2018 ANNUAL REPORT
BACK IN BUSINESS AND LEVERAGED
TO BATTERY METALS
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CONTENTS
MISSION STATEMENT
ABOUT US
FY2018 ACHIEVEMENTS
LETTER FROM CHAIRMAN AND MANAGING DIRECTOR
REVIEW OF OPERATIONS
EXPLORATION
OTHER ASSETS
VISION
DIRECTORS’ 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
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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 Australasian Code for Reporting of
Exploration Results, Mineral Resources and Ore Reserves(the JORC Code 2012 Edition). 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.
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 Australiasian 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.
2018 ANNUAL REPORT | PAGE 1
2018 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.
INVESTMENT HIGHLIGHTS
• Australian based Resource Company with exposure to the Battery Metals and PGMs
• Significant Resource Base
300,000t Ni, 105,000t Cu, 15,000t Co and 1.4Moz Pt and Pd
• Historical Production
85,000t Ni, 60,000t Cu and 5,000t Co
• Savannah Project to re-start
Fully funded, ramp up underway, first shipment Q1 2019
• Long mine life, low re-start cost
• 8.3 year mine life with excellent potential for mine life extension
• Experienced mine development and operating team
Vision
Building a multi-commodity company producing base metals, battery metals and PGMs
Commitment
Maximise margins to deliver capital growth and dividends to our shareholders
Results
A sustainable mining company
PAGE 2 | 2018 ANNUAL REPORT
PAGE 2 | 2018 ANNUAL REPORT
ABOUT US
Panoramic Resources Limited (ASX code: 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 $65 million Savannah Project in late 2004 and then in 2005 purchased
and restarted the Lanfranchi Nickel Project, near Kambalda. In FY2014,
the Company produced a record 22,256t contained nickel and produced
19,301t contained nickel in FY2015. The Lanfranchi and Savannah Projects
were placed on care and maintenance in November 2015 and May 2016
respectively, pending a sustained recovery in the nickel price.
After delivering an Updated Feasibility Study on the Savannah Project in
October 2017, securing an offtake customer and project financing for up
to A$40 million in July 2018, the Company made the decision to restart
operations at Savannah. The project is ramping up with the first shipment of
concentrate scheduled for early in the March 2019 quarter.
On 13 September 2018, the Company announced it had agreed to sell
Lanfranchi to Black Mountain Metals for $15.1 million in cash. The sale is
expected to settle during the December 2018 quarter with the funds used to
strengthen the Company’s balance sheet.
Apart from the substantial nickel, copper and cobalt inventory at Savannah
the Company has a diversified resource base including platinum group
metals (PGM) and gold. 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. Following the ASX listing of
Horizon Gold Limited (ASX Code: HRN) in December 2016, the Company’s
interest in gold consists of an indirect investment in the Gum Creek Gold
Project located near Wiluna through its 51% majority shareholding in Horizon.
The Company’s vision is to broaden its exploration and production base,
with the aim of becoming a major, diversified mining company in the S&P/
ASX 100 Index. The growth path will include developing existing resources,
discovering new ore bodies, acquiring additional projects and is being led by
an experienced exploration-to-production team with a proven track record.
2018 ANNUAL REPORT | PAGE 3
2018 ANNUAL REPORT | PAGE 3
FY2018 ACHIEVEMENTS
Delivered the Updated Savannah Feasibility Study
• Mine life - approximately 8.3 years
• Average annual metal in concentrate production:
• 10,800t nickel
• 6,100t copper
• 800t cobalt
• Low life-of-mine cash costs:
• C1 cash costs - US$1.50/lb or A$1.90/lb (nickel in concentrate)
• Operating cash costs - US$2.40/lb or A$3.10/lb (payable nickel)
• Sustaining cash costs - US$3.50/lb (payable nickel)
• Pre-production ramp up capital - approximately $36 million
• Short lead time to production - six to nine months
• Robust financial metrics - $380 million NPV and 200% IRR at US$6.75/lb nickel
• Significant life-of-mine metal in concentrate production:
• 90,200t nickel
• 50,700t copper
• 6,700t cobalt
New Equity for Pre-Production Activities and Exploration at
Savannah
• Entitlement Offer raised $20.9 million before costs, via a 1 for 7 at 34 cents
Executed a New Concentrate Sales Agreement for Savannah
• Term - Four years
• Buyer - Sino Nickel (a JV company - 60% Jinchuan and 40% Sino Mining
International)
• Quantity - 100% of annual concentrate production
• Metal Payabilities - improved payabilities for certain contained metals
compared to previous Sales Agreement
• Commencement date - from the date of first shipment or 31 March 2019
Two Year Share Price Performance
SAVANNAH
MINE LIFE
8.3 YEARS
OPERATING
CASH COSTS
US$2.40/lb
payable Ni
NPV
$380M
at US$6.75/lb Ni
and A$=US$0.75
IRR 200%
YEAR
HIGHLY COMPETITIVE
OFFTAKE AGREEMENT
PRODUCTION
PER ANNUM
10,800t Ni
6,100t Cu
800t Co
PAGE 4 | 2018 ANNUAL REPORT
02,000,0004,000,0006,000,0008,000,00010,000,00012,000,000$0.00$0.10$0.20$0.30$0.40$0.50$0.60$0.70$0.801/09/201620/09/20169/10/201628/10/201616/11/20165/12/201624/12/201612/01/201731/01/201719/02/201710/03/201729/03/201717/04/20176/05/201725/05/201713/06/20172/07/201721/07/20179/08/201728/08/201716/09/20175/10/201724/10/201712/11/20171/12/201720/12/20178/01/201827/01/201815/02/20186/03/201825/03/201813/04/20182/05/201821/05/20189/06/201828/06/201817/07/20185/08/201824/08/201812/09/20181/10/2018VolumePAN A$ Share PricePanoramic Resources Limited (ASX:PAN)September 2016 -September 2018 Volume PAN Share PriceSAVANNAH TO RE-START OPERATIONS TARGETING FIRST SHIPMENT OF NICKEL-COPPER-COBALT CONCENTRATE MARCH 2019 QUARTER FY2018 ACHIEVEMENTS
Secured Debt and Hedging Facilities for Savannah Re-Start
Project Loan
• Project Finance Facility - Macquarie Bank Limited
• Principal - up to A$40 million
• Margin - competitive for a financing of this style
• Drawdown - upon execution of full documentation and satisfaction of limited CPs
• Repayment Schedule - quarterly repayments commencing 31 March 2020
• Final Repayment - 31 December 2021
Mandatory Nickel and Copper Hedging Undertaken
• For delivery between February 2019 and June 2021:
• 7,000t Ni at an average achieved forward price of A$8.51/lb
• 3,000t Cu at an average achieved forward price of A$3.71/lb
• The volume of Ni and Cu hedged represents ~20% of forecast contained
metal produced
Commenced Pre-Production Activities for the Savannah
Re-start
• MACA Interquip appointed to refurbish the processing and paste plants
• Transfer of mobile equipment and stores from Lanfranchi
• Repairs and recommissioning of mobile and fixed plant commenced
• Works commenced on the 3m wall lift of the tailing storage facility
• Works commenced on the Savannah North ventilation intake shaft
SHORT LEAD
TIME
TO PRODUCTION
6-9 MONTHS
Corporate
• Appointment of Nicholas Cernotta and Rebecca Hayward as Non-Executive
Directors
2018 ANNUAL REPORT | PAGE 5
SAVANNAH TO RE-START OPERATIONS TARGETING FIRST SHIPMENT OF NICKEL-COPPER-COBALT CONCENTRATE MARCH 2019 QUARTER LETTER FROM THE
CHAIRMAN AND
MANAGING DIRECTOR
Dear fellow Shareholders,
It has been a busy and productive year at Panoramic with the highlight being the decision to re-
start the Savannah nickel-copper-cobalt Project based on the Updated Feasibility Study released
in October 2017. This decision was made in an environment of significantly improved nickel,
copper and cobalt prices and after the following key milestones were achieved:
• an equity raising of $20.9 million via a one for seven entitlement offer;
• execution of a new four-year concentrate offtake deal;
• securing a project debt facility of up to $40 million; and
• executing mandatory nickel and copper hedging.
that
The Updated Feasibility Study demonstrated
the
Savannah Project has robust economics based on the
following parameters:
•
average annual production of 10,800t nickel, 6,100t
copper and 800t cobalt
+8 year mine life
•
• C1 cash cost of US$1.50/lb nickel in concentrate
operating cash cost of US$2.40/lb of payable nickel
•
•
sustaining cash cost of US$3.50/lb of payable nickel
• NPV of $380 million and IRR of 200% at long term
commodity price forecasts
Following delivery of the Updated Feasibility Study, work
commenced on the debt and equity financing of the Project
and marketing of the bulk nickel-copper-cobalt concentrate
that Savannah will produce. With the buoyant market for
battery metals including nickel, copper and cobalt during the
first half of 2018 and the positive outlook, we received strong
interest from the equity market, debt providers and potential
offtake customers.
Continued support from our existing shareholders saw the
Company close an oversubscribed pro-rata renounceable
entitlement offer in February 2018, raising $20.9 million, before
costs. These funds enabled us to commit to various long lead
time pre-production activities at Savannah, including:
•
•
•
•
refurbishment of the processing and paste plants;
3m lift of the tailings storage facility wall;
refurbishment of mobile equipment; and
construction of the new ventilation intake rise.
Following the equity raising, focus shifted to securing attractive
offtake terms for the Savannah bulk nickel-copper-cobalt
concentrate and an appropriate debt financing package to
underpin the restart of Savannah.
interest
The Company received strong
from potential
offtake customers, given the tightness in the nickel sulphide
concentrate market, the emergence of new players (battery
manufacturers) creating more competition and the buoyant
commodity price environment. In June 2018, the Company
announced a new four-year concentrate offtake agreement
with Sino Nickel Pty Ltd, a joint venture with Jinchuan and
Sino Mining International. This agreement continues the close
commercial relationship that commenced in 2003 when Sino/
PAGE 6 | 2018 ANNUAL REPORT
Jinchuan supported the original opening of the Savannah
mine with debt funding and a long-term concentrate offtake
agreement.
The final milestone for the re-start of the Project was achieved
in early July 2018, when we announced a financing facility with
Macquarie Bank Limited encompassing a project loan of up to
$40 million together with mandatory nickel and copper hedging
of 7,000t nickel and 3,000t copper representing approximately
20% of forecast metal production over the period between
February 2019 to June 2021. The hedging was executed at an
average price of A$8.51/lb for nickel and A$3.71/lb for copper.
With the financing secured, the Board made the decision
to re-start Savannah and work immediately commenced
on recruiting approximately 250 personnel and the various
contractors required to commission and operate the Savannah
Project. Onboarding of senior personnel is well advanced and
the focus is now on the employment of mining personnel and
plant operators.
Onsite activities are gathering momentum with the processing
plant refurbishment nearing completion and rehabilitation of
the underground workings progressing according to schedule.
Overall the Project is on target to meet our timetable of
delivering the first shipment of concentrate to Sino/Jinchuan
early in the March 2019 quarter.
With Savannah now being the key focus of the business, we
reviewed our other assets and made the decision to divest
Lanfranchi. In September 2018, we announced the sale of the
Yours sincerely,
Lanfranchi mine and associated infrastructure for $15.1 million
to Black Mountain Metals LLC. We anticipate receiving over
$13 million of the sale proceeds during the December 2018
quarter. These funds will strengthen the Company’s balance
sheet and allow us to undertake exploration activities in and
around Savannah.
The strength and experience of the board was enhanced with
the appointment of two new directors in the June 2018 quarter
with Nick Cernotta joining on 2 May and Rebecca Hayward
on 21 June. These experienced industry professionals joined
us in time to participate in the decision to re-open Savannah
and we look forward to their guidance and contribution as we
introduce innovative management and operating systems and
processes that will ensure Savannah can operate safely and
profitably.
We would like to acknowledge the work done by the relatively
small Panoramic team over the past couple of years to produce
the studies and reports that have supported the decision to
re-start Savannah. It is not easy to move from managing
operating mines to designing and financing a new mine, while
maintaining assets on care and maintenance on reduced
salaries and with metal prices at historically low levels.
Finally, we believe that the support and forbearance of our
shareholders and other stakeholders will be rewarded, with
the successful recommissioning and ramp up of the Savannah
Project and we thank them for their patience.
Brian Phillips
Chairman
Peter Harold
Managing Director
2018 ANNUAL REPORT | PAGE 7
REVIEW OF OPERATIONS
SAVANNAH PROJECT
is
Overview
located
The Savannah Nickel-Copper-Cobalt Project
240km south of Kununurra in the East Kimberley region of
Western Australia, and consists of a number of nickel sulphide
orebodies, underground mining works, 1.0Mtpa processing
plant and associated infrastructure. The Savannah Project
was constructed during FY2003 at a total cost of $65 million
and commissioned in late 2004 initially on open-pit ore. After
18 months, the operations transitioned to underground mining.
Over an initial twelve-year period, Savannah milled 8.5 million
tonnes at an average grade of 1.29% Ni, 0.65% Cu and 0.06%
Co to produce 1.22 million tonnes of concentrate containing
94,600t Ni, 53,000t Cu and 5,000t Co. In FY2016, Savannah
achieved a record year with 9,845t Ni, 6,011t Cu and 476t Co
in concentrate produced prior to being placed onto care and
maintenance in May 2016 due to the historically low nickel price.
In 2014, the Company discovered the Savannah North orebody
and in 2016, the Company reported an updated Resource
estimate of 175,100t Ni, 75,400t Cu and 12,700t Co metal
contained.
In February 2017, the Company delivered a Feasibility Study on
mining and processing the remaining Savannah ore and the new
Savannah North orebody. The Company continued to review
and optimise the Feasibility Study parameters culminating in the
release of the Updated Savannah Feasibility Study in October
2017.
The Updated Feasibility Study formed the basis for the restart
of the Savannah Project which was formally approved by the
Panoramic Board in July 2018, following completion of a new
concentrate Offtake Agreement and debt financing facilities.
First shipment of concentrate is scheduled for early in the March
2019 quarter.
Figure 1. Savannah Location
PAGE 8 | 2018 ANNUAL REPORT
PAGE 8 | 2018 ANNUAL REPORT
Restarting Savannah
The re-start at Savannah is based on the Updated Savannah
Feasibility Study (October 2017) which demonstrates the
mining of the remaining Savannah orebody and Savannah
North will provide an initial mine life of approximately 8.3
years with globally competitive cash costs and modest pre-
production capital requirements. The key physicals from the
Updated Feasibility Study are summarised in Table 1.
Table 1. Key parameters of the Updated Feasibility Study, October 2017
Operating metric
Mineral Resource
Mine Production
Mine Life
13.2Mt @ 1.65% Ni, 0.75% Cu and 0.11% Co containing
218,300t nickel, 99,100t copper and 14,900t cobalt
7.65Mt @ 1.42% Ni, 0.68% Cu and 0.10% Co containing
108,700t nickel, 51,700t copper and 7,300t cobalt
8.3 years
Life-of-mine metal in concentrate production
90,200t Ni, 50,700t Cu and 6,700t Co
Average annual metal in concentrate production
10,800tpa Ni, 6,100tpa Cu and 800t Co
Mining
The re-start will commence with the mining of the remaining
Ore Reserve at Savannah, whilst developing across to the
Savannah North deposit. Access to Savannah North will
be via decline from the existing Savannah decline. Access
development from Savannah to first ore at Savannah North
is scheduled to take approximately nine months, with full
production from Savannah North reached 15 months after
commencement of development. Mining of the Savannah
North orebody is proposed to be via conventional long-hole
open stoping with paste fill, at an average mining rate of
0.94Mtpa over the life of the mine.
A full fleet of mobile mining equipment is on site at Savannah
(including additional equipment from Lanfranchi) and is being
recommissioned for the restart.
Figure 2. Savannah Project Simplified Mine Plan
2018 ANNUAL REPORT | PAGE 9
Processing
The nominal throughput capacity of the Savannah plant is
approximately 1.0Mtpa. Between February and May 2016,
prior to going onto care and maintenance, the Savannah
plant was operating between 120tph and 140tph, averaging
approximately 130tph (85,000t per month, or over 1Mtpa).
Post re-start, plant throughput rates are forecast to be between
90tph and 130tph, averaging approximately 120tph at full
production (approximately 78,000t per month). On an annual
basis, life-of-mine mill throughput averages 0.94Mtpa. A
three-month ramp-up to steady-state production (~65,000tpm)
is planned and full production is forecast to be achieved after
12 months, as Savannah North material becomes available.
Life-of-mine nickel head grade averages 1.42% Ni, with
monthly averages varying from 1.0% Ni to 1.7% Ni. Lower
nickel grades are processed in the first year of production,
associated with the remnant Ore Reserves at Savannah.
The Company will produce a bulk Ni-Cu-Co concentrate with a
target nickel grade of 8%. Processing recoveries at the target
nickel grade will vary with each ore type. Over the mine life,
recoveries are forecast to average 83% Ni, 98% Cu and 92%
Co, based on historical plant performance for Savannah ore
and the metallurgical testwork on Savannah North samples.
Having been idle for over two years, the processing and paste
plants required some attention and are being refurbished by
MACA Interquip to ensure they are fit for purpose. Major works
are being undertaken on the ROM bin, crusher, flotation cells,
thickener tanks, concentrate filter and on stream analyser.
Concentrate
Metal in concentrate production is forecast to average 10,800t
Ni, 6,100t Cu and 800t Co per year with 90,200t Ni, 50,700t
Cu and 6,700t Co in concentrate produced over life of mine.
The Savannah North concentrate is low in impurities and has
attractive Fe:MgO and Ni:Fe ratios, making it an ideal blending
feed for nickel concentrate smelters. Typical concentrate
specifications, based on analysis of concentrates from
metallurgical testwork, are shown in Table 2.
Savannah nickel-copper-cobalt concentrate
Refurbished concentrate thickener
Table 2 – Savannah North typical concentrate
specifications
Savannah North
Concentrate Specifications
Typical
Nickel (Ni)
Copper (Cu)
Cobalt (Co)
Magnesium Oxide (MgO)
Iron (Fe)
Sulphur (S)
Arsenic (As)
Lead (Pb)
Selenium (Se)
Fluorine (F)
Chlorine (Cl)
8%
4.5%
0.6%
<1%
46%
35%
<5ppm
<100ppm
<100ppm
<100ppm
<50ppm
PAGE 10 | 2018 ANNUAL REPORT
Infrastructure
The accommodation village is in good condition with only
minor repairs and upgrades required to bring all 200 rooms
back into service.
