonnes
nickel, 6,011 tonnes copper and 476 tonnes cobalt and the
Lost Time Injury Frequency Rate moved to zero during the
March quarter. This is a great credit to the Savannah team,
especially after being advised in January that the majority
were to be made redundant. Lanfranchi produced 3.85 million
tonnes of ore at an average grade of 2.44% nickel containing
94,079 tonnes nickel over a ten year period. The successful
development and exploitation of these assets has allowed
Panoramic to reward shareholders with significant capital
gains during periods of higher nickel prices and cumulative
franked dividend payments of $114 million. It should be noted
that both operations significantly exceeded their respective
initial mine life expectations due to major exploration success,
which is a great credit to Panoramic’s exploration team lead
by John Hicks. John and his team have discovered in excess
of 320,000 tonnes of nickel across both sites over the past ten
years and these discoveries have not only provided the basis
for the success of the operations to-date, but will underpin the
business in the future.
The Future
We now find ourselves in a new paradigm. In the space of
twelve months, we have transitioned from two operating nickel
mines with approximately 400 employees producing over
20,000 tonnes nickel per annum to a project development
company with a growing resource base, two well established
operational centres and enormous optionality on the nickel
price. We also own 1.27 million ounces of gold Resources at
Gum Creek and two PGM Projects with combined Resources
of close to three million ounces of platinum/palladium. While
our personnel numbers have been diminished, we have
retained the core executive team and support staff necessary
to hold the assets, continue exploration activities to grow our
Resource base, complete the planned study work and plan
and execute the restarts when the nickel price recovers to
sustainable levels.
i
e
k
c
n
e
d
a
r
g
r
e
h
g
h
n
a
i
l
a
r
t
s
u
A
i
s
t
i
s
o
p
e
d
e
d
h
p
u
s
l
i
Nickel
The immediate priorities for both nickel assets are to complete
feasibility studies on
the new orebodies and continue
exploration to grow the resource base.
At Savannah, exploration activities during 2016 resulted in
a major upgrade of the Savannah North Resource to an
estimated 10.27 million tonnes at 1.70% nickel for 175,100
tonnes nickel of which 73% is classified as Indicated Resource.
The combined Savannah and Savanah North Resources
now stand at 226,400 tonnes nickel, 104,700 tonnes copper
and 15,300 tonnes cobalt. Based on production to date, the
current Resources and the exploration potential, Savannah
is a significant mineralised system when compared to other
Australian nickel sulphide projects. By way of comparison,
the current nickel in Resources at Savannah is approximately
3.5 times greater than the original 2003 Resource.
Contained Nickel in Resource (kt)
l
350
300
250
200
150
100
50
-
)
O
G
I
(
r
e
g
n
i
l
l
o
B
-
a
v
o
N
)
P
H
B
(
s
f
f
i
l
C
)
A
S
W
(
s
u
e
s
s
y
d
O
)
A
S
W
(
)
A
S
W
(
l
l
o
u
Q
d
e
t
t
o
p
S
G
H
x
o
F
g
n
y
F
i
l
)
S
O
P
(
s
u
r
e
b
r
e
C
)
S
O
P
(
a
r
r
a
d
n
W
i
t
M
)
A
S
W
(
h
t
r
o
N
s
u
e
s
s
y
d
O
)
N
A
P
(
h
t
r
o
N
h
a
n
n
a
v
a
S
)
P
H
B
(
s
u
n
e
V
h
t
r
o
N
h
a
n
n
a
v
a
S
+
h
a
n
n
a
v
a
S
)
O
G
I
(
g
n
o
L
)
A
S
W
(
6
M
A
)
S
O
P
(
s
y
a
H
e
g
a
M
i
*
)
N
A
P
(
h
a
n
n
a
v
a
S
)
P
H
B
(
G
U
r
e
t
s
n
e
L
i
)
R
C
M
(
h
t
r
o
N
n
k
r
u
D
i
)
R
C
M
(
l
e
t
i
i
M
Following the positive Scoping Study delivered in March 2016,
the priority now is to complete a feasibility study on mining
the remaining Savannah Resources and then exploiting
the Savannah North Resource with ore being processed
through the existing Savannah mill. Based on plant trials
conducted during the June 2016 quarter, the feasibility study
will incorporate the addition of a Jamieson Cell and IsaMill
into the existing process flowsheet to improve the bulk
concentrate nickel grade (targeting +10%) while maintaining
nickel recoveries at around 86%. The study is scheduled for
completion in December 2016 and will determine the basis for
restart planning and scheduling.
In addition to the feasibility study, surface drilling to test the
east and west extensions of the Savannah North mineralisation
and other potential targets in the vicinity of the Savannah mill,
commenced in September 2016.
At Lanfranchi, the primary focus will be on preparing a
mining schedule for the high-grade Lower Schmitz Resource
of 131,000 tonnes at 5.1% nickel for 6,700 tonnes nickel
contained. This Resource is located in the Schmitz channel
which has seen historic production of approximately 53,000
tonnes of contained nickel by Panoramic and previous owners.
There remain a significant number of exploration targets to be
tested at Lanfranchi when funds become available.
2016 ANNUAL REPORT | PAGE 7
Gold
Following the sale of Mt Henry, the Company’s gold portfolio
now consists of the Gum Creek Project which has significant
gold Resources of 17.3 million tonnes at an average grade
of 2.3g/t gold for 1.3 million ounces over a 724km2 tenement
package where there has been historical production of
approximately one million ounces of gold. Gum Creek also
hosts substantial infrastructure including an accommodation
village, air strip, tailings dam and processing plant.
As a result of the positive March 2016 Free Milling Scoping
Study, the identification of new exploration targets along the
Wilsons Shear and the strong rally in the gold price and gold
equities in early 2016, the Company reviewed the asset and
determined it was significantly undervalued inside Panoramic
compared to peer gold companies.
In order to enhance value for our shareholders and take
advantage of the resurgence in the gold price, the Company
has commenced a process to partially divest Gum Creek by
way of an initial public offering on the ASX. The plan is to
vend Gum Creek into a new listed entity for a consideration
to Panoramic of $15.6 million before costs in shares and
to concurrently raise $15 million of new equity via a priority
entitlement to the Company’s existing shareholders as part of
the compliance listing of the new entity to be called Horizon
Gold Limited. The funds will be used to fast-track exploration
and development studies on both free milling and refractory
ore. Our goal is to have the prospectus for Horizon Gold
finalised in October 2016 with the listing completed during
the December 2016 quarter, subject to a favourable equity
market.
PGMs
PGM prices have been lower than expected, however there
are positive signs in relation to improved demand for both
platinum and palladium and prices should recover from here.
We will continue to hold the Panton Project which provides a
significant PGM option, with the potential to utilise the Savannah
infrastructure to improve the Panton Project economics. At
Thunder Bay North, we look forward to Rio Tinto Exploration
Canada Inc. continuing to explore as it works towards earning
a 70% interest in the project by spending C$20 million over five
and half years.
and has more than 20 years’ experience in the management
and strategic development of resource companies.
Peter’s expertise provides complementary skills on the
Panoramic Board.
With the change in operating status, we have streamlined the
Executive Management Team with a number of senior members
departing during the year. We thank those individuals for their
service and wish them well in their future careers. To further
reduce costs, Directors took a 35% reduction in directors’ fees
effective 1 March 2016 and senior executives accepted a 10%
salary reduction effective 1 July 2016.
Funding
the decision
to place Savannah onto care and
Post
maintenance, we felt it prudent to secure additional funds to
allow us to maintain the nickel assets in a “ready to restart”
status, undertake the planned study work on Savannah North
and fund additional exploration programs over a period in which
we potentially have no operating income. We completed a one
for three underwritten Entitlement Offer in April 2016 raising
$10.7 million and were delighted with the support from existing
shareholders who took up 78% of the Entitlement Offer,
including Zeta who co-underwrote the issue and procured the
shortfall which resulted in Zeta moving to approximately 25%
ownership of the Company.
Summary
Reflecting on the year, we have made the hard decisions
to ensure the business can survive through a period of
unanticipated nickel price weakness. The Board remains
confident in the outlook for nickel as stainless steel demand
growth improves and the world moves to a more balanced nickel
supply/demand environment. We are optimistic the nickel
price will recover to sustainable levels that will underpin the
profitable extraction of our nickel resources. In the meantime,
we will continue to grow our resource base, extract value from
our gold and PGM assets and study ways to reduce capital and
operating costs so that the restarted nickel operations deliver
secure, improved returns to shareholders.
With a large resource base, production ready assets,
significant exploration upside, dedicated staff and supportive
shareholders, we look to the future with renewed enthusiasm.
Board and Senior Management Changes
During the year, there were was some Board changes with Chris
Langdon retiring after twelve years of service. We thank Chris
for his guidance and dedication during his tenure. In October
2015, we welcomed Peter Sullivan onto the Board as a Non-
executive Director representing our major shareholder, Zeta
Resources Limited (Zeta). Peter is an engineer with an MBA
Yours faithfully
Peter Harold
Managing Director
PAGE 8 | 2016 ANNUAL REPORT
SAFETY
•
Twelve month Lost Time Injury Frequency Rate down from 3.2 to zero at 30 June 2016
Panoramic LTIFR performance versus Dept Mines and Petroleum Nickel
Industry LTIFR
(includes Contractor LTIs)
PAN RES LTIFR
DMP NICKEL INDUSTRY LTIFR
12.00
10.00
8.00
6.00
4.00
2.00
0.00
NICKEL PRODUCTION
•
•
Lanfranchi produced 1,019t Ni before being placed onto care and maintenance in August 2015
Record production at Savannah of 9,845t Ni before operations were placed onto care and maintenance in May 2016
Panoramic Total Nickel Production
Ni Contained in Conc/Ore
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
,
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
s
e
n
n
o
t
y
r
d
d
e
n
a
t
n
o
c
i
i
N
$7.00
$6.00
$5.00
$4.00
$3.00
$2.00
$1.00
$0.00
t
s
o
C
h
s
a
C
e
b
a
y
a
P
$
A
l
4
6
8
0
1
,
2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16
Actual Production
Payable Cash Cost
CUMULATIVE CASHFLOW
•
Cumulative cashflow of ~$750 million
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
2016
2016 ANNUAL REPORT | PAGE 9
NICKEL DIVISION
SAVANNAH PROJECT
nickel, copper, cobalt in concentrate
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. Project currently on care and
maintenance.
Mining Method
Open stoping with paste fill
Processing
1.0Mtpa capacity plant
SAG mill, flotation and filtering to produce a bulk concentrate
Production History
8-10,000t Ni pa, 5-6,000t Cu pa, 350-500t Co pa
Offtake
The Jinchuan Group until March 2020
FY2016 Highlights
•
•
•
•
•
Record production of 9,845 tonnes
nickel, 6,011 tonnes copper and 476
tonnes cobalt
Positive Scoping Study delivered on
Savannah North
Plant trials confirmed addition of
Jamieson Cell and IsaMill can
improve concentrate grade and metal
recoveries
Savannah North major Resource
upgrade, 10.27 million tonnes at
1.70% nickel for 175,100t contained
nickel (August 2016)
Savannah combined Resources now
three and a half times greater than
when mining commenced in 2003, at:
•
•
•
226,400t nickel
104,700t copper
15,300t cobalt
FY2017 Activities
•
•
Feasibility study on mining the
remaining Savannah orebody and
Savannah North is underway and due
for completion in December 2016
Further surface drilling programs
to test extensions of the Savannah
North mineralisation
PAGE 10 | 2016 ANNUAL REPORT
NICKEL DIVISION
LANFRANCHI PROJECT
nickel and copper in ore
The Lanfranchi Project is located 42km south of Kambalda, Western Australia. Project is currently on care and maintenance.
Mining Method
Open stoping with paste fill and airleg mining
Processing
BHP Billiton Nickel West Kambalda Concentrator
Historic Production
500-600,000tpa ore
10-12,000t Ni & 1,000t Cu pa
Offtake
BHP Billiton Nickel West until February 2019
FY2016 Highlights
•
Release Lower Schmitz maiden
Resource of 131,000 tonnes at 5.1%
for 6,700 tonnes nickel contained
FY2017 Activities
•
•
Undertake a mining study on Lower
Schmitz
Drill test down-plunge extensions of
the existing ore channels and other
high priority EM targets, if funds are
available
2016 ANNUAL REPORT | PAGE 11
GOLD DIVISION
GUM CREEK GOLD PROJECT
gold
The Gum Creek Gold Project is located 640 kilometres north-east of Perth and approximately 120 kilometres south west of
Wiluna, Western Australia.
The Project covers an approximately 724km² of the highly prospective Gum Creek Greenstone Belt located in the East Murchison
Province of the Western Australian Archaean Yilgarn Craton.
Mining
Resources
Open pit and underground
17.3Mt at an average grade of 2.3g/t Au containing 1.3M ounces gold
FY2016 Highlights
•
•
•
Positive Scoping Study on Free
Milling ore delivered
Exciting new IP anomalies located
along the Wilsons Shear
Decision made to partially divest via
an IPO of a new company called
Horizon Gold Limited on the ASX
FY2017 Activities
•
•
Complete IPO of Horizon Gold
Limited to raise $15 million of new
equity via a priority entitlement to the
Company’s existing shareholders
Fast-track exploration and
development studies at Gum Creek
using funds from the IPO
PAGE 12 | 2016 ANNUAL REPORT
PGM DIVISION
THE PANTON PROJECT
platinum, palladium
The project is located in the Kimberley region of Western Australia, 60km south of the Savannah Project. The Panton Project is
one of the largest and highest grade PGM deposits in Australia.
Mining
Resources
Open cut and underground
14.3Mt at 5.2 g/t PGMs + Au containing 1.0Moz Pt and 1.1Moz Pd (2004 JORC)
FY2016 Highlights
• Metallurgical testwork confirmed improved recoveries and higher grade PGM concentrates can be produced from Panton
material
•
•
Confirmed Panton material is amenable to beneficiation via ore sorting
Held preliminary discussions with a PGM industry player regarding potential partnering on the Project
FY2017 Activities
•
Continue sponsoring Curtin University research project on alternative PGM leaching methods applicable to Panton
material
•
Continue discussions with PGM industry players on potential partnering
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.
THUNDER BAY NORTH PROJECT
platinum, palladium
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-continent Rift, an emerging North American nickel-copper-platinum group metal mining camp.
Mining
Resources
Open cut and underground
10.4Mt @ 1.13g/t Pt and 1.07g/t Pd containing 377koz Pt and 355koz Pd
FY2016 Highlights
•
•
Rio Tinto Exploration Canada Inc. completed two drilling programs totalling ~10,000 metres
Promising intersections were obtained from several of the Eastern Lake holes and one hole on the Beaver Lake portion of
the Project
FY2017 Activities
•
Rio to undertake a semi-airborne HeliSAMTM magnetics survey over the Escape Lake, Current Lake, Beaver Lake, SEA
Intrusion, 025 Intrusion and Swamp Anomaly
2016 ANNUAL REPORT | PAGE 13
EXPLORATION
Panoramic is conducting exploration activities on its significant
tenement package in a systematic and measured manner
and continued to have good success in FY2016. 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. Some of the
highlights for FY2016 were the release of the maiden Lower
Schmitz Mineral Resource estimate at Lanfranchi and for Gum
Creek the recognition of several new and exciting geophysical
targets. The major highlights for FY2016 were:
• The release of the maiden Savannah North Mineral
Resource estimate
• The commencement of a new underground resource
definition drill program, designed to infill the existing
resource and build upon the resource both up dip to the
east and down dip to the west and north resulting in a
major resource upgrade for Savannah North
• The release of the maiden Lower Schmitz Mineral Resource
estimate at Lanfranchi
• The recognition of several new and exciting geophysical
targets at Gum Creek
Panoramic spent $7.9 million on exploration and project
evaluation related activities in FY2016, down from $15.4
million in FY2015.
PAGE 14 | 2016 ANNUAL REPORT
EXPLORATION
Savannah and Savannah North
Projects
•
•
•
•
•
The focus of exploration activities at Savannah in
FY2016 was the ongoing evaluation of Savannah
North and adding to the existing Mineral Resource
inventory
In October 2015 the Company released the maiden
Savannah North Mineral Resource estimate of
6.88 million tonnes at 1.59% Ni for 109,600t Ni
the Company
resumed
In February 2016,
underground
resource definition drilling at
Savannah North. The purpose of the new drill
program was to infill and convert Inferred areas
of the maiden resource estimate to Indicated
category while also testing for extension to the
resource both up dip to the east and down dip to
the west and north
The program was completed in July 2016 and
culminated in the release of an upgraded Savannah
North Mineral Resource estimate of 10.27 million
tonnes at 1.70% Ni for 175,100t Ni in August 2016
The Company completed an initial, single deep
drill test and DHEM survey of both the Dave Hill
and Wilson intrusions located immediately to the
south of Savannah. Thick sequences of olivine
rich ultramafic lithologies similar to the Savannah
and Savannah North intrusions were intersected in
both drill holes. Several zones of weak, low-grade
mineralisation were also intersected in both drill
holes, highlighting the prospectivity of both areas
and justifying further work
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
•
•
Following the discovery of the high-grade Lower
Schmitz mineralisation in January 2015 the focus
of exploration at Lanfranchi for FY2016 was the
evaluation of the Lower Schmitz deposit
A maiden Lower Schmitz Mineral Resource
estimate of 131,000 tonnes at 5.1% Ni for 6,700t
Ni was reported by the Company during the March
2016 Quarter. Since this time no further exploration
has been undertaken at Lanfranchi
2016 ANNUAL REPORT | PAGE 15
EXPLORATION
Gum Creek Gold Project
•
•
•
•
•
The Company finalised the acquisition
of detail airborne EM (SkyTem) and
ground gravity surveys across the Gum
Creek Project, enabling for the first time
in the Project’s history the establishment
of a fully integrated geophysical data
set comprising of magnetics, gravity
and electro-magnetics
Company’s
consultant
The
geophysicists have used this data set
in conjunction with the existing drill and
geochemical data bases to identifiy
14 priority target areas. One of the 14
target zones was the Wilsons Shear
(host to the high-grade Wilsons deposit)
along which a further 14 additional
targets were identified
These target areas will form the basis
of ongoing exploration in FY2017
In addition to the above the Company
completed an induced polarisation (IP)
test survey at Wilsons. The survey
identified a clear chargeable anomaly
coincident with the known Wilsons
mineralization. On the basis of the
very positive test IP survey results the
Company then completed a further
13 IP surveys lines across the Wilson
Shear extending six kilometres to the
south of Wilsons
Two clear, chargeable anomalies
similar to that at Wilsons were identified
by this IP survey. Both anomalies are
coincident with the Wilsons Shear and
warrant immediate follow up testing
Cowan Nickel Project, WA (Panoramic holds 100% nickel rights)
Following a review of non-core exploration activities and the exploration results at Cowan during 2015, the Company formally
withdrew from the Cowan Nickel Project in December 2015.
Drake Resources Exploration Alliance (Scandinavia)
Following a review of non-core exploration activities, the Panoramic and Drake Resources Limited alliance to identify, explore and
develop base and precious metal opportunities across Scandinavia was formally terminated in December 2015.
PAGE 16 | 2016 ANNUAL REPORT
FY2017 GOALS
SAFETY
No LTIs
RESOURCES
Continue to grow
Savannah Resources
Nickel Operations
Complete Savannah
North feasibility and
Lower Schmitz
mining studies
GROWTH
Increase Nickel
Reserves
GOLD
Complete IPO of
Gum Creek
PGMs
Advance both projects
2016 ANNUAL REPORT | PAGE 17
DIRECTORS’
REPORT
PAGE 18 | 2016 ANNUAL REPORT
Directors' report
For the Financial Year ended 30 June 2016
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 2016.
Directors
Brian Phillips (Non-Executive Chairman)
AWASM-Mining, FAusIMM
Appointed 27 March 2007; Non-Executive Chairman from 17 November 2011
Brian 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)*
Peter Harold (Managing Director)
B.AppSc(Chem), AFAICD
Appointed 16 March 2001
Peter is a process engineer with over 28 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)*
• Peak Resources Limited (Non-Executive Chairman from 1 December 2015)*
Christopher Langdon (Non-Executive Director)
B.Com (Econ)
Appointed 4 August 2004, Resigned 30 June 2016
Christopher 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)*
John Rowe (Non-Executive Director)
BSc (Hons), ARSM, MAusIMM
Appointed 5 December 2006
John 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 to 31 March 2016)
• Southern Cross Goldfields Ltd (Non-Executive Director from 14 April 2010 to 23 September 2013)
2016 ANNUAL REPORT | PAGE 19
Directors' report
For the Financial Year ended 30 June 2016
Peter Sullivan (Non-Executive Director)
BE, MBA
Appointed 1 October 2015
Peter is an engineer with an MBA and has been involved in the management and strategic development of resource
companies and projects for more than 20 years. His work experience includes periods in project engineering, corporate
finance, investment banking, corporate and operational management and public company directorships.