The decline, underground workings and pumping system
have all been well maintained and operated over the last two
years, so minimal rehabilitation is required to recommence
underground operations.
A new fresh air raise is required to mine Savannah North and
the chosen contractor, RUC Cementation has commenced
drilling the pilot hole for the raise bore.
The other major infrastructure works required for the re-start is
the tailings storage facility 3m wall lift. This contract has been
let and works are well underway.
Savannah North raise bore rig and platform
Tailings Storage Facility 3m wall lift
Approvals and Permitting
Savannah North is located on the existing granted Savannah
mining leases. The site groundwater licence issued by the
Department of Water and the Licence to Operate issued by the
Department of Environment Regulation remain current.
Before mining operations can recommence, the standard
notifications and approvals under the Mines Safety and
Inspection Act 1994 (WA) will be sought. Panoramic does not
anticipate any issues with regulatory approvals upon restart as
the Savannah operation ran successfully for 12 years and the
restart will be based on existing systems and processes.
No environmental permitting issues are expected upon re-start
of operations, as all environmental reporting, monitoring and
licence conditions were being complied with during the care
and maintenance period.
2018 ANNUAL REPORT | PAGE 11
Social and Heritage
The Savannah operation has maintained strong social and
heritage relationships with the traditional owners, pastoralists
and other local business and community groups over the past
seventeen years. The 2007 Kimberley Nickel Co-existence
Agreement outlines the processes for acknowledgement
and engagement with the traditional owners and has given
rise to employment and business opportunities, heritage and
cultural awareness training and other support and services
in health, education, sports and arts for local communities.
This agreement remains in place and applies to the
recommencement of operations and life of mine production.
Meeting with the Traditional Owners in Warmun
Project Economics
The Updated Feasibility Study demonstrates robust economics
at Base Case commodity price assumptions and even stronger
economics for Long Term commodity price forecasts as shown
in Table 3.
Financial modelling was undertaken on a pre-tax, ungeared,
real-dollars basis using a discount rate of 8%. All amounts are
expressed in A$ unless noted otherwise. Input costs are as at
September 2017.
Table 3 – Updated Feasibility Study Financial Summary for the Base Case and Long Term US$ commodity prices and
US$:A$ FX rates
Financial Metrics
Commodity Price Assumption - Ni
Commodity Price Assumption - Cu
Commodity Price Assumption - Co
US$:A$ Exchange Rate Assumption
Revenue
Up-front Capital (pre-production)
LOM Capital (inclusive of up-front capital)
Operating costs plus royalties
Pre-tax cash flow
Pre-tax NPV (8% discount rate)
IRR
C1 cash costs (Ni in concentrate basis)
Operating cash costs (payable Ni basis)
Sustaining cash costs (operating cash costs plus
sustaining capital, payable Ni basis)
Units
US$/lb
US$/lb
US$/lb
US$
A$M
A$M
A$M
A$M
A$M
A$M
%
A$/lb Ni
US$/lb
A$/lb Ni
US$/lb
A$/lb Ni
US$/lb
Base Case Prices Long Term Prices*
5.50
3.10
28.00
0.78
1,470
36
240
900
330
210
100
1.90
1.50
3.10
2.40
4.50
3.50
6.75
2.72
26.00
0.75
1,720
32
230
920
570
380
200
2.10
1.60
3.40
2.60
4.80
3.60
* The Long Term (LT) Real (2017$) US$ nickel and copper prices and the US$:A$ FX rate are consensus forecasts sourced from UBS Global I/O Miner Price Review, dated 5
October 2017. The LT Real (2017$) US$ cobalt price is sourced from Macquarie Bank Limited Research Report titled “Price Forecast Changes”, dated 9 October 2017.
PAGE 12 | 2018 ANNUAL REPORT
Sensitivity Analysis
The Updated Feasibility Study Base Case uses a nickel price of
US$5.50/lb over the 8.3 year life of mine. The consensus view
of commodity price forecasters is for a return to higher nickel
prices, partly driven by the increased use of nickel in batteries
by the rapidly emerging electric vehicle industry. Accordingly,
the Project is highly leveraged to any future increase in the
US$ nickel price.
Project NPV sensitivities at a range of US$ nickel prices and
US$:A$ Foreign Exchange (FX) rates are shown in Table 4.
Table 4 - NPV sensitivity table for a range of US$ nickel prices and US$:A$ FX rates
Pre-tax NPV8 ($’M)
US$:A$
FX Rate
0.65
0.70
0.75
0.80
0.85
5.00
270
207
153
105
63
6.00
453
377
312
254
203
Nickel Price (US$/lb)
7.00
635
546
469
401
342
8.00
790
690
604
528
461
9.00
946
835
739
654
580
10.00
1,102
979
874
781
699
Financing
The Company executed a financing agreement with Macquarie
Bank Limited on 20 September 2018 to provide a secured
project loan of up to A$40 million and nickel, copper and
US$:A$FX hedging lines. The combination of the equity raised
in February 2018 via the one for seven pro-rata Entitlement
Offer and the Macquarie project loan of up to A$40 million
means the Savannah Project restart is fully funded.
Official signing of the Savannah Financing Facility Documentation
Project Loan
The terms of the loan with Macquarie Bank Limited are as
follows:
•
• Margin - very competitive for a financing of this style;
•
Principal - up to A$40 million;
Availability - upon execution of full documentation and
satisfaction of limited conditions precedent;
quarterly
-
commencing 31 March 2020;
Final Repayment - 31 December 2021;
Loan Covenants and project ratios - customary for this
size of facility; and
Loan Security - the Savannah Project.
repayments
• Repayment Schedule
•
•
•
Hedging
The nickel and copper hedging consist of mandatory and
discretionary hedging.
The mandatory initial hedge program was completed in July
2018 and consists of 7,000t Ni at an average achieved forward
price of A$8.51 per pound and 3,000t Cu at an average
achieved forward price of A$3.71 per pound for delivery
between February 2019 and June 2021.
2018 ANNUAL REPORT | PAGE 13
Marketing
In July 2018, the Company executed a new Concentrate
Sales Agreement with Sino Nickel, a joint venture company
owned 60% by Jinchuan and 40% by Sino Mining International
Limited.
The new Agreement replaces the Extended Concentrate
Sales Agreement, dated 26 March 2010, which was due to
expire on 31 March 2020. The terms of the new Agreement
will be applicable from the first shipment of concentrate from
the recommissioned Savannah Project and incorporates
improved payabilities for certain contained metals compared to
the previous agreement. Panoramic believes that the terms of
the Agreement are highly competitive in the global market for
Savannah’s bulk nickel-copper-cobalt concentrate, based on
the bids for the concentrate received from a number of parties
and the knowledge that the market for nickel concentrates had
tightened significantly during FY2018.
Between 2004 and 2016 the Company shipped over 1.2
million dry metric tonnes of nickel-copper-cobalt concentrate,
worth in-excess of US$1.4 billion, from Wyndham Port through
to Jinchuan’s smelter/refinery in Gansu province, northwest
China. Panoramic is delighted to have completed the new
offtake arrangements with Jinchuan/Sino Nickel on mutually
agreed terms, which further cements the already strong
relationship between the organisations. Based on the long
association with Jinchuan/Sino Nickel and the competitive
terms of the new Agreement, it is Panoramic’s view that the
unique characteristics of the Savannah concentrate (payable
Ni, Cu and Co, low MgO, and no penalty elements) make it an
ideal feed for Jinchuan’s smelter.
Project Commissioning
Once the formal decision to restart operations at the Savannah
Project was made in July 2018, the Company immediately
commenced Phase Two of the pre-production activities. These
activities are well underway with first shipment of concentrate
scheduled for early in the March 2019 quarter.
MACA Interquip Team
PAGE 14 | 2018 ANNUAL REPORT
EXPLORATION
Since
inception, Panoramic has delivered significant
exploration success across its asset base. In aggregate, over
the past seventeen years, the Company’s exploration team
has been instrumental in the discovery of:
•
•
•
•
342,700 tonnes nickel
125,000 tonnes copper
18,700 tonnes cobalt
630,000 ounces gold
Panoramic continues to conduct exploration activities on its
tenement package in a systematic manner. Following on from
the Savannah North discovery in early 2014 and the release
of the maiden Savannah North Mineral Resource estimate
in FY2016, Panoramic has focused its exploration effort
on building upon the nickel resource base at Savannah. In
FY2018, the exploration activities focused on various regional
exploration targets in the vicinity of the Savannah Project.
Savannah Regional Exploration
Regional exploration activities resumed at Savannah in May
2018 with up to $4 million allocated from the funds raised in the
January 2016 Entitlement Offer.
The impetus for this resumption came from research by
CSIRO Mineral Research on the Sub-Chamber D, Dave Hill
and Wilsons intrusions. The CSIRO research concluded that
these layered mafic-ultramafic intrusions were being emplaced
at the same time and by the same magmatic event that was
responsible for the emplacement of the mineralised Savannah
and Savannah North intrusions.
In addition to the three identified intrusions, Panoramic
highlighted other intrusions about Savannah at Frog Hollow,
Three Nuns, Anomaly A, Northern Ultramafic Granulite,
Norton and Oxide that also warrant exploration. As a result,
the Company has expanded its tenement holding around
Savannah to include the Norton Intrusion located to the north
of the Savannah Project.
The initial work consists of broad-spaced stratigraphic diamond
drilling and associated Down-hole electromagnetic (DHEM)
surveys on the following intrusions:
• Sub-Chamber D (located on the Savannah Project Mining
Leases);
• Dave Hill / Wilson Complex; and
•
Frog Hollow.
The aim of the drill testing is to determine the 3D architecture
of the intrusions and, if they exist, the location of the more
prospective ultramafic (high MgO rich) phases within each
intrusion. If justified and once the more prospective ultramafic
phases have been identified, additional holes will be drilled to
test these prospective areas for nickel sulphide mineralisation.
Figure 3 – Savannah Project Plan showing location of
prospective mafic-ultramafic intrusions and planned 2018
drill holes.
Figure 4 - Savannah Mine Complex Plan showing
location of prospective mafic-ultramafic intrusions and
planned 2018 drill holes.
2018 ANNUAL REPORT | PAGE 15
2018 ANNUAL REPORT | PAGE 15
OTHER ASSETS
Lanfranchi Project
On 13 September 2018, the Company announced an
agreement to sell the Lanfranchi Project to a wholly owned
subsidiary of Texas-based Black Mountain Metals LLC for a
total cash consideration of A$15.1 million.
Panoramic and Black Mountain have executed a binding Sale
and Purchase Agreement pursuant to which Black Mountain
will acquire all of the issued shares in Panoramic’s wholly-
owned subsidiary Cherish Metals Pty Ltd, which owns 100%
of the Lanfranchi Nickel Project and associated infrastructure
42km south of Kambalda, Western Australia.
A deposit of $1.51 million was paid to Panoramic in September
2018 with a further $11.99 million due on completion, which is
expected to be during the December 2018 quarter. Panoramic
understands that Black Mountain has sufficient cash reserves
such that this transaction is not subject to finance.
In addition to the initial cash payment, Panoramic will receive
a further deferred cash consideration of $1.60 million to be
paid in 12 equal monthly instalments commencing from the
date that is 14 days from the first supply of ore under the
current contract with BHP Nickel West, the processing of ore
in another commercial capacity or 1 January 2021, whichever
is earlier. In the event that Black Mountain wishes to divest
the Lanfranchi Nickel Project prior to payment of the Deferred
Consideration, the entire Deferred Consideration amount will
be paid immediately.
The sale of Lanfranchi is consistent with Panoramic’s strategy
to focus its efforts on Savannah Ni-Cu-Co Project.
Thunder Bay North Project
Background
The Thunder Bay North (TBN) Project is located near Thunder
Bay in northwest Ontario, Canada. The advanced exploration
project claims cover an aggregate area of 40,816 hectares.
The TBN Project Resource contains 10.4Mt at 1.13g/t Pt and
1.07g/t Pd for ~0.4Moz Pt and ~0.4Moz Pd with exploration
potential at depth and along strike.
In 2015, Rio Tinto Exploration Canada Inc. (RTEC) commenced
a farm-in whereby RTEC can earn a 70% interest in the TBN
Project by sole funding C$20 million in expenditure over five
years, with a minimum spend of C$5 million. In January 2017,
RTEC confirmed that it had achieved the minimum spend of
C$5 million on the Project.
FY2018 Activities
There was no exploration activity on the project in FY2018 and
Panoramic is in discussions with RTEC regarding the future
plans and strategy for the Project. Panoramic maintains a
small office in Thunder Bay with two employees who are sub-
contracting geological consulting services to third parties to
reduce the overhead in Thunder Bay.
2018 ANNUAL REPORT | PAGE 16
PAGE 16 | 2018 ANNUAL REPORT
Panton Project
Background
Panton is located 60km south of the Savannah Nickel Project
in the East Kimberley region of Western Australia. Panton is
a significant PGM Resource containing ~1.0Moz Pt at 2.2g/t
and ~1.1Moz Pd at 2.4g/t with exploration potential at depth
and along strike.
Panoramic considers the Panton Project to be a quality PGM
development asset which fits within the Company’s commodity
diversification and growth strategy and is a key part of its
“Kimberley Hub” concept.
FY2018 Activities
In addition to continuing to sponsor research by Curtin
University on alternative PGM leaching methods applicable to
Panton ore, the Company is studying the viability of producing
a high grade PGM concentrate together with a chromite by-
product steam. The results of a preliminary test-work program
to investigate the possibility of producing the chromite by-
product stream are expected to be available in the second half
of 2018.
Plans FY2019
Continue work on the chromite by-product stream and if this is
viable undertake a scoping study.
Horizon Gold Limited (Panoramic 51%)
Background
In July 2016, the Company announced that it had begun
the process to partially divest the 100% owned Gum Creek
Gold Project by way of an Initial Public Offering. On 21
October 2016, Panoramic entered into various agreements
with Horizon Gold Limited to transfer the Gum Creek Gold
Project and its wholly owned subsidiary, Panoramic Gold
Pty Ltd, to Horizon on completion of the $15 million IPO and
the successful spin-out of Horizon onto the ASX Official List.
Horizon was subsequently listed on the ASX on 21 December
2016 (ASX Code: HRN).
Under the Management Agreement with Panoramic, Horizon
utilises Panoramic’s management team to provide corporate,
technical, managerial and administrative services to Horizon,
providing a cost-effective administration and continuity of
knowledge in relation to Gum Creek.
FY2018 Activities
Resource Extension
• Exploration Targets estimated at Butcherbird Shear and
Regional Exploration
• Significant base metal intersection at Altair:
•
43.0m @ 3.67% Zn & 0.60% Cu from 196.0m,
including 9.0m @ 6.69% Zn and 1.00% Cu from
213.0m
• Regional geochemical study:
• Database comprising over 81,000 surface samples
and 70,000 drill holes
• Several targets identified for drill testing
• Air-core drilling – 440 holes for 20,100m at eight targets
Positive results include:
• Gidgee South – 4m @ 2.8g/t Au from 28m
(GPAC1261)
• Melbourne Bitter – 4m @ 3.4g/t Au from 76m
(GPAC0922)
• Orion – 4m @ 2.1g/t Au from 72m (GPAC1057)
• RC drilling – 59 holes for 8,025m at 18 targets. Positive
results include:
• Psi – 7m @ 4.9g/t Au from 28m (GWRC462)
•
Toedter – 1m @ 20.6g/t Au from 133m (GWRC482)
Swan Premium
Development Studies
• High-grade mineralisation intersected from initial 12 hole
• Concept Study on high-grade underground option for
drill program. Best intercepts:
•
•
•
8.0m @ 19.7g/t Au from 297.0m in SBDD080;
6.6m @ 10.9g/t Au from 265.9m in SBDD076; and
5.0m @ 10.6g/t Au from 257.0m in SBDD073
Swan Premium
Plans FY2019
Refer
announcements.
to Horizon Gold’s Annual Report and ASX
2018 ANNUAL REPORT | PAGE 17
VISION
MINING
RESTART SAVANNAH
EXPLORATION
BUILD RESOURCES
COMMITMENT
SAFELY HOME
EVERY DAY
COMMITMENT
GOAL
CAPITAL GROWTH
& DIVIDENDS
GOAL
COMMODITY
FOCUS
Ni
Cu
Co PGMs
GROW THE BUSINESS
COMMODITY FOCUS
PAGE 18 | 2018 ANNUAL REPORT
DIRECTORS’ REPORT
2018 ANNUAL REPORT | PAGE 19
Directors' report
For the Financial Year ended 30 June 2018
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 2018.
Directors
Brian M Phillips (Independent Non-Executive Chairman)
AWASM-Mining, FAusIMM
Appointed 27 March 2007; Independent 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:
• White Rock Minerals Ltd (Non-Executive Chairman from 26 March 2010)*
* Denotes current directorship
Peter J Harold (Managing Director)
B.AppSc(Chem), AFAICD
Appointed 16 March 2001
Peter is a process engineer with over 30 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 base metal 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:
• Pacifico Minerals Limited (Non-Executive Director from 19 August 2013)*
• Peak Resources Limited (Non-Executive Chairman from 1 December 2015 to 31 December 2017)
• Horizon Gold Limited (Non-Executive Director from 10 August 2016, Non-Executive Chairman from 31 August
2016)*
• Ocean Grown Abalone Limited (Non-Executive Chairman from 14 November 2017)*
* Denotes current directorship
John Rowe (Independent 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)
PAGE 20 | 2018 ANNUAL REPORT
Directors' report
For the Financial Year ended 30 June 2018
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 2018.
Directors
Brian M Phillips (Independent Non-Executive Chairman)
AWASM-Mining, FAusIMM
Appointed 27 March 2007; Independent 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:
• White Rock Minerals Ltd (Non-Executive Chairman from 26 March 2010)*
* Denotes current directorship
Peter J Harold (Managing Director)
B.AppSc(Chem), AFAICD
Appointed 16 March 2001
Peter is a process engineer with over 30 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 base metal 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:
• Pacifico Minerals Limited (Non-Executive Director from 19 August 2013)*
• Peak Resources Limited (Non-Executive Chairman from 1 December 2015 to 31 December 2017)
• Horizon Gold Limited (Non-Executive Director from 10 August 2016, Non-Executive Chairman from 31 August
2016)*
* Denotes current directorship
• Ocean Grown Abalone Limited (Non-Executive Chairman from 14 November 2017)*
John Rowe (Independent 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)
Directors' report
For the Financial Year ended 30 June 2018
Peter R 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 30 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 from 1 October 2004)*
• Resolute Mining Limited (Managing Director from 14 February 2001 to 30 June 2015 and Non-Executive
Director from 30 June 2015)*
• Zeta Resources Mining Limited (Non-Executive Chairman from 7 June 2013)*
• Pan Pacific Petroleum NL (Non-Executive Director from 26 September 2014 to 15 April 2018)
• Bligh Resources Limited (Non-Executive Director from 13 July 2017)*
* Denotes current directorship
Nicholas L Cernotta (Independent Non-Executive Director)
BEng (Mining)
Appointed 2 May 2018
Nicholas (Nick) is a mining engineer with over 30 years’ experience in the mining industry, spanning various
commodities and operations in Australia and Overseas. Nick has held senior executive roles with extensive
operational experience in both the public and private sectors of the mineral resources industry, including as Director
of Operations at Fortescue Metals Group Ltd., Chief Operating Officer at MacMahon Contracting and Director of
Operations at Barrick Gold.
During the past three years, Nick has also served as a director of the following listed companies:
• ServTech Global Holdings Ltd (Non-Executive Chairman from 17 October 2016 to 22 November 2017)
• Pilbara Minerals Limited (Non-Executive Director from 6 February 2017)*
* Denotes current directorship
Rebecca J Hayward (Independent Non-Executive Director)
LLB
Appointed 21 June 2018
Rebecca is an experienced infrastructure and resources lawyer, with a strong background in mining, energy and
large scale infrastructure transactions. Rebecca currently manages the legal, contracts and procurement function
for the Projects division of a large resource company. Rebecca was a Senior Associate at Clayton Utz in the
Melbourne Construction and Major Projects team, where she had a lead role in a number of large infrastructure
projects for both the private and public sectors.
During the past three years, Rebecca has not served as a director of any other listed company.
Company Secretary
Trevor R Eton
B.A (Hons)(Econ), PostGradDip (Man), AFAIM
Appointed 12 March 2003
Trevor is an accountant with over 30 years’ 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 company.
2018 ANNUAL REPORT | PAGE 21
Directors' report
For the Financial Year ended 30 June 2018
Meetings of Directors
The number of meetings of directors (including committee meetings of directors) held during the year ended 30
June 2018, and the number of meetings attended by each director are as follows:
Number of meetings held
Number of meetings
attended:
Brian M Phillips
Peter J Harold
John Rowe
Peter R Sullivan
Nicholas L Cernotta
Rebecca J Hayward
Directors'
Meetings
10
Meetings of Committees
Audit
2
Remuneration
3
Risk
-
10
10
10
10
2
1
2
-
2
2
-
-
3
3*
3
3
-
-
-
-
-
-
-
-
*Peter Harold attended each meeting of the Remuneration Committee as an invitee
Committee Membership
As at the date of this report, the Company has an Audit Committee, a Remuneration Committee and a Risk
Committee.
Members acting on the committees of the Board during the year were:
Audit Committee
John Rowe (c)
Brian M Phillips
Peter R Sullivan
Nicholas L Cernotta
Remuneration Committee
Peter R Sullivan (c)
Brian M Phillips
John Rowe
Nicholas L Cernotta
Risk Committee*
Nicholas L Cernotta (c)
Brian M Phillips
John Rowe
Peter R Sullivan
Rebecca J Hayward
Rebecca J Hayward
Rebecca J Hayward
(c) designates the Chairman of the Committee. The Company Secretary, Trevor Eton, acts as the Secretary on each of the
committees of the Board
*The Risk Committee was previously known as the Environment, Safety & Risk Committee
Directors' Interests
The relevant interest of each director in the share capital as notified by the directors to the Australian Securities
Exchange (ASX) in accordance with S205G(1) of the Corporations Act 2001, at the date of signing is as follows:
Peter J Harold
Name of Director
Brian M Phillips
Peter J Harold
John Rowe
Peter R Sullivan
Nicholas L Cernotta
Rebecca J Hayward
Ordinary Shares
Direct
-
2,388,446
-
-
-
-
Indirect
328,466
4,307,714
99,894
-
-
-
Performance rights over
ordinary shares
-
-
-
-
-
-
PAGE 22 | 2018 ANNUAL REPORT
Directors' report
For the Financial Year ended 30 June 2018
Meetings of Directors
The number of meetings of directors (including committee meetings of directors) held during the year ended 30
June 2018, and the number of meetings attended by each director are as follows:
Directors'
Meetings
Audit
Remuneration
Risk
Meetings of Committees
10
10
10
10
10
2
1
2
2
-
2
2
-
-
3
3
3*
3
3
-
-
-
-
-
-
-
-
-
*Peter Harold attended each meeting of the Remuneration Committee as an invitee
Number of meetings held
Number of meetings
attended:
Brian M Phillips
Peter J Harold
John Rowe
Peter R Sullivan
Nicholas L Cernotta
Rebecca J Hayward
Committee Membership
Committee.
Audit Committee
John Rowe (c)
Brian M Phillips
Peter R Sullivan
Nicholas L Cernotta
Rebecca J Hayward
committees of the Board
Directors' Interests
Name of Director
Brian M Phillips
Peter J Harold
John Rowe
Peter R Sullivan
Nicholas L Cernotta
Rebecca J Hayward
Members acting on the committees of the Board during the year were:
Remuneration Committee
Risk Committee*
Peter R Sullivan (c)
Brian M Phillips
John Rowe
Nicholas L Cernotta
Rebecca J Hayward
Nicholas L Cernotta (c)
Brian M Phillips
John Rowe
Peter R Sullivan
Rebecca J Hayward
Peter J Harold
(c) designates the Chairman of the Committee. The Company Secretary, Trevor Eton, acts as the Secretary on each of the
*The Risk Committee was previously known as the Environment, Safety & Risk Committee
The relevant interest of each director in the share capital as notified by the directors to the Australian Securities
Exchange (ASX) in accordance with S205G(1) of the Corporations Act 2001, at the date of signing is as follows:
Ordinary Shares
Performance rights over
ordinary shares
Direct
2,388,446
-
-
-
-
-
Indirect
328,466
4,307,714
99,894
-
-
-
-
-
-
-
-
-
Directors' report
For the Financial Year ended 30 June 2018
Principal Activities
The principal activities of the consolidated entity during the course of the financial year consisted of exploration,
evaluation and development of mineral deposits.
The consolidated entity has four business divisions in which it operates, being:
Nickel Division - comprising the Lanfranchi Nickel Project which, as at the date of this report, remains on care
and maintenance and the Savannah Nickel Project, which is undertaking pre-production activities for the
commencement of nickel-copper- cobalt concentrate production by the end of 2018;
Gold Division - comprising the Company’s 51% equity interest in Horizon Gold Limited (the parent entity of the
Gum Creek Gold Project);
Platinum Group Metals (PGM) Division - comprising the Thunder Bay North PGM Project and the Panton PGM
Project; and
Australian and Overseas Exploration Division - comprising greenfield exploration activities within the two
segments.
Operating and Financial Review
Operating Results for the Year
The Group recorded a loss after tax for the financial year ending 30 June 2018 of $48,039,000 (2017: $4,770,000).
As at the date of this report, the Company has an Audit Committee, a Remuneration Committee and a Risk
Financial Performance
The Group's performance during the 2017/18 financial year and for the four previous financial years, are set out in
the table below. The financial results shown below were all prepared under International Financial Reporting
Standards (IFRS).
Year Ended 30 June
Revenue and other income ($'000)
Cost of sales of goods ($'000)
Royalties ($'000)
Exploration and evaluation ($'000)
Care and maintenance expenses ($'000)
Other expenses ($'000)
EBITDA (before impairment) ($'000)
Depreciation and amortisation ($'000)
Net reversal of / (impairment) of assets ($'000)
Finance costs ($'000)
Profit /(loss) before tax ($'000)
Income tax benefit (expense) ($'000)
Net profit/(loss) after tax ($'000)
Earnings/(loss) per share (cents)
Dividends per share (cents)
Dividends pay out ratio (%)
Market capitalisation ($'000)
Closing share price ($ per share)
Return on equity (%)
2018
1,714
-
-
(487)
(5,474)
(3,908)
(8,155)
(430)
(38,511)
(943)
(48,039)
-
(48,039)
(10.3)
-
-
304,788
0.620
(26.8)
2017
9,666
(8,473)
(490)
(493)
(7,539)
(5,369)
(12,698)
(760)
9,178
(490)
(4,770)
-
(4,770)
(1.0)
-
-
94,285
0.220
(2.8)
2016
93,441
(97,933)
(4,920)
(4,280)
(1,002)
(8,520)
(23,214)
(50,749)
(79,453)
(1,405)
(154,821)
10,462
(144,359)
(42.7)
-
-
57,857
0.135
(88.0)
2015
200,280
(155,048)
(11,948)
(12,912)
(905)
(8,884)
10,583
(62,124)
11,864
(998)
(40,675)
11,827
(28,848)
(9.0)
1.0
-
149,462
0.465
(18.1)
2014
239,505
(153,549)
(11,313)
(3,186)
(985)
(7,494)
62,978
(59,655)
(13,119)
(1,334)
(11,130)
1,808
(9,322)
(3.1)
2.0
-
267,489
0.83
(6.2)
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, Ernst & Young (EY). The table above shows how it is reconciled to the
Consolidated Income Statement.
2018 ANNUAL REPORT | PAGE 23
Directors' report
For the Financial Year ended 30 June 2018
Revenue and Other Income
The Nickel Division did not generate sales revenue as both nickel operations remained on care and maintenance
during the financial year. Other revenue of $1,261,000 was made up of (1) rental income from the leasing out of the
Lanfranchi accommodation village ($794,000) and interest income ($467,000). Other income of $453,000 was made
up of (1) a gain on the re-estimation of the Lanfranchi rehabilitation provision ($50,000); (2) AusIndustry refund on
the 2016/17 financial year research and development (R&D) activities ($214,000); (3) the sale of consumables and
data ($108,000) and (4) sundry income ($81,000).
Care and Maintenance Costs (including depreciation and amortisation)
Care and maintenance costs totaling $5,474,000 were incurred by the Nickel Division and the Gum Creek Gold
Project during the period. These costs were 27% lower than the previous financial year ($7,539,000) as the costs
incurred in the 2016/17 financial year included the (1) costs of placing and maintaining the Savannah Nickel Project
on full care and maintenance and (2) the one-off mine closure and rehabilitation costs incurred at the Copernicus
Nickel Project.
Corporate and Marketing Costs
Corporate and marketing costs of $4,022,000 were 25% lower than the previous reporting period as a result of the
continued reduction of corporate activity and lower employee costs following the termination and resignation of full-
time staff during the financial year.
Impairment Loss
As a result of reviews on the carrying values of the consolidated entity’s non-current assets against their estimated
recoverable values, total impairment losses of $45,152,000 were recognised by the consolidated entity at 30 June
2018, being:
• Gum Creek Gold Project – an impairment loss of $12,569,000 was recognised against the Project’s assets
following an independent, external review; and
• Thunder Bay North PGM Project – an impairment loss of $32,583,000 was recognised against the Project’s
assets following an internal review.
Reversal of Impairment Loss
Immediately prior to the Lanfranchi Nickel Project being classified as an asset held for sale at 30 June 2018, the
consolidated entity undertook a review of the carrying value of the Project’s assets and liabilities. As a result of this
review, a reversal of a previous impairment loss of $7,260,000 was made against the asset carrying values of the
Lanfranchi Nickel Project.
Income Tax Benefit
There was no tax benefit booked on the consolidated entity’s loss for the financial year as the corresponding
equivalent deferred tax asset was not recognised in the consolidated statement of financial position at 30 June
2018.
Review of Financial Condition
Balance Sheet
Horizon Gold Limited
In recognition of the Company’s majority 51% shareholding in Horizon Gold Limited (“Horizon)” at balance date,
under AASB 10 Consolidated Financial Statements, the assets, liabilities, equity, income, expenses and cash flows
of Horizon are consolidated in the financial statements of the consolidated entity after attributing the profit or loss
and each component of other comprehensive income to the equity owners of the Company and to the non-
controlling interests (as described in note 30 of the “Notes to the Consolidated Financial Statements”).
For clarity, the Company has shown in Table A below, a non-AIFRS pro-forma consolidated balance sheet in which
the Company’s 51% shareholding in Horizon has been re-classified as an ”investment in subsidiary”. In this
presentation, the Company’s equity investment of 39,030,617 shares in Horizon is shown at fair value through profit
and loss measured using the quoted share price of Horizon at balance date, instead of the assets, liabilities, equity
and results of Horizon being separately consolidated as required under AASB10. The table also includes the
adjustments to reconcile the pro-forma balance sheet back to the consolidated balance sheet.
PAGE 24 | 2018 ANNUAL REPORT
Directors' report
For the Financial Year ended 30 June 2018
Revenue and Other Income
The Nickel Division did not generate sales revenue as both nickel operations remained on care and maintenance
during the financial year. Other revenue of $1,261,000 was made up of (1) rental income from the leasing out of the
Lanfranchi accommodation village ($794,000) and interest income ($467,000). Other income of $453,000 was made
up of (1) a gain on the re-estimation of the Lanfranchi rehabilitation provision ($50,000); (2) AusIndustry refund on
the 2016/17 financial year research and development (R&D) activities ($214,000); (3) the sale of consumables and
data ($108,000) and (4) sundry income ($81,000).
Care and Maintenance Costs (including depreciation and amortisation)
Care and maintenance costs totaling $5,474,000 were incurred by the Nickel Division and the Gum Creek Gold
Project during the period. These costs were 27% lower than the previous financial year ($7,539,000) as the costs
incurred in the 2016/17 financial year included the (1) costs of placing and maintaining the Savannah Nickel Project
on full care and maintenance and (2) the one-off mine closure and rehabilitation costs incurred at the Copernicus
Nickel Project.
Corporate and Marketing Costs
Corporate and marketing costs of $4,022,000 were 25% lower than the previous reporting period as a result of the
continued reduction of corporate activity and lower employee costs following the termination and resignation of full-
time staff during the financial year.
Impairment Loss
2018, being:
As a result of reviews on the carrying values of the consolidated entity’s non-current assets against their estimated
recoverable values, total impairment losses of $45,152,000 were recognised by the consolidated entity at 30 June
• Gum Creek Gold Project – an impairment loss of $12,569,000 was recognised against the Project’s assets
following an independent, external review; and
• Thunder Bay North PGM Project – an impairment loss of $32,583,000 was recognised against the Project’s
Immediately prior to the Lanfranchi Nickel Project being classified as an asset held for sale at 30 June 2018, the
consolidated entity undertook a review of the carrying value of the Project’s assets and liabilities. As a result of this
review, a reversal of a previous impairment loss of $7,260,000 was made against the asset carrying values of the
There was no tax benefit booked on the consolidated entity’s loss for the financial year as the corresponding
equivalent deferred tax asset was not recognised in the consolidated statement of financial position at 30 June
assets following an internal review.
Reversal of Impairment Loss
Lanfranchi Nickel Project.
Income Tax Benefit
2018.
Review of Financial Condition
Balance Sheet
Horizon Gold Limited
In recognition of the Company’s majority 51% shareholding in Horizon Gold Limited (“Horizon)” at balance date,
under AASB 10 Consolidated Financial Statements, the assets, liabilities, equity, income, expenses and cash flows
of Horizon are consolidated in the financial statements of the consolidated entity after attributing the profit or loss
and each component of other comprehensive income to the equity owners of the Company and to the non-
controlling interests (as described in note 30 of the “Notes to the Consolidated Financial Statements”).
For clarity, the Company has shown in Table A below, a non-AIFRS pro-forma consolidated balance sheet in which
the Company’s 51% shareholding in Horizon has been re-classified as an ”investment in subsidiary”. In this
presentation, the Company’s equity investment of 39,030,617 shares in Horizon is shown at fair value through profit
and loss measured using the quoted share price of Horizon at balance date, instead of the assets, liabilities, equity
and results of Horizon being separately consolidated as required under AASB10. The table also includes the
adjustments to reconcile the pro-forma balance sheet back to the consolidated balance sheet.
Directors' report
For the Financial Year ended 30 June 2018
Table A: Pro-forma Consolidated Balance Sheet (51% equity interest in Horizon Gold Limited re-classified
as “Investment in Subsidiary”)
Current Assets
Cash and cash equivalents
Trade and other receivables
Inventories
Prepayments
Assets classified as held for sale
Total Current Assets
Non-Current assets
Available-for-sale financial assets
Investment in subsidiary
Property, plant and equipment
Exploration and evaluation
Development properties
Mine properties
Other non-current assets
Total Non-Current Assets
Total Assets
Current Liabilities
Trade and other payables
Provisions
Liabilities directly associated with
assets held for sale
Total Current Liabilities
Non-Current Liabilities
Provisions
Total Non-Current Liabilities
Total Liabilities
Net Assets
Equity
Contributed equity
Reserves
Accumulated losses
Non-controlling interests
Total Equity
30 June 2018
(Pro-forma)1
$’000
18,270
400
184
231
17,002
36,087
2,703
6,050
6,334
33,022
17,222
27
1,303
66,661
102,748
3,192
873
3,502
7,567
16,980
16,980
24,547
78,201
188,860
35,473
(146,132)
-
78,201
Adjustments
30 June 2018
$’000
7,160
21
-
15
-
7,196
-
(6,050)
4,296
12,741
-
-
-
10,987
18,183
572
50
-
622
9,842
9,842
10,464
7,719
-
9,116
(8,137)
6,740
7,719
(AIFRS)
$’000
25,430
421
184
246
17,002
43,283
2,703
-
10,630
45,763
17,222
27
1,303
77,648
120,931
3,764
923
3,502
8,189
26,822
26,822
35,011
85,920
188,860
44,589
(154,269)
6,740
85,920
1 The pro-forma balance sheet presentation of the de-consolidated 51% equity interest in Horizon Gold Limited is a
non-AIFRS treatment of this investment. The adjustments to the Pro-forma balance sheet are to comply with AIFRS.
2 The financial information presented above in Table A has not been audited or reviewed by the Company’s Auditor,
Ernst & Young (EY).
2018 ANNUAL REPORT | PAGE 25
Directors' report
For the Financial Year ended 30 June 2018
Net Working Capital - current assets less current liabilities
The net working capital position of $35,094,000 was 105% higher than at the previous balance date. This position
is higher than the previous balance date as it includes the net assets of the Lanfranchi Nickel Project which has
been classified as an asset held for sale. The amount excludes $1,303,000 (2017: $1,803,000) which is cash
backing the drawn amount on the Company’s performance bond facility (and is classified as a non-current asset,
as described in note 16 of the “Notes to the Consolidated Financial Statements”).