During the past three years, Peter has also served as a director of the following listed companies:
• GME Resources Limited (Managing Director from 24 June 1996 to 1 October 2004 and Non-Executive Director
• Resolute Mining Limited (Managing Director from 14 February 2001 to 30 June 2015 and Non-Executive
from 1 October 2004)*
Director from 30 June 2015)*
• Zeta Resources Limited (Non-Executive Chairman from 7 June 2013)*
• Pan Pacific Petroleum NL (Non-Executive Director from 26 September 2014)*
* Denotes current directorship on other listed companies
Company Secretary
Trevor Eton
B.A (Hons)(Econ), PostGradDip (Man), AFAIM
Appointed 12 March 2003
Trevor 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 2016,
and the number of meetings attended by each director are as follows:
Meetings of Committees
Directors'
Meetings
13
Audit
2
Number of meetings held
Number of meetings attended:
Brian M Philips
Peter J Harold
Christopher D J Langdon
John Rowe
Peter R Sullivan*
*was present at all meetings that were available to be attended from 1 October 2015
13
13
13
13
9
2
-
2
2
1
Remuneration
2
Environment,
Safety & Risk
2
2
-
2
2
1
2
2
2
2
1
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 *
Brian M Phillips
John Rowe (c)
Peter R Sullivan #
Remuneration
Brian M Phillips (c)
Christopher D Langdon *
John Rowe
Peter R Sullivan #
Environment, Safety & Risk
Brian M Phillips (c)
Christopher D Langdon *
John Rowe
Peter R Sullivan #
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.
* retired as member of the committees of directors on 30 June 2016
# appointed as a member of the committees of directors on 1 October 2015
PAGE 20 | 2016 ANNUAL REPORT
Directors' report
For the Financial Year ended 30 June 2016
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
John Rowe
Peter R Sullivan
Principal Activities
Ordinary Shares
Direct
-
-
-
-
Indirect
287,407
4,567,714
87,407
-
Performance rights over
ordinary shares
-
2,354,601
-
-
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 Gum Creek 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
The Group recorded a loss after tax for the financial year ending 30 June 2016 of $144,359,000 (2015: $28,847,000).
Financial Performance
The Group's performance during the 2016 financial year and for the four previous financial years, are set out in the table
below. The financial results shown below were all prepared under International Financial Reporting Standards (IFRS).
Year Ended 30 June
2016
2015
2014
2013
2012
Revenue and other income ($'000)
Cost of production ($'000)
Royalties ($'000)
Exploration and evaluation ($'000)
Other expenses ($'000)
EBITDA (before impairment) ($'000)
Depreciation and amortisation ($'000)
Impairments/write-back of assets ($'000)
Finance costs ($'000)
Profit /(loss) before tax ($'000)
Income tax benefit (expense) ($’000)
Net profit/(loss) after tax ($'000)
Basic earnings/(loss) per share (cents)
Dividends per share (cents)
Dividends pay out ratio (%)
Market capitalisation ($'000)
Closing share price ($ per share)
Return on equity (%)
93,441
(97,933)
(4,920)
(2,358)
(9,520)
(21,290)
(50,749)
(81,377)
(1,405)
(154,821)
10,462
(144,359)
(42.7)
-
-
57,857
0.135
(88.0)
200,280
(155,048)
(11,948)
(12,912)
(9,789)
10,583
(62,124)
11,864
(998)
(40,675)
11,827
(28,848)
(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)
Note: EBITDA (before impairment) is not shown in the Consolidated Income Statement or the accompanying notes and as such has not
been reviewed by the Company's auditor. The table above shows how it is reconciled to the Consolidated Income Statement.
2016 ANNUAL REPORT | PAGE 21
Directors' report
For the Financial Year ended 30 June 2016
Revenue and Other Income
The Company’s Nickel Division generated $91,641,000 of revenue which was 54% down on the prior year. Sales revenue
was lower from the 47% decrease in nickel contained in concentrate/ore sold (10,367 tonnes) over the previous reporting
period (19,547 tonnes) following the cessation of production at the Lanfranchi Nickel Project in August 2015 and the
significantly lower nickel, copper and cobalt prices received on the sales of contained metal in concentrate/ore over the
course of the period. The LME spot nickel price averaged A$5.82 per pound during the financial year, down 30% on the
previous year’s equivalent LME average spot nickel price of A$8.34 per pound. The progressively weaker nickel price on a
US$ basis until the June 2016 quarter, resulted in significant negative final invoice pricing (QP) adjustments being
recognised during the financial year. Other revenue comprised interest income of $495,000 and other income of
$1,305,000 was made up of a gain on the disposal of the Mt Henry Gold Mine ($651,000), a gain on the re-estimation of the
Copernicus site decommissioning and rehabilitation provision ($433,000) and the sale of consumables and spare parts
($221,000).
Cost of Production
Total aggregate direct costs of the Nickel Division were 37% lower than the previous financial year, due primarily to the
cessation of production at the Lanfranchi Nickel Project in August 2015. Included in direct costs was $16,496,000 in one-off
redundancy and leave entitlement payments to employees who had their employment contracts terminated during the
reporting period and $6,652,000 for a non-cash increase in the provision for inventory obsolescence against the carrying
value of the Nickel Division’s warehouse spares.
Other Expenses
The majority of costs in “Other expenses” are for corporate and marketing costs ($8,565,000), which were 8% higher than
the previous reporting period as a result of the $755,000 in one-off redundancy and leave entitlement payments to
employees who had their employment contracts terminated during the period.
Exploration and Evaluation Expenditure
Expenditure on greenfield exploration and evaluation ($2,358,000) was significantly lower than the previous financial year
($12,912,000), primarily as a result of the curtailment of exploration activities at the Lanfranchi Nickel Project and overseas.
Exploration costs are expensed to the consolidated income statement until such time as a Resource under 2012 JORC (or
oversea equivalent) has been determined on the area of interest.
Impairment of Assets
In response to the sharp fall in the US$ nickel price and the uncertainty around the timing of a price recovery, pre-tax
impairment charges of $30,269,000 and $12,020,000 were made over the reporting period against the carrying values of
the Savannah Nickel Project and Lanfranchi Nickel Project, respectively. Of the total pre-tax impairment charge of
$42,289,000, $37,616,000 was recognised in the consolidated income statement.
As a result of a review of the carrying value of the Gum Creek Gold at 31 December 2015, a pre-tax impairment charge of
$41,837,000 was made against the carrying values of the Project’s assets.
Previously capitalised exploration expenditure of $1,924,000 was written-off during the financial year.
Income Tax Benefit
Tax benefit of $10,462,000 represented an effective tax benefit rate of 7%, down from the rate of 29% in the previous
reporting period. There was no tax benefit booked on the impairment loss of $79,453,000 as the corresponding equivalent
deferred tax asset was not recognised in the consolidated statement of financial position at 30 June 2016.
Review of Financial Condition
Balance Sheet
Net Working Capital - current assets less current liabilities
The net working capital position of $21,408,000 was 58% lower than at the previous period end. The consolidated entity’s
operating cash flows were materially impacted by (1) the costs incurred to place the Lanfranchi Nickel Project onto care and
maintenance in the first half of the financial year, and (2) the reduction in concentrate sales revenue from the Savannah
Nickel Project as a result of the significant falls in the A$ prices of nickel, copper and cobalt over the course of the fiscal
year. Trade and other payables decreased by 87% over the reporting period as a direct result of the reduction in operational
activity across the Nickel Division.
PAGE 22 | 2016 ANNUAL REPORT
Directors' report
For the Financial Year ended 30 June 2016
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 a net cash outflow after tax of $42,822,000. Cashflow from operating
activities included a prior year income tax refund of $613,000.
Net cash inflow from investing activities of $1,737,000, included the $17,811,000 in net proceeds from the sale of the Mt
Henry Gold Project. From 1 April 2016, $1,803,000 has been used to cash back the drawn amount on the Company’s
performance bond facility and is shown as a cash outflow in the consolidated statement of cash flows at 30 June 2016.
Net cash inflow from financing activities included $10,103,000 in net proceeds from the fully underwritten, pro-rata
renounceable one for three rights issue at $0.10 per share undertaken by the Company in April 2016.
Net Tax Balances
At balance date, the consolidated entity had a net deferred tax asset value of $35,846,000. Due to the current weakness
and uncertain outlook in the US$ nickel price, this asset was not recognised in the consolidated statement of financial
position at 30 June 2016.
Provision for Inventory Obsolescence
The consolidated entity’s provision for inventory obsolescence against the carrying value of warehouse spares was
increased by $6,652,000 over the reporting period.
Net Assets/Equity
The net asset position of the consolidated entity decreased 57% to $102,156,000 as a result of the reduction in net working
capital and the decrease in total non-current assets following the booking of significant impairment losses against the
assets of the Nickel Division and the Gum Creek Gold Project.
Contributed equity increased by $10,103,000 after the Company successfully undertook a fully underwritten, pro-rata
renounceable one for three rights issue at $0.10 per share in April 2016. As a result of the capital raising, total ordinary
shares on issue increased by 107,143,256 shares to 428,567,271 ordinary shares.
Capital Structure
The debt to equity ratio (borrowings on contributed equity) at 30 June 2016 was 0.9% (2015: 1.8%).
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 strong 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% (2015: 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% (2015: 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 2016, the consolidated entity had no nickel forward sales contracts and no nickel put options in place.
As at 30 June 2016, the consolidated entity had no United States dollar denominated foreign exchange derivatives 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 41.
2016 ANNUAL REPORT | PAGE 23
Directors' report
For the Financial Year ended 30 June 2016
Dividends
No final dividend has been declared for the financial year ended 30 June 2016.
Review of Operations
Nickel Division
On a Group basis, the operations produced an aggregate 10,864 (2015: 19,301) tonnes of contained nickel, down 44% on
the previous financial year. The Group sold an aggregate 10,367 (2015: 19,547) tonnes of contained nickel, down 47% on
the prior year.
2016
Lanfranchi Nickel Project, South Kambalda, WA
Physicals
(i) Produced
Ore Mined (t)
Nickel Grade (%)
Nickel in Ore (t)
(ii) Sold
Nickel in Ore (t)
468,491
2.26
10,575
43,692
2.33
1,019
10,611
1,051
2015
In addition the mine produced 82 (2015: 846) tonnes of copper. The nickel ore was trucked and treated at BHP Billiton
Nickel West’s Kambalda nickel concentrator under an Ore Tolling and Concentrate Purchase Agreement.
In response to the low US$ nickel price, the Project was put onto full care and maintenance in November 2015.
2015
2016
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)
870,542
1.32
85.8
9,845
854,794
1.18
86.4
8,726
8,936
9,316
In addition, the mine produced 6,011 (2015: 5,314) tonnes of copper and 476 (2015: 443) tonnes of cobalt in concentrate.
The concentrate was trucked to and shipped from the port of Wyndham to the Jinchuan Group in China under the March
2010 Extended Concentrate Sales Agreement.
In response to the low US$ nickel price, the Project was placed onto care and maintenance in May 2016.
Copernicus Nickel Project, East Kimberley region, WA
During the financial year, Copernicus ore was mined and transported to the Savannah Nickel Project concentrator for
blending and processing with Savannah ore. Mining of ore at the Copernicus open-pit was completed in February 2016 and
rehabilitation of the Copernicus site was carried out between March and July 2016.
Exploration and Development Projects
During the financial year, the Group continued exploring for extensions to existing Mineral Resources and Ore Reserves at
each of its nickel projects together with exploration on the Company’s advanced and greenfield exploration projects within
and outside Australia.
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:
PAGE 24 | 2016 ANNUAL REPORT
Directors' report
For the Financial Year ended 30 June 2016
Nickel Division
At the Savannah Nickel Project, the Company continued exploration activities on the Savannah North Resource and on
other exploration targets within the mineral tenements. On 1 October 2015, the Company released an upgraded Savannah
North Mineral Resource estimate of 6.88 million tonnes at a nickel grade of 1.59% for 109,600 tonnes of contained nickel.
The Resource estimate was based on less than 30% of the potential 2km mineralised footprint of Savannah North.
Additional drill programs in 2016 were undertaken to test for extensions to the Resource.
In January 2016, the Company released the Savannah North Scoping Study based on the October 2015 Mineral Resource
estimate. This study demonstrates there is potential to add significant mine life at the Savannah Project through the
development of Savannah North.
On 28 April 2016, the Company released a maiden Mineral Resource estimate for the Lower Schmitz Project at Lanfranchi
of 131,000 tonnes at a nickel grade of 5.1% for 6,700 tonnes of contained nickel. On 24 August 2016, the Company
announced a material upgrade in the Savannah North Resource to 10.27 million tonnes at a nickel grade of 1.70% for
175,100 tonnes of contained nickel.
Gold Division
Mt Henry Gold Project, Norseman, WA
On 31 July 2015, the Company sold its 70% interest in the Mt Henry Gold Project to Metals X Limited (“Metals X”) for
15,225,000 ordinary shares (after brokerage) in Metals X. The Company realised net proceeds of $17,811,000 on the sale
of the 15,225,000 shares in Metals X during the financial year.
Gum Creek Gold Project, Murchison region, WA (previously known as the Gidgee Gold Project)
In the first half of the financial year, geophysical data from a detailed ground gravity and airborne electromagnetic (VTEM)
survey was integrated with existing magnetic surveys, geological mapping and the drill hole database identifying 14 new
exploration targets. Four of these targets are associated with the Wilsons Shear Zone, and this mineral area was the
subject of Induced Polarisation (“IP”) surveying in early 2016. Two discrete IP chargeable anomalies have been
subsequently identified for further exploration.
In March 2016, an updated Scoping Study on the project was released based on the processing of free milling open-pit
Resources only. The results of the Study were positive and demonstrate a project with potentially attractive economic
outcomes.
In June 2016, metallurgical test work on the Wilsons refractory mineralisation identified a potential low cost processing
route utilising mild conditions to oxidise floatation concentrate, achieving high gold recoveries. A number of areas for
optimisation have been identified for future test work.
In June 2016, following the release of the updated March 2016 Scoping Study, exploration results, encouraging
metallurgical test work and the buoyant gold sector, the directors approved a process to partially divest the Gum Creek
Gold Project by way of an initial public offering (“IPO”) on the Australian Stock Exchange (“ASX”) in order to fast track
additional exploration and development studies.
Platinum Group Metals (PGM) Division
Thunder Bay North PGM ("TBN") Project, North-West Ontario, Canada
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 is responsible for managing the Project and ensuring the TBN tenements are kept in good
standing.
During the financial year, RTEC conducted various exploration activities on the TBN Project under the earn-in arrangement
of the Agreement, which is continuing.
Panton PGM Project, East Kimberley, WA
Early in the financial year, a trial was undertaken on Panton mineral samples to determine whether mined material could be
economically upgraded using ore sorting prior to processing. The results of the ore sorting test work were encouraging and
demonstrate that the ore can be upgraded, subject to further test work. In addition, the Company continued its $45,000
annual sponsorship of research by a post-graduate student of Curtin University into alternative direct leaching technologies
for smaller chromite rich PGM deposits. This research is due for completion in late 2018.
2016 ANNUAL REPORT | PAGE 25
Directors' report
For the Financial Year ended 30 June 2016
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. The buyback period ended on 14 December 2015. Over the twelve month period, a total of 851,809 shares in the
Company were brought back at an average share price of $0.3909, with all the shares subsequently cancelled.
Capital Raising
On 31 March 2016, the Company announced a fully underwritten, pro-rata renounceable one for three rights issue at $0.10
per share to raise $10.7 million before costs. The Entitlement Offer closed on 26 April 2016 with applications from the
Company’s existing shareholders totaling approximately 78% of the 107.1 million new shares offered. The shortfall was
fully underwritten.
The capital raised is to be used primarily to fund further exploration, evaluation and development at Savannah North,
evaluation studies on other projects and for working capital.
Gum Creek Initial Public Offer (IPO)
To fast track exploration and development studies at the Gum Creek Gold Project, the directors resolved in June 2016 to
commence a process to partially divest the project by way of an IPO on the ASX. As at the date of this report, the indicative
structure is to vend the Gum Creek Gold Project into a new listed entity for a consideration of $15,612,000 before costs in
shares and to concurrently raise $15,000,000 of new equity via a priority entitlement to the Company’s existing
shareholders as part of the compliance listing of the new entity.
While it is the Company’s intention to proceed with the IPO, there is no guarantee that this will occur and the success of the
IPO is dependent on prevailing market conditions.
Employees
At the end of the financial year, the Group had 52 permanent, full time employees (2015: 413).
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 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.
• 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 was
payable in Metals X ordinary shares by the Company).
• On 3 August 2015, the Company announced that as a result of a seismic event on 29 July 2015 in the vicinity of
the Deacon orebody and the weakness in the nickel price, a curtailment in mining operations at the Lanfranchi
Nickel Project, scheduled for later in 2015, had been brought forward. The Project was placed onto care and
maintenance in November 2015 at the conclusion of Resource definition drilling on the Lower Schmitz orebody.
• At Savannah, a maiden 30 June 2015 Mineral Resource estimate of 55,200 tonnes of contained nickel for
Savannah North was reported on 11 August 2015. The Savannah North Mineral Resource estimate was
subsequently upgraded to 6.88 million tonnes at a nickel grade of 1.59% for 109,400 tonnes of contained nickel
and reported on 1 October 2015.
• On 14 December 2015, the Company’s On-Market Share Buyback scheme ended.
• On 27 January 2016, the Company announced and released the Savannah North Scoping Study which
demonstrated the potential to add significant mine life at Savannah through the development of Savannah
North. The announcement included a “Cautionary Statement” that the Savannah North Scoping Study was
based on low-level technical and economic assessments and was insufficient to support the estimation of Ore
Reserves or to provide assurance of an economic development case, or to provide certainty that the
conclusions of the Scoping Study will be realised.
• On 27 January 2016, the Company announced that due to the weak US$ nickel price and uncertainty around
the timing of a price recovery, the Savannah Nickel Project was to be placed onto care and maintenance by the
end of the financial year.
PAGE 26 | 2016 ANNUAL REPORT
Directors' report
For the Financial Year ended 30 June 2016
•
In March 2016, an updated Scoping Study on the Gum Creek Gold Project was released based on the
processing of free milling open-pit Resources only. The announcement included a “Cautionary Statement” that
the updated Gum Creek Scoping Study was based on low-level technical and economic assessments and was
insufficient to support the estimation of Ore Reserves or to provide assurance of an economic development
case, or to provide certainty that the conclusions of the Scoping Study will be realised.
• On 29 March 2016, the full Federal Court handed down its decision on the appeal to the 21 November 2014
Determination of native title in relation to the existence, enjoyment or exercise of native title rights held by the
Ngadju People over certain tenements, including the Lanfranchi Nickel Project tenements. The Court
overturned the initial decision and confirmed the validity of the relevant tenements. The Ngadju People
subsequently filed applications for special leave to appeal to the High Court.
• On 31 March 2016, the Company announced a fully underwritten, pro-rata renounceable one for three rights
issue at $0.10 per share to raise $10,714,000 before costs.
• On 28 June 2016, the directors resolved to commence a process to vend the Gum Creek Gold Project into a
new listed entity for an indicative consideration of $15,612,000 before costs in shares and to concurrently raise
$15,000,000 of new equity via a priority entitlement to the Company’s existing shareholders as part of the
compliance listing of the new listed entity on the ASX.
Matters subsequent to the end of the financial year
Savannah North Resource Upgrade
On 24 August 2016, the Company announced a material upgrade in the Savannah North Resource to 10.27 million tonnes
at a nickel grade of 1.70% for 175,100 tonnes of contained nickel.
In the interval between the end of the financial year and the date of this report, apart from the matter mentioned above,
there has not arisen any item, transaction or event of a material and unusual nature likely, in the opinion of the directors of
the Company, to affect significantly the operations of the consolidated entity, the results of those operations, or the state of
affairs of the consolidated entity, in future financial years.
Business Strategies and Prospects (Incorporating Likely developments and expected results)
The Company’s primary goal is to mine its Resources profitably and return value to shareholders through capital growth
and dividends. 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 funding, exploration activities will continue to find new areas of mineralisation, principally at and surrounding the
Savannah Nickel Project where additional Resource definition and extensional drilling will be undertaken on the Savannah
North Mineral Resource.
The consolidated entity is targeting to complete a Feasibility Study on the combined Savannah and Savannah North ore
bodies during the next financial year so that when nickel prices have sufficiently recovered on a sustainable basis, the
Savannah Nickel Project can re-start with a longer mine life and lower cost base.
The Company will continue to review existing Resources and Reserves at the Lanfranchi Nickel Project and consider
options to unlock further value.
Gold Division
The process to partially divest the Gum Creek Gold Project via an IPO and compliance listing of a new entity on the ASX will
continue.
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 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 (2015: nil).
2016 ANNUAL REPORT | PAGE 27
Directors' report
For the Financial Year ended 30 June 2016
Indemnification of Auditors
To the extent permitted by law, the Company has agreed to indemnify the auditors, Ernst & Young (EY), 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 (EY) 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 $53,151 (2015: $75,300) 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.
2016 Remuneration Report (Audited)
This 2016 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
Peter Sullivan
Chairman (Non-Executive)
Managing Director
Director (Non-Executive) (to 30 June 2016)
Director (Non-Executive)
Director (Non-executive) (appointed 1 October 2015)
(ii) Named Executives
Trevor Eton
Terry Strong
Christopher Williams
Angus Thomson
John Hicks
Tim Mason
Mark Recklies
Tracey Ram
Chief Financial Officer & Company Secretary
Chief Operating Officer
General Manager - Project Development & Technical Services (to 7 December 2015)
Executive GM - Business Development (to 10 August 2015)
General Manager - Exploration
Manager – Special Projects
Operations Manager - Savannah
General Manager - Human Resources (to 30 June 2016)
(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.
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.