The contribution of Horizon Gold Limited’s net assets to net working capital was $6,574,000 (2017: $10,984,000).
Trade payables and accrued expenses increased by 49% over the reporting period as a direct result of the
commencement of various pre-production and development activities at the Savannah Nickel Project.
The operating activities of the consolidated entity (including greenfield exploration and net corporate costs)
generated a net cash outflow of $6,936,000 (2017: $7,862,000).
Net cash outflow from investing activities of $7,262,000 included (1) $4,297,000 expenditure on exploration and
evaluation activities at the Savannah Nickel Project and Gum Creek Gold Project; (2) $2,697,000 expenditure on
pre-production activities at the Savannah Nickel Project and (3), plant and equipment ($1,209,000).
Net Tax Balances
At balance date, the consolidated entity had a net deferred tax asset value of $47,012,000. Due to the Nickel
Division’s operations being on care and maintenance, this asset was not recognised in the consolidated statement
of financial position at 30 June 2018.
Net Assets/Equity
The net asset position of the consolidated entity reduced 23% to $85,920,000, primarily due to the reduction in total
non-current assets following the booking of $45,152,000, in aggregate, of impairment losses against the assets of
the Gum Creek Gold Project and the Thunder Bay North PGM Project at 30 June 2018.
Capital Structure
The debt to equity ratio (borrowings on contributed equity) at 30 June 2018 was nil (2017: 0.5%).
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 when its operations are in production.
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.
PAGE 26 | 2018 ANNUAL REPORT
Directors' report
For the Financial Year ended 30 June 2018
Net Working Capital - current assets less current liabilities
The net working capital position of $35,094,000 was 105% higher than at the previous balance date. This position
is higher than the previous balance date as it includes the net assets of the Lanfranchi Nickel Project which has
been classified as an asset held for sale. The amount excludes $1,303,000 (2017: $1,803,000) which is cash
backing the drawn amount on the Company’s performance bond facility (and is classified as a non-current asset,
as described in note 16 of the “Notes to the Consolidated Financial Statements”).
The contribution of Horizon Gold Limited’s net assets to net working capital was $6,574,000 (2017: $10,984,000).
Trade payables and accrued expenses increased by 49% over the reporting period as a direct result of the
commencement of various pre-production and development activities at the Savannah Nickel Project.
The operating activities of the consolidated entity (including greenfield exploration and net corporate costs)
generated a net cash outflow of $6,936,000 (2017: $7,862,000).
Net cash outflow from investing activities of $7,262,000 included (1) $4,297,000 expenditure on exploration and
evaluation activities at the Savannah Nickel Project and Gum Creek Gold Project; (2) $2,697,000 expenditure on
pre-production activities at the Savannah Nickel Project and (3), plant and equipment ($1,209,000).
At balance date, the consolidated entity had a net deferred tax asset value of $47,012,000. Due to the Nickel
Division’s operations being on care and maintenance, this asset was not recognised in the consolidated statement
Net Tax Balances
of financial position at 30 June 2018.
Net Assets/Equity
Capital Structure
Business and Financial Risks
The net asset position of the consolidated entity reduced 23% to $85,920,000, primarily due to the reduction in total
non-current assets following the booking of $45,152,000, in aggregate, of impairment losses against the assets of
the Gum Creek Gold Project and the Thunder Bay North PGM Project at 30 June 2018.
The debt to equity ratio (borrowings on contributed equity) at 30 June 2018 was nil (2017: 0.5%).
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 when its operations are in production.
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.
Directors' report
For the Financial Year ended 30 June 2018
Hedging Policy
The consolidated entity has an active policy, when its operations are in production, of limiting the exposure to
nickel price risk and currency risk through limited hedging.
As at 30 June 2018, the consolidated entity had no nickel forward sales contracts and no nickel put options in
place.
As at 30 June 2018, 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 46.
Dividends
No final dividend has been declared for the financial year ended 30 June 2018.
Review of Operations
Nickel Division
Savannah Nickel Project, East Kimberley region, WA
During the financial year, the Project remained on care and maintenance.
The Company completed evaluation work on a restart of operations at the Project, including the development and
mining of the Savannah North nickel deposit. In February 2018, the Company commenced refurbishment activities
on the Savannah Process Plant and began construction of critical pre-production infrastructure, including the
Savannah North ventilation rise.
In July 2018, the Company announced the decision by the directors to restart operations at the Project (refer to the
“Matters subsequent to the end of the financial year” section of the Directors’ Report for further details).
Lanfranchi Nickel Project, South Kambalda, WA
During the financial year, the Project remained on care and maintenance.
Since 1 July 2017, the accommodation village has been leased to a mining company. This arrangement continues
to provide income for the Project to offset the costs of ongoing care and maintenance.
With the improvement in nickel prices and the Company’s increasing focus on the restart of operations at the
Savannah Nickel Project, the Company has reviewed the future options for the Project, including retaining
ownership and exploring for additional resources, seeking a joint venture partner to help fund exploration activities
and/or divestment of the asset. In April 2018, the Company appointed Hartley Limited to assist in this process,
including seeking expressions of interest to purchase the Project.
Leading up to the end of the financial period, several interested parties have reviewed the Project’s assets. With
the increasing likelihood that the Project will be sold over the 2018/19 financial year, the Project has been classified
as an asset held for sale at 30 June 2018 (as described in note 10 of the “Notes to the Consolidated Financial
Statements”).
2018 ANNUAL REPORT | PAGE 27
Directors' report
For the Financial Year ended 30 June 2018
Exploration and Development Projects
Nickel Division
During the financial year, the consolidated entity completed evaluation work on the Savannah North Project and
explored for new discoveries and extensions to existing resources.
In July 2017, the Company released the Savannah Project Feasibility Study Optimisation (“Optimisation Study”)
based on an improved mine plan, higher grade ore and lower input costs (refer to the Company’s ASX
announcement of 20 July 2017). The Optimisation Study represented the first revision to the original Savannah
Project Feasibility Study released in February 2017 (refer to the Company’s ASX announcement of 2 February 2017
for further details).
On 27 October 2017, the Company released the results of an update (“Updated FS”) to the February 2017
Savannah Feasibility Study and the Optimisation Study. The Updated FS demonstrates a financially robust project
with a long mine life, modest pre-production capital requirements and competitive cash operating costs. The
Updated FS is based on a combined Savannah Nickel Project Ore Reserve of 7.65 million tonnes at a nickel grade
of 1.42% for 108,700 tonnes of contained nickel, a copper grade of 0.68% for 51,700 tonnes of contained copper
and a cobalt grade of 0.10% for 7,300 tonnes of contained cobalt (refer to the Company’s ASX announcement of
27 October 2017 for further details).
Note: The Updated FS disclosed a life-of-mine (8.3 years) and production target of 108,700 tonnes of contained
nickel in ore. This target included 1,200 tonnes of contained nickel classified as Inferred Resource which, under the
JORC Code, has a low level of geological confidence and there is no certainty that further exploration work will
result in the determination of Indicated Mineral Resources or that the production target itself will be realised.
In April 2018, the Company reported that exploration activities had resumed at and in the tenements surrounding
the Savannah Nickel Project. Up to $4 million is budgeted on the 2018 Exploration Program, with the initial work
consisting of broad-spaced stratigraphic diamond drilling and associated down-hole electromagnetic (DHEM)
surveys on the following intrusions:
• Dave Hill / Wilson Complex;
• Sub-Chamber D (located on the Savannah Nickel Project Mining Leases); and
• Frog Hollow.
The aim of the drill testing is to determine the 3D architecture of the intrusions and, if they exist, the location of the
more prospective ultramafic (high MgO rich) phases within each intrusion. Little or no exploration has been
conducted on these intrusions and previous drilling by the Group demonstrated that both Dave Hill and Wilson host
disseminated/blebby magmatic nickel-copper sulphide mineralisation (refer to the Company’s ASX announcement
of 28 April 2016 for further details).
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 16 January
2019, 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.
In January 2017, RTEC confirmed that it had exceeded the minimum spend of C$5 million.
During the 2017/18 financial year, RTEC continued to fund activities on the TBN Project under the earn-in
arrangement of the Agreement. The three part-time employees of TBN assisted RTEC as required and continued
to undertake various consulting projects for locally based exploration companies to assist in offsetting the costs of
running the Thunder Bay Office.
The Company continued to hold discussions with RTEC on the future plans and strategy for the Project. As at the
date of this report, these discussions are continuing.
In recognition of the uncertainty over the future of the Project, the Company reviewed and compared the carrying
values of the TBN Projects assets against their estimated recoverable values as at 30 June 2018 This review
resulted in an impairment loss of $32.58 million being recognised against the carrying values of the Project’s assets.
PAGE 28 | 2018 ANNUAL REPORT
Directors' report
For the Financial Year ended 30 June 2018
Exploration and Development Projects
Nickel Division
During the financial year, the consolidated entity completed evaluation work on the Savannah North Project and
explored for new discoveries and extensions to existing resources.
In July 2017, the Company released the Savannah Project Feasibility Study Optimisation (“Optimisation Study”)
based on an improved mine plan, higher grade ore and lower input costs (refer to the Company’s ASX
announcement of 20 July 2017). The Optimisation Study represented the first revision to the original Savannah
Project Feasibility Study released in February 2017 (refer to the Company’s ASX announcement of 2 February 2017
for further details).
On 27 October 2017, the Company released the results of an update (“Updated FS”) to the February 2017
Savannah Feasibility Study and the Optimisation Study. The Updated FS demonstrates a financially robust project
with a long mine life, modest pre-production capital requirements and competitive cash operating costs. The
Updated FS is based on a combined Savannah Nickel Project Ore Reserve of 7.65 million tonnes at a nickel grade
of 1.42% for 108,700 tonnes of contained nickel, a copper grade of 0.68% for 51,700 tonnes of contained copper
and a cobalt grade of 0.10% for 7,300 tonnes of contained cobalt (refer to the Company’s ASX announcement of
27 October 2017 for further details).
Note: The Updated FS disclosed a life-of-mine (8.3 years) and production target of 108,700 tonnes of contained
nickel in ore. This target included 1,200 tonnes of contained nickel classified as Inferred Resource which, under the
JORC Code, has a low level of geological confidence and there is no certainty that further exploration work will
result in the determination of Indicated Mineral Resources or that the production target itself will be realised.
In April 2018, the Company reported that exploration activities had resumed at and in the tenements surrounding
the Savannah Nickel Project. Up to $4 million is budgeted on the 2018 Exploration Program, with the initial work
consisting of broad-spaced stratigraphic diamond drilling and associated down-hole electromagnetic (DHEM)
surveys on the following intrusions:
• Dave Hill / Wilson Complex;
• Frog Hollow.
• Sub-Chamber D (located on the Savannah Nickel Project Mining Leases); and
The aim of the drill testing is to determine the 3D architecture of the intrusions and, if they exist, the location of the
more prospective ultramafic (high MgO rich) phases within each intrusion. Little or no exploration has been
conducted on these intrusions and previous drilling by the Group demonstrated that both Dave Hill and Wilson host
disseminated/blebby magmatic nickel-copper sulphide mineralisation (refer to the Company’s ASX announcement
of 28 April 2016 for further details).
Platinum Group Metals (PGM) Division
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 16 January
2019, 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.
In January 2017, RTEC confirmed that it had exceeded the minimum spend of C$5 million.
During the 2017/18 financial year, RTEC continued to fund activities on the TBN Project under the earn-in
arrangement of the Agreement. The three part-time employees of TBN assisted RTEC as required and continued
to undertake various consulting projects for locally based exploration companies to assist in offsetting the costs of
running the Thunder Bay Office.
The Company continued to hold discussions with RTEC on the future plans and strategy for the Project. As at the
date of this report, these discussions are continuing.
In recognition of the uncertainty over the future of the Project, the Company reviewed and compared the carrying
values of the TBN Projects assets against their estimated recoverable values as at 30 June 2018 This review
resulted in an impairment loss of $32.58 million being recognised against the carrying values of the Project’s assets.
Directors' report
For the Financial Year ended 30 June 2018
Panton PGM Project, East Kimberley, WA
The Company continued its sponsorship of research by a post-graduate student of Curtin University into alternative
direct leaching technologies for smaller chromite rich PGM deposits. This research has led the Company to study
and review the viability of producing a high grade PGM concentrate with a chromite by-product stream. The results
of a preliminary test-work program are expected to be available in the September 2018 quarter.
Gold Division
Horizon Gold Limited (owner of the Gum Creek Gold Project, Murchison region, WA)
Following the spin-off, capital raising and initial public offering (IPO) of Horizon (ASX Code: HRN) in December
2016, the Company has retained a 51% majority equity interest of 39,030,617 shares in Horizon and as a result, an
indirect interest in the Gum Creek Gold Project. The market value of this equity investment in Horizon at 30 June
2018 was approximately $6.0 million (by reference to the then Horizon share price of 15.5 cents per share), The
Company’s shares in Horizon are escrowed from trading on the ASX until 21 December 2018.
Exploration activities are ongoing at the Gum Creek Gold Project (refer to the public announcements made by
Horizon for further details). Under the October 2016 Management Agreement, consolidated entity personnel are
continuing to provide management services to Horizon on a cost recovery basis.
As a result of an independent, external review of the carrying values of the Gum Creek Gold Project assets against
their estimated recoverable values as at 30 June 2018, an impairment loss of $12.57 million was recognised against
the Project’s assets.
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:
Capital Raising
On 24 January 2018, the Company announced a fully underwritten, pro-rata renounceable one for seven
Entitlement Offer at 34 cents per new share to raise $20.9 million (before costs). The Entitlement Offer closed
oversubscribed on 21 February 2018 and 61,450,606 new shares were issued on 1 March 2018 to existing
shareholders following a scale back on a pro-rata basis.
The purpose of the Offer was to raise funds to progress the critical-path pre-production activities for the Savannah
Nickel Project restart, fund the new exploration programs at and surrounding the Savannah Nickel Project, various
business development initiatives and for general corporate costs and working capital.
Employees
Thunder Bay North PGM (TBN) Project, North-West Ontario, Canada
At the end of the financial year, the Group had 20 permanent, full time employees (2017: 20).
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 20 July 2017, the Company released the Savannah Project Feasibility Study Optimisation (“Optimisation
Study”). The Optimisation Study represented the first revision of the February 2017 Savannah Project
Feasibility Study.
• On 1 August 2017, the Company issued 1,575,012 ordinary shares to executives of the Company following the
vesting on 1 July 2017 of the FY2015 Performance Rights. Following the issue of new shares for no
consideration, the share capital of the Company increased to 430,142,283 ordinary shares.
• On 27 October 2017, the Company released the results of an update (“Updated FS”) to the February 2017
Savannah Feasibility Study. The Updated FS demonstrated a financially robust project with a long mine life,
modest pre-production capital requirements and competitive cash operating costs.
• On 24 January 2018, the Company announced a fully underwritten, pro-rata renounceable one for seven
Entitlement Offer at 34 cents per new share to raise $20,893,000 (before costs).
2018 ANNUAL REPORT | PAGE 29
Directors' report
For the Financial Year ended 30 June 2018
• On 1 March 2018, the Company issued 61,450,606 new shares as a result of the pro-rata one for seven
Entitlement Offer at 34 cents per new share.
• On 29 June 2018, Savannah Nickel Mines Pty Ltd (a wholly owned subsidiary of the Company) executed a
new four-year Concentrate Sales Agreement with Jinchuan Group Co. Ltd and Sino Nickel Pty Ltd. The
Agreement covers 100% of the concentrate that will be produced from the Savannah Nickel Project from early
2019.
Matters subsequent to the end of the financial year
Savannah Nickel Project Restart and execution of Committed Offer for Project Finance Facilities
On 16 July 2018, the Company announced that Board had made the formal decision to restart operations at the
Savannah Nickel Project (refer to the Company’s ASX announcement of 16 July 2018 for further details). The
announcement was made concurrently with the execution by the Company, its wholly owned subsidiary, Savannah
Nickel Mines Pty Ltd, and Macquarie Bank Limited (“Macquarie”) of a credit approved “Committed Offer” from
Macquarie for Project Finance Facilities (“Facilities”), consisting of a secured project loan of up to $40 million and
nickel and copper hedging lines. The Facilities was the last remaining condition precedent to the directors making
the decision to restart the Project.
The nickel and copper hedging facility consists of mandatory and discretionary hedging. The mandatory hedge
program has been completed, being 7,000 tonnes of contained nickel for delivery between February 2019 and June
2021 at an average achieved forward price of A$8.51 per pound and 3,000 tonnes of contained copper for delivery
between February 2019 and June 2021 at an average achieved forward price of A$3.71 per pound.
As a result of the decision to reopen the Project, the Company has commenced Phase Two of pre-production
activities at the Savannah Nickel Project and is targeting to export the first shipment of Savannah bulk concentrate
to China early in the March 2019 quarter.
Vesting of FY2016 Performance Rights and issue of Ordinary Shares
On 10 August 2018, the Company issued 2,935,093 ordinary shares to executives of the Company following vesting
on 1 July 2018 of FY2016 Performance Rights. Following the issue of new shares for no consideration, the share
capital of the Company has increased to 494,527,982 ordinary shares.
In the interval between the end of the financial year and the date of this report, apart from the matters 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 explore for, develop and 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
In relation to the restart of the Savannah Nickel Project, the Company will continue with the employment of mine-
site personnel and completing the Phase Two pre-production activities, to be funded from existing cash reserves
and from drawdowns on the A$40 million project loan from Macquarie Bank Limited, with the aim of being in
production by the end of calendar 2018.
Exploration activities will continue on the intrusions at and surrounding the Savannah Nickel Project, with the aim
of finding the location of the more prospectively nickel hosting ultramafic (high MgO rich) phases within each
intrusion.
The Company will continue with the process to unlock the value of the Lanfranchi Nickel Project.
PAGE 30 | 2018 ANNUAL REPORT
Directors' report
For the Financial Year ended 30 June 2018
• On 1 March 2018, the Company issued 61,450,606 new shares as a result of the pro-rata one for seven
Entitlement Offer at 34 cents per new share.
• On 29 June 2018, Savannah Nickel Mines Pty Ltd (a wholly owned subsidiary of the Company) executed a
new four-year Concentrate Sales Agreement with Jinchuan Group Co. Ltd and Sino Nickel Pty Ltd. The
Agreement covers 100% of the concentrate that will be produced from the Savannah Nickel Project from early
2019.
Matters subsequent to the end of the financial year
Savannah Nickel Project Restart and execution of Committed Offer for Project Finance Facilities
On 16 July 2018, the Company announced that Board had made the formal decision to restart operations at the
Savannah Nickel Project (refer to the Company’s ASX announcement of 16 July 2018 for further details). The
announcement was made concurrently with the execution by the Company, its wholly owned subsidiary, Savannah
Nickel Mines Pty Ltd, and Macquarie Bank Limited (“Macquarie”) of a credit approved “Committed Offer” from
Macquarie for Project Finance Facilities (“Facilities”), consisting of a secured project loan of up to $40 million and
nickel and copper hedging lines. The Facilities was the last remaining condition precedent to the directors making
the decision to restart the Project.
The nickel and copper hedging facility consists of mandatory and discretionary hedging. The mandatory hedge
program has been completed, being 7,000 tonnes of contained nickel for delivery between February 2019 and June
2021 at an average achieved forward price of A$8.51 per pound and 3,000 tonnes of contained copper for delivery
between February 2019 and June 2021 at an average achieved forward price of A$3.71 per pound.
As a result of the decision to reopen the Project, the Company has commenced Phase Two of pre-production
activities at the Savannah Nickel Project and is targeting to export the first shipment of Savannah bulk concentrate
to China early in the March 2019 quarter.
Vesting of FY2016 Performance Rights and issue of Ordinary Shares
On 10 August 2018, the Company issued 2,935,093 ordinary shares to executives of the Company following vesting
on 1 July 2018 of FY2016 Performance Rights. Following the issue of new shares for no consideration, the share
capital of the Company has increased to 494,527,982 ordinary shares.
In the interval between the end of the financial year and the date of this report, apart from the matters 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 explore for, develop and 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
In relation to the restart of the Savannah Nickel Project, the Company will continue with the employment of mine-
site personnel and completing the Phase Two pre-production activities, to be funded from existing cash reserves
and from drawdowns on the A$40 million project loan from Macquarie Bank Limited, with the aim of being in
production by the end of calendar 2018.
Exploration activities will continue on the intrusions at and surrounding the Savannah Nickel Project, with the aim
of finding the location of the more prospectively nickel hosting ultramafic (high MgO rich) phases within each
intrusion.
The Company will continue with the process to unlock the value of the Lanfranchi Nickel Project.
Directors' report
For the Financial Year ended 30 June 2018
Gold Division
The consolidated entity will continue to provide technical, commercial, managerial and administrative services to
the Gum Creek Gold Project and such other assets of Horizon Gold Limited as appropriate, pursuant to the
Management Agreement dated 21 October 2016 between the Company and Horizon.
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 continue discussions with RTEC on the future plans and strategy for 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 (2017: nil).
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 accrued and/or paid premiums of $40,490 (2017: $25,775) 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.
2018 ANNUAL REPORT | PAGE 31
Directors' report
For the Financial Year ended 30 June 2018
2018 Remuneration Report (Audited)
This 2018 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 other Key Management Personnel disclosed in this Report
(i) Directors
Brian Phillips
Peter Harold
John Rowe
Peter Sullivan
Nicholas Cernotta
Rebecca Hayward
Chairman (Non-Executive)
Managing Director
Director (Non-Executive)
Director (Non-executive)
Director (Non-executive) (from 2 May 2018)
Director (Non-executive) (from 21 June 2018)
(ii) Named Executives
Trevor Eton
John Hicks
Tim Mason
Chief Financial Officer and Company Secretary
General Manager - Exploration
Manager – Projects
(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.
(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 assesses 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.
PAGE 32 | 2018 ANNUAL REPORT
Directors' report
For the Financial Year ended 30 June 2018
2018 Remuneration Report (Audited)
This 2018 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 other Key Management Personnel disclosed in this Report
(i) Directors
Brian Phillips
Peter Harold
John Rowe
Peter Sullivan
Chairman (Non-Executive)
Managing Director
Director (Non-Executive)
Director (Non-executive)
Nicholas Cernotta
Rebecca Hayward
Director (Non-executive) (from 2 May 2018)
Director (Non-executive) (from 21 June 2018)
(ii) Named Executives
Trevor Eton
John Hicks
Tim Mason
(b) Remuneration Philosophy
Chief Financial Officer and Company Secretary
General Manager - Exploration
Manager – Projects
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.
(c) Remuneration Committee
senior executive team.
(d) Remuneration Structure
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 assesses 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
In accordance with best practice corporate governance, the remuneration structure of the non-executive directors,
and senior management, is separate and distinct.
Directors' report
For the Financial Year ended 30 June 2018
(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). Since July 2018 and until the date of the report, the Remuneration Committee has received
remuneration advice from BDO Remuneration and Reward Services Pty Ltd on the design and structure of a new
Short Term Incentive (STI) and Long Term Incentive (LTI) scheme for the Group’s KMP and other senior managers.
(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 2015/16
financial year, the Board reviewed the fees paid to non-executive directors on two separate occasions, in August
2015 and February 2016. As a result of these reviews, the non-executive directors agreed to accept a reduction in
fees paid to non-executive directors, with the Non-Executive Chairman’s annual remuneration being reduced to
$90,000 per annum and other non-executive director’s annual remuneration being reduced to $65,000 per annum.
The fees paid to non-executive directors for the period ending 30 June 2018 are detailed in Table 1 on pages 40
and 41 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.
2018 ANNUAL REPORT | PAGE 33
Directors' report
For the Financial Year ended 30 June 2018
(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
Structure
In determining the level and make-up of executive remuneration, the Remuneration Committee takes into
consideration the operational and economic circumstances the Company is facing and likely to face in the medium
term together with 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 36 to 37.
Remuneration consists of the following key elements:
• Fixed Remuneration (base salary, superannuation and non-monetary benefits);
• Variable Remuneration:
o 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 if the
Company’s operational and economic circumstances permit), is established for each senior executive by the
Remuneration Committee. Table 1 on page 40 and 41 details the variable component (%) of the Group’s KMP.
Where necessary, when the payment of superannuation on an individual’s STIB 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 by the Remuneration Committee on a
regular basis and the process consists of a review of Company-wide, business unit and individual performance, the
Company’s operational and economic circumstances, 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 that were made across the consolidated entity during the
2015/16 financial year, the Remuneration Committee reviewed all salaries resulting in senior executives, with a
base salary over $200,000 per annum, agreeing to accept a 10% reduction in base salary from 1 July 2016. The
base salary and other benefits of the Group’s KMP and other senior managers have been maintained at these
levels for both the 2016/17 and 2017/18 financial years.
The fixed remuneration component of the Group’s KMP is detailed in Table 1 on page 40 and 41.
PAGE 34 | 2018 ANNUAL REPORT
Directors' report
For the Financial Year ended 30 June 2018
(g) Executive Remuneration
Objective
Directors' report
For the Financial Year ended 30 June 2018
(ii) Variable Remuneration - Short-term Incentive Bonus (STIB)
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:
The objective and intention of the executive STIB scheme, when the Company’s operational and economic
circumstances permit, is to encourage and provide a further incentive to executives to:
•
reward executives for Company, operating segment and individual performance against targets set by
reference to appropriate benchmarks;
• align the interests of executives with those of shareholders;
•
link reward with the strategic goals and the performance of the Company; and
• ensure total remuneration is competitive by market standards.
Structure
In determining the level and make-up of executive remuneration, the Remuneration Committee takes into
consideration the operational and economic circumstances the Company is facing and likely to face in the medium
term together with 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 36 to 37.
Remuneration consists of the following key elements:
• Fixed Remuneration (base salary, superannuation and non-monetary benefits);
• Variable Remuneration:
o 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 if the
Company’s operational and economic circumstances permit), is established for each senior executive by the
Remuneration Committee. Table 1 on page 40 and 41 details the variable component (%) of the Group’s KMP.
Where necessary, when the payment of superannuation on an individual’s STIB 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 by the Remuneration Committee on a
regular basis and the process consists of a review of Company-wide, business unit and individual performance, the
Company’s operational and economic circumstances, 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 that were made across the consolidated entity during the
2015/16 financial year, the Remuneration Committee reviewed all salaries resulting in senior executives, with a
base salary over $200,000 per annum, agreeing to accept a 10% reduction in base salary from 1 July 2016. The
base salary and other benefits of the Group’s KMP and other senior managers have been maintained at these
levels for both the 2016/17 and 2017/18 financial years.
The fixed remuneration component of the Group’s KMP is detailed in Table 1 on page 40 and 41.
(a) Maximise the financial performance of the Company on a regular and consistent basis that is also
consistent with the Company’s Core Values; and
(b) create and maintain a culture within all levels of the Company and Group such that the Company’s Core
Values are accepted, supported and actively promoted by all the employees of the Company and Group.
The STIB scheme has, in the past, been designed so as to provide sufficient incentive to the executives such that
the cost to the Company is reasonable in the circumstances.
In light of the Nickel Division operations being on care and maintenance during the financial year, the Remuneration
Committee put on hold the current STIB scheme that commenced from 1 January 2010.
As the Company’s operational and economic circumstances are about to change with the restart of operations at
the Savannah Project, it is planned that a new STI scheme will be put in place during the 2018/19 financial year
for the Group’s KMP and other senior managers.
(iii) Variable Remuneration - Long Term Incentive (LTI)
Objective
The objective of a LTI program is to reward and incentivise executives in a manner which aligns this element of
remuneration with the creation of shareholder wealth.
The Company’s performance during the 2017/18 financial year and for the previous four financial years, and its
impact on shareholder wealth, is summarised in the table below.
Year Ended 30 June
Revenue and other income ($'000)
Cost of sales of goods ($'000)
Royalties ($'000)
Exploration and evaluation ($'000)
Care and maintenance expenses ($'000)
Other expenses ($'000)
EBITDA (before impairment) ($'000)
Depreciation and amortisation ($'000)
Net reversal of / (impairment) of assets ($'000)
Finance costs ($'000)
Profit /(loss) before tax ($'000)
Income tax benefit (expense) ($'000)
Net profit/(loss) after tax ($'000)
Earnings/(loss) per share (cents)
Dividends per share (cents)
Dividends pay out ratio (%)
Market capitalisation ($'000)
Closing share price ($ per share)
Return on equity (%)
2018
1,714
-
-
(487)
(5,474)
(3,908)
(8,155)
(430)
(38,511)
(943)
(48,039)
-
(48,039)
(10.3)
-
-
304,788
0.620
(26.8)
2017
9,666
(8,473)
(490)
(493)
(7,539)
(5,369)
(12,698)
(760)
9,178
(490)
(4,770)
-
(4,770)
(1.0)
-
-
94,285
0.220
(2.8)
2016
93,441
(97,933)
(4,920)
(4,280)
(1,002)
(8,520)
(23,214)
(50,749)
(79,453)
(1,405)
(154,821)
10,462
(144,359)
(42.7)
-
-
57,857
0.135
(88.0)
2015
200,280
(155,048)
(11,948)
(12,912)
(905)
(8,884)
10,583
(62,124)
11,864
(998)
(40,675)
11,827
(28,848)
(9.0)
1.0
-
149,462
0.465
(18.1)
2014
239,505
(153,549)
(11,313)
(3,186)
(985)
(7,494)
62,978
(59,655)
(13,119)
(1,334)
(11,130)
1,808
(9,322)
(3.1)
2.0
-
267,489
0.83
(6.2)
From 1 July 2014 and until 30 July 2017, LTI grants to executives were delivered in the form of performance rights
to shares issued under the 2010 Panoramic Resources Limited Employee Share Plan (“2010 ES Plan”).
2018 ANNUAL REPORT | PAGE 35
Directors' report
For the Financial Year ended 30 June 2018
On 30 July 2017, the 2010 ES Plan three-year shareholder approval period ended, meaning a new Employee Share
Plan (“Plan”) will need shareholder approval before new LTI grants can be granted to the Group’s KMP and other
senior managers.
In light of the Company’s operational and economic circumstances changing with the restart of operations at the
Savannah Nickel Project, the design of a new Plan is currently being worked on with the input and supervision of
the Remuneration Committee. This new Plan will be put before shareholders for review and approval during the
2018/19 financial year so that the Remuneration Committee can issue LTI grants to the Group’s KMP and other
senior managers.
2010 Panoramic Resources Limited Employee Share Plan (“2010 ES Plan”)
Under the structure of the old 2010 ES Plan, KMP and senior management employees of the Group were invited,
subject to the Company’s operational and economic circumstances, to receive a new grant of performance rights
to shares, such that the LTI grant formed a key component of their remuneration package. The LTI dollar value that
KMP and other senior management employees were entitled to be received was set at a fixed percentage of their
annual Fixed Remuneration (base salary plus statutory superannuation) ranging 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 was determined by dividing the LTI dollar value by the fair value (“FV”) of one performance right (as
determined by an independent valuer).
FY2015 Performance Rights
•
The FV at 1 July 2014 was externally determined at $0.67. The vesting day of the FY2015 Performance Rights was
1 July 2017. On 1 August 2017, the Company issued 1,575,012 ordinary shares to the Group’s KMP and
other senior managers following the part satisfaction of the two performance hurdles (relative total
shareholder return (“TSR”) and resources and reserves growth performance) and three year time based
vesting hurdle – namely, 525,017 FY2015 Performance Rights did not satisfy the TSR performance hurdle
and lapsed.
FY2016 Performance Rights
•
The FV at 1 July 2015 was externally determined at $0.208. The vesting day of the FY2016 Performance Rights
was 1 July 2018. On 10 August 2018, the Company issued 2,935,093 ordinary shares to the Group’s KMP
and other senior managers following the 100% satisfaction of the two performance hurdles (relative TSR
and resources and reserves growth performance) and three year time based vesting hurdle,.
Performance Conditions
Vesting of the FY2015 Performance Rights and FY2016 Performance Rights were 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.
o Altona Mining Limited
o Aurelia Metals Limited
o CuDeco Limited
o Heron Resources Limited
o Hillgrove Resources Limited
o Hot Chili Ltd
Independence Group NL
o
o Mincor Resources NL
o Rex Minerals Limited
o Sandfire Resources NL
o Poseidon Nickel Limited
o Western Areas Ltd
PAGE 36 | 2018 ANNUAL REPORT
Directors' report
For the Financial Year ended 30 June 2018
Directors' report
For the Financial Year ended 30 June 2018
On 30 July 2017, the 2010 ES Plan three-year shareholder approval period ended, meaning a new Employee Share
Plan (“Plan”) will need shareholder approval before new LTI grants can be granted to the Group’s KMP and other
senior managers.
senior managers.
In light of the Company’s operational and economic circumstances changing with the restart of operations at the
Savannah Nickel Project, the design of a new Plan is currently being worked on with the input and supervision of
the Remuneration Committee. This new Plan will be put before shareholders for review and approval during the
2018/19 financial year so that the Remuneration Committee can issue LTI grants to the Group’s KMP and other
2010 Panoramic Resources Limited Employee Share Plan (“2010 ES Plan”)
Under the structure of the old 2010 ES Plan, KMP and senior management employees of the Group were invited,
subject to the Company’s operational and economic circumstances, to receive a new grant of performance rights
to shares, such that the LTI grant formed a key component of their remuneration package. The LTI dollar value that
KMP and other senior management employees were entitled to be received was set at a fixed percentage of their
annual Fixed Remuneration (base salary plus statutory superannuation) ranging 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 was determined by dividing the LTI dollar value by the fair value (“FV”) of one performance right (as
determined by an independent valuer).
•
FY2015 Performance Rights
and lapsed.
•
FY2016 Performance Rights
The FV at 1 July 2014 was externally determined at $0.67. The vesting day of the FY2015 Performance Rights was
1 July 2017. On 1 August 2017, the Company issued 1,575,012 ordinary shares to the Group’s KMP and
other senior managers following the part satisfaction of the two performance hurdles (relative total
shareholder return (“TSR”) and resources and reserves growth performance) and three year time based
vesting hurdle – namely, 525,017 FY2015 Performance Rights did not satisfy the TSR performance hurdle
The FV at 1 July 2015 was externally determined at $0.208. The vesting day of the FY2016 Performance Rights
was 1 July 2018. On 10 August 2018, the Company issued 2,935,093 ordinary shares to the Group’s KMP
and other senior managers following the 100% satisfaction of the two performance hurdles (relative TSR
and resources and reserves growth performance) and three year time based vesting hurdle,.
Performance Conditions
performance conditions as defined below:
measure over a 3 year period; and
period.
Vesting of the FY2015 Performance Rights and FY2016 Performance Rights were subject to meeting service and
• 75% of the performance rights will be performance tested against the relative total shareholder return (“TSR”)
• 25% of the performance rights will be performance tested against the reserve/resource growth over a 3 year
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.
o Altona Mining Limited
o Aurelia Metals Limited
o CuDeco Limited
o Heron Resources Limited
o Hillgrove Resources Limited
o Hot Chili Ltd
o
Independence Group NL
o Mincor Resources NL
o Rex Minerals Limited
o Sandfire Resources NL
o Poseidon Nickel Limited
o Western Areas Ltd
(iii) Variable Remuneration - Long Term Incentive (LTI)
(continued)
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 was the Company’s metal reserve/resource growth net of depletion. Broadly, the
quantum of the increase in reserves/resources determined the number of performances rights that vested.
The following table sets out the vesting outcome that was 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
No Hedging Contracts on LTI Grants
% 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
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 46.
Table 3 on page 42 provides details of the movements during the financial year of FY2015 Performance Rights and
FY2016 Performance Rights 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.
2018 ANNUAL REPORT | PAGE 37
Directors' report
For the Financial Year ended 30 June 2018
(ii) Non-Executive Directors
All other non-executive directors conduct their duties under the following terms:
• A non-executive director may resign from their position and thus terminate their 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
Nicholas Cernotta
Rebecca Hayward
Amount payable on
termination
$32,500
$32,500
$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), and secondly, up to a maximum
of 25% of Peter Harold’s fixed remuneration per annum under the discretionary Second Part (Core Values).
The Cash bonus under the First Part (Financial Performance) will be calculated at the end of the Relevant
Financial Year using figures obtained from the audited consolidated financial statements of the Company for
the Relevant Financial Year, in accordance with the following formula:
CPH = the Cash bonus to be paid to Peter Harold for the Relevant Financial Year;
CPH = [P - (E x 15%)] x 2.5%, where
P = Earnings Before Interest and Tax (“EBIT”) of the Company (on a consolidated basis) for the Relevant
Financial Year;
E = the average of (1) the “Total Assets” line item of the audited consolidated balance sheet of the Company
(on a consolidated basis) for the Relevant Financial Year and (2) the “Total Assets” line item of the audited
consolidated balance sheet of the Company for the year immediately preceding the Relevant Financial Year.