PAGE 28 | 2016 ANNUAL REPORT
Directors' report
For the Financial Year ended 30 June 2016
(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).
(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.
In recognition of the significant operational changes made across the consolidated entity during the financial
year, the Board reviewed and the non-executive directors agreed to accept a reduction in fees paid to
non-executive directors on two separate occasions, in August 2015 and February 2016. As a result of the two
changes, the Non-Executive Chairman’s annual remuneration has been reduced from approximately $162,000 to
$90,000 per annum (a 44% net reduction) and other non-executive director’s annual remuneration has been
reduced from approximately $113,000 to $65,000 per annum (a 42% net reduction).
The fees paid to non-executive directors for the period ending 30 June 2016 are detailed in Table 1 on pages 36 and 37 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;
•
• ensure total remuneration is competitive by market standards.
link reward with the strategic goals and the performance of the Company; and
2016 ANNUAL REPORT | PAGE 29
Directors' report
For the Financial Year ended 30 June 2016
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 pages 35 to37.
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 36 and 37 details the variable
component (%) of the Group’s KMP. 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.
(i) Fixed Remuneration
Objective
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.
Structure
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.
In recognition of the significant operational changes made across the consolidated entity during the financial
year, the Remuneration Committee reviewed and senior executives, with a base salary over $200,000 per annum,
have agreed to accept a 10% reduction in base salary, effective 1 July 2016.
The fixed remuneration component of the Group’s key management personnel is detailed in Table 1 on page 36 and 37.
(ii) Variable Remuneration - Short-term Incentive Bonus (STIB)
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 with the Company’s Core Values; and
(b) 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.
Structure
The current structure of the executive STIB scheme commenced from 1 January 2010.
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.
PAGE 30 | 2016 ANNUAL REPORT
Directors' report
For the Financial Year ended 30 June 2016
STIB First Part - Cash Bonus based on Financial Performance
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 = [P - (E x 15%)] x 20%, where
CEXEC = the maximum Cash bonus to be paid to executives for the Relevant Financial Year;
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 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
• 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
• Core Value Five - maintain a steady return to Shareholders through dividends and/or increase in the value of
the management team;
mining house; and
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 = P x 5%, where
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.
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.
2016 ANNUAL REPORT | PAGE 31
Directors' report
For the Financial Year ended 30 June 2016
2016 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 2016 consolidated financial statements. In addition, no Discretionary Cash bonus
(Second Part) has been approved for payment in relation to the 2016 financial year.
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. The short term incentive variable
remuneration component of the Group’s KMP is detailed in Table 1 on pages 36 and 37.
(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 2016 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
2016
2015
2014
2013
2012
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)
Net profit/(loss) after tax ($'000)
Basic earnings/(loss) per share (cents)
Dividends per share (cents)
Dividends pay out ratio (%)
Market capitalisation ($'000)
Closing share price ($ per share)
Return on equity (%)
93,441
(97,933)
(4,920)
(2,358)
(9,520)
(50,749)
(81,377)
(1,405)
(154,821)
10,462
(144,359)
(42.7)
-
-
57,857
0.135
(88.0)
200,280
185,590
239,505
(155,048) (153,549) (145,012)
(9,283)
(11,313)
(11,948)
(2,682)
(3,186)
(12,912)
(11,625)
(8,478)
(9,789)
(54,386)
(59,656)
(62,124)
(8,026)
(13,119)
11,864
(1,563)
(1,334)
(998)
(46,987)
(11,130)
(40,675)
15,302
1,808
11,827
(31,685)
(9,322)
(28,848)
(12.5)
(3.1)
(9.0)
1.0
2.0
1.0
-
-
-
52,135
267,489
149,462
0.20
0.83
0.465
(22.9)
(6.2)
(18.1)
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)
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 17% to
100% of Fixed Remuneration depending on level and seniority and market conditions. 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 FY2016 grant of performance rights, the FV at 1 July 2015 was externally
determined at $0.208.
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.
PAGE 32 | 2016 ANNUAL REPORT
Directors' report
For the Financial Year ended 30 June 2016
The Company’s TSR will be measured at the end of each financial year against a customised peer group, which for the
FY2016 grant of performance rights for the 3 year period commencing 1 July 2015, comprised the following companies:
- Altona Mining Limited
- Aurelia Metals Limited
- CuDeco Limited
- Heron Resources Limited
- Hillgrove Resources Limited
- Hot Chili Ltd
- Independence Group NL
- Mincor Resources NL
- Rex Minerals Limited
- Sandfire 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.
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 41.
Table 3 on page 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 ($45,000), 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.
2016 ANNUAL REPORT | PAGE 33
Directors' report
For the Financial Year ended 30 June 2016
(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
John Rowe
Peter Sullivan
Amount payable on
termination
$32,500
$32,500
• 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 = [P (E x 15%)] x 2.5%, where
CPH = the Cash bonus to be paid to Peter Harold for the Relevant Financial Year;
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 service 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 be 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.
•
•
PAGE 34 | 2016 ANNUAL REPORT
Directors' report
For the Financial Year ended 30 June 2016
• 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 up to 100% of his annual Fixed Remuneration
in performance rights to shares. On 20 November 2015 at a General Meeting of shareholders, Peter Harold was
granted 1,450,000 FY2016 performance rights at zero cost under the 2010 ES Plan. The FV of each performance
right on 20 November 2015 was externally determined at $0.2080. 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.
If Peter Harold’s employment contract 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
and be cancelled.
•
• The principal terms and conditions of the performance rights granted under the 2010 ES Plan are provided from page
32.
(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:
Date of Current
Employment Contract
Named Executive
8 January 2013
Trevor Eton
6 February 2013
Terry Strong
Angus Thomson #
8 January 2013
Christopher Williams # 6 February 2013
14 March 2014
John Hicks
1 January 2013
Tracey Ram #
1 December 2015
Tim Mason
23 January 2013
Mark Recklies
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
Manager – Special Projects
Operations Manager - Savannah Project
# the named executive’s employment contract was terminated during the financial year
Employment Contracts
The common key features of the above named executives’ employment contracts are:
• Each named executive may resign from their position and thus terminate their 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’s employment contract 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 and be cancelled.
• Each named executive accrues 4 weeks of annual leave entitlements per year and 13 weeks of long service
•
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 17% to 75% of their annual Fixed
Remuneration in performance rights. Each of the named executives were granted FY2015 performance rights
and/or FY2016 performance rights at zero cost under the 2010 ES Plan, as shown in Table 3 on page 38. The
main terms and conditions of performance rights granted under the 2010 ES Plan are provided from page 32.
2016 ANNUAL REPORT | PAGE 35
Directors' report
For the Financial Year ended 30 June 2016
(i) Details of Remuneration
Table 1: Remuneration of Directors and Executive 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.
2016
Name
Short-term benefits
Post
employment
benefits
Cash
salary
and fees Bonus
$
$
Other
$
Super-
annuation
$
Retirement
Benefits
$
Non-executive
directors
C D J Langdon (c)
J Rowe
P R Sullivan (d)
B M Phillips
Executive directors
P J Harold
Executives
T R Eton
C J Williams (e)
T J Strong
J D Hicks
M A Recklies
T S Mason
A S Thomson (f)
T M Ram (g)
91,491
91,491
63,333
128,733
553,500
300,600
131,031
306,000
230,000
261,250
229,872
24,474
179,808
2,591,583
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4,085
4,085
3,055
4,085
-
-
-
-
12,035
52,583
12,035
1,779
4,085
12,035
4,085
4,085
1,319
12,035
28,557
12,448
29,070
21,850
24,819
21,838
2,325
19,898
78,803
213,388
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Share
based
payments
Rights to
shares
(a)/(b)
$
-
-
-
-
270,635
108,347
(42,623)
108,853
55,267
62,776
52,864
(48,919)
(16,874)
Termination/
Resignation
payments
$
Total
$
Performance
related
%
-
-
-
-
-
-
302,405
-
-
-
-
167,857
114,988
95,576
95,576
66,388
132,818
888,753
449,539
405,040
448,008
319,152
352,930
308,659
147,056
309,855
4,019,35
0
-
-
-
-
30
24
-
24
17
18
17
-
-
14
550,326
585,250
Includes the non-cash amortisation expense of the FY2015 and/or FY2016 LTI performance rights to shares over the period
(a)
(b) For individuals who left the Company during the period, the total accumulated amortisation expense up to the date of departure has
been reversed
(c) Mr. C D J Langdon retired as a director on 30 June 2016
(d) Mr. P R Sullivan was appointed a director on 1 October 2015
(e) Mr. C J Williams left the Company on 7 December 2015
(f) Mr. A S Thomson left the Company on 10 August 2015
(g) Ms. T M Ram left the Company on 30 June 2016
PAGE 36 | 2016 ANNUAL REPORT
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 S Thomson
T M Ram
Directors' report
For the Financial Year ended 30 June 2016
2015
Name
Short-term benefits
Post
employment
benefits
Cash
salary
and fees
$
Bonus
(a)
$
Other
$
Super-
annuation
$
Retirement
Benefits
$
112,630
112,630
161,597
-
-
-
4,555
4,555
4,555
-
-
-
553,500 151,217
11,210
66,948
-
-
-
-
Share
based
payments
Rights to
shares
(b)
$
-
-
-
201,290
Termination/
Resignation
payments
$
Total
$
Performance
related
%
-
-
-
-
117,185
117,185
166,152
-
-
-
984,165
36
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
11,210
4,555
4,555
11,210
4,555
4,555
10,985
10,985
87,487
63,935
63,935
42,623
32,613
37,044
31,195
48,919
16,874
538.426
437,152
446,675
376,335
328,523
360,518
309,500
344,604
241,188
4,229,182
31,407
300,600 30,000
32,811
302,250 43,125
28,557
300,600
24,700
230,000 30,000
27,669
261,250 30,000
23,750
220,000 30,000
24,700
230,000 30,000
18,508
172,321 22,500
279,050
2,957,377 366,842
(a) Cash bonuses paid are in relation to the 2014 financial year
(b) Includes the non-cash amortisation expense of the FY2015 LTI performance rights to shares over the period
(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 - 2015/16
No options were granted during 2015/16.
Performance Rights to Shares - 2015/16
Performance rights to shares granted as compensation to key management personnel are shown in Table 3 on page 38.
21
24
11
19
19
20
23
16
21
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.
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
2016.
(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 32.
Security holdings
The number of securities over ordinary shares in the Company held during the financial year by the managing 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.
2016 ANNUAL REPORT | PAGE 37
Directors' report
For the Financial Year ended 30 June 2016
Table 3: Securities holdings of managing director and specified executives
Balance at
2016
start of the
year
Granted as
compen-
sation
Other
changes#
Exercised
Balance at
end of the
year
Vested and
exercisable
904,601
Performance Rights
Managing director 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
368,459
368,459
245,640
187,948
213,484
179,776
281,922
97,243
2,847,532
2015
1,450,000
593,432
604,093
-
302,704
343,833
289,543
-
156,617
3,740,222
-
-
-
-
-
-
-
-
-
-
-
2,354,601
-
-
(245,640)
-
-
-
(281,922)
(253,860)
(781,422)
961,891
972,552
-
490,652
557,317
469,319
-
-
5,806,332
-
-
-
-
-
-
-
-
-
-
Unvested
2,354,601
961,891
972,552
-
490,652
557,317
469,319
-
-
5,806,332
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
-
-
904,601
-
Performance Rights
Managing director 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
-
-
-
-
-
-
-
-
-
# Other changes relate to performance rights cancelled due to termination of employment
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
2,847,532
-
-
-
-
-
-
-
-
-
-
904,601
368,459
368,459
245,640
187,948
213,484
179,776
281,922
97,243
2,847,532
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.
2016
Name
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
Directors of Panoramic Resources Limited
Ordinary shares
P J Harold
C D J Langdon
J Rowe
P R Sullivan
B M Philips
3,490,785
43,518
65,555
-
65,555
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
50,000
188,000
-
155,000
204,500
-
100,000
1,560
4,364,473
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,076,929
14,506
21,852
-
221,852
4,567,714
58,024
87,407
-
287,407
20,000
94,001
-
(155,000)
102,251
-
-
780
1,397,171
70,000
282,001
-
-
306,751
-
100,000
2,340
5,761,644
PAGE 38 | 2016 ANNUAL REPORT
Directors' report
For the Financial Year ended 30 June 2016
2015
Balance at the
start 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
3,490,785
43,518
65,555
65,555
100,000
188,000
-
155,000
204,500
-
100,000
1,560
4,414,473
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
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(50,000)
-
-
-
-
-
-
-
(50,000)
3,490,785
43,518
65,555
65,555
50,000
188,000
-
155,000
204,500
-
100,000
1,560
4,364,473
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 than 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 2016 and 30 June 2015
2016
Value of securities granted
during the year
$
Value of securities exercised
during the year
$
Value of securities
cancelled during the year #
$
(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
Note: the value for each performance right to a share granted in 2015/16 to P J. Harold and the other named executives is $0.208 (the fair
value (FV) determined on 20 November 2015).
# Refer to Table 3 on page 24 for the number of performance rights to shares cancelled
-
-
-
149,840
-
-
171,972
-
91,894
301,600
123,434
125,651
-
62,963
71,517
-
60,225
32,576
-
-
-
-
-
-
-
-
-
2015
Value of securities granted
during the year
$
Value of securities exercised
during the year
$
Value of securities
cancelled during the year
$
606,083
224,760
224,760
149,840
114,648
130,225
171,972
109,663
59,318
(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
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)
There were no alterations to the terms and conditions of securities granted as remuneration since their grant date.
There were performance rights to shares that were cancelled during the period on the date of the named executive’s termination, as
detailed in Table 3 of the remuneration report. There were no loans to directors or other key management personnel at any time during
the year ended 30 June 2016. 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 2016 Remuneration Report.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2016 ANNUAL REPORT | PAGE 39
Directors' report
For the Financial Year ended 30 June 2016
Environmental regulation
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.
Rounding of Amounts
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 Australian Securities and Investments Commission
Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191, dated 24 March 2016.
Auditor's Independence Declaration
Section 307C of the Corporations Act 2001 requires our auditors, Ernst & Young (EY), 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 2016. This Independence Declaration is attached to the Directors’ Report and forms a part of the Directors’ Report.
Legal Matters
On 29 March 2016, the full Federal Court handed down its decision on the appeal to the 21 November 2014
Determination of native title in relation to the existence, enjoyment or exercise of native title rights held by the
Ngadju People over certain tenements, including the Lanfranchi Nickel Project tenements. The Court overturned the
initial decision and confirmed the validity of the relevant tenements. The Ngadju People subsequently filed
applications for special leave to appeal to the High Court, which applications are yet to be determined as at the date
of this report.
Non-audit Services
The following non-audit services were provided by the entity’s auditor, Ernst & Young (EY). 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 (EY) received or are due to receive the following amounts for the provision of non-audit services:
Tax Compliance and other services of $103,750 (including $81,750 in relation to a review on prior period income tax
returns)
Signed in accordance with a resolution of the directors.
Peter Harold
Managing Director
Perth, 30 August 2016
PAGE 40 | 2016 ANNUAL REPORT
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 2016.
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
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.
these documents can be accessed on
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 June 2016. 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.
2016 ANNUAL REPORT | PAGE 41
Corporate Governance Statement
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: nil; men: 100%;
• Percentage of women and men employed at the Board level - women: nil; men: 100%; and
• Percentage of indigenous employees at the Savannah Nickel Project - 7% (objective since 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 annual performance appraisal system in place for Board performance on a director by director
basis. The last performance appraisal was conducted at a meeting of directors in May 2015, where 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.
PAGE 42 | 2016 ANNUAL REPORT
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:
Position
Name
Brian M Phillips Chairman
Independence
Classification
Independent
Peter J Harold Managing Director
John Rowe
Non-Executive Director
not rated
Independent
Peter R Sullivan # Non-Executive Director Non Independent
Qualification/Skills
Mining Engineer, general mining
Process Engineer, project
development
Geologist, general mining
Engineer, corporate and project
development
Service
(yrs)
9
15
10
-
# Peter R Sullivan is a non-executive director of a substantial shareholder holding more than 5% of the ordinary shares in the Company
and as a consequence has been assessed as not being independent under the independence criteria detailed in Recommendation 2.3 of
the Recommendations.
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 had and subject to a recovery in base
metal prices, will, in all likelihood, again have a sustainable producing business. In addition, the Company remains active in
reviewing, 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 director 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.
2016 ANNUAL REPORT | PAGE 43
Corporate Governance Statement
• 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 2016 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 behaviour 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.
PAGE 44 | 2016 ANNUAL REPORT
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 updated Guidance Note 8 (August 2015) 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.
2016 ANNUAL REPORT | PAGE 45
Corporate Governance Statement
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;
•
• 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.
customer declaration of force majeure;
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 2015) 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.
PAGE 46 | 2016 ANNUAL REPORT
Corporate Governance Statement
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.
In 2015/16, the compliance reporting requirements detailed above were undertaken on a more limited basis at each mine
site as a consequence of the nickel operations being currently on care and maintenance.
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.
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 2016 Remuneration Report on pages 28
to 39.
2016 ANNUAL REPORT | PAGE 47
Directors' Declaration
30 June 2016
In accordance with a resolution of the directors of Panoramic Resources Limited, I state that:
1. In the directors' opinion:
(a)
the financial statements and notes set out on pages 41 to 117 are in accordance with the Corporations Act
2001, including:
(i)
giving a true and fair view of the Consolidated entity’s financial position as at 30 June 2016 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.
(ii)
(b)
subject to the achievement of the matters set out in Note 1(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 2016.
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, subject to the achievement of the matters set out in Note 1(b), 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, 30 August 2016
PAGE 48 | 2016 ANNUAL REPORT
Independent Auditors Report
2016 ANNUAL REPORT | PAGE 49
Independent Auditors Report
PAGE 50 | 2016 ANNUAL REPORT
Auditor’s Independence Declaration
2016 ANNUAL REPORT | PAGE 51
FINANCIAL
REPORT
PAGE 52 | 2016 ANNUAL REPORT
Consolidated income statement
For the year ended 30 June 2016
Revenue
Cost of sales of goods
Gross margin on sale of goods
Other income
Exploration and evaluation expenditure
Exploration expenditure written-off
Mark to market of derivatives
Impairment loss
Reversal of impairment loss
Share based payments
Other expenses
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
5
6
2016
$'000
92,136
(153,252)
(61,116)
1,305
(2,358)
(1,924)
(623)
(79,453)
-
(624)
(8,623)
(1,405)
(154,821)
10,462
(144,359)
2015
$'000
199,669
(228,794)
(29,125)
611
(12,911)
-
(1,739)
-
11,863
(689)
(7,686)
(998)
(40,674)
11,827
(28,847)
(144,359)
(28,847)
Cents
Cents
Loss per share attributable to the ordinary equity holders of the
Company:
Basic loss per share
Diluted loss per share
35
35
(42.7)
(42.7)
(9.0)
(9.0)
The above consolidated income statement should be read in conjunction with the accompanying notes.
2016 ANNUAL REPORT | PAGE 53
Consolidated statement of comprehensive income
For the year ended 30 June 2016
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)
2016
$'000
2015
$'000
(144,359)
(28,847)
(90)
-
(489)
231
10
1,668
(3,272)
(3,851)
(148,210)
-
1,909
(26,938)
(148,210)
(26,938)
The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.
PAGE 54 | 2016 ANNUAL REPORT
Consolidated balance sheet
As at 30 June 2016
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Derivative financial instruments
Prepayments
Asset 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
Provisions
Total current liabilities
Non-current liabilities
Borrowings
Deferred tax liabilities
Provisions
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Contributed equity
Reserves
Accumulated losses / retained earnings
Total equity
Notes
7
8
9
12
11
10
13
16
16
16
14
17
18
19
20
21
22
23
2016
$'000
19,437
797
8,480
-
302
-
29,016
677
80,201
18,019
1,403
9,523
1,803
111,626
140,642
4,638
728
2,242
7,608
876
-
30,002
30,878
38,486
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
35,629
2,855
8,438
46,922
68
11,341
30,955
42,364
89,286
24
25(a)
102,156
239,879
169,044
42,337
(109,225)
158,941
45,564
35,374
102,156
239,879
The above consolidated balance sheet should be read in conjunction with the accompanying notes.
2016 ANNUAL REPORT | PAGE 55
l
a
t
o
T
y
t
i
u
q
e
0
0
0
$
'
d
e
n
i
a
t
e
R
i
s
g
n
n
r
a
e
0
0
0
$
'
n
g
i
e
r
o
F
y
c
n
e
r
r
u
c
-
e
r
a
h
S
d
e
s
a
b
n
o
i
t
a
l
s
n
a
r
t
t
n
e
m
y
a
p
e
v
r
e
s
e
r
0
0
0
$
'
e
v
r
e
s
e
r
0
0
0
$
'
w
o
l
f
h
s
a
C
l
a
s
-
r
o
f
-
e
l
b
a
l
i
a
v
A
e
g
d
e
h
e
v
r
e
s
e
r
0
0
0
$
'
l
a
i
c
n
a
n
i
f
e
e
v
r
e
s
e
r
s
t
e
s
s
a
0
0
0
$
'
l
a
r
e
n
M
i
s
e
i
t
r
e
p
o
r
p
n
o
i
t
a
u
a
v
e
r
l
e
v
r
e
s
e
r
0
0
0
$
'
d
e
t
u
b
i
r
t
n
o
C
y
t
i
u
q
e
0
0
0
$
'
s
e
t
o
N
y
t
i
u
q
e
n
i
s
e
g
n
a
h
c
f
o
t
n
e
m
e
t
a
t
s
d
e
t
a
d
i
l
o
s
n
o
C
6
1
0
2
e
n
u
J
0
3
d
e
d
n
e
r
a
e
y
e
h
t
r
o
F
9
8
6
-
)
5
3
3
(
)
8
5
6
,
9
(
-
)
8
5
6
,
9
(
)
4
0
3
,
9
(
)
8
5
6
,
9
(
-
-
-
-
)
7
4
8
,
8
2
(
)
7
4
8
,
8
2
(
-
9
0
9
,
1
-
8
6
6
,
1
)
8
3
9
,
6
2
(
)
7
4
8
,
8
2
(
8
6
6
,
1
-
-
-
-
-
9
8
6
9
8
6
9
7
8
9
3
2
,
4
7
3
5
3
,
4
7
5
1
,
9
5
4
0
2
,
)
9
5
3
,
4
4
1
(
)
9
5
3
,
4
4
1
(
-
)
1
5
8
,
3
(
-
)
9
8
4
(
)
0
1
2
,
8
4
1
(
)
9
5
3
,
4
4
1
(
)
9
8
4
(
4
2
6
)
0
4
2
(
3
0
1
,
0
1
7
8
4
,
0
1
-
-
)
0
4
2
(
)
0
4
2
(
-
-
-
-
-
-
-
-
-
4
2
6
4
2
6
9
7
8
,
9
3
2
4
7
3
,
5
3
4
7
5
,
1
9
5
4
,
0
2
6
5
1
2
0
1
,
)
5
2
2
9
0
1
(
,
5
8
0
1
,
3
8
0
1
2
,
-
0
1
0
1
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1
2
1
,
6
7
2
9
7
8
,
3
7
)
4
9
(
0
7
7
,
9
1
)
0
1
(
3
8
1
-
1
3
2
1
3
2
-
-
-
-
4
1
4
-
4
1
4
)
0
9
(
)
0
9
(
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
)
5
3
3
(
)
5
3
3
(
7
1
1
3
2
,
6
7
2
9
5
1
,
7
1
1
,
3
2
1
4
9
,
8
5
1
-
)
2
7
2
,
3
(
)
2
7
2
,
3
(
-
-
-
7
1
1
3
2
,
1
4
9
8
5
1
,
4
2
6
2
-
-
-
-
-
-
3
0
1
,
0
1
4
4
0
,
9
6
1
3
0
1
,
0
1
4
2
4
2
3
5
4
8
,
9
1
:
s
r
e
n
w
o
s
a
y
t
i
c
a
p
a
c
r
i
e
h
t
n
i
s
r
e
n
w
o
h
t
i
w
s
n
o
i
t
c
a
s
n
a
r
T
x
a
t
d
n
a
s
t
s
o
c
n
o
i
t
c
a
s
n
a
r
t
f
o
t
e
n
,
y
t
i
u
q
e
f
o
s
n
o
i
t
u
b
i
r
t
n
o
C
r
a
e
y
e
h
t
r
o
f
s
s
o
l
e
v
i
s
n
e
h
e
r
p
m
o
c
l
a
t
o
T
e
m
o
c
n
i
i
e
v
s
n
e
h
e
r
p
m
o
c
r
e
h
t
O
4
1
0
2
y
l
u
J
1
t
a
e
c
n
a
l
a
B
r
a
e
y
e
h
t
r
o
f
s
s
o
L
i
d
a
p
r
o
r
o
f
i
d
e
d
v
o
r
p
s
d
n
e
d
v
D
i
i
:
s
r
e
n
w
o
s
a
y
t
i
c
a
p
a
c
r
i
e
h
t
n
i
s
r
e
n
w
o
h
t
i
w
s
n
o
i
t
c
a
s
n
a
r
T
x
a
t
d
n
a
s
t
s
o
c
n
o
i
t
c
a
s
n
a
r
t
f
o
t
e
n
,
y
t
i
u
q
e
f
o
s
n
o
i
t
u
b
i
r
t
n
o
C
i
s
e
c
v
r
e
s
e
e
y
o
p
m
e
l
f
o
e
u
a
v
l
-
s
n
o
i
t
p
o
e
r
a
h
s
e
e
y
o
p
m
E
l
r
a
e
y
e
h
t
r
o
f
s
s
o
l
e
v
i
s
n
e
h
e
r
p
m
o
c
l
a
t
o
T
5
1
0
2
e
n
u
J
0
3
t
a
e
c
n
a
l
a
B
5
1
0
2
y
l
u
J
1
t
a
e
c
n
a
l
a
B
e
m
o
c
n
i
i
e
v
s
n
e
h
e
r
p
m
o
c
r
e
h
t
O
r
a
e
y
e
h
t
r
o
f
s
s
o
L
i
s
e
c
v
r
e
s
e
e
y
o
p
m
e
l
f
o
e
u
a
v
l
-
s
n
o
i
t
p
o
e
r
a
h
s
e
e
y
o
p
m
E
l
i
y
r
a
d
s
b
u
s
i
f
o
l
a
s
o
p
s
d
i
n
o
r
e
f
s
n
a
r
t
y
t
i
u
q
E
6
1
0
2
e
n
u
J
0
3
t
a
e
c
n
a
l
a
B
PAGE 56 | 2016 ANNUAL REPORT
.
s
e
o
n
t
i
g
n
y
n
a
p
m
o
c
c
a
e
h
t
h
t
i
w
n
o
i
t
c
n
u
n
o
c
j
n
i
d
a
e
r
e
b
l
d
u
o
h
s
y
t
i
u
q
e
n
i
s
e
g
n
a
h
c
f
o
t
n
e
m
e
t
a
t
s
d
e
t
a
d
i
l
o
s
n
o
c
e
v
o
b
a
e
h
T
Consolidated statement of cash flows
For the year ended 30 June 2016
Notes
2016
$'000
2015
$'000
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 (outflow) 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
Proceeds from cash backed bonds
Payments for cash backed bonds
Proceeds from sale of property, plant and equipment
Proceeds from sale of available-for-sale financial assets
Interest received
Net cash inflow (outflow) from investing activities
Cash flows from financing activities
Proceeds from issues of shares and other equity securities
Payments for shares bought back
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
33
26
7
102,470
(143,400)
(160)
613
(2,345)
(42,822)
218,330
(164,118)
(378)
2,970
(10,322)
46,482
(1,867)
-
(7,526)
(5,553)
-
(1,803)
180
17,811
495
1,737
10,103
-
(3,636)
-
6,467
(34,618)
54,055
19,437
(7,195)
(500)
(19,836)
(15,122)
500
-
-
709
1,764
(39,680)
-
(336)
(6,808)
(9,658)
(16,802)
(10,000)
64,055
54,055
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
2016 ANNUAL REPORT | PAGE 57
Notes to the consolidated financial statements
30 June 2016
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 2016 was authorised for issue in accordance with a resolution of the directors on 30 August 2016.
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. The financial report complies with Australian Accounting Standards and International
Financial Reporting Standards (IFRS) as issued by International Accounting Standards Board.
(b) Going concern basis
These financial statements have been prepared on a going concern basis which assumes that the Group will be able to
meet its liabilities as they fall due for the foreseeable future.
As a result of the weakening nickel price and both the Savannah and Lanfranchi nickel mine being placed onto care and
maintenance during the year, the Group experienced net cash outflows from operating activities of $42.8 million for the year
ended 30 June 2016. In addition, the Group incurred a net loss of $144.4 million for the year ended 30 June 2016, including
impairment charges of $79.4 million. At 30 June 2016, the Group had cash and cash equivalents of $19.4 million and held
approximately $8.4 million in unsold nickel concentrate ready for shipment in July 2016.
On the basis of the high probability that global nickel prices remain weak for a sustained period, the directors are cognisant
that there may need to be additional staffing changes and cuts to operational and corporate costs, notwithstanding there
may be a need to raise additional funds via equity raisings from existing or new shareholders or to put in place borrowing
facilities in order to fund exploration and evaluation expenditure programs on its growth assets and for general working
capital requirements during the period the Group’s income producing assets remain on care and maintenance. The Board
is satisfied that the Company will be able to raise additional capital (via equity, debt or a combination) as and when required
and as a result it is appropriate to prepare the financial statements on a going concern basis.
Should the Group not achieve the funding outcomes set out above, there is significant uncertainty whether the Group will
continue as a going concern and therefore whether it will realise its assets and extinguish its liabilities in the normal course
of business and at the amounts stated in the financial report. No adjustments have been made relating to the recoverability
and classification of recorded asset amounts and classification of liabilities that might be necessary should the company
not continue as a going concern
(c) Basis of consolidation
The consolidated financial statements comprise the financial statements of the Group and its subsidiaries as at 30 June
2016. 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
PAGE 58 | 2016 ANNUAL REPORT
Notes to the consolidated financial statements
30 June 2016
When the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts
and circumstances in assessing whether it has power over an investee, including:
• The contractual arrangement with the other vote holders of the investee
• Rights arising from other contractual arrangements
• The Group’s voting rights and potential voting rights
The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to
one or more of the three elements of control. Consolidation of a subsidiary begins when the Group obtains control over the
subsidiary and ceases when the Group loses control of the subsidiary. Assets, liabilities, income and expenses of a
subsidiary acquired or disposed of during the year are included in the statement of comprehensive income from the date
the Group gains control until the date the Group ceases to control the subsidiary.
Profit or loss and each component of other comprehensive income (OCI) are attributed to the equity holders of the parent of
the Group and to the non-controlling interests, even if this results in the noncontrolling interests having a deficit balance.
When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into
line with the Group’s accounting policies. All intra-group assets and liabilities, equity, income, expenses and cash flows
relating to transactions between members of the Group are eliminated in full on consolidation.
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) New accounting standards and interpretations
Refer to Appendix A on page 107.
(e) 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 (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 either under the
2012 or 2004 editions of 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.
2016 ANNUAL REPORT | PAGE 59
Notes to the consolidated financial statements
30 June 2016
(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. 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’.
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.
PAGE 60 | 2016 ANNUAL REPORT
Notes to the consolidated financial statements
30 June 2016
(v) Provision for decommissioning and rehabilitation
Decommissioning and restoration 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 restoration 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 2016 was $29.883 million (2015: $30.184 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 Monte Carlo model and a Binomial
model, using the assumptions detailed in note 36.
(f) 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.
(g) 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 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.
2016 ANNUAL REPORT | PAGE 61
Notes to the consolidated financial statements
30 June 2016
(h) 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.
(i) 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.
(j) Term deposits
Term deposits are stated at nominal value. These deposits have original maturity of three months or more.
(k) 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.
(l) 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.
PAGE 62 | 2016 ANNUAL REPORT
Notes to the consolidated financial statements
30 June 2016
(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.
(m) 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. 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 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.
(n) Foreign currency translation
Both the functional and presentation currency of Panoramic Resources Limited and its Australian subsidiaries is Australian
dollars (A$).
2016 ANNUAL REPORT | PAGE 63
Notes to the consolidated financial statements
30 June 2016
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 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).
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.
(o) 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.
(p) 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.
PAGE 64 | 2016 ANNUAL REPORT
Notes to the consolidated financial statements
30 June 2016
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.
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 stand alone 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.
(q) 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.
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.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation
authority.
(r) 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.
2016 ANNUAL REPORT | PAGE 65
Notes to the consolidated financial statements
30 June 2016
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
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
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.
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.
(s) 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 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.
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.
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.
PAGE 66 | 2016 ANNUAL REPORT
Notes to the consolidated financial statements
30 June 2016
(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.
(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) Provision for decommissioning 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 rehabilitation 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.
2016 ANNUAL REPORT | PAGE 67
Notes to the consolidated financial statements
30 June 2016
(t) Impairment of non-financial assets
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 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.
(u) 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.
(v) 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.
(w) 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.
PAGE 68 | 2016 ANNUAL REPORT
Notes to the consolidated financial statements
30 June 2016
(x) 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.
(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 or binomial 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.
2016 ANNUAL REPORT | PAGE 69
Notes to the consolidated financial statements
30 June 2016
(y) 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.
(z) 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.
(aa) 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.
(ab) 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.
(ac) 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.
(ad) Joint Operations
The Group’s recognises its interest in joint operations:
- 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
PAGE 70 | 2016 ANNUAL REPORT
Notes to the consolidated financial statements
30 June 2016
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 Gum Creek 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 all 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. As
mentioned in Note 1(b), the Lanfranchi Nickel Project was placed onto care and maintenance in November 2015 and the
Savannah Nickel Project was placed onto care and maintenance in May 2016..
Gold
The 100% owned and operated Gum Creek Gold Project (formerly Gidgee Gold) 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 Gum Creek processing facility which is under care and maintenance. The Wilsons
Gold Project acquisition forms part of the Gum Creek Gold Project. The combined mineral Resource of Gum Creek,
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. As detailed in note 10, Mt Henry
Gold Project was sold during the period and accordingly the Mt Henry Gold Project has not been included in the segment
results for 2016.
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.
2016 ANNUAL REPORT | PAGE 71
Notes to the consolidated financial statements
30 June 2016
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
2016
Sales to external customers
Other revenue
Total segment revenue
Total segment results
Total segment assets
Total segment liabilities
Impairment of assets (Note 10, 14, 16)
Depreciation and amortisation
Mark to market of derivatives
Exploration and evaluation written off
Interest expense
Interest income
2015
Sales to external customers
Other revenue
Total segment revenue
Total segment results
Total segment assets
Total segment liabilities
Nickel
$'000
Gold
$'000
Platinum
Group
Metals
$'000
Australian
Exploration
$'000
Overseas
Exploration
$'000
Total
$'000
91,641
269
91,910
(101,271)
43,810
27,342
37,616
50,399
623
-
643
(268)
-
2
2
(43,998)
15,452
9,638
41,837
-
-
128
753
(2)
-
12
12
(142)
42,898
83
-
-
-
-
-
(12)
-
-
-
(1,885)
24,294
(1)
-
-
-
1,796
-
-
-
-
-
280
2
(11)
91,641
283
91,924
(147,016)
126,456
37,051
-
-
-
-
-
-
79,453
50,399
623
1,924
1,396
(282)
Nickel
$'000
Gold
$'000
Platinum
Group
Metals
$'000
Australian
Exploration
$'000
Overseas
Exploration
$'000
Total
$'000
197,897
1,310
199,207
(26,268)
186,635
74,379
-
2
2
(3,387)
75,186
28,880
-
1
1
(494)
42,706
1,291
-
-
-
(634)
26,587
46
-
-
-
(743)
17
(10)
197,897
1,313
199,210
(31,526)
331,131
104,586
(433,953)
(100,681)
(43,504)
(25,999)
736
(603,401)
(Reversal of)/ impairment of assets (Note
10,14,16)
Depreciation and amortisation
Mark to market of derivatives
Interest expense
Interest income
(c) Other segment information
(i) Segment revenue
Segment revenue reconciles to total revenue from continuing operations as follows:
(14,378)
61,799
1,739
977
(1,276)
2,515
34
-
-
(2)
-
-
-
-
(1)
Total segment revenue
Unallocated revenue
Consolidated revenue (note 3)
PAGE 72 | 2016 ANNUAL REPORT
-
-
-
-
-
-
-
-
-
-
(11,863)
61,833
1,739
977
(1,279)
2016
$'000
91,924
212
92,136
2015
$'000
199,210
459
199,669
Notes to the consolidated financial statements
30 June 2016
The amount of its revenue from external customers in Australia is $86.799 million (2015: $77.452 million), and the total
revenue from external customers in China is $4.842 million (2015: $120.445 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 $86.799 million (2015: $120.445 million) of external revenue. The next most significant client
accounts for $4.842 million (2015: $77.452 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
Unallocated assets
Total assets as per the consolidated balance sheet
2016
$'000
(147,016)
(7,805)
10,462
(144,359)
2016
$'000
126,456
113
14,073
140,642
2015
$'000
(31,526)
(9,148)
11,827
(28,847)
2015
$'000
331,131
(27,675)
25,709
329,165
The total of non-current assets located in Australia is $103.955 million (2015: $205.040 million), and the total of these
non-current assets located in Canada is $36.687 million (2015: $36.171 million). Non-current assets for this purpose
consist of property, plant and equipment, exploration and evaluation, development and mine properties.
(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
2016
$'000
37,051
117
1,318
38,486
2015
$'000
104,586
(16,689)
1,389
89,286
2016 ANNUAL REPORT | PAGE 73
Notes to the consolidated financial statements
30 June 2016
3 Revenue
Sales revenue
Sale of goods
Other revenue
Interest income
4 Other income
Gain on disposal of exploration and evaluation asset (Mt. Henry)
Net gain on sale of available-for-sale financial assets
Government grants
Gain on measurement of rehabilitation liability
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
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
Net loss on sale of investment
2016
$'000
2015
$'000
91,641
197,897
495
92,136
1,772
199,669
2016
$'000
651
-
-
433
221
1,305
2016
$'000
2015
$'000
-
209
363
-
39
611
2015
$'000
97,933
4,920
13,255
31,804
5,340
153,252
155,047
11,948
21,615
33,798
6,386
228,794
169
1,236
1,405
1,517
1,517
7,726
(1)
317
33
(292)
840
8,623
398
600
998
1,452
1,452
7,964
32
278
47
(635)
-
7,686
PAGE 74 | 2016 ANNUAL REPORT
Notes to the consolidated financial statements
30 June 2016
2016
$'000
2015
$'000
Breakdown of employee benefits expenses
Salaries and wages
Payroll tax
Superannuation
Redundancies
Others
Share based payments expense
6
Income tax benefit
(a) Income tax benefit
Adjustment of current tax for current year
Relating to origination and reversal of temporary differences in current year
Adjustments in relation to prior years
Deferred tax asset not recognised
(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% (2015 - 30.0%)
Tax effect of amounts which are not deductible (taxable) in calculating
taxable income:
Entertainment expense
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
Other
Deferred tax asset not recognised
Income tax benefit
(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
27,436
2,128
2,696
10,814
907
624
44,605
2016
$'000
-
(46,409)
57
35,890
(10,462)
2016
$'000
(154,821)
(46,446)
3
156
-
-
-
-
-
57
39
(161)
35,890
(10,462)
165,283
2016
$'000
-
39
(918)
(879)
42,232
2,814
4,494
244
6,069
689
56,542
2015
$'000
491
(11,927)
(391)
-
(11,827)
2015
$'000
(40,674)
(12,202)
4
207
(84)
63
448
(31)
491
(391)
(331)
(1)
-
(11,827)
52,501
2015
$'000
4
99
-
103
2016
$'000
2015
$'000
(1)
(1)
2016 ANNUAL REPORT | PAGE 75
Notes to the consolidated financial statements
30 June 2016
(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
Income tax losses of Panoramic Resources Limited
Potential tax benefit @ 30%
7 Current assets - Cash and cash equivalents
Cash at bank and in hand
Deposits at call
2016
$'000
1,789
23,695
877
80,767
32,138
2016
$'000
7,254
12,183
2015
$'000
1,789
23,695
826
-
7,893
2015
$'000
25,421
28,634
(a) Reconciliation to cash at the end of the year
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:
19,437
54,055
Cash at bank and in hand and deposits at call
2016
$'000
19,437
2015
$'000
54,055
(b) Cash at bank and on hand
Cash at bank earns interest at floating rates based on daily bank deposit rates. The weighted average interest rate
achieved for the year was 1.4% (2015: 1.5%).
(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 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 2.6% (2015: 3.5%).
(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
2016
$'000
-
797
797
2015
$'000
8,119
3,116
11,235
PAGE 76 | 2016 ANNUAL REPORT
Notes to the consolidated financial statements
30 June 2016
(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 2016 was nil (2015: $2.744 million) and the
amount of fair value changes recognised in the income statement during the year ended 30 June 2016 was $11.220 million
(2015: $10.021 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 are non interest bearing in 2015 and 2016.
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
Nickel ore stocks on hand
- at net realisable value
Concentrate stocks on hand
- at net realiseable value
10 Current assets - Asset classified as held for sale
Asset held for sale
Opening balance
Transfer into held for sale category
Transfer out of held for sale category
Disposal
Closing balance
2016
$'000
-
-
8,480
8,480
2016
$ '000
18,000
16,023
(16,023)
(18,000)
-
2015
$'000
10,126
1,516
1,268
12,910
2015
$ '000
-
18,000
-
-
18,000
2016 ANNUAL REPORT | PAGE 77
Notes to the consolidated financial statements
30 June 2016
(a) Gum Creek Gold Project
On 3 August 2015, the Company announced the decision by the directors to divest the Company’s Gum Creek Gold
Project. Accordingly, the project was classified as an asset held for sale under AASB 5.
In accordance with Australian Accounting Standards, immediately before the classification of Gum Creek Gold Project as
assets held for sale, the carrying value of the Gum Creek Gold Project was assessed to ensure that it was being carried at
the lower of its carrying value and fair value less cost to dispose (FVLCD). Accordingly, an impairment loss of $41.837
million has been recognised in the consolidated income statement to reduce the carrying values of the Gum Creek Gold
Project to its fair value less cost to dispose.
On 30 May 2016, the Company announced that the directors were considering a partial divestment of the Gum Creek Gold
Project by way of an initial public offering (IPO) on the Australian Securities Exchange (ASX). Therefore, at 30 June 2016,
the Gum Creek Gold Project (which was previously classified as asset held for sale) has been re-classified into the
respective asset category.