“Total Assets” includes current and non-current assets.
• Peter Harold may resign from his position and thus terminate the Contract by giving 6 months written notice. Any
vested unlisted options not exercised, if applicable, will be forfeited 4 weeks after notice of resignation. Peter Harold
will not receive any accrued benefits of the executive STIB scheme in the event that he gives notice.
•
• Peter Harold accrues 5 weeks of annual leave entitlements per year and 13 weeks of long 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) 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) 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) during the period after the notice
is given until such time as he stops working.
PAGE 38 | 2018 ANNUAL REPORT
Directors' report
For the Financial Year ended 30 June 2018
(ii) Non-Executive Directors
All other non-executive directors conduct their duties under the following terms:
• A non-executive director may resign from their position and thus terminate their 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
Nicholas Cernotta
Rebecca Hayward
Amount payable on
termination
$32,500
$32,500
$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), and secondly, up to a maximum
of 25% of Peter Harold’s fixed remuneration per annum under the discretionary Second Part (Core Values).
The Cash bonus under the First Part (Financial Performance) will be calculated at the end of the Relevant
Financial Year using figures obtained from the audited consolidated financial statements of the Company for
the Relevant Financial Year, in accordance with the following formula:
CPH = the Cash bonus to be paid to Peter Harold for the Relevant Financial Year;
CPH = [P - (E x 15%)] x 2.5%, where
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) 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) 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) during the period after the notice
is given until such time as he stops working.
Directors' report
For the Financial Year ended 30 June 2018
•
If there is a Change of Control Event, Peter Harold will be entitled to be paid his accrued First Part (Financial
Performance) 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) will be at the discretion of the Board. If the Board is
unable to determine for any reason the accrued and discretionary benefits to Peter Harold, Peter Harold will be
entitled to be paid an accrued STIB based on 100% of Peter Harold’s fixed remuneration per annum.
• From 1 July 2014 until 30 July 2017, for the granting of performance rights to shares at zero cost under the 2010 ES
Plan, Peter Harold was 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 (with 1,450,000 FY2016 performance rights vesting on 1
July 2018). The FV of each performance right on 20 November 2015 was externally determined at $0.208. 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 (with 678,446 of the 904,601 FY2015 performance rights vesting on 1 July 2017).
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 that were granted and now vested under the 2010 ES
Plan are provided in pages 36 and 37.
(iv) Other Named Executives
All other named executives are employed under individual open common law employment contracts. These
executives and the commencement date of their contracts are as follows:
Named Executive
Date of Current
Employment Contract
Position
Trevor Eton
John Hicks
Tim Mason
8 January 2013
14 March 2014
1 December 2015
Chief Financial Officer and Company Secretary
General Manager - Exploration
Manager – Projects
Employment Contracts
P = Earnings Before Interest and Tax (“EBIT”) of the Company (on a consolidated basis) for the Relevant
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.
2018 ANNUAL REPORT | PAGE 39
Directors' report
For the Financial Year ended 30 June 2018
•
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 until 30 July 2017, for the granting of performance rights to shares at zero cost under the
2010 ES Plan, each named executive, depending on level and seniority, were 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. The main terms
and conditions of performance rights granted and vested under the 2010 ES Plan are provided in pages 36
and 37:
(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.
2018
Short-term benefits
Post
employment
benefits
Long-
term
benefits
Cash
salary
and fees Bonus Other
($)
($)
($)
Super-
annuation
($)
Long Service
Leave
($)
Share
based
payments
Rights to
shares
(a)
($)
Termination /
Resignation
payments
($)
Total
($)
Performance
related
(%)
Non-executive
directors
B M Phillips
J Rowe
P R Sullivan
N L Cernotta (b)
R J Hayward (c)
Executive directors
P J Harold
Executives
T R Eton
J D Hicks (d)
T S Mason
90,000
65,000
65,000
10,833
1,806
498,150
270,540
207,000
198,000
1,406,329
-
-
-
-
-
-
-
-
-
2,244
2,244
2,244
363
55
-
-
-
-
-
-
-
-
-
-
-
-
11,770
47,324
12,454
116,245
10,394
45,266
10,394
84,974
25,701
19,665
18,810
111,500
6,764
5,175
4,950
29,343
47,575
24,267
23,212
211,299
-
-
-
-
-
-
-
-
-
92,244
67,244
67,244
11,196
1,861
685,943
360,974
301,373
255,366
1,843,445
-
-
-
-
17
13
8
9
11
Includes the non-cash amortisation expense of the FY2016 LTI performance rights to shares over the period
(a)
(b) Mr. N L Cernotta joined the Company on 2 May 2018
(c) Ms. R J Hayward joined the Company on 21 June 2018
(d) Mr J D Hicks short term benefits in “Other” includes a cash payment of $34,872 for unused annual leave
PAGE 40 | 2018 ANNUAL REPORT
Directors' report
For the Financial Year ended 30 June 2018
Directors' report
For the Financial Year ended 30 June 2018
•
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 until 30 July 2017, for the granting of performance rights to shares at zero cost under the
2010 ES Plan, each named executive, depending on level and seniority, were 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. The main terms
and conditions of performance rights granted and vested under the 2010 ES Plan are provided in pages 36
and 37:
(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.
2018
Short-term benefits
Post
employment
benefits
Long-
term
benefits
Share
based
payments
Rights to
Termination /
and fees Bonus Other
Super-
annuation
($)
($)
($)
($)
Leave
($)
Long Service
shares
(a)
($)
Resignation
payments
($)
Total
($)
Performance
related
(%)
Cash
salary
90,000
65,000
65,000
10,833
1,806
Non-executive
directors
B M Phillips
J Rowe
P R Sullivan
N L Cernotta (b)
R J Hayward (c)
Executive directors
P J Harold
Executives
T R Eton
J D Hicks (d)
T S Mason
-
-
-
-
-
-
-
-
-
2,244
2,244
2,244
363
55
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
92,244
67,244
67,244
11,196
1,861
685,943
360,974
301,373
255,366
1,843,445
-
-
-
-
17
13
8
9
11
270,540
207,000
198,000
1,406,329
10,394
45,266
10,394
25,701
19,665
18,810
84,974
111,500
6,764
5,175
4,950
29,343
47,575
24,267
23,212
211,299
(a)
Includes the non-cash amortisation expense of the FY2016 LTI performance rights to shares over the period
(b) Mr. N L Cernotta joined the Company on 2 May 2018
(c) Ms. R J Hayward joined the Company on 21 June 2018
(d) Mr J D Hicks short term benefits in “Other” includes a cash payment of $34,872 for unused annual leave
2017
Short-term benefits
Post
employment
benefits
Long-
term
benefits
Cash
salary
and fees Bonus Other
($)
($)
($)
Super-
annuation
($)
Long Service
Leave
($)
Share
based
payments
Rights to
shares
(a)(b)
($)
Termination /
Resignation
payments
($)
Total
($)
Performance
related
(%)
Non-executive
directors
B M Phillips
J Rowe
P R Sullivan
Executive directors
P J Harold
Executives
T R Eton
T J Strong (c)
J D Hicks
M A Recklies (d)
T S Mason
90,000
65,000
65,000
498,150
270,540
186,778
207,000
126,968
198,000
1,707,436
-
-
-
-
-
-
-
-
-
-
3,851
3,851
3,851
-
-
-
-
-
-
-
-
-
13,467
47,324
12,454
318,088
-
-
-
-
93,851
68,851
68,851
889,483
12,044
2,595
12,045
1,931
3,851
57,486
25,701
17,744
19,665
12,062
18,810
141,306
6,764
5,149
5,175
3,266
4,949
37,757
127,768
(172,787)
65,173
(99,820)
62,340
300,762
-
176,004
-
410,125
-
586,129
442,817
215,483
309,058
454,532
287,950
2,830,876
-
-
-
36
29
-
21
-
22
11
(a)
(b)
Includes the non-cash amortisation expense of the FY2015 and/or FY2016 LTI performance rights to shares over the
period
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. T J Strong left the Company on 3 March 2017
(d) Mr. M A Recklies left the Company on 30 December 2016
(j) Details of share based compensation and bonuses
(a) Securities granted as part of remuneration
Table 2: Securities granted as part of remuneration during the year
Performance Rights to Shares
•
2017/18 Financial Year:
No performance rights to shares were granted as compensation to key management personnel (KMP).
498,150
11,770
47,324
12,454
116,245
•
2016/17 Financial Year:
No performance rights to shares were granted as compensation to key management personnel (KMP).
Options
•
2017/18 Financial Year:
No options were granted as compensation to key management personnel (KMP).
•
2016/17 Financial Year:
No options were granted as compensation to key management personnel (KMP).
2018 ANNUAL REPORT | PAGE 41
Directors' report
For the Financial Year ended 30 June 2018
The fair value 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 1,230,580 ordinary shares issued to KMP on the exercise of securities during the financial year (FY2015
Performance Rights). There have been 2,635,679 ordinary shares issued to key management personnel on the
exercise of securities (FY2016 Performance Rights) since 30 June 2018.
(b) 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 in pages 36 and 37.
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 (KMP) of the Group, including their
personally related parties are provided in the following table. In the table provided, performance rights to shares are
separately identified.
Table 3: Securities holdings of managing director and specified executives
2018
Performance Rights
Balance at
start of the
year
(number)
Granted as
compen-
sation
(number)
Exercised
Other
changes#
Balance at
end of the
year
Vested and
exercisable Unvested
(number)
(number)
(number)
(number)
(number)
Managing director of Panoramic
Resources Limited
P J Harold
Other key management personnel
of the Group
T R Eton
J D Hicks
T S Mason
2,354,601
961,891
490,652
469,319
4,276,463
-
-
-
-
-
(678,446)
(226,155)
1,450,000
(276,343)
(140,960)
(134,831)
(1,230,580)
(92,116)
(46,988)
(44,945)
(410,204)
593,432
302,704
289,543
2,635,679
-
-
-
-
-
1,450,000
593,432
302,704
289,543
2,635,679
# Other changes relate to performance rights that did not satisfy the performance hurdles and lapsed
2017
Performance Rights
Managing director of Panoramic
Resources Limited
P J Harold
Other key management personnel
of the Group
T R Eton
T J Strong
J D Hicks
M A Recklies
T S Mason
Balance at
start of the
year
(number)
Granted as
compen-
sation
(number)
Exercised
Other
changes#
Balance at
end of the
year
Vested and
exercisable Unvested
(number)
(number)
(number)
(number)
(number)
2,354,601
961,891
972,552
490,652
557,317
469,319
5,806,332
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,354,601
-
(972,552)
-
(557,317)
-
(1,529,869)
961,891
-
490,652
-
469,319
4,276,463
-
-
-
-
-
-
-
2,354,601
961,891
-
490,652
-
469,319
4,276,463
# Other changes relate to performance rights forfeited due to termination of employment
PAGE 42 | 2018 ANNUAL REPORT
Directors' report
For the Financial Year ended 30 June 2018
The fair value 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 1,230,580 ordinary shares issued to KMP on the exercise of securities during the financial year (FY2015
Performance Rights). There have been 2,635,679 ordinary shares issued to key management personnel on the
exercise of securities (FY2016 Performance Rights) since 30 June 2018.
(b) 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
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 (KMP) of the Group, including their
personally related parties are provided in the following table. In the table provided, performance rights to shares are
Table 3: Securities holdings of managing director and specified executives
Balance at
start of the
year
Granted as
compen-
sation
(number)
Balance at
Other
end of the
Vested and
Exercised
changes#
year
exercisable Unvested
(number)
(number)
(number)
(number)
(number)
(number)
2,354,601
(678,446)
(226,155)
1,450,000
1,450,000
provided in pages 36 and 37.
Security holdings
separately identified.
2018
Performance Rights
Managing director of Panoramic
Resources Limited
P J Harold
Other key management personnel
of the Group
T R Eton
J D Hicks
T S Mason
961,891
490,652
469,319
4,276,463
(276,343)
(140,960)
(134,831)
(92,116)
(46,988)
(44,945)
593,432
302,704
289,543
(1,230,580)
(410,204)
2,635,679
593,432
302,704
289,543
2,635,679
# Other changes relate to performance rights that did not satisfy the performance hurdles and lapsed
Balance at
start of the
year
Granted as
compen-
sation
Other
Balance at
end of the
Vested and
Exercised
changes#
year
exercisable Unvested
(number)
(number)
(number)
(number)
(number)
(number)
(number)
2017
Performance Rights
Managing director of Panoramic
Resources Limited
P J Harold
Other key management personnel
of the Group
T R Eton
T J Strong
J D Hicks
M A Recklies
T S Mason
2,354,601
961,891
972,552
490,652
557,317
469,319
5,806,332
# Other changes relate to performance rights forfeited due to termination of employment
2,354,601
2,354,601
-
-
-
-
(972,552)
(557,317)
-
-
-
-
-
-
-
961,891
-
-
490,652
469,319
(1,529,869)
4,276,463
961,891
490,652
-
-
469,319
4,276,463
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Directors' report
For the Financial Year ended 30 June 2018
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 (KMP) of the Group, including their personally related parties, are
set out below. There were no shares granted during the reporting period as remuneration.
2018
Ordinary Shares
Balance at
the start of
the year
(number)
Received during
the year on the
exercise of
options
(number)
Received on
vesting of rights
to deferred shares
(number)
Other
changes
during the
year
(number)
Balance at
end of the
year
(number)
Directors of Panoramic Resources Limited
P J Harold
B M Phillips
J Rowe
P R Sullivan
N L Cernotta
R J Hayward
4,567,714
287,407
87,407
-
-
-
Other key management personnel of the Group
T R Eton
J D Hicks
T S Mason
70,000
306,751
2,340
5,321,619
-
-
-
-
-
-
-
-
-
-
678,446
-
-
-
-
-
-
41,059
12,487
-
-
-
276,343
140,960
134,831
1,230,580
(250,000)
49,935
23,122
(123,397)
5,246,160
328,466
99,894
-
-
-
96,343
497,646
160,293
6,428,802
2017
Ordinary Shares
Balance at
the start of
the year
(number)
Received during
the year on the
exercise of options
(number)
Received on
vesting of rights to
deferred shares
(number)
Other
changes
during the
year
(number)
Balance at
end of the
year
(number)
Directors of Panoramic Resources Limited
P J Harold
B M Phillips
J Rowe
P R Sullivan
4,567,714
287,407
87,407
-
Other key management personnel of the Group
T R Eton
T J Strong
J D Hicks
M A Recklies
T S Mason
70,000
282,001
306,751
100,000
2,340
5,703,620
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(282,001)
-
(100,000)
-
(382,001)
4,567,714
287,407
87,407
-
70,000
-
306,751
-
2,340
5,321,619
All equity transactions with key management personnel other than those arising from the exercise of 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.
2018 ANNUAL REPORT | PAGE 43
Directors' report
For the Financial Year ended 30 June 2018
Securities granted and exercised as part of remuneration for the year ended 30 June 2018 and 30 June
2017
2018
Performance Rights
Value of securities
granted during the year
($)
Value of securities
exercised during the year
($)
Value of securities lapsed
during the year #
($)
P J Harold
T R Eton
J D Hicks
T S Mason
-
-
-
-
149,258
60,795
31,011
29,663
49,754
20,046
10,337
9,888
# Refer to Table 3 on page 42 for the number of performance rights to shares that lapsed
2017
Performance Rights
Value of securities granted
during the year
($)
Value of securities
exercised during the year
($)
Value of securities cancelled
during the year #
($)
P J Harold
T R Eton
T J Strong
J D Hicks
M A Recklies
T S Mason
-
-
-
-
-
-
-
-
-
-
-
-
-
-
259,123
-
136,732
-
# Refer to Table 3 on page 42 for the number of performance rights to shares cancelled
There were no alterations to the terms and conditions of securities granted as remuneration from their grant date
until their vesting date.
In the 2016/17 financial year, there were performance rights to shares that were cancelled on the date of the named
executive’s termination, as detailed in Table 3 on page 42 of the remuneration report.
Related Party Transactions
There were no loans to key management personnel and their related parties at any time during the year ended 30
June 2018. There were no transactions involving key management personnel and their related parties other than
compensation and transaction concerning shares and performance rights to shares as discussed in the
remuneration report.
This marks the end of the 2018 Remuneration Report.
Environmental regulation
The Group’s operations are subject to significant environmental regulations under both Commonwealth and State
legislation in relation to its development, mining and exploration activities. The Group’s management monitors
compliance with the relevant environmental legislation. The directors are not aware of any breaches of the
legislation during the period covered by this report.
PAGE 44 | 2018 ANNUAL REPORT
2017
2018
P J Harold
T R Eton
J D Hicks
T S Mason
2017
P J Harold
T R Eton
T J Strong
J D Hicks
M A Recklies
T S Mason
Performance Rights
($)
Value of securities
Value of securities
granted during the year
exercised during the year
Value of securities lapsed
during the year #
Performance Rights
($)
Value of securities granted
Value of securities
Value of securities cancelled
during the year
exercised during the year
during the year #
-
-
-
-
-
-
-
-
-
-
($)
149,258
60,795
31,011
29,663
($)
-
-
-
-
-
-
($)
49,754
20,046
10,337
9,888
($)
-
-
-
-
259,123
136,732
# Refer to Table 3 on page 42 for the number of performance rights to shares cancelled
There were no alterations to the terms and conditions of securities granted as remuneration from their grant date
until their vesting date.
In the 2016/17 financial year, there were performance rights to shares that were cancelled on the date of the named
executive’s termination, as detailed in Table 3 on page 42 of the remuneration report.
Related Party Transactions
There were no loans to key management personnel and their related parties at any time during the year ended 30
June 2018. There were no transactions involving key management personnel and their related parties other than
compensation and transaction concerning shares and performance rights to shares as discussed in the
remuneration report.
This marks the end of the 2018 Remuneration Report.
Environmental regulation
The Group’s operations are subject to significant environmental regulations under both Commonwealth and State
legislation in relation to its development, 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.
Directors' report
For the Financial Year ended 30 June 2018
Directors' report
For the Financial Year ended 30 June 2018
Securities granted and exercised as part of remuneration for the year ended 30 June 2018 and 30 June
Rounding of Amounts
# Refer to Table 3 on page 42 for the number of performance rights to shares that lapsed
Non-audit Services
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 2018. This Independence Declaration is attached to the Directors’ Report and forms a part
of the Directors’ Report.
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 $95,493.
Signed in accordance with a resolution of the directors.
Peter Harold
Managing Director
Perth, 31 August 2018
Competent Person Statements
Information in this report relating to Ore Reserves has been compiled by or reviewed by Lilong Chen. Mr Chen is a
member of the Australasian Institute of Mining and Metallurgy (AusIMM) and 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 report of the matters based on his information in the
form and context in which it appears.
The information in this report that relates to exploration activities has been complied or reviewed 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. 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.
No New Information or Data
This report contains references to exploration results, Mineral Resource and Ore Reserve estimates, and feasibility
study results including production targets, all of which have been cross referenced to previous market
announcements made by the Company. 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 Resource and Ore Reserve estimates, and feasibility study results including production targets, that all
material assumptions and technical parameters underpinning the estimates in the relevant market announcement
continue to apply and have not materially changed.
2018 ANNUAL REPORT | PAGE 45
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 Securities 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.
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, the Board has adopted a formal Board
Charter. The Board Charter details the Board’s role, authority, responsibilities, membership and operation and sets
out the matters specifically reserved for the Board and the powers delegated to any of its Committees and to
management. 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
The Board Charter can be viewed on the Company’s website at www.panoramicresources.com under the Corporate
Governance section.
Board Processes
The Board is responsible for the overall Corporate Governance of the Company including the strategic direction,
establishing goals for executive management and monitoring the achievement of these goals. The Board has
established a framework for the management of the Company and its controlled entities, a framework which divides
the functions of running the Company between the Board, the Managing Director and the senior executives. The
Board has put in place a system of internal control, a pro-active business risk management process, and has the
task of monitoring financial performance and the establishment of appropriate ethical standards. The agenda for
meetings of the Board is prepared by the Managing Director. Standard items include the project reports, financial
reports, strategic matters, governance and compliance. Submissions are circulated in advance. Senior executives
are regularly involved in Board discussions.
The Company Secretary of the Company is directly accountable to the Board, through the Chairman, on all matters
to do with the proper functioning of the Board. The Company Secretary is to facilitate and monitor the
implementation of Board policies and procedures and is to provide advice to the Board on the application of the
Board Charter, the Company’s Constitution, corporate governance matters, ASX Listing Rules and other applicable
laws.
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 is in the process of updating the 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 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.
PAGE 46 | 2018 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 Securities 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.
Principle 1: Lay Foundations for Management and Oversight
The Board’s primary role is the protection and enhancement of long-term shareholder value.
Primary Role of the Board
Board Operation
To ensure the Board is well equipped to discharge its responsibilities, the Board has adopted a formal Board
Charter. The Board Charter details the Board’s role, authority, responsibilities, membership and operation and sets
out the matters specifically reserved for the Board and the powers delegated to any of its Committees and to
management. 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
The Board Charter can be viewed on the Company’s website at www.panoramicresources.com under the Corporate
Governance section.
Board Processes
The Board is responsible for the overall Corporate Governance of the Company including the strategic direction,
establishing goals for executive management and monitoring the achievement of these goals. The Board has
established a framework for the management of the Company and its controlled entities, a framework which divides
the functions of running the Company between the Board, the Managing Director and the senior executives. The
Board has put in place a system of internal control, a pro-active business risk management process, and has the
task of monitoring financial performance and the establishment of appropriate ethical standards. The agenda for
meetings of the Board is prepared by the Managing Director. Standard items include the project reports, financial
reports, strategic matters, governance and compliance. Submissions are circulated in advance. Senior executives
are regularly involved in Board discussions.
The Company Secretary of the Company is directly accountable to the Board, through the Chairman, on all matters
to do with the proper functioning of the Board. The Company Secretary is to facilitate and monitor the
implementation of Board policies and procedures and is to provide advice to the Board on the application of the
Board Charter, the Company’s Constitution, corporate governance matters, ASX Listing Rules and other applicable
laws.
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 is in the process of updating the 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 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.
Corporate Governance Statement
Principle 1: Lay Foundations for Management and Oversight (continued)
Appointment of Directors and Management
The Company has in place an appropriate organisational and management structure to ensure the day to day
running of the Company is undertaken in an effective and efficient manner and to ensure the Company has the right
mix of skills and resources to implement and achieve the Board’s corporate and strategic objectives. The Board
and the Managing Director regularly reviews this structure to determine that it is appropriate and “fit for purpose”
and if necessary make changes in the number of roles and personnel.
The directors and senior executives have a clear understanding of their duties, roles and responsibilities and of the
expectations of them, as contained within a written agreement agreed and signed by the Company and each director
and senior executive.
The Board reviews its composition as required to ensure that the Board has the appropriate mix of commercial,
financial and mining skills, technical expertise, industry experience, and diversity (including, but not limited to gender
and age) for which the Board is looking to achieve in its membership. When a vacancy exists, for whatever reason,
or where it is considered that the Board would benefit from the services of a new director with particular skills,
candidates with the appropriate experience, expertise and diversity are considered. Under the direction and
supervision of the Chair, appropriate background checks are undertaken of each candidate as to the person’s
character, experience, education, criminal record and bankruptcy history. Each incumbent director is encouraged,
and given the opportunity to meet with each candidate on a one to one basis. The full Board then appoints the most
suitable candidate who must stand for election at the next general meeting of shareholders. For the meeting,
shareholders are given sufficient information of the new director, including but not limited to biographical details,
other listed directorships currently held and in the case of a director standing for election for the first time, advice
that appropriate background checks have been undertaken.
Diversity Policy
The Company has in place a Diversity Policy which provides the written framework and objectives for achieving a
work environment that values and utilises the contributions of employees with diverse backgrounds, experiences,
and perspectives, irrespective of gender, age, ethnicity and cultural background. The Board is responsible for
developing, where possible, measurable objectives and strategies to support the framework and objectives of the
Diversity Policy. The Remuneration Committee is responsible for monitoring the progress of the measurable
objectives through various monitoring, evaluation and reporting mechanisms.
Apart from participation rates established for indigenous employment at the Savannah nickel project prescribed
under the 2007 Savannah Co-Existence Agreement (and as reported below), the Board has not determined
measurable objectives on gender diversity across the workplace and at the Board level. In the coming financial
year, the Board is to continue to oversee the development of new programs to achieve a broader pool of skilled and
experienced senior management and Board candidates, and if deemed appropriate, identify future and targeted
measurable objectives and strategies on gender diversity.
Pursuant to Recommendation 1.5 of the Recommendations, the Company discloses the following information as
at the date of this report:
• Percentage of women and men employed within the Group - women: 10%; men: 90%;
• Percentage of women and men employed as a senior executive - women: nil; men: 100%;
• Percentage of women and men employed at the Board level - women: 17%; men: 83%; and
• Percentage of indigenous employees at the Savannah Nickel Project – nil.
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.
2018 ANNUAL REPORT | PAGE 47
Corporate Governance Statement
Principle 1: Lay Foundations for Management and Oversight (continued)
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. In the coming year, each Director performance will be discussed informally, whereby the performance
of individual members and the performance of the Board as a whole, will be assessed. The Board has agreed to
conduct these informal performance assessments until such time as a suitable formal performance appraisal system
has been put in place. 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 six 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.
The name, position, independence classification, qualification, skills and length of service of each director of the
Company in office at the date of the Statement is:
Name
Position
Independence
Classification
Qualification/Skills Service (yrs)
Brian M Phillips
Chairman
Independent
Peter J Harold
John Rowe
Managing Director
Non-Executive
Director
n/a, executive
Independent
Peter R Sullivan #
Non-Executive
Director
Non Independent
Nicholas L Cernotta
Non-Executive
Director
Rebecca J Hayward
Non-Executive
Director
Independent
Independent
Mining Engineer,
general mining
Process Engineer,
project development
Geologist, general
mining
Engineer,
corporate and project
development
Mining Engineer,
general mining and
project development
Lawyer,
corporate and project
development
11
17
12
2
-
-
# 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
PAGE 48 | 2018 ANNUAL REPORT
Corporate Governance Statement
Principle 1: Lay Foundations for Management and Oversight (continued)
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. In the coming year, each Director performance will be discussed informally, whereby the performance
of individual members and the performance of the Board as a whole, will be assessed. The Board has agreed to
conduct these informal performance assessments until such time as a suitable formal performance appraisal system
has been put in place. 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 six 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.
The name, position, independence classification, qualification, skills and length of service of each director of the
Company in office at the date of the Statement is:
Name
Position
Independence
Classification
Qualification/Skills Service (yrs)
Brian M Phillips
Chairman
Independent
Peter J Harold
Managing Director
n/a, executive
John Rowe
Independent
Peter R Sullivan #
Non Independent
Non-Executive
Director
Non-Executive
Director
Non-Executive
Nicholas L Cernotta
Director
Independent
Rebecca J Hayward
Director
Independent
Non-Executive
Mining Engineer,
general mining
Process Engineer,
project development
Geologist, general
mining
Engineer,
corporate and project
development
Mining Engineer,
general mining and
project development
Lawyer,
corporate and project
development
11
17
12
2
-
-
# 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
Corporate Governance Statement
Principle 2: Structure the Board to Add Value (continued)
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 is targeting to 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. The Independence Criteria detailed in Recommendation 2.3 of the Recommendations in
relation to each non-executive director is listed in Annexure A to the Board Charter and each director’s
independence is assessed on a regular basis against the Independence Criteria and the quantitative and qualitative
Materiality Thresholds (listed in Annexure B of the Board Charter) when appropriate.
Where a director acquires an interest, position, association or relationship described in Recommendation 2.3 of the
Recommendations and exceeds the Materiality Thresholds set out in the Board Charter, the director must
immediately declare the nature of the interest, position, association or relationship and the Board will determine
whether to declare any loss of independence.
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 the Savannah Nickel Project 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 John Rowe, 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.
2018 ANNUAL REPORT | PAGE 49
Corporate Governance Statement
Principle 2: Structure the Board to Add Value (continued)
• Remuneration Committee
The Remuneration Committee consists of all non-executive directors. The Remuneration Committee is chaired by
Peter Sullivan, who has been assessed as not being independent under the Independence criteria detailed in
Recommendation 2.3 of the Recommendations. The Board believes that Peter Sullivan is an appropriate person
for the position of Chair, due, in part, to his extensive corporate experience gained from a previous role as managing
director of a large listed resource company and his current directorships of several listed resource companies.
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 2018 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.
• Risk Committee
The Risk Committee (previously known as the Environment, Safety and Risk Committee) consist of all directors and
is chaired by Nick Cernotta, an independent director. The role of the 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 well-being 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 risks, occupational health and safety risks
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 a 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.
Although the Committee did not meet during the 2017/18 financial year, as a consequence of the appointment of
two new non-executive directors and the Company’s decision, in July 2018, to restart mining operations at the
Savannah Nickel Project, the Committee met in August 2018 to review both the Committee Charter and the 2015
Risk Management Guideline and to discuss with management on the rapidly changing business landscape and
what risks and challenges the Company will be facing with the transition to a producing company over FY2019.
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.
PAGE 50 | 2018 ANNUAL REPORT
Corporate Governance Statement
Principle 2: Structure the Board to Add Value (continued)
• Remuneration Committee
The Remuneration Committee consists of all non-executive directors. The Remuneration Committee is chaired by
Peter Sullivan, who has been assessed as not being independent under the Independence criteria detailed in
Recommendation 2.3 of the Recommendations. The Board believes that Peter Sullivan is an appropriate person
for the position of Chair, due, in part, to his extensive corporate experience gained from a previous role as managing
director of a large listed resource company and his current directorships of several listed resource companies.
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 2018 Remuneration Report includes these reporting
Further details on the Committee and of remuneration arrangements in place for the directors and executives are
obligations.
set out in the Directors’ Report.
• Risk Committee
The Risk Committee (previously known as the Environment, Safety and Risk Committee) consist of all directors and
is chaired by Nick Cernotta, an independent director. The role of the 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 well-being 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 risks, occupational health and safety risks
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 a 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.
Although the Committee did not meet during the 2017/18 financial year, as a consequence of the appointment of
two new non-executive directors and the Company’s decision, in July 2018, to restart mining operations at the
Savannah Nickel Project, the Committee met in August 2018 to review both the Committee Charter and the 2015
Risk Management Guideline and to discuss with management on the rapidly changing business landscape and
what risks and challenges the Company will be facing with the transition to a producing company over FY2019.
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.
Corporate Governance Statement
Principle 3: Act Ethically and Responsibly (continued)
Code of Conduct (continued)
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.
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.
The Company has put in place a Privacy Data Breach Response Plan (“Plan”), which sets out the required steps to
be followed if an actual or potential breach of personal or sensitive information occurs. Following this Plan will help
the Company’s employees and contractors to contain, assess and respond to data breaches in a timely manner
and to mitigate potential harm to any affected individuals and organisations. This Plan can be accessed on the
Company's website at www.panoramicresources.com under the Corporate Governance section.
2018 ANNUAL REPORT | PAGE 51
Corporate Governance Statement
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.
Principle 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.
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.
Principle 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.
PAGE 52 | 2018 ANNUAL REPORT
Corporate Governance Statement
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.
Principle 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.
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.
Principle 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.
Corporate Governance Statement
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 currently 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, principally when in
production, 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 FY2012 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 FY2015, 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 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 Guideline is available on the Company’s website at www.panoramicresources.com.
The Board has established a committee of the Board, the 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 (August 2018) 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. As a consequence of the Company’s operations being on care and maintenance
during the 2017/18 financial year, the Committee did not hold a meeting during the financial year.
In August 2018, the Risk Committee convened a meeting with management to discuss the various elements of the
Company’s risk management framework in light of the decision to restart operations at the Savannah Nickel Project.
It was agreed at that meeting to conduct various workshops across the Group to review risk registers, the risk
appetite tolerance thresholds and Risk Appetite Statements, with the aim to updating the Guideline during the
2018/19 financial year. The Risk Committee in its review of the Company’s risk management framework is targeting
to incorporate certain aspects of the recent 2018 revision to the International Organisation for Standardisation (ISO)
ISO 31000 Standard, which has provided a clearer, shorter and more concise guide on the principles of risk
management.
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 FY2016, FY2017 and again in FY2018, the compliance reporting requirements detailed above were undertaken
on a more limited basis as a consequence of the Group’s operations being on care and maintenance.
2018 ANNUAL REPORT | PAGE 53
Corporate Governance Statement
Principle 7: Recognise and Manage Risk (continued)
The reporting and control mechanisms, 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. Subject always to the
Company’s operational and economic circumstances, 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
Committee also ensures that there is no discrimination on remuneration in respect to gender.
Until recently, the Company’s executives were able to participate in a performance share rights plan (“LTI Plan”)
that was linked to the Company’s performance on a relative share price basis against its peers in the resources
industry and a resources and reserves growth performance basis. During the period when the Nickel Division
operations have been on care and maintenance, the Remuneration Committee put on hold the granting of new
performance rights to shares under the LTI Plan to employees.
In light of the Company’s operational and economic circumstances changing with the restart of operations at the
Savannah Nickel Project, a new LTI Plan is currently being designed with input from consultants under supervision
of the Remuneration Committee. This LTI Plan will be put before shareholders for review and approval during the
2018/19 financial year.
Further details in relation to director and executive remuneration are set out in the 2018 Remuneration Report on
pages 32 to 44.
PAGE 54 | 2018 ANNUAL REPORT
Corporate Governance Statement
Principle 7: Recognise and Manage Risk (continued)
The reporting and control mechanisms, 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.
Board Remuneration
Principle 8: Remunerate Fairly and Responsibly
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. Subject always to the
Company’s operational and economic circumstances, 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
Committee also ensures that there is no discrimination on remuneration in respect to gender.
Until recently, the Company’s executives were able to participate in a performance share rights plan (“LTI Plan”)
that was linked to the Company’s performance on a relative share price basis against its peers in the resources
industry and a resources and reserves growth performance basis. During the period when the Nickel Division
operations have been on care and maintenance, the Remuneration Committee put on hold the granting of new
performance rights to shares under the LTI Plan to employees.
In light of the Company’s operational and economic circumstances changing with the restart of operations at the
Savannah Nickel Project, a new LTI Plan is currently being designed with input from consultants under supervision
of the Remuneration Committee. This LTI Plan will be put before shareholders for review and approval during the
Further details in relation to director and executive remuneration are set out in the 2018 Remuneration Report on
2018/19 financial year.
pages 32 to 44.
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
(ii)
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 64 to 123 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 2018 and of
its performance for the year ended on that date; and
complying with Australian Accounting Standards
Interpretations) and Corporations Regulations 2001.
the Australian Accounting
(including
Directors' declaration
30 June 2018
(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 2018.
3. In the opinion of the directors, as at the date of this declaration, there are reasonable grounds to believe that the
members of the Closed Group identified in note 31 will be able to meet any obligations or liabilities to which they
are or may become subject, by virtue of the Deed of Cross Guarantee.
On behalf of the Board
Peter Harold
Managing Director
Perth, 31 August 2018
2018 ANNUAL REPORT | PAGE 55
INDEPENDENT AUDITORS REPORT
Ernst & Young
11 Mounts Bay Road
Perth WA 6000 Australia
GPO Box M939 Perth WA 6843
Tel: +61 8 9429 2222
Fax: +61 8 9429 2436
ey.com/au
Independent auditor's report to the members of Panoramic Resources
Limited
Report on the audit of the financial report
Opinion
We have audited the financial report of Panoramic Resources Limited (the Company) and its subsidiaries
(collectively the Group), which comprises the consolidated balance sheet as at 30 June 2018, the
consolidated income statement, consolidated statement of comprehensive income, consolidated
statement of changes in equity and consolidated statement of cash flows for the year then ended, notes to
the financial statements, including a summary of significant accounting policies, and the directors'
declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act
2001, including:
a)
b)
giving a true and fair view of the consolidated balance sheet of the Group as at 30 June 2018 and
of its consolidated financial performance for the year ended on that date; and
complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those
standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report
section of our report. We are independent of the Group in accordance with the auditor independence
requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional
and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are
relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical
responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the financial report of the current year. These matters were addressed in the context of our audit
of the financial report as a whole, and in forming our opinion thereon, but we do not provide a separate
opinion on these matters. For each matter below, our description of how our audit addressed the matter
is provided in that context. We have determined the matters described below to be the key audit matters
to be communicated in our report.