Prior to reclassification out of the held for sale category, the carrying value of the Gum Creek Gold Project was assessed to
ensure that it was being carried at the lower of its carrying value (adjusted for depreciation and amortisation) and fair value.
It was determined that the fair value of the project approximate its carrying value.
The fair value of the Gum Creek Gold Project at 30 June 2016 has been determined based on comparable market
transactions. The fair value methodology adopted at 30 June 2016 is categorised as Level 3 in the fair value hierarchy. In
determining the FVLCD, estimates are made in relation to the underlying resources/reserves and the valuation multiple.
Any change in these estimates could impact the FVLCD of the underlying CGU.
(b) Mt Henry Gold Project
On 14 May 2015, the Company announced the decision by the directors to divest the Company’s 70% interest in the Mt
Henry Gold Project. The Mt Henry Gold Project was classified as held for sale at 30 June 2015 and consisted of exploration
and evaluation properties amounting to $18 million. The fair value at 30 June 2015 was determined based on comparable
market transactions. The fair value methodology adopted at 30 June 2015 was categorised as Level 3 in the fair value
hierarchy.
On 31 July 2015, the Company sold its 70% interest in the Mt Henry Gold Project to Metals X Limited. The project was
settled for 15.225 million of Metals X Limited shares (after brokerage) valued at $18.650 million at the date of settlement. A
gain on the sale of the Mt Henry Gold Project of $0.651 million has been recognised in the consolidated income statement
for the period ended 30 June 2016. In determining the FVLCD, estimates are made in relation to the underlying
resources/reserves and the valuation multiple. Any change in these estimates could impact the FVLCD of the underlying
CGU.
11 Current assets - Prepayments
Prepayments
12 Derivative financial instruments
Current assets
Diesel Call Options
Total current derivative financial instrument assets
2016
$'000
302
2016
$'000
-
-
2015
$'000
1,187
2015
$'000
178
178
PAGE 78 | 2016 ANNUAL REPORT
Notes to the consolidated financial statements
30 June 2016
(a) Instruments used by the group
The Group used 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 used a number of methodologies to determine the fair value of derivatives. These techniques included
comparing contracted rates to market rates with the same length of maturity to determine the value of forward contracts and
used 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 were determined by reference to published /
observable prices.
(b) 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.
(c) 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.
13 Non-current assets - Available-for-sale financial assets
Available-for-sale financial assets include the following classes of financial assets:
Listed securities
Equity securities
At beginning of year
Additions
Disposal proceeds
Net loss on sale
Fair value gain/(loss) recognised in other comprehensive income
At end of year
2016
$'000
677
2016
$'000
858
18,650
(17,811)
(840)
(180)
677
2015
$'000
858
2015
$'000
528
500
(709)
209
330
858
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.
2016 ANNUAL REPORT | PAGE 79
Notes to the consolidated financial statements
30 June 2016
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
Year ended 30 June 2016
Opening net book amount
Additions
Transfer (to) from other asset class
Disposals
Depreciation charge
Impairment loss
Foreign currency exchange adjustments
Closing net book amount
At 30 June 2016
Deemed cost
Accumulated depreciation and impairment
Net book amount
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
2016
$'000
2015
$'000
206,491
(197,236)
9,255
204,629
(168,633)
35,996
8,626
(7,026)
1,600
14,210
-
14,210
51,806
Total
$'000
51,806
4,723
(294)
(371)
(13,606)
(32,705)
(30)
9,523
14,210
4,645
(7,777)
-
-
(10,933)
-
145
123
22
145
213,930
(204,407)
9,523
11,428
5,343
(3,121)
(9)
-
-
569
-
14,210
14,210
-
14,210
63,379
7,343
-
(41)
(154)
(21,941)
3,242
(22)
51,806
227,465
(175,659)
51,806
7,316
(7,193)
123
123
22
145
9,523
Plant and
equipment
$'000
Leased plant
and
equipment
$'000
Construction
in progress
$'000
35,996
78
7,483
(371)
(12,690)
(21,211)
(30)
9,255
206,491
(197,236)
9,255
45,949
2,000
5,050
(32)
(154)
(19,468)
2,673
(22)
35,996
204,629
(168,633)
35,996
1,600
-
-
-
(916)
(561)
-
123
7,316
(7,193)
123
6,002
-
(1,929)
-
-
(2,473)
-
-
1,600
8,626
(7,026)
1,600
PAGE 80 | 2016 ANNUAL REPORT
Notes to the consolidated financial statements
30 June 2016
(a) Impairment of assets
Nickel Division
The weakening of commodity prices during the first half and the deficiency in market capitalisation compared to net assets
led to the Group to make an assessment of the recoverability of the carrying value of its assets at 31 December 2015 under
AASB 136 Impairment of Assets. A further review was undertaken at 30 June 2016. In each review, an external party was
engaged to determine the fair value less costs to dispose (FVLCD) of the Nickel Division assets. The FVLCD were then
compared against the carrying value and as a result of the impairment test, an impairment loss of $42.290 million was
recognised to reduce the carrying amount of the exploration and evaluation properties, plant and equipment, mine
development and the mine properties to their recoverable amount. Of this amount, $37.616 million has been recognised in
the income statement and $4.674 million has been recognised in the mineral properties revaluation reserve ($3.272 million
net of tax). The mineral property 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.
The fair value less cost to dispose of the Savannah Nickel Project and Lanfranchi Nickel Project determined by the external
party was based on comparable market transactions. The fair value methodology adopted is categorised as Level 3 in the
fair value hierarchy. In determining the FVLCD, estimates are made in relation to the underlying resources/reserves and
the valuation multiple. Any change in these estimates could impact the FVLCD of the underlying CGU.
Gum Creek Gold Project
On 3 August 2015, the Company announced the decision by the directors to divest the Company’s Gum Creek Gold
Project. Accordingly, the project was classified as an asset held for sale under AASB 5.
In accordance with Australian Accounting Standards, immediately before the classification of Gum Creek Gold Project as
assets held for sale, the carrying value of the Gum Creek Gold Project was assessed to ensure that it was being carried at
the lower of its carrying value and fair value less cost to dispose (FVLCD). Accordingly, an impairment loss of $41.837
million has been recognised in the consolidated income statement to reduce the carrying values of the Gum Creek Gold
Project to its fair value less cost to dispose.
On 30 May 2016, the Company announced that the directors were considering a partial divestment of the Gum Creek Gold
Project by way of an inital public offering (IPO) on the Australian Securities Exchange (ASX). Therefore, at 30 June 2016,
the Gum Creek Gold Project (which was previously classified as asset held for sale) has been re-classified into the
respective asset category. Prior to reclassification out of the held for sale category, the carrying value of the Gum Creek
Gold Project was assessed to ensure that it was being carried at the lower of its carrying value (adjusted for depreciation
and amortisation) and fair value. It was determined that the fair value of the project approximate its carrying value. The fair
value of the Gum Creek Gold Project at 30 June 2016 has been determined based on comparable market transactions. The
fair value methodology adopted at 30 June 2016 is categorised as Level 3 in the fair value hierarchy. In determining the
FVLCD, estimates are made in relation to the underlying resources/reserves and the valuation multiple. Any change in
these estimates could impact the FVLCD of the underlying CGU.
As at 30 June 2016, a total Group impairment loss of $32.705 million was recognised to decrease the carrying amount of
plant and equipment to their recoverable amount. This has been 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 $1.885 million (2015: $1.600 million).
2016 ANNUAL REPORT | PAGE 81
Notes to the consolidated financial statements
30 June 2016
15 Non-current assets - Deferred tax assets
The balance comprises temporary differences attributable to:
Tax losses
Employee benefits
Provisions
Trading stock
Sundry temporary differences
Research and development tax offset
Business related costs
Deferred tax asset not recognised
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
2016
$'000
24,230
1,506
9,459
492
501
4,091
213
(35,890)
4,602
(4,602)
-
2015
$'000
16,561
2,765
9,395
492
-
4,091
431
-
33,735
(33,735)
-
33,735
28,212
(29,133)
4,602
5,523
33,735
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
Accumulated impairment
Blank
Mine (mineral) properties
Deemed cost
Accumulated amortisation and impairment
2016
$'000
2015
$'000
350,509
(332,490)
18,019
117,282
(37,081)
80,201
89,703
(88,300)
1,403
99,623
353,720
(300,156)
53,564
113,794
-
113,794
95,415
(83,873)
11,542
178,900
PAGE 82 | 2016 ANNUAL REPORT
Notes to the consolidated financial statements
30 June 2016
Mine
Development
Expenditure
$'000
Exploration
and
Evaluation
$'000
Mine (Mineral)
Properties
$'000
Total
$'000
11,542
-
-
(5,338)
(4,801)
-
-
1,403
178,900
11,439
294
(37,144)
(51,422)
(520)
(1,924)
99,623
53,564
5,801
-
(31,806)
(9,540)
-
-
18,019
113,794
5,638
294
-
(37,081)
(520)
(1,924)
80,201
Year ended 30 June 2016
Opening net book amount
Expenditure incurred
Transfer to /(from) other asset class
Amortisation charge
Impairment
Exchange differences
Written off to profit and loss
Closing net book amount
At 30 June 2016
Deemed cost
Accumulated amortisation and impairment
Net book amount
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
Closing net book amount
At 30 June 2015
Deemed cost
562,929
Accumulated amortisation and impairment
(384,029)
Net book amount
178,900
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.
122,736
15,587
(18,000)
(4,014)
-
(2,515)
113,794
57,820
19,887
-
4,014
(33,800)
5,643
53,564
192,987
35,474
(18,000)
-
(40,184)
8,623
178,900
12,431
-
-
-
(6,384)
5,495
11,542
350,509
(332,490)
18,019
557,494
(457,871)
99,623
353,720
(300,156)
53,564
89,703
(88,300)
1,403
117,282
(37,081)
80,201
95,415
(83,873)
11,542
113,794
-
113,794
(a) Impairment of assets
Nickel Division
The weakening of commodity prices during the first half and the deficiency in market capitalisation compared to net assets
led to the Group to make an assessment of the recoverability of the carrying value of its assets at 31 December 2015 under
AASB 136 Impairment of Assets. A further review was undertaken at 30 June 2016. In each review, an external party was
engaged to determine the fair value less costs to dispose (FVLCD) of the Nickel Division assets. The FVLCD were then
compared against the carrying value and as a result of the impairment test, an impairment loss of $42.290 million was
recognised to reduce the carrying amount of the exploration and evaluation properties, plant and equipment, mine
development and the mine properties to their recoverable amount. Of this amount, $37.616 million has been recognised in
the income statement and $4.674 million has been recognised in the mineral properties revaluation reserve ($3.272 million
net of tax). The mineral property 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.
The fair value less cost to dispose of the Savannah Nickel Project and Lanfranchi Nickel Project determined by the external
party was based on comparable market transactions. The fair value methodology adopted is categorised as Level 3 in the
fair value hierarchy. In determining the FVLCD, estimates are made in relation to the underlying resources/reserves and
the valuation multiple. Any change in these estimates could impact the FVLCD of the underlying CGU.
2016 ANNUAL REPORT | PAGE 83
Notes to the consolidated financial statements
30 June 2016
Gum Creek Gold Project
On 3 August 2015, the Company announced the decision by the directors to divest the Company’s Gum Creek Gold
Project. Accordingly, the project was classified as an asset held for sale under AASB 5.
In accordance with Australian Accounting Standards, immediately before the classification of Gum Creek Gold Project as
assets held for sale, the carrying value of the Gum Creek Gold Project was assessed to ensure that it was being carried at
the lower of its carrying value and fair value less cost to dispose (FVLCD). Accordingly, an impairment loss of $41.837
million has been recognised in the consolidated income statement to reduce the carrying values of the Gum Creek Gold
Project to its fair value less cost to dispose.
On 30 May 2016, the Company announced that the directors were considering a partial divestment of the Gum Creek Gold
Project by way of an initial public offering (IPO) on the Australian Securities Exchange (ASX). Therefore, at 30 June 2016,
the Gum Creek Gold Project (which was previously classified as asset held for sale) has been re-classified into the
respective asset category. Prior to reclassification out of the held for sale category, the carrying value of the Gum Creek
Gold Project was assessed to ensure that it was being carried at the lower of its carrying value (adjusted for depreciation
and amortisation) and fair value. It was determined that the fair value of the project approximate its carrying value. The fair
value of the Gum Creek Gold Project at 30 June 2016 has been determined based on comparable market transactions. The
fair value methodology adopted at 30 June 2016 is categorised as Level 3 in the fair value hierarchy. In determining the
FVLCD, estimates are made in relation to the underlying resources/reserves and the valuation multiple. Any change in
these estimates could impact the FVLCD of the underlying CGU.
Mt Henry Gold Project
On 14 May 2015, the Company announced the decision by the directors to divest the Company’s 70% interest in the Mt
Henry Gold Project. The Mt Henry Gold Project was classified as held for sale at 30 June 2015 and consisted of exploration
and evaluation properties amounting to $18 million. The fair value at 30 June 2015 was determined based on comparable
market transactions. The fair value methodology adopted at 30 June 2015 was categorised as Level 3 in the fair value
hierarchy.
On 31 July 2015, the Company sold its 70% interest in the Mt Henry Gold Project to Metals X Limited. The project was
settled for 15.225 million of Metals X Limited shares (after brokerage) valued at $18.65 million at the date of settlement. A
gain on the sale of the Mt Henry Gold Project of $0.651 million has been recognised in the consolidated income statement
for the period ended 30 June 2016.
As at 30 June 2016, a total Group impairment loss of $51.422 million was recognised to decrease the carrying amount of
exploration and evaluation properties, mine development and mine properties to their recoverable amount. Of this amount,
$46.748 million has been recognised in the income statement and $4.674 million has been recognised in the mineral
properties revaluation reserve.
17 Non-current assets - Other non-current assets
Others
2016
$'000
1,803
1,803
2015
$'000
36
36
At 30 June 2016, $1.803 million is cash backed against the drawn amount on the Company's performance bond facility.
At 30 June 2015, cash backed bonds of $0.036 million was placed with a financial institution in respect to Copernicus Nickel
Mines' miscellaneous mining licenses.
18 Current liabilities - Trade and other payables
Trade payables
Accrued expenses
Amounts owing on estimated final customer invoices
2016
$'000
2,243
2,092
303
4,638
2015
$'000
18,877
14,080
2,672
35,629
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.
PAGE 84 | 2016 ANNUAL REPORT
Notes to the consolidated financial statements
30 June 2016
19 Current liabilities - Borrowings
2016
$'000
2015
$'000
Secured
Lease liabilities (note 29)
Other loans
Total secured current borrowings
(a) Risk exposures
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.
(c) Security and fair value disclosures
Details of the Group's security relating to non-current borrowings are set out in note 21.
728
-
728
2,063
792
2,855
20 Current liabilities - Provisions
Employee benefits - long service leave
Employee benefits - annual leave
2016
$'000
957
1,285
2,242
2015
$'000
3,170
5,268
8,438
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)
2016
$'000
876
2015
$'000
68
(a) Assets pledged as security
Finance lease liabilities are effectively secured as the rights to the leased assets recognised in the financial statements and
revert to the lessor in the event of default.
The carrying amounts of assets pledged as security for current and non-current borrowings are $1.885 million (2015:
$1.600 million).
(b) Other loans
Finance lease liabilities
Finance lease liabilities have an average term of 3 years (2015: 4 years). The average interest rate implicit in the hire
purchase liability is 4.59% (2015: 7.23%). Secured finance lease liabilities are secured by a charge over the asset.
Financing facilities available
At reporting date, there is a performance bond facility available. The performance bond facility is $2.0 million (2015: $2.0
million) with a drawdown amount at reporting date of $1.8 million (2015: $1.8 million) and $0.2 million (2015: $0.2 million)
available to be used. The $1.8 million drawn amount is cash-backed with a financial institution (note 17).
(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.
2016 ANNUAL REPORT | PAGE 85
Notes to the consolidated financial statements
30 June 2016
2016
Trade and other payables (note 18)
Lease liabilities (notes 19 and 21)
Weighted average interest rate
2015
Trade and other payables (note 18)
Lease liabilities (notes 19 and 21)
Other loans
Weighted average interest rate
Fixed interest rate
1 year
or less
$'000
-
728
728
4.59%
Over 1
to 2
years
$'000
-
803
803
4.60%
Over 2
to 3
years
$'000
-
73
73
4.60%
Over 3
to 4
years
$'000
-
-
-
-
Non
interest
bearing
$'000
4,639
-
4,639
N/A
Fixed interest rate
1 year
or less
$'000
-
1,885
792
2,677
5.53%
Over 1
to 2
years
$'000
-
68
-
68
-
Over 2
to 3
years
$'000
-
-
-
-
-
Over 3
to 4
years
$'000
-
-
-
-
-
Non
interest
bearing
$'000
35,628
178
-
35,806
N/A
Floating
interest
rate
$'000
-
-
-
-
Floating
interest
rate
$'000
-
-
-
-
-
Total
$'000
4,639
1,604
6,243
Total
$'000
35,628
2,131
792
38,551
(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
2016
2015
Carrying
amount
$'000
Fair value
$'000
Carrying
amount
$'000
Fair value
$'000
1,604
1,604
1,604
1,604
2,131
2,131
2,131
2,131
(i) On-balance sheet
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.
PAGE 86 | 2016 ANNUAL REPORT
Notes to the consolidated financial statements
30 June 2016
22 Non-current liabilities - Deferred tax liabilities
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
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
- directly to statement of comprehensive income
23 Non-current liabilities - Provisions
Employee benefits - long service leave
Rehabilitation
2016
$'000
1,078
2,490
3
2
747
120
162
4,602
(4,602)
-
45,076
(39,595)
(879)
4,602
2016
$'000
119
29,883
30,002
2015
$'000
1,078
3,530
3
180
39,965
120
200
45,076
(33,735)
11,341
48,314
(3,340)
102
45,076
2015
$'000
771
30,184
30,955
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(e)(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:
2016
Rehabilitation
$'000
30,184
1,236
(1,537)
29,883
Rehabilitation
$'000
29,584
600
30,184
Carrying amount at start of year
- unwinding of discount
Additional provision charged to plant and equipment
Carrying amount at end of year
2015
Carrying amount at start of year
- unwinding of discount
Carrying amount at end of year
2016 ANNUAL REPORT | PAGE 87
Notes to the consolidated financial statements
30 June 2016
24 Contributed equity
(a) Share capital
Ordinary shares
Ordinary shares - fully paid
(b) Movements in ordinary share capital
Date
Details
1 July 2014
12 January 2015
13 January 2015
14 January 2015
16 January 2015
30 June 2015
1 July 2015
3 May 2016
30 June 2016
Opening balance
Share Buy-back
Share Buy-back
Share Buy-back
Share Buy-back
Transaction costs, net of tax
Balance
Opening balance
Share Issue
Transaction costs, net of tax
Balance
2016
Shares
2015
Shares
2016
$'000
2015
$'000
428,567,271
321,424,015
169,044
158,941
Number of
shares
Issue /
Redemption
price
322,275,824
(113,594)
(308,200)
(301,967)
(128,048)
-
321,424,015
321,424,015
107,143,256
-
428,567,271
$0.39
$0.39
$0.39
$0.38
$0.10
$'000
159,276
(44)
(121)
(118)
(49)
(3)
158,941
158,941
10,714
(611)
169,044
(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.
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 2016 was 0.95% (2015: 1.84%).
The Group has put in place a Group Cash Management Policy to ensure that up to 180 days (2015: 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 2016 this was $103,760,000 (2015:
$242,802,000).
PAGE 88 | 2016 ANNUAL REPORT
Notes to the consolidated financial statements
30 June 2016
25 Reserves
(a) Reserves
Mineral properties revaluation reserve
Available-for-sale financial assets
Share-based payments
Foreign currency translation
Movements:
2016
$'000
19,845
324
21,083
1,085
42,337
2016
$'000
2015
$'000
23,117
414
20,459
1,574
45,564
2015
$'000
414
(129)
39
324
23,117
-
-
23,117
23,117
(4,190)
918
19,845
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
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
The Company increased the Group's holding in Lanfranchi from 75% to 100% in 2009. This required revaluation of the
original interest. The asset revaluation reserve resulted from the increase in the fair value of the original interest.
19,770
689
20,459
20,459
624
21,083
(94)
1,668
1,574
1,574
(489)
1,085
183
329
(98)
414
(10)
10
-
-
-
-
2016 ANNUAL REPORT | PAGE 89
Notes to the consolidated financial statements
30 June 2016
(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) 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
No final dividend was paid for the year ended 30 June 2015. 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 interim dividend was paid for the half year ended 31 December 2015. 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%.
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.
(c) Franking credits
Franking credits available for subsequent reporting periods
The tax rate at which paid dividends have been franked is 30% (2015: 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 entities of the consolidated entity
Tax compliance and other services
2016
$'000
-
-
-
2015
$'000
6,445
3,213
9,658
Consolidated entity
2016
$'000
10,503
2015
$'000
11,116
2016
$
2015
$
155,000
198,095
-
-
103,750
258,750
221,890
419,985
PAGE 90 | 2016 ANNUAL REPORT
Notes to the consolidated financial statements
30 June 2016
28 Guarantees and contingencies
(a) Guarantees
At 30 June 2016, the Company had bank guarantees with a financial institution with a face value of $0.709 million (2015:
$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 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 $1.604 million (2015: $2.131 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.