We have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of the
Financial Report section of our report, including in relation to these matters. Accordingly, our audit
included the performance of procedures designed to respond to our assessment of the risks of material
misstatement of the financial report. The results of our audit procedures, including the procedures
performed to address the matters below, provide the basis for our audit opinion on the accompanying
financial report.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
PT:CT:PAN:017
PAGE 56 | 2018 ANNUAL REPORT
INDEPENDENT AUDITORS REPORT
1. Carrying value of non-current assets
Why significant
How our audit addressed the key audit matter
As at 30 June 2018 the Group had non-current assets
including capitalised exploration and evaluation
expenditure, development properties, mine properties
and property, plant and equipment (refer to Notes 13
and 15) totaling $73.64 million. The Group recorded an
impairment reversal associated with the Lanfranchi
cash generating unit (“CGU”) of $7.26 million and an
impairment loss of $45.15 million associated with the
Magma and Gum Creek CGU’s as described in Note 13
and 15.
At the end of each reporting period, the directors
exercise judgment in determining whether there is any
indication of impairment or indication that an
impairment loss recognised in prior periods may no
longer exist or may have decreased. If any such
indication exists, the Group estimates the recoverable
amount of that asset. As detailed in Notes 13 and 15, it
was determined that the recoverable amount, based on
the Director’s assessment of fair value less costs of
disposal (FVLCD) of certain Projects were different to
their CGU’s carrying value resulting in a reversal of
impairment and impairment loss recorded at 30 June
2018 as noted above.
We considered this to be a key audit matter because of
the:
►
►
Significant judgment involved in considering if
there was an indicator of impairment present or an
indicator that an impairment loss recognised in
prior periods may no longer exist or may have
decreased
Significant judgment and estimates such as
underlying reserves and resources, as well as
resource multiples based on comparable
transactions are involved in the determination of
recoverable amount.
Our audit procedures included the following:
► We assessed the appropriateness of the Group’s
identification of indicators of impairment and
indicators that losses recognised in prior periods
may no longer exist or may have decreased
►
►
For the FVLCD determined by the Group, we
assessed the key assumptions in the Group’s
recoverability assessments, including assessing
resource multiples and performing comparable
transaction analysis using external data where
available. Our valuation specialists were involved
in this assessment
For recoverable amounts determined by external
independent experts engaged by the Group, we
involved our valuation specialists to assess the
valuation report provided by the experts including
assessing:
►
►
►
The qualifications, competence and
objectivity the expert used by the Group
The valuation method adopted
The assumptions applied by the valuation
expert as detailed in notes 13 and 15.
► We also considered the adequacy of the Group’s
disclosures with respect to the degree of
estimation involved in the determination of the
recoverable amount and the reversal of the
impairment loss.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
PT:CT:PAN:017
2018 ANNUAL REPORT | PAGE 57
INDEPENDENT AUDITORS REPORT
3. Going concern assessment
Why significant
How our audit addressed the key audit matter
Our audit procedures included the following:
► Analysed the Group’s cash flow forecast prepared
for the purpose of the going concern assessment
► Assessed whether the cash flow model was
consistent with the budget that was approved by
the Directors
► Assessed the reasonableness of the future cash
inflows from the Group’s borrowing facilities and
revenue from Nickel offtake agreements
► Assessed the future cash outflows taking into
account our knowledge of the Group’s operations,
historical spend and future plans
► Assessed the mitigating actions identified by the
Group in the event that actual cash flows are below
forecast, including performing sensitivity analysis
► Assessed the adequacy of the disclosures included
in the financial report in respect of the use of the
going concern basis.
The Group is not currently generating revenue and is
currently undertaking the refurbishment of its Savannah
Nickel Mine.
As disclosed in note 1 of the financial report, the
Directors concluded that in their opinion there are
reasonable grounds to believe that the Group has the
ability to pay its debts as and when they fall due. The
financial report has been prepared on a going concern
basis. The going concern assumption is fundamental to
the basis of preparation of the financial report. As the
Group is not generating revenue and given the judgment
involved in preparing cash flow forecasts, we considered
this matter and the related disclosures to be a Key Audit
Matter.
The Directors’ assessment is largely based on the
expectations of and the estimates made by the Group of
future cash flows. The expectations and estimates can
be influenced by subjective elements such as estimates
of amounts and timing of future cash outflows and
inflows, including expected revenue and costs associated
with the refurbishment and recommencement of mining
at Savannah Nickel Mine.
The financial report has been prepared on a going
concern basis. The Group’s assessment of going concern
is set out in note 1 to the financial report.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
PT:CT:PAN:017
PAGE 58 | 2018 ANNUAL REPORT
INDEPENDENT AUDITORS REPORT
INDEPENDENT AUDITORS REPORT
Information other than the financial report and auditor’s report thereon
The directors are responsible for the other information. The other information comprises the information
included in the Company’s 2018 Annual Report other than the financial report and our auditor’s report
thereon. We obtained the Directors’ Report that is to be included in the Annual Report, prior to the date of
this auditor’s report, and we expect to obtain the remaining sections of the Annual Report after the date
of this auditor’s report.
Our opinion on the financial report does not cover the other information and we do not and will not
express any form of assurance conclusion thereon, with the exception of the Remuneration Report and our
related assurance opinion.
In connection with our audit of the financial report, our responsibility is to read the other information and,
in doing so, consider whether the other information is materially inconsistent with the financial report or
our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed on the other information obtained prior to the date of this
auditor’s report, we conclude that there is a material misstatement of this other information, we are
required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors for the financial report
The directors of the Company are responsible for the preparation of the financial report that gives a true
and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for
such internal control as the directors determine is necessary to enable the preparation of the financial
report that gives a true and fair view and is free from material misstatement, whether due to fraud or
error.
In preparing the financial report, the directors are responsible for assessing the Group’s ability to continue
as a going concern, disclosing, as applicable, matters relating to going concern and using the going
concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes
our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgment and maintain professional scepticism throughout the audit. We also:
►
Identify and assess the risks of material misstatement of the financial report, whether due to fraud
or error, design and perform audit procedures responsive to those risks, and obtain audit evidence
that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a
material misstatement resulting from fraud is higher than for one resulting from error, as fraud may
involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal
control.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
PT:CT:PAN:017
2018 ANNUAL REPORT | PAGE 59
INDEPENDENT AUDITORS REPORT
►
►
►
►
►
Obtain an understanding of internal control relevant to the audit in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If
we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s
report to the related disclosures in the financial report or, if such disclosures are inadequate, to
modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our
auditor’s report. However, future events or conditions may cause the Group to cease to continue as
a going concern.
Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and events in a
manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the financial report. We are responsible
for the direction, supervision and performance of the Group audit. We remain solely responsible for
our audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing of the
audit and significant audit findings, including any significant deficiencies in internal control that we
identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated to the directors, we determine those matters that were of most
significance in the audit of the financial report of the current year and are therefore the key audit matters.
We describe these matters in our auditor’s report unless law or regulation precludes public disclosure
about the matter or when, in extremely rare circumstances, we determine that a matter should not be
communicated in our report because the adverse consequences of doing so would reasonably be expected
to outweigh the public interest benefits of such communication.
Report on the audit of the remuneration report
Opinion on the remuneration report
We have audited the Remuneration Report included in the directors' report for the year ended 30 June
2018.
In our opinion, the Remuneration Report of Panoramic Resources Limited for the year ended 30 June
2018, complies with section 300A of the Corporations Act 2001.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
PT:CT:PAN:017
PAGE 60 | 2018 ANNUAL REPORT
INDEPENDENT AUDITORS REPORT
INDEPENDENT AUDITORS REPORT
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the Remuneration
Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an
opinion on the Remuneration Report, based on our audit conducted in accordance with Australian
Auditing Standards.
Ernst & Young
Philip Teale
Partner
Perth
31 August 2018
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
PT:CT:PAN:017
2018 ANNUAL REPORT | PAGE 61
AUDITORS INDEPENDENT DECLARATION
Ernst & Young
11 Mounts Bay Road
Perth WA 6000 Australia
GPO Box M939 Perth WA 6843
Tel: +61 8 9429 2222
Fax: +61 8 9429 2436
ey.com/au
Auditor’s Independence Declaration to the Directors of Panoramic
Resources Limited
As lead auditor for the audit of Panoramic Resources Limited for the financial year ended 30 June 2018, I
declare to the best of my knowledge and belief, there have been:
a)
b)
no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Panoramic Resources Limited and the entities it controlled during the
financial year ended 30 June 2018.
Ernst & Young
Philip Teale
Partner
31 August 2018
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
PT:CT:PAN:016
PAGE 62 | 2018 ANNUAL REPORT
AUDITORS INDEPENDENT DECLARATION
FINANCIAL REPORT
2018 ANNUAL REPORT | PAGE 63
Consolidated income statement
For the year ended 30 June 2018
Revenue
Cost of sales of goods
Gross margin on sale of goods
Other income
Care and maintenance expenses
Corporate and marketing costs
Exploration and evaluation expenditure
Exploration expenditure written-off
Impairment loss
Reversal of impairment loss
Share based payments
Other expenses
Finance costs
Loss before income tax
Loss for the year
Loss for the year is attributable to:
Owners of Panoramic Resources Limited
Non-controlling interests
Notes
3
5
4
13, 15
13, 15
5
5
2018
$'000
1,261
-
1,261
453
(5,474)
(4,022)
(487)
(619)
(45,152)
7,260
(160)
(156)
(943)
(48,039)
(48,039)
(40,803)
(7,236)
(48,039)
2017
$'000
8,966
(8,963)
3
700
(7,539)
(5,365)
(493)
-
-
9,178
(473)
(291)
(490)
(4,770)
(4,770)
(4,241)
(529)
(4,770)
Cents
Cents
Loss per share for loss attributable to the ordinary equity holders of
the Company:
Basic loss per share
Diluted loss per share
34
34
(10.3)
(10.3)
(1.0)
(1.0)
The above consolidated income statement should be read in conjunction with the accompanying notes.
PAGE 64 | 2018 ANNUAL REPORT
Consolidated income statement
For the year ended 30 June 2018
Consolidated statement of comprehensive income
For the year ended 30 June 2018
Revenue
Cost of sales of goods
Gross margin on sale of goods
Other income
Care and maintenance expenses
Corporate and marketing costs
Exploration and evaluation expenditure
Exploration expenditure written-off
Impairment loss
Reversal of impairment loss
Share based payments
Other expenses
Finance costs
Loss before income tax
Loss for the year
Loss for the year is attributable to:
Owners of Panoramic Resources Limited
Non-controlling interests
Notes
3
5
4
5
5
13, 15
13, 15
2018
$'000
1,261
-
1,261
453
(5,474)
(4,022)
(487)
(619)
(45,152)
7,260
(160)
(156)
(943)
(48,039)
(48,039)
(40,803)
(7,236)
(48,039)
2017
$'000
8,966
(8,963)
3
700
(7,539)
(5,365)
(493)
-
-
9,178
(473)
(291)
(490)
(4,770)
(4,770)
(4,241)
(529)
(4,770)
Loss per share for loss attributable to the ordinary equity holders of
the Company:
Basic loss per share
Diluted loss per share
Cents
Cents
34
34
(10.3)
(10.3)
(1.0)
(1.0)
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
Exchange differences on translation of foreign operations
Blank
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
Non-controlling interests
Notes
12
2018
$'000
(48,039)
1,422
439
1,861
(46,178)
(38,942)
(7,236)
(46,178)
2017
$'000
(4,770)
528
(324)
204
(4,566)
(4,037)
(529)
(4,566)
The above consolidated income statement should be read in conjunction with the accompanying notes.
The above consolidated statement of comprehensive income should be read in conjunction with the accompanying
notes.
2018 ANNUAL REPORT | PAGE 65
65
Consolidated balance sheet
As at 30 June 2018
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Prepayments
Assets classified as held for sale
Total current assets
Non-current assets
Available-for-sale financial assets
Exploration and evaluation
Development properties
Mine properties
Property, plant and equipment
Other non-current assets
Total non-current assets
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Borrowings
Provisions
Liabilities directly associated with assets classified as held for sale
Total current liabilities
Non-current liabilities
Borrowings
Provisions
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Contributed equity
Reserves
Accumulated losses
Non-controlling interests
Notes
2018
$'000
2017
$'000
7
8
9
11
10
12
15
15
15
13
16
17
18
19
10
20
22
25,430
421
184
246
17,002
43,283
2,703
45,763
17,222
27
10,630
1,303
77,648
120,931
3,764
-
923
3,502
8,189
-
26,822
26,822
35,011
85,920
23
24(a)
188,860
44,589
(154,269)
6,740
20,650
545
3
226
-
21,424
1,200
91,772
17,028
1,403
11,555
1,803
124,761
146,185
2,533
769
971
-
4,273
68
29,722
29,790
34,063
112,122
169,044
42,568
(113,466)
13,976
Total equity
85,920
112,122
The above consolidated balance sheet should be read in conjunction with the accompanying notes.
PAGE 66 | 2018 ANNUAL REPORT
66
Consolidated balance sheet
As at 30 June 2018
l
a
t
o
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q
e
0
0
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ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Prepayments
Assets classified as held for sale
Total current assets
Non-current assets
Available-for-sale financial assets
Exploration and evaluation
Development properties
Mine properties
Property, plant and equipment
Other non-current assets
Total non-current assets
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Borrowings
Provisions
Total current liabilities
Non-current liabilities
Borrowings
Provisions
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Contributed equity
Reserves
Accumulated losses
Non-controlling interests
Total equity
Liabilities directly associated with assets classified as held for sale
Notes
2018
$'000
2017
$'000
7
8
9
11
10
12
15
15
15
13
16
17
18
19
10
20
22
25,430
421
184
246
17,002
43,283
2,703
45,763
17,222
27
10,630
1,303
77,648
120,931
3,764
-
923
3,502
8,189
-
26,822
26,822
35,011
85,920
23
24(a)
188,860
44,589
(154,269)
6,740
85,920
112,122
20,650
545
3
226
-
21,424
1,200
91,772
17,028
1,403
11,555
1,803
124,761
146,185
2,533
769
971
-
4,273
68
29,722
29,790
34,063
112,122
169,044
42,568
(113,466)
13,976
66
The above consolidated balance sheet should be read in conjunction with the accompanying notes.
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2018 ANNUAL REPORT | PAGE 67
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T
Consolidated statement of cash flows
For the year ended 30 June 2018
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
Payments for exploration and evaluation expense
Net cash (outflow) 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
Exploration and evaluation expenditure
Return of proceeds from cash backed performance bonds
Proceeds from sale of property, plant and equipment
Interest received
Net cash (outflow) from investing activities
Cash flows from financing activities
Proceeds from issues of shares (net of cost)
Proceeds from partial sale of subsidiary
Repayment of borrowings
Net cash inflow from financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
Cash and cash equivalents at end of year
Notes
33
7
2018
$'000
1,305
(7,732)
(22)
(487)
(6,936)
(1,209)
(81)
(2,697)
(4,297)
500
55
467
(7,262)
19,816
-
(838)
18,978
4,780
20,650
25,430
2017
$'000
8,782
(16,098)
(53)
(493)
(7,862)
(249)
-
(265)
(4,955)
-
693
557
(4,219)
-
14,055
(761)
13,294
1,213
19,437
20,650
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
PAGE 68 | 2018 ANNUAL REPORT
68
Consolidated statement of cash flows
For the year ended 30 June 2018
Notes to the consolidated financial statements
30 June 2018
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
Payments for exploration and evaluation expense
Net cash (outflow) 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
Exploration and evaluation expenditure
Return of proceeds from cash backed performance bonds
Proceeds from sale of property, plant and equipment
Interest received
Net cash (outflow) from investing activities
Cash flows from financing activities
Proceeds from issues of shares (net of cost)
Proceeds from partial sale of subsidiary
Repayment of borrowings
Net cash inflow from financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
Cash and cash equivalents at end of year
7
Notes
33
2018
$'000
1,305
(7,732)
(22)
(487)
(6,936)
(1,209)
(81)
(2,697)
(4,297)
500
55
467
19,816
-
(838)
18,978
4,780
20,650
25,430
2017
$'000
8,782
(16,098)
(53)
(493)
(7,862)
(249)
-
(265)
(4,955)
-
693
557
-
14,055
(761)
13,294
1,213
19,437
20,650
(7,262)
(4,219)
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
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 2018 was authorised for issue in accordance with a resolution of the directors
on 31 August 2018.
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,
and development 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 the Group will be able
to meet its liabilities as they fall due for the foreseeable future. Both the Savannah and Lanfranchi nickel mine
continued to be on care and maintenance during the financial year. The Group undertook additional evaluation
work on the economics of a restart of the Savannah Nickel Project, producing an updated Feasibility Study in
October 2017 that demonstrates that the Project is economic at current nickel prices. In February 2018, the
Company raised $20.9 million (before costs) in new capital and commenced various pre-production activities on
site infrastructure, including the refurbishment of the Savannah Process Plant.
On 29 June 2018, Savannah Nickel Mines Pty Ltd (a wholly owned subsidiary of the Company) executed a new
four-year Concentrate Sales Agreement with Jinchuan Group Co. Ltd and Sino Nickel Pty Ltd. The Agreement
covers 100% of the concentrate that will be produced from the Savannah Nickel Project from early 2019.
On 16 July 2018, the Company announced that the Savannah Nickel Project will reopen following the Company
and Savannah Nickel mines Pty Ltd (a wholly owned subsidiary of Panoramic) executed a credit approved term
sheet with Macquarie Bank Limited for Project Finance Facilities (Facilities). The Facilities provided consist of a
secured project loan of up to $40 million and nickel and copper hedging lines. The combination of the equity
raised in February 2018 and the Macquarie project loan of up to $40 million means that the Savannah Project
restart is fully funded.
The Group is expected to start generating revenue from its income producing assets in 2019. As a result, it is
appropriate to prepare the financial statements on a going concern basis.
(c) Basis of consolidation
The consolidated financial statements comprise the financial statements of the Group and its subsidiaries as at 30
June 2018. 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.
68
69
2018 ANNUAL REPORT | PAGE 69
Notes to the consolidated financial statements
30 June 2018
When the Group has less than a majority of the voting or similar rights of an investee, the Group considers all
relevant facts and circumstances in assessing whether it has power over an investee, including:
The contractual arrangement with the other vote holders of the investee;
•
• Rights arising from other contractual arrangements; and
The Group’s voting rights and potential voting rights.
•
The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are
changes to one or more of the three elements of control. Consolidation of a subsidiary begins when the Group
obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. Assets, liabilities,
income and expenses of a subsidiary acquired or disposed of during the year are included in the statement