(c) Contingent liabilities
Power Purchase Agreement
The Company and a supplier are in discussions over the termination date in relation to the supply of electricity to the
Lanfranchi Nickel Project. Additional demand charges of $585,000 may be payable by the Company if a termination date of
1 July 2016 applies. It is the Company’s opinion that the contract to supply electricity to the project terminated on 15
December 2015.
In addition, the same supplier has claimed that due to its administrative error, the Company has been undercharged
$376,000 in energy charges for 2014/2015. It is the Company’s opinion that the back-charges cannot be claimed on a
retrospective basis in accordance with the Power Purchase Agreement. The relevant invoice has been withdrawn pending
further investigation by the supplier.
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
2016
$'000
-
-
4,078
13,563
35,311
52,952
2015
$'000
2,469
2,469
4,049
14,165
38,640
56,854
2016 ANNUAL REPORT | PAGE 91
Notes to the consolidated financial statements
30 June 2016
(b) Lease commitments: group as lessee
(i) Finance leases
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)
2016
$'000
825
859
1,684
(80)
1,604
728
876
2015
$'000
2,039
178
2,217
(86)
2,131
2,063
68
(c) Operating lease commitments as lessee
(i) Corporate office
The Group has a commercial lease on its corporate office premises. This is a non-cancellable lease expiring on 28
February 2019.
Future minimum rentals payable under the non-cancellable operating leases at 30 June 2016 are as follows:
1,604
2,131
Within one year
Later than one year and not later than five years
2016
$'000
1,628
2,869
2015
$'000
1,500
3,607
(ii) Drill rig
The Group has a drill rig on hire under a non-cancellable lease expiring on 13 December 2016.
Future minimum rentals payable under the non-cancellable operating leases at 30 June 2016 are as follows:
4,497
5,107
Within one year
(d) Operating lease commitments as lessor
(i) Corporate office
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 the non-cancellable operating leases at 30 June 2016 are as follows:
2016
$'000
330
2015
$'000
-
Commitments for minimum lease receipts in relation to non-cancellable operating
leases are as follows:
Within one year
(e) Remuneration commitments
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
2016
$'000
330
2016
$'000
2015
$'000
-
2015
$'000
824
1,233
PAGE 92 | 2016 ANNUAL REPORT
Notes to the consolidated financial statements
30 June 2016
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
Country of
incorporation Class of shares
Equity holding
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 Mine Pty Ltd
Panoramic Gold Pty Ltd
Pindan (USA) Inc.
Pindan (Finland) Exploration Ltd
Panoramic Copper Pty Ltd
Panton Sill Pty Ltd (formerly Panoramic Precious
Metals Pty Ltd)
Mt Henry Gold Pty Ltd
Mt Henry Mines Pty Ltd
Magma Metals Pty Limited
Greenstone Metals Ltd
Panoramic PGM's (Canada) Ltd (formerly Magma
Metals (Canada) Ltd)
Panoramic Nickel Pty Ltd
Panoramic PGMs Pty Ltd
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
USA
Finland
Australia
Australia
Australia
Australia
Australia
Australia
Canada
Australia
Australia
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
2016
%
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
2015
%
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
*
**
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 Project (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.
Refer to note 31 for details on deed of cross guarantee signed between certain subsidiaries and Panoramic Resources
Limited.
2016 ANNUAL REPORT | PAGE 93
Notes to the consolidated financial statements
30 June 2016
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 and summary of movements in consolidated retained earnings
Set out below is a consolidated income statement and a summary of movements in consolidated retained earnings for the
year ended 30 June 2016 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 (expense) / benefit
Loss for the year
Retained earnings at the beginning of the financial year
Loss for the year
Dividends provided for or paid
(Accumulated losses) / retained earnings at the end of the financial year
2016
$'000
(111,480)
(8,657)
(120,137)
2016
$'000
66,140
(120,137)
-
(53,997)
2015
$'000
(45,095)
13,878
(31,217)
2015
$'000
107,015
(31,217)
(9,658)
66,140
PAGE 94 | 2016 ANNUAL REPORT
Notes to the consolidated financial statements
30 June 2016
(b) Consolidated balance sheet
Set out below is a consolidated balance sheet as at 30 June 2016 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
Other non-current 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
2016
$'000
19,356
800
8,480
178
28,814
68,034
627
8,236
24,245
18,389
-
1,803
121,334
150,148
4,309
728
178
2,143
7,358
876
20,423
21,299
28,657
121,491
134,257
41,231
(53,997)
121,491
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
2016 ANNUAL REPORT | PAGE 95
Notes to the consolidated financial statements
30 June 2016
32 Events occurring after the reporting period
Savannah North Resource Upgrade
On 24 August 2016, the Company announced a material upgrade in the Savannah North Resource to 10.27 million tonnes
at a nickel grade of 1.70% for 175,100 tonnes of contained nickel.
In the interval between the end of the financial year and the date of this report, apart from the matter mentioned above,
there has not arisen any item, transaction or event of a material and unusual nature likely, in the opinion of the directors of
the Company, to affect significantly the operations of the consolidated entity, the results of those operations, or the state of
affairs of the consolidated entity, in future financial years.
33 Reconciliation of loss for the year to net cash inflow (outflow) from operating
activities
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
Exploration and evaluation written off
Gain on remeasurement of liability
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 other assets
(Increase)/decrease in derivative financial instruments
Increase in provisions
Decrease in deferred tax assets
(Decrease) in deferred tax liabilities
Net cash (outflow) / inflow from operating activities
34 Non-cash investing and financing activities
Acquisition of plant and equipment by means of finance leases
2016
$'000
(144,359)
13,606
31,806
5,338
79,453
840
(651)
624
(500)
1,924
(433)
10,764
885
(35,267)
4,413
36
178
(1,629)
1,493
(11,343)
(42,822)
2015
$'000
(28,847)
21,941
33,800
6,384
(11,864)
(209)
32
689
(1,772)
-
-
21,434
1,741
6,651
4,298
-
34
1,026
(102)
(8,754)
46,482
2016
$'000
2,317
2015
$'000
-
PAGE 96 | 2016 ANNUAL REPORT
Notes to the consolidated financial statements
30 June 2016
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
Weighted average number of ordinary shares used as the denominator in
calculating basic and diluted loss per share
2016
Cents
(42.7)
(42.7)
2016
Cents
(42.7)
(42.7)
2016
$'000
2015
Cents
(9.0)
(9.0)
2015
Cents
(9.0)
(9.0)
2015
$'000
(144,359)
(28,847)
(144,359)
(28,847)
(144,359)
(28,847)
(144,359)
(28,847)
2016
Number
2015
Number
338,449,518
321,882,993
Performance rights on issue are not considered in the calculation of diluted loss per share as they are considered to be
contingently issuable.
2016 ANNUAL REPORT | PAGE 97
Notes to the consolidated financial statements
30 June 2016
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).
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 FY2016, a total of 4,624,513 performance rights were calculated to be granted to executives and senior employees. To
determine the number of FY2016 performance grants at 27 November 2015, a weighted average FV of $0.2080 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 FY2016 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 27 November 2015:
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
Number Number Number Number Number Number
Number
Consolidated 2016
27/11/15 30/06/18 01/07/18
12/09/14 30/06/17 01/07/17 2,402,176
01/07/14 30/06/17 01/07/17
904,601
Total
- 4,624,513
-
-
3,306,777 4,624,513
-
-
-
-
-
-
-
-
(156,617) 4,467,896
(624,805) 1,777,371
904,601
(781,422) 7,149,868
-
-
-
-
-
Weighted average exercise
price
$-
$-
$-
$-
$-
$-
$-
PAGE 98 | 2016 ANNUAL REPORT
Notes to the consolidated financial statements
30 June 2016
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
-
-
-
$-
$-
$-
$-
$-
$-
$-
The weighted average remaining contractual life of performance shares outstanding at the end of the period was 1.63 years
(2015: 2 years).
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
FY2016
Performance
Grants
4,624,513
27/11/2015
30/06/2018
$0.275
2.11%
2% pa in year 1 and
4% pa thereafter
75%
$0.191
FY2015
Performance
Grants
2,402,176
12/09/2014
30/06/2017
$0.83
2.83%
2% pa in year 1 and
4% pa thereafter
71%
$0.56
FY2015
Performance
Grants
904,601
01/07/2014
30/06/2017
$0.83
2.71%
2% pa in year 1 and
4% pa thereafter
71%
$0.63
$0.259
$0.76
$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’).
2016 ANNUAL REPORT | PAGE 99
Notes to the consolidated financial statements
30 June 2016
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 $0.624 million (2015: $0.689 million).
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
2016
$'000
13,008
11,098
24,106
1,257
65
1,322
(70,996)
171,174
21,386
(169,776)
Capital and reserves attributable to owners of Panoramic Resources Limited
Loss for the year
Total comprehensive income
(b) Guarantees entered into by the parent entity
The parent entity has given financial guarantees in respect of:
(i) leases of subsidiaries amounting to $1.604 million (2015: $2.131 million);
(ii) the bank facilities of a subsidiary amounting to $0.250 million (2015: $0.250 million); and
(iii) a rehabilitation bank guarantee of a subsidiary amounting to $2 million (2015: $2 million).
22,784
90,653
90,653
2015
$'000
6,545
97,660
104,205
1,335
55
1,390
(311,225)
161,071
20,867
(79,123)
102,815
(3,389)
(3,389)
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.
PAGE 100 | 2016 ANNUAL REPORT
Notes to the consolidated financial statements
30 June 2016
(c) Contingent liabilities of the parent entity
The parent entity and Group had contingent liabilities at 30 June 2016 in respect of a bank guarantee put in place with a
financial institution with a face value of $0.709 million (2015: $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 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, whilst
most of the costs are denominated in Australian Dollars. The Group’s functional currency is Australian Dollars.
The Group’s profit and loss and balance sheet can be affected significantly by movements in the USD/AUD 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 2016, the Group had the following exposure to USD foreign currency that is not designated in cashflow hedges.
2016 ANNUAL REPORT | PAGE 101
Notes to the consolidated financial statements
30 June 2016
Cash at bank
Trade receivables
Trade payables
Net exposure
Sensitivity
2016
$'000
591
-
(302)
289
2015
$'000
20,150
8,442
(2,674)
25,918
The following sensitivity is based on the foreign currency risk exposures in existence at the balance sheet date. The +/- 5%
(2015: +/- 10%) sensitivity is based on reasonably possible changes, over a financial year, using an observed range of
actual historical rates, for the Australian dollar to the US dollar, for the preceding 5 years and management's expectation of
future movements.
At 30 June 2016, had the US dollar 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 other equity
AUD to USD +5% (2015: +10%)
AUD to USD -5% (2015: -10%)
2016
'000
15
(14)
2015
'000
1,253
(1,025)
2016
'000
-
-
2015
'000
-
-
Management believes the balance sheet date risk exposures are representative of the risk inherent in the financial
instruments.
(b) Interest rate risk
The Group has put in place a Cash Management Policy to ensure that up to 180 days (2015: 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
2016
2015
Weighted
average
interest rate
%
2.6%
Weighted
average
interest rate
%
1.9%
Balance
$'000
7,254
Balance
$'000
25,421
The following sensitivity is based on the interest rate risk exposures in existence at the balance sheet date. The sensitivity
used is +/- 25 basis points (2015: +/- 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.
PAGE 102 | 2016 ANNUAL REPORT
Notes to the consolidated financial statements
30 June 2016
Sensitivity
At 30 June 2016
Financial assets
Cash and cash equivalents
Total increase/
(decrease)
At 30 June 2015
Financial assets
Cash and cash equivalents
Total increase/
(decrease)
Carrying
amount
$'000
7,254
Carrying
amount
$'000
25,421
Interest rate risk
-0.25%
+0.25%
Profit
$'000
Equity
$'000
Profit
$'000
Equity
$'000
(4)
(4)
-
-
4
4
Interest rate risk
-0.75%
+0.75%
Profit
$'000
Equity
$'000
Profit
$'000
Equity
$'000
(6)
(6)
-
-
6
6
-
-
-
-
(c) Fair value measurements
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) valuation techniques for which the lowest level input that is significant to the fair value measurement is
(c) valuation techniques for which the lowest level input that is significant to the fair value measurement is
directly or indirectly observable, and
unobservable.
At 30 June 2016 the Group does not have any level 3 instruments.
2016 ANNUAL REPORT | PAGE 103
Notes to the consolidated financial statements
30 June 2016
The following table presents the fair value measurement hierarchy of the Group's assets and liabilities at 30 June 2016 and
30 June 2015:
At 30 June 2016
Level 1
$'000
Level 2
$'000
Level 3
$'000
Total
$'000
Assets
Equity securities
Total assets
Liabilities
Financial liabilities for which fair values are disclosed:
- Lease liabilities
Total liabilities
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
677
677
-
-
-
-
1,604
1,604
Level 1
$'000
Level 2
$'000
Level 3
$'000
-
858
-
858
-
-
178
-
8,119
8,297
2,131
2,131
-
-
-
-
-
-
-
-
-
-
677
677
1,604
1,604
Total
$'000
178
858
8,119
9,155
2,131
2,131
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 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.
In 2016, the Group has no financial assets and financial liabilities that have exposure to commodity risk.
In 2015, the +/- 30% sensitivity is based on reasonably possible changes, over a financial year, using the observed range of
actual historical prices for the preceeding 5 year period and management's expectation of future movements.
PAGE 104 | 2016 ANNUAL REPORT
Notes to the consolidated financial statements
30 June 2016
At 30 June 2015
Commodity price risk
-30%
+30%
Gross
exposure
$'000
Profit
$'000
Equity
$'000
Profit
$'000
Equity
$'000
Financial assets
Accounts receivable
Total increase/
(decrease)
(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.
(4,151)
(4,151)
8,442
4,151
4,151
-
-
-
-
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 securitise 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 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% (2015: 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 balance sheet 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.
2016 ANNUAL REPORT | PAGE 105
Notes to the consolidated financial statements
30 June 2016
Sensitivity
Available-for-sale financial investment
+30% (2015: +30%)
Available-for-sale financial investment
-30% (2015: -30%)
(g) Liquidity risk
Impact on post-tax profit
2016
$'000
2015
$'000
Impact on equity
2015
$'000
2016
$'000
-
-
-
-
139
(139)
180
(180)
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 put in place a Group Cash Management Policy to ensure that up to 180 days (2015: 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.
Maturities of financial liabilities
The tables below analyse the Group’s financial liabilities and 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 2016
Non-derivatives
Trade payables
Finance lease liabilities
Total non-derivatives
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
Less than
1 year
$'000
Between 1
and 5
years
$'000
Total
contrac-
tual
cash
flows
$'000
Carrying
amount
(assets)/
liabilities
$'000
4,638
825
5,463
-
859
859
4,638
1,684
6,322
4,638
1,604
6,242
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
806
2,217
38,651
35,628
792
2,131
38,551
-
178
PAGE 106 | 2016 ANNUAL REPORT
Notes to the consolidated financial statements
30 June 2016
Appendix A
New accounting standards and interpretations
(i) Changes in accounting policies and disclosures
The accounting policies adopted are consistent with those of the previous financial year except as follows:
The Company has adopted the following new and amended Australian Accounting Standards and AASB interpretations as
of 1 July 2015:
• 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.
Part A of AASB 2013-9 makes consequential amendments arising from the issuance of AASB CF 2013-1.
Part B makes amendments to particular Australian Accounting Standards to delete references to AASB 1031 and also
makes minor editorial amendments to various other standards.
Part C makes amendments to a number of Australian Accounting Standards, including incorporating Chapter 6 Hedge
Accounting into AASB 9 Financial Instruments.
The adoption of AASB 2013-9 had no effect on the financial position or performance of the Group.
• AASB 2015-3 Amendments to Australian Accounting Standards arising from the Withdrawal of AASB 1031 Materiality
The Standard completes the AASB’s project to remove Australian guidance on materiality from Australian Accounting
Standards.
The adoption of AASB 2015-3 had no effect on the financial position or performance of the Group.
• AASB 2015-4 Amendments to Australian Accounting Standards - Financial Reporting Requirements for Australian
Groups with a Foreign Parent
The amendment aligns the relief available in AASB 10 Consolidated Financial Statements and AASB 128 Investments in
Associates and Joint Ventures in respect of the financial reporting requirements for Australian groups with a foreign
parent.
The adoption of AASB 2015-4 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.
2016 ANNUAL REPORT | PAGE 107
Notes to the consolidated financial statements
30 June 2016
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.
PAGE 108 | 2016 ANNUAL REPORT
Notes to the consolidated financial statements
30 June 2016
The IASB has clarified that the use of revenue-based methods to calculate the depreciation of an asset is not appropriate
because revenue generated by an activity that includes the use of an asset generally reflects factors other than the
consumption of the economic benefits embodied in the asset.
The 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 2018
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
AASB 2015-8 amended the AASB 15 effective date so it is now effective for annual reporting periods commencing on or
after 1 January 2018. Early application is permitted.
AASB 2014-5 incorporates the consequential amendments to a number Australian Accounting Standards (including
Interpretations) arising from the issuance of AASB 15.
AASB 2016-3 Amendments to Australian Accounting Standards - Clarifications to AASB 15 amends AASB 15 to clarify
the requirements on identifying performance obligations, principal versus agent considerations and the timing of
recognising revenue from granting a licence and provides further practical expedients on transition to 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 2018
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)
(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 2015-10 defers the mandatory effective date (application date) of AASB 2014-10 so that the amendments are
required to be applied for annual reporting periods beginning on or after 1 January 2018 instead of 1 January 2016.
2016 ANNUAL REPORT | PAGE 109
Notes to the consolidated financial statements
30 June 2016
• 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 2015-9 Amendments to Australian Accounting Standards - Scope and Application Paragraphs [AASB 8, AASB 133
& AASB 1057], effective 1 July 2016
This Standard inserts scope paragraphs into AASB 8 and AASB 133 in place of application paragraph text in AASB 1057.
This is to correct inadvertent removal of these paragraphs during editorial changes made in August 2015. There is no
change to the requirements or the applicability of AASB 8 and AASB 133.
• AASB 2016 Leases, effective 1 July 2019
Lessee accounting
- Lessees are required to recognise assets and liabilities for all leases with a term of more than 12 months, unless the
underlying asset is of low value.
- A lessee measures right-of-use assets similarly to other non-financial assets and lease liabilities similarly to other
financial liabilities.
- Assets and liabilities arising from a lease are initially measured on a present value basis. The measurement includes
non-cancellable lease payments (including inflation-linked payments), and also includes payments to be made in optional
periods if the lessee is reasonably certain to exercise an option to extend the lease, or not to exercise an option to
terminate the lease.
- AASB 16 contains disclosure requirements for lessees.
PAGE 110 | 2016 ANNUAL REPORT
Notes to the consolidated financial statements
30 June 2016
The key features of AASB 16 are as follows:
Lessor accounting
- AASB 16 substantially carries forward the lessor accounting requirements in AASB 117. Accordingly, a lessor continues
to classify its leases as operating leases or finance leases, and to account for those two types of leases differently.
- AASB 16 also requires enhanced disclosures to be provided by lessors that will improve information disclosed about a
lessor’s risk exposure, particularly to residual value risk.
AASB 16 supersedes:
(a) AASB 117 Leases
(b) Interpretation 4 Determining whether an Arrangement contains a Lease
(c) SIC-15 Operating Leases-Incentives
(d) SIC-27 Evaluating the Substance of Transactions Involving the Legal Form of a
Lease
The new standard will be effective for annual periods beginning on or after 1 January 2019. Early application is permitted,
provided the new revenue standard, AASB 15 Revenue from Contracts with Customers, has been applied, or is applied at
the same date as AASB 16.
• AASB 2016-1 Amendments to Australian Accounting Standards - Recognition of Deferred Tax Assets for Unrealised
Losses [AASB 112], effective 1 July 2017
This Standard amends AASB 112 Income Taxes (July 2004) and AASB 112 Income Taxes (August 2015) to clarify the
requirements on recognition of deferred tax assets for unrealised losses on debt instruments measured at fair value.
• 2016-2 Amendments to Australian Accounting Standards - Disclosure Initiative: Amendments to AASB 107, effective 1
July 2017
This Standard amends AASB 107 Statement of Cash Flows (August 2015) to require entities preparing financial
statements in accordance with Tier 1 reporting requirements to provide disclosures that enable users of financial
statements to evaluate changes in liabilities arising from financing activities, including both changes arising from cash
flows and non-cash changes.
• IFRS 2 (Amendments) Classification and Measurement of Share-based Payment Transactions [Amendments to IFRS 2],
effective 1 July 2018
This standard amends to IFRS 2 Share-based Payment, clarifying how to account for certain types of share-based
payment transactions. The amendments provide requirements on the accounting for:
- The effects of vesting and non-vesting conditions on the measurement of cash-settled share-based payments
- Share-based payment transactions with a net settlement feature for withholding tax obligations
- A modification to the terms and conditions of a share-based payment that changes the classification of the transaction
from cash-settled to equity-settled
The Company has decided not to early adopt any of the new and amended pronouncements. The Company is in the
process of evaluating the impact of the above standards.
2016 ANNUAL REPORT | PAGE 111
Additional Shareholder Information
As at 30 September 2016
Stock Exchange Listing
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%) in accordance with notices provided to the Company
As at 30 September 2016
Name of Shareholder
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 (%)
Zeta Resources Limited
(UIL Limited, General Provincial Life Pension
Fund (L) Limited, Bermuda Commercial
Bank Limited and ICM Limited)
105,782,966
24.68
Class of Shares and Voting Rights
At 30 September 2016, there were 5,006 holders of 428,567,271 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 options or performance share rights in the Company. Voting rights will be attached to
the issued Ordinary shares when options and/or performance rights have been exercised.
Unmarketable Shares
At 30 September 2016, the number of parcels of shares with a value of less than $500 was 1,151.
Distribution of Shareholders
As at 30 September 2016
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
700
1,794
814
1,417
281
5,006
385,504
5,032,138
6,540,854
47,902,090
368,706,685
428,567,271
PAGE 112 | 2016 ANNUAL REPORT
Additional Shareholder Information
As at 30 September 2016
Listing of 20 Largest Shareholders
As at 30 September 2016
Name of Ordinary Registered Shareholder
Number of Shares Held
Percentage of Shares Held
%
J P MORGAN NOMINEES AUSTRALIA LIMITED
129,459,244
1.
2.
3.
4.
5.
6.
7.
8.
9.
CITICORP NOMINEES PTY LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
ZETA RESOURCES LIMITED
UBS NOMINEES PTY LTD
NATIONAL NOMINEES LIMITED
MATSA RESOURCES LIMITED
MR DAVID NORMAN DEITCH
MR KWOK LEUNG FUNG + MS YUEN MAN MOK
10.
11.
DDH 1 DRILLING PTY LTD
3RD WAVE INVESTORS LTD
12.
ANGLO AMERICAN INVESTMENTS
13.
ABN AMRO CLEARING SYDNEY NOMINEES PTY LTD
14.
MATSA RESOURCES LIMITED
15.
16.
17.
18.
19.
SPRINGWAY INVESTMENTS PTY LTD
MRS SUE-ELLEN STUART
BRISPOT NOMINEES PTY LTD
BNP PARIBAS NOMS PTY LTD
MRS ELIZABETH ANNE FOGARTY + MISS CAITLYN
ELIZABETH FOGARTY
46,797,868
30,157,510
19,984,431
18,979,129
13,317,996
6,589,367
4,500,000
3,500,000
3,397,984
3,350,014
2,781,429
2,614,986
2,410,635
1,945,636
1,910,780
1,826,343
1,581,261
1,500,001
20.
COLENEW PTY LIMITED
1,483,722
Unquoted Equity Securities
As at 30 September 2016
30.21
10.92
7.04
4.66
4.43
3.11
1.54
1.05
0.82
0.79
0.78
0.65
0.61
0.56
0.45
0.45
0.43
0.37
0.35
0.35
Securities
FY2015 Rights
FY2016 Rights
Number of Securities
Exercise Price $
Expiry Date
Number of Holders
2,681,974
4,475,266
NIL
NIL
30 June 2017
30 June 2018
8
9
2016 ANNUAL REPORT | PAGE 113
Schedule of Mining Tenements
Project
Tenement
Status Area
Equity
Tenement
Manager
Copernicus
L80/52
Live
141
HA
100%
PanRes
Copernicus
L80/86
Live
1
HA
100%
PanRes
Copernicus
M80/540
Live
129
HA
100%
PanRes
East Kimberley E80/4880
Live
35
BL
East Kimberley
JV - Keller
Creek
E80/4834
Live
Gum Creek
E51/1144
Live
Gum Creek
E51/1538
Live
Gum Creek
E53/1215
Live
Gum Creek
E53/1273
Live
Gum Creek
E53/1725
Live
Gum Creek
E57/633
Live
Gum Creek
E57/676
Live
Gum Creek
E57/678
Live
Gum Creek
E57/705
Live
Gum Creek
L51/93
Live
Gum Creek
L53/116
Live
Gum Creek
L53/199
Live
Gum Creek
L53/46
Gum Creek
L53/47
Gum Creek
L53/95
Live
Live
Live
15
23
35
34
10
30
22
15
13
6
6
9
24
60
24
71
100%
80% -
THX has
20% free
carried
interest
PanRes
PanRes
BL
BL
100%
PanRes
BL
100%
PanRes
BL
100%
PanRes
BL
100%
PanRes
BL
100%
PanRes
BL
100%
PanRes
BL
100%
PanRes
BL
100%
PanRes
BL
100%
PanRes
HA
100%
PanRes
HA
100%
PanRes
HA
100%
PanRes
HA
100%
PanRes
HA
100%
PanRes
HA
100%
PanRes
Gum Creek
L53/96
Live
237
HA
100%
PanRes
Gum Creek
L57/20
Live
7
HA
100%
PanRes
Gum Creek
L57/44
Gum Creek
L57/47
Live
Live
32
36
HA
100%
PanRes
HA
100%
PanRes
Panoramic
Commitment
100% of Commit,
Rent & Rates
100% of Commit,
Rent & Rates
100% of Commit,
Rent & Rates
100% of Commit,
Rents & Rates
100% of Commit,
Rents & Rates
100% of Commit,
Rents & Rates
100% of Commit,
Rents & Rates
100% of Commit,
Rents & Rates
100% of Commit,
Rents & Rates
100% of Commit,
Rents & Rates
100% of Commit,
Rents & Rates
100% of Commit,
Rents & Rates
100% of Commit,
Rents & Rates
100% of Commit,
Rents & Rates
100% of Commit,
Rents & Rates
100% of Commit,
Rents & Rates
100% of Commit,
Rents & Rates
100% of Commit,
Rents & Rates
100% of Commit,
Rents & Rates
100% of Commit,
Rents & Rates
100% of Commit,
Rents & Rates
100% of Commit,
Rents & Rates
100% of Commit,
Rents & Rates
100% of Commit,
Rents & Rates
Current Registered Holders
SMY Copernicus Pty Ltd
SMY Copernicus Pty Ltd
SMY Copernicus Pty Ltd
Pindan Exploration
Company Pty Ltd
Pindan Exploration
Company Pty Ltd 80/100 &
Thundelarra Exploration Ltd
20/100
Panoramic Gold Pty Ltd
Panoramic Gold Pty Ltd
Panoramic Gold Pty Ltd
Panoramic Gold Pty Ltd
Panoramic Gold Pty Ltd
Panoramic Gold Pty Ltd
Panoramic Gold Pty Ltd
Panoramic Gold Pty Ltd
Panoramic Gold Pty Ltd
Panoramic Gold Pty Ltd
Panoramic Gold Pty Ltd
Panoramic Gold Pty Ltd
Panoramic Gold Pty Ltd
Panoramic Gold Pty Ltd
Panoramic Gold Pty Ltd
Panoramic Gold Pty Ltd
Panoramic Gold Pty Ltd
Panoramic Gold Pty Ltd
Panoramic Gold Pty Ltd
PAGE 114 | 2016 ANNUAL REPORT
Schedule of Mining Tenements
Project
Tenement
Status Area
Equity
Tenement
Manager
Gum Creek
M51/104
Live
37
HA
100%
PanRes
Gum Creek
M51/105
Live
118
HA
100%
PanRes
Gum Creek
M51/157
Live
94
HA
100%
PanRes
Gum Creek
M51/185
Live
248
HA
100%
PanRes
Gum Creek
M51/186
Live
365
HA
100%
PanRes
Gum Creek
M51/290
Live
5
HA
100%
PanRes
Gum Creek
M51/410
Live
354
HA
100%
PanRes
Gum Creek
M51/458
Live
620
HA
100%
PanRes
Gum Creek
M53/10
Live
10
HA
100%
PanRes
Gum Creek
M53/105
Live
567
HA
100%
PanRes
Gum Creek
M53/11
Live
10
HA
100%
PanRes
Gum Creek
M53/153
Live
917
HA
100%
PanRes
Gum Creek
M53/251
Live
171
HA
100%
PanRes
Gum Creek
M53/252
Live
705
HA
100%
PanRes
Gum Creek
M53/500
Live
391
HA
100%
PanRes
Gum Creek
M53/716
Live
255
HA
100%
PanRes
Gum Creek
M53/904
Live
9
HA
100%
PanRes
Gum Creek
M53/988
Live
512
HA
100%
PanRes
Gum Creek
M57/633
Live
651
HA
100%
PanRes
Gum Creek
M57/634
Live
13705 HA
100%
PanRes
Gum Creek
M57/635
Live
1443
HA
100%
PanRes
Gum Creek
P53/1577
Live
6
HA
100%
PanRes
Gum Creek
P53/1581
Live
Gum Creek
P53/1582
Gum Creek
P53/1640
Live
Pendin
g
72
61
HA
100%
PanRes
HA
100%
PanRes
159
HA
100%
PanRes
Panoramic
Commitment
100% of Commit,
Rents & Rates
100% of Commit,
Rents & Rates
100% of Commit,
Rents & Rates
100% of Commit,
Rents & Rates
100% of Commit,
Rents & Rates
100% of Commit,
Rents & Rates
100% of Commit,
Rents & Rates
100% of Commit,
Rents & Rates
100% of Commit,
Rents & Rates
100% of Commit,
Rents & Rates
100% of Commit,
Rents & Rates
100% of Commit,
Rents & Rates
100% of Commit,
Rents & Rates
100% of Commit,
Rents & Rates
100% of Commit,
Rents & Rates
100% of Commit,
Rents & Rates
100% of Commit,
Rents & Rates
100% of Commit,
Rents & Rates
100% of Commit,
Rents & Rates
100% of Commit,
Rents & Rates
100% of Commit,
Rents & Rates
100% of Commit,
Rents & Rates
100% of Commit,
Rents & Rates
100% of Commit,
Rents & Rates
100% of Commit,
Rents & Rates
Current Registered Holders
Panoramic Gold Pty Ltd
Panoramic Gold Pty Ltd
Panoramic Gold Pty Ltd
Panoramic Gold Pty Ltd
Panoramic Gold Pty Ltd
Panoramic Gold Pty Ltd
Panoramic Gold Pty Ltd
Panoramic Gold Pty Ltd
Panoramic Gold Pty Ltd
Panoramic Gold Pty Ltd
Panoramic Gold Pty Ltd
Panoramic Gold Pty Ltd
Panoramic Gold Pty Ltd
Panoramic Gold Pty Ltd
Panoramic Gold Pty Ltd
Panoramic Gold Pty Ltd
Panoramic Gold Pty Ltd
Panoramic Gold Pty Ltd
Panoramic Gold Pty Ltd
Panoramic Gold Pty Ltd
Panoramic Gold Pty Ltd
Panoramic Gold Pty Ltd
Panoramic Gold Pty Ltd
Panoramic Gold Pty Ltd
Panoramic Gold Pty Ltd
2016 ANNUAL REPORT | PAGE 115
Schedule of Mining Tenements
Project
Tenement
Gum Creek
P53/1641
Gum Creek
P57/1304
Lanfranchi
M15/1295
Status Area
Pendin
g
31
Equity
Tenement
Manager
HA
100%
PanRes
Live
Pendin
g
48
40
HA
HA
PanRes
PanRes
Panoramic
Commitment
100% of Commit,
Rents & Rates
100% of Commit,
Rents & Rates
100% of Commit,
Rents & Rates
Lanfranchi
M15/473
Live
982
HA
Lanfranchi
ML15/346
Live
120
HA
Lanfranchi
ML15/347
Live
120
HA
Lanfranchi
ML15/367
Live
120
HA
Lanfranchi
ML15/368
Live
120
HA
Lanfranchi
ML15/369
Live
120
HA
Lanfranchi
ML15/370
Live
120
HA
Lanfranchi
ML15/371
Live
120
HA
Lanfranchi
ML15/372
Live
120
HA
Lanfranchi
ML15/375
Live
121
HA
Lanfranchi
ML15/376
Live
121
HA
Lanfranchi
ML15/377
Live
121
HA
Lanfranchi
ML15/378
Live
121
HA
Lanfranchi
ML15/379
Live
120
HA
Lanfranchi
ML15/380
Live
120
HA
Lanfranchi
ML15/381
Live
121
HA
Lanfranchi
ML15/382
Live
120
HA
Lanfranchi
ML15/383
Live
121
HA
Lanfranchi
ML15/384
Live
120
HA
Lanfranchi
ML15/385
Live
121
HA
Lanfranchi
ML15/386
Live
121
HA
100%
All rights
except Au
All rights
except Au
All rights
except Au
All rights
except Au
All rights
except Au
All rights
except Au
All rights
except Au
All rights
except Au
All rights
except Au
All rights
except Au
All rights
except Au
All rights
except Au
All rights
except Au
All rights
except Au
All rights
except Au
All rights
except Au
All rights
except Au
All rights
except Au
All rights
except Au
All rights
except Au
All rights
except Au
All rights
except Au
PanRes
100% of Commit,
Rents & Rates
PanRes
PanRes
PanRes
PanRes
PanRes
PanRes
PanRes
PanRes
PanRes
PanRes
PanRes
PanRes
PanRes
PanRes
PanRes
PanRes
PanRes
PanRes
PanRes
PanRes
100% of Commit,
Rents & Rates
100% of Commit,
Rents & Rates
100% of Commit,
Rents & Rates
100% of Commit,
Rents & Rates
100% of Commit,
Rents & Rates
100% of Commit,
Rents & Rates
100% of Commit,
Rents & Rates
100% of Commit,
Rents & Rates
100% of Commit,
Rents & Rates
100% of Commit,
Rents & Rates
100% of Commit,
Rents & Rates
100% of Commit,
Rents & Rates
100% of Commit,
Rents & Rates
100% of Commit,
Rents & Rates
100% of Commit,
Rents & Rates
100% of Commit,
Rents & Rates
100% of Commit,
Rents & Rates
100% of Commit,
Rents & Rates
100% of Commit,
Rents & Rates
100% of Commit,
Rents & Rates
Current Registered Holders
Panoramic Gold Pty Ltd
Panoramic Gold Pty Ltd
Cherish Metals Pty Ltd 72/96
& Lanfranchi Pty Ltd 24/96
Cherish Metals Pty Ltd 72/96
& &Donegal Lanfranchi Pty
Ltd 24/96
Cherish Metals Pty Ltd 72/96
&
&Donegal Lanfranchi Pty Ltd
24/96
Cherish Metals Pty Ltd 72/96
& Lanfranchi Pty Ltd 24/96
Cherish Metals Pty Ltd 72/96
& Lanfranchi Pty Ltd 24/96
Cherish Metals Pty Ltd 72/96
& Lanfranchi Pty Ltd 24/96
Cherish Metals Pty Ltd 72/96
& Lanfranchi Pty Ltd 24/96
Cherish Metals Pty Ltd 72/96
& Lanfranchi Pty Ltd 24/96
Cherish Metals Pty Ltd 72/96
& Lanfranchi Pty Ltd 24/96
Cherish Metals Pty Ltd 72/96
& Lanfranchi Pty Ltd 24/96
Cherish Metals Pty Ltd 72/96
& Lanfranchi Pty Ltd 24/96
Cherish Metals Pty Ltd 72/96
& Lanfranchi Pty Ltd 24/96
Cherish Metals Pty Ltd 72/96
& Lanfranchi Pty Ltd 24/96
Cherish Metals Pty Ltd 72/96
& Lanfranchi Pty Ltd 24/96
Cherish Metals Pty Ltd 72/96
& Lanfranchi Pty Ltd 24/96
Cherish Metals Pty Ltd 72/96
& Lanfranchi Pty Ltd 24/96
Cherish Metals Pty Ltd 72/96
& Lanfranchi Pty Ltd 24/96
Cherish Metals Pty Ltd 72/96
& Lanfranchi Pty Ltd 24/96
Cherish Metals Pty Ltd 72/96
& Lanfranchi Pty Ltd 24/96
Cherish Metals Pty Ltd 72/96
& Lanfranchi Pty Ltd 24/96
Cherish Metals Pty Ltd 72/96
& Lanfranchi Pty Ltd 24/96
Cherish Metals Pty Ltd 72/96
& Lanfranchi Pty Ltd 24/96
PAGE 116 | 2016 ANNUAL REPORT
Schedule of Mining Tenements
Project
Tenement
Status Area
Lanfranchi
ML15/387
Live
120
HA
Lanfranchi
ML15/388
Live
120
HA
Lanfranchi
ML15/389
Live
121
HA
Lanfranchi
ML15/482
Live
121
HA
Lanfranchi
ML15/483
Live
121
HA
Lanfranchi
ML15/484
Live
121
HA
Lanfranchi
ML15/485
Live
120
HA
Lanfranchi
ML15/486
Live
121
HA
Lanfranchi
ML15/487
Live
121
HA
Lanfranchi
ML15/488
Live
120
HA
Lanfranchi
ML15/489
Live
73
HA
Lanfranchi
ML15/490
Live
121
HA
Lanfranchi
ML15/491
Live
120
HA
Lanfranchi
ML15/492
Live
120
HA
Lanfranchi
ML15/493
Live
121
HA
Lanfranchi
P15/3752
Live
40
HA
Equity
All rights
except Au
All rights
except Au
All rights
except Au
All rights
except Au
All rights
except Au
All rights
except Au
All rights
except Au
All rights
except Au
All rights
except Au
All rights
except Au
All rights
except Au
All rights
except Au
All rights
except Au
All rights
except Au
All rights
except Au
All rights
except Au
Laverton
M38/372
Live
109
HA
100%
PanRes
Laverton
M38/694
Live
967
HA
100%
PanRes
Laverton
P38/3496
Live
Laverton
P38/3499
Live
22
80
HA
100%
PanRes
HA
100%
PanRes
Tenement
Manager
PanRes
PanRes
Panoramic
Commitment
100% of Commit,
Rents & Rates
100% of Commit,
Rents & Rates
PanRes
100% of Commit,
Rents & Rates
PanRes
100% of Commit,
Rents & Rates
PanRes
100% of Commit,
Rents & Rates
PanRes
100% of Commit,
Rents & Rates
PanRes
100% of Commit,
Rents & Rates
PanRes
100% of Commit,
Rents & Rates
PanRes
100% of Commit,
Rents & Rates
PanRes
100% of Commit,
Rents & Rates
PanRes
100% of Commit,
Rents & Rates
PanRes
100% of Commit,
Rents & Rates
PanRes
100% of Commit,
Rents & Rates
PanRes
100% of Commit,
Rents & Rates
PanRes
100% of Commit,
Rents & Rates
PanRes
100% of Commit,
Rents & Rates
100% of Commit,
Rents & Rates
100% of Commit,
Rents & Rates
100% of Commit,
Rents & Rates
100% of Commit,
Rents & Rates
Current Registered Holders
Cherish Metals Pty Ltd 72/96
& Lanfranchi Pty Ltd 24/96
Cherish Metals Pty Ltd 72/96
& Lanfranchi Pty Ltd 24/96
Cherish Metals Pty Ltd 72/96
&Donegal Lanfranchi Pty Ltd
24/96
Cherish Metals Pty Ltd 72/96
&Donegal Lanfranchi Pty Ltd
24/96
Cherish Metals Pty Ltd 72/96
&Donegal Lanfranchi Pty Ltd
24/96
Cherish Metals Pty Ltd 72/96
&Donegal Lanfranchi Pty Ltd
24/96
Cherish Metals Pty Ltd 72/96
&Donegal Lanfranchi Pty Ltd
24/96
Cherish Metals Pty Ltd 72/96
&Donegal Lanfranchi Pty Ltd
24/96
Cherish Metals Pty Ltd 72/96
&Donegal Lanfranchi Pty Ltd
24/96
Cherish Metals Pty Ltd 72/96
&Donegal Lanfranchi Pty Ltd
24/96
Cherish Metals Pty Ltd 72/96
&Donegal Lanfranchi Pty Ltd
24/96
Cherish Metals Pty Ltd 72/96
&Donegal Lanfranchi Pty Ltd
24/96
Cherish Metals Pty Ltd 72/96
&Donegal Lanfranchi Pty Ltd
24/96
Cherish Metals Pty Ltd 72/96
&Donegal Lanfranchi Pty Ltd
24/96
Cherish Metals Pty Ltd 72/96
&Donegal Lanfranchi Pty Ltd
24/96
Cherish Metals Pty Ltd 72/96
&Donegal Lanfranchi Pty Ltd
24/96
Magma Metals Pty Ltd
Magma Metals Pty Ltd
Magma Metals Pty Ltd
Magma Metals Pty Ltd
2016 ANNUAL REPORT | PAGE 117
Schedule of Mining Tenements
Project
Tenement
Status Area
Equity
Tenement
Manager
Laverton
P38/3717
Live
166
HA
100%
PanRes
Laverton
P38/3718
Live
HA
100%
PanRes
P38/3719
Live
HA
PanRes
69
36
Panoramic
Commitment
100% of Commit,
Rents & Rates
100% of Commit,
Rents & Rates
100% of Commit,
Rents & Rates
Laverton
Laverton -
Focus JV
Laverton -
Focus JV
Laverton -
Focus JV
Laverton -
Focus JV
Laverton -
Focus JV
Laverton -
Focus JV
Laverton -
Focus JV
Laverton -
Focus JV
Laverton -
Focus JV
Laverton -
Focus JV
Laverton -
Focus JV
Laverton -
Focus JV
Panton
Panton
Panton
M38/101
Live
584
HA
M38/159
Live
598
HA
M38/342
Live
317
HA
M38/363
Live
6
M38/364
Live
19
HA
HA
M38/37
Live
650
HA
M38/38
Live
281
HA
M38/49
Live
946
HA
M38/535
Live
465
HA
M38/693
Live
49
HA
P38/3500
Live
186
HA
P38/3501
Live
186
HA
100%
100%
Ni-Cu-PGM
100%
Ni-Cu-PGM
100%
Ni-Cu-PGM
100%
Ni-Cu-PGM
100%
Ni-Cu-PGM
100%
Ni-Cu-PGM
100%
Ni-Cu-PGM
100%
Ni-Cu-PGM
100%
Ni-Cu-PGM
100%
Ni-Cu-PGM
100%
Ni-Cu-PGM
100%
Ni-Cu-PGM
Focus
Nil
Focus
Nil
Focus
Nil
Focus
Nil
Focus
Nil
Focus
Nil
Focus
Nil
Focus
Nil
Focus
Nil
Focus
Nil
Focus
Nil
Focus
M80/103
Live
860
HA
100%
PanRes
M80/104
Live
571
HA
100%
PanRes
M80/105
Live
829
HA
100%
PanRes
Savannah
L80/64
Live
311
HA
100%
PanRes
Savannah
M80/179
Live
242
HA
100%
PanRes
Savannah
M80/180
Live
961
HA
100%
PanRes
Savannah
M80/181
Live
960
HA
100%
PanRes
Savannah
M80/182
Live
590
HA
100%
PanRes
Savannah
M80/183
Live
968
HA
100%
PanRes
Nil
100% of Commit,
Rents & Rates
100% of Commit,
Rents & Rates
100% of Commit,
Rents & Rates
100% of Commit,
Rents & Rates
100% of Commit,
Rents & Rates
100% of Commit,
Rents & Rates
100% of Commit,
Rents & Rates
100% of Commit,
Rents & Rates
100% of Commit,
Rents & Rates
Current Registered Holders
Magma Metals Pty Ltd
Magma Metals Pty Ltd
Magma Metals Pty Ltd
Focus Minerals (Laverton)
Pty Limited
Focus Minerals (Laverton)
Pty Limited
Focus Minerals (Laverton)
Pty Limited
Focus Minerals (Laverton)
Pty Limited
Focus Minerals (Laverton)
Pty Limited
Focus Minerals (Laverton)
Pty Limited
Focus Minerals (Laverton)
Pty Limited
Focus Minerals (Laverton)
Pty Limited
Focus Minerals (Laverton)
Pty Limited
Focus Minerals (Laverton)
Pty Limited
Focus Minerals (Laverton)
Pty Limited
Focus Minerals (Laverton)
Pty Limited
Panton Sill Pty Ltd
Panton Sill Pty Ltd
Panton Sill Pty Ltd
Savannah Nickel Mines Pty
Ltd
Savannah Nickel Mines Pty
Ltd
Savannah Nickel Mines Pty
Ltd
Savannah Nickel Mines Pty
Ltd
Savannah Nickel Mines Pty
Ltd
Savannah Nickel Mines Pty
Ltd
PAGE 118 | 2016 ANNUAL REPORT
Resources and Reserves
NICKEL - MINERAL RESOURCES AS AT 30 JUNE 2016
Resource
Equity Metal
Date of
Resource
JORC
Compliance
Measured
Indicated
Inferred
Total
Tonnes
(%)
Tonnes
(%)
Tonnes
(%)
Tonnes
(%)
Metal
Tonnes
Savannah Project
Savannah (above 900)
100%
Savannah (below 900)
100%
Savannah North
100%
Copernicus (O/P)
100%
Copernicus (U/G)
100%
100%
Lanfranchi Project
Cruikshank
Deacon
Gigantus
Helmut South
Helmut South Ext
John
Lanfranchi
Martin
McComish
Metcalfe
Schmitz
Lower Schmitz
Winner
Total (Equity)
Nickel
Copper
Cobalt
Nickel
Copper
Cobalt
Nickel
Copper
Cobalt
Nickel
Copper
Cobalt
Nickel
Copper
Cobalt
Nickel
Nickel
Copper
Cobalt
Jun-16
2012
1,275,000
Jun-16
2012
780,000
Jun-16
2012
Jun-15
2012
132,000
1.51
0.87
0.07
1.64
0.76
0.10
0.97
0.52
0.03
759,000
125,000
1.20
0.90
0.07
1.72
0.75
0.09
4,780,000 1.51 2,103,000 1.77
0.88
0.12
0.72
0.11
Jul-10
2004
508,000
25,000
1.30
0.91
0.05
Apr-11
Mar-14
Jul-07
May-14
Apr-14
Jul-07
Apr-14
Feb-12
Jul-07
Jan-14
Jul-13
Mar-16
Jul-11
2004
2012
2004
2012
2012
2004
2012
2012
2004
2012
2012
2012
2004
89,000
2.99
2,018,000 1.42 611,000
134,000
652,000
21,000
4.54
29,000
2.87
40,000
4.12
30,000
4.92
4.40
3.58
291,000
63,000
7,000
992,000
1.99 111,000
16,000
3.93
5.60
79,000
4.40
55,000
47,000
280,000
23,000
51,000
14,000
0.98
0.69
0.02
0.79
1.70
1.63
1.42
3.49
4.16
1.49
1.35
2.95
4.80
Notes:
• Figures have been rounded and therefore may not add up exactly to the reported totals
• All resources are inclusive of reserves
• Savannah Project Resource cutoff grade is 0.50% Ni
• Copernicus Project Resource cutoff grade is 0.50% Ni
• Lanfranchi Project Resource cutoff grade is 1.00% Ni
905,000
28,300
17,900
1,400
14,900
6,900
900
2,034,000 1.39
0.88
0.07
1.65
0.76
0.10
6,883,000 1.59 109,600
52,900
0.77
7,800
0.11
1,300
0.97
700
0.52
0
0.03
6,800
1.29
4,800
0.90
300
0.05
532,000
132,000
2,629,000 1.28
2.22
224,000
1.63
652,000
33,600
5,000
10,600
50,000
291,000
158,000
54,000
992,000
391,000
69,000
131,000
14,000
3.59
1.42
3.97
3.66
1.49
1.81
4.14
5.11
4.40
1,800
4,100
6,300
2,000
14,800
7,100
2,900
6,700
600
256,300
83,200
10,400
Competent Person Statement
The information in this report that relates to Mineral Resources is based on information compiled by or reviewed by Paul Hetherington (MAusIMM) for
the Savannah Project Resource and Copernicus Project Resource and Bradley Robinson (MAusIMM) for the Lanfranchi Project Resources. The
aforementioned were formerly full-time employees of Panoramic Resources Limited. The aforementioned have sufficient experience that is relevant to
the style of mineralisation and type of deposit under consideration and to the activity which they are 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. The aforementioned
consent to the inclusion in the release of the matters based on their information in the form and context in which it appears.
The information in this report that relates Mineral Resources at Lower Schmitz is based on information compiled by Mr Paul Payne. Mr Payne is a
Fellow of the Australasian Institute of Mining and Metallurgy (AusIMM) and consultant working for Payne Geological Services Pty Ltd (PayneGeo).
Mr Payne has 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. Mr Payne consents to the inclusion in this report of the matters based on the information in the form and context in
which it appears.
2016 ANNUAL REPORT | PAGE 119
Resources and Reserves
NICKEL - ORE RESERVE AS AT 30 JUNE 2016
Reserve
Equity Metal
Date of
Reserve
JORC
Compliance
Proven
Probable
Total
Tonnes
(%)
Tonnes
(%)
Tonnes
(%)
Metal
Tonnes
Savannah Project
Above 900 Fault
100%
Below 900 Fault
100%
Copernicus Open Pit
100%
Nickel
Copper
Cobalt
Nickel
Copper
Cobalt
Nickel
Copper
Cobalt
Lanfranchi Project
Deacon
Metcalfe
Lanfranchi
Schmitz
Helmut Sth Ext
Total (Equity)
100%
Nickel
Nickel
Copper
Cobalt
Jun-16
2012
1,365,000
1.15
0.66
0.06
194,000
1,558,000
1.24
1.28
0.07
1.16
0.74
0.06
18,100
11,500
900
Jun-16
2012
Jun-16
2004
Jun-16
Jun-16
Jun-16
Jun-16
Jun-16
2012
2012
2012
2012
2012
42,000
113,000
11,000
15,000
27,000
2.67
1.57
2.56
2.96
2.19
42,000
113,000
11,000
15,000
27,000
2.67
1.57
2.56
2.96
2.19
1,100
1,800
300
500
600
22,300
11,500
900
Notes:
• Figures have been rounded and therefore may not add up exactly to the reported totals
• All reserves are inclusive of resources
• Savannah Project Reserve cutoff grade is 0.80% Ni
• Lanfranchi Project Reserve cutoff grade is 1.00% Ni except for airleg mining which is 2.00% Ni
Competent Person Statement
Information in this report relating to Ore Reserves has been compiled by or reviewed by Lilong Chen (MAusIMM). The aforementioned is a full-time
employee of Panoramic Resources Limited. The aforementioned has sufficient experience that is relevant to the style of mineralisation and type of
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. The aforementioned consents to the inclusion in the
release of the matters based on his information in the form and context in which it appears.
PAGE 120 | 2016 ANNUAL REPORT
Resources and Reserves
GOLD - MINERAL RESOURCES AS AT 30 JUNE 2016
Resource
Equity Metal
Date of
Resource
JORC
Compliance
Gum Creek
Project
Swan OC
Heron South
Howards
Specimen Well
Toedter
Eagles Peak
Orion
Deep South
Shiraz
Swan UG
Swift UG
Omega UG
Kingfisher UG
Wilsons UG
100%
Gold
Jun-15
Oct-12
Jul-13
Mar-06
Mar-06
Mar-06
Mar-06
Mar-06
Jul-13
Jun-15
Jun-15
Mar-06
Mar-04
Jul-13
2012
2004
2012
2004
2004
2004
2004
2004
2012
2012
2012
2004
2004
2012
Measured
Indicated
Inferred
Total
Tonnes
Au
(g/t)
Tonnes
Au
(g/t)
Tonnes
Au
(g/t)
2.36
1.41
1.01
1.79
1.62
990,000
136,000
716,000
72,000
661,000
440,000
0.76
2,250,000 2.57
1,000,000 2.31
5,255,000 1.07
2.06
289,000
13,000
22,000
20,000
3.46
3.04
3.02
2,476,000 0.84
207,000
8.71
77,000
46,000
11.25
10.25
9.20
31,000
390,000
6.80
2,131,000 5.33
136,000
5.97
Tonnes
3,240,000
1,136,000
5,971,000
361,000
661,000
13,000
22,000
20,000
2,916,000
Au
(g/t)
2.51
2.20
1.06
2.00
1.62
3.46
3.04
3.02
0.83
284,000
46,000
31,000
390,000
2,267,000
9.40
10.25
9.20
6.80
5.37
Metal
(Au oz)
261,100
80,300
204,000
23,200
34,400
1,400
2,200
1,900
77,600
85,800
15,200
9,200
85,300
391,500
Total (Equity)
Gold
-
-
14,084,000 2.32 3,274,000 2.12 17,358,000 2.28
1,273,100
Notes:
• Swan OC resource cutoff grade is 0.7 g/t. The resources have been partially diluted over a minimum mining width of 2.5m and confined to a A$2,000
Whittle pit shell
• Eagles Peak Resource cutoff grade is 1.2 g/t
• Orion Resource cutoff grade is 1.3 g/t
• Deep South Resource cutoff grade is 1.2 g/t
• Swan UG Resource cutoff grade is 4.0 g/t for resource wireframes near historic workings and 6.0 g/t for resource wireframes away from historic
workings. The resource is based on an approximate 2.5m minimum vertical mining width.
• Swift UG Resource cutoff grade is 6.0 g/t.
• Omega UG Resource cutoff grade is 3.0 g/t
• Kingfisher UG Resource cutoff grade is 3.0 g/t
• Heron South resource cutoff grade is 0.5 g/t
• Howards resource cutoff grade is 0.4g/t
• Specimen Well resource cutoff grade is 0.5 g/t
• Toedter resource cutoff grade is 0.5 g/t
• Wilsons resource cutoff grade is 1.0 g/t for lower grade domains and 2.0g/t for high grade domains
Cross references to previous market announcements:
• Swan, Swift, Howards, Shiraz, Wilsons – refer ASX announcement dated 30 September 2015 titled “Mineral Resources and Ore Reserves at 30
June 2015”
• Heron South – refer ASX announcement dated 17 October 2012 titled “Gidgee Resource Upgrade – Howards and Heron South”
• Specimen Well, Toedter – refer ASX announcement dated 21 June 2012 titled “Significant Upgrade in Gold Resource at Gidgee”
• Eagles Peak, Orion, Deep South, Omega UG, Kingfisher UG – refer Legend Mining Limited (ASX:LEG) announcement dated 19 March 2007 titled
“Legend Mining Limited Annual Report 31st December 2006”
No New Information or Data
The Gold Mineral Resource estimates tabled above have been previously reported, and the relevant market announcements cross referenced. The
Company confirms that it is not aware of any new information or data that materially affects the information included in the relevant market
announcements and, in the case of estimates of Mineral Resources, that all material assumptions and technical parameters underpinning the
estimates in the relevant market announcement continue to apply and have not materially changed.
2016 ANNUAL REPORT | PAGE 121
Resources and Reserves
PLATINUM GROUP METALS (PGM) - MINERAL RESOURCES AS AT 30 JUNE 2016
Thunder Bay North
Resource
Equity
Date of
Resource
JORC
Compliance
Tonnage
Pt
(g/t)
Pd
(g/t)
Rh
(g/t)
Au
(g/t)
Ag
(g/t)
Cu
(%)
Ni
(%)
Co
%
Pt-Eq
(g/t)
Grade
Metal (oz)
Pd
Pt
(oz
(oz
,000)
,000)
100%
Jan-11
2004
Open Pit
Indicated
Inferred
Underground
100%
Feb-12
2004
Indicated
Inferred
Total (Equity)
8,460,000
1.04
0.98
0.04
0.07
1.50
0.25
0.18
0.014
2.13
283
53,000
0.96
0.89
0.04
0.07
1.60
0.22
0.18
0.014
2.00
2
1,369,000
1.65
1.54
0.08
0.11
2.60
0.43
0.24
0.016
3.67
472,000
1.32
1.25
0.06
0.09
2.10
0.36
0.19
0.011
2.97
73
20
267
2
68
19
10,354,000
377
355
Notes - Open Pit Resource:
The open pit Mineral Resource is reported at a cut-off grade of 0.59 g/t Pt-Eq within a Lerchs-Grossman resource pit shell optimized on Pt-Eq. The
strip ratio (waste:ore) of this pit is 9.5:1. The platinum-equivalency formula is based on assumed metal prices and overall recoveries. The Pt-Eq
formula is: Pt-Eq g/t = Pt g/t + Pd g/t x 0.3204 + Au g/t x 0.6379 + Ag g/t x 0.0062 + Cu g/t x 0.00011 + Total Ni g/t x 0.000195 + Total Co g/t x 0.000124
+ Rh g/t x 2.1816. The conversion factor shown in the formula for each metal represents the conversion from each metal to platinum on a recovered
value basis. The assumed metal prices used in the Pt-Eq formula are: Pt US$1,595/oz, Pd US$512/oz, Au US$1,015/oz, Ag US$15.74/oz, Cu
US$2.20/lb, Ni US$7.71/lb, Co US$7.71/lb and Rh US$3,479/oz. The assumed combined flotation and PlatsolTM process recoveries used in the
Pt-Eq formula are: Pt 76%, Pd 75%, Au 76%, Ag 55%, Cu 86%, Ni 44%, Co 28% and Rh 76%. The assumed refinery payables are: Pt 98%, Pd 98%,
Au 97%, Ag 85%, Cu 100%, Ni 100%, Co 100% and Rh 98%.
Notes - Underground Resources:
The underground mineral resource is reported at a cut-off grade of 1.94g/t Pt-Eq. The Pt-Eq formula is: Pt-Eq g/t = Pt g/t + Pd g/t x 0.2721 + Au g/t x
0.3968 + Ag g/t x 0.0084 + Cu g/t x 0.000118 + Sulphide Ni g/t x 0.000433 + Sulphide Co g/t x 0.000428 + Rh g/t x 2.7211. The assumed metal prices
used in the Pt-Eq formula are: Pt US$1,470/oz, Pd US$400/oz, Rh US$4,000/oz, Au US$875/oz, Ag US$14.30/oz, Cu US$2.10/lb, Ni US$7.30/lb and
Co US$13.00/lb. The assumed process recoveries used in the Pt-Eq formula are: Pt 75%, Pd 75%, Rh 75%, Au 50%, Ag 50%, Cu 90%, and Ni and Co
in sulphide 90%. The assumed smelter recoveries used in the Pt-Eq formula are Pt 85%, Pd 85%, Rh 85%, Au 85%, Ag 85%, Cu 85%, Ni 90% and Co
50%. Ni and Co in sulphide were estimated by linear regression of MgO to total Ni and total Co respectively. The regression formula for Ni in sulphide
(NiSx) is: NiSx = Ni - (MgO% x 60.35 - 551.43). The regression formula for Co in sulphide (CoSx) is: CoSx = Co - (MgO% x 4.45 - 9.25).
Cross references to previous market announcements:
• Open pit Resources – refer Magma Metals Limited (ASX:MMW) announcement dated 7 February 2011 titled “Positive Scoping Study for Thunder
Bay North Project”
• Underground Resources – refer Magma Metals Limited (ASX:MMW) announcement dated 23 February 2012 titled “Magma Metals Increases
Mineral Resources at TBN to 790,000 Platinum-Equivalent Ounces”
No New Information or Data
The Thunder Bay North Mineral Resource estimates tabled above have been previously reported, and the relevant market announcements cross
referenced. The Company confirms that it is not aware of any new information or data that materially affects the information included in the relevant
market announcements and, in the case of estimates of Mineral Resources, that all material assumptions and technical parameters underpinning the
estimates in the relevant market announcement continue to apply and have not materially changed.
PAGE 122 | 2016 ANNUAL REPORT
Resources and Reserves
PLATINUM GROUP METALS (PGM) - MINERAL RESOURCES AS AT 30 JUNE 2016
Panton
Resource
Equity
Date of
Resource
JORC
Compliance
Tonnage
Grade
Metal (oz)
Pt
(g/t)
Pd
(g/t)
Au
(g/t)
Ni
(%)
Cu
(%)
Pt
(oz ,000)
Pd
(oz ,000)
100%
Mar-12
2012
Top Reef
Measured
Indicated
Inferred
Middle Reef
100%
Mar-12
2012
Measured
Indicated
Inferred
Total (Equity)
4,400,000
4,130,000
1,560,000
2,130,000
1,500,000
600,000
2.46
2.73
2.10
1.36
1.56
1.22
14,320,000
2.19
2.83
3.21
2.35
1.09
1.28
1.07
2.39
0.42
0.38
0.38
0.10
0.10
0.10
0.31
0.28
0.31
0.36
0.18
0.19
0.19
0.27
0.08
0.09
0.13
0.03
0.04
0.05
0.08
348
363
105
93
75
24
400
426
118
75
62
21
984
1,081
Cross references to previous market announcements:
• refer ASX announcement dated 30 September 2015 titled “Mineral Resources and Ore Reserves at 30 June 2015”
No New Information or Data
The Panton Mineral Resource estimates tabled above have been previously reported, and the relevant market announcements cross referenced.
The Company confirms that it is not aware of any new information or data that materially affects the information included in the relevant market
announcements and, in the case of estimates of Mineral Resources, that all material assumptions and technical parameters underpinning the
estimates in the relevant market announcement continue to apply and have not materially changed.
2016 ANNUAL REPORT | PAGE 123
REGISTERED OFFICE
Level 9, 553 Hay Street
Perth, Western Australia, 6000
Telephone: +61 8 6266 8600
Facsimile: +61 8 9421 1008
Email: info@panres.com
Website: www.panoramicresources.com
AUSTRALIAN BUSINESS NUMBER
47 095 792 288
AUDITOR
Ernst & Young
Ernst & Young Building
11 Mounts Bay Road
Perth, Western Australia, 6000
BANKER
National Australia Bank
100 St Georges Terrace
Perth, Western Australia, 6000
SHARE REGISTRY
Computershare Investor Services
172 St Georges Terrace
Perth, Western Australia, 6000
TAX ADVISORS
Ernst & Young
Ernst & Young Building
11 Mounts Bay Road
Perth, Western Australia, 6000
Corporate Directory
BOARD OF DIRECTORS
Brian Phillips
Non Executive Chairman
Peter Harold
Managing Director
John Rowe
Non-Executive Director
Peter Sullivan
Non-Executive Director
MANAGEMENT
Trevor Eton
Chief Financial Officer and Company Secretary
Terry Strong
Chief Operating Officer
John Hicks
General Manager Exploration
Tim Mason
General Manager - Special Projects
Tim Shervington
Commercial Manager
Andrew Math
Group Financial Controller
Jeremy Smith
IT Manager
Evy Litopoulos
Investor Relations Manager
Geoff Rogers
Legal Counsel
SAVANNAH PROJECT
Mark Recklies
General Manager
PAGE 124 | 2016 ANNUAL REPORT
P
a
n
o
r
a
m
i
c
R
e
s
o
u
r
c
e
s
L
i
m
i
t
e
d
|
2
0
1
6
A
n
n
u
a
l
R
e
p
o
r
t
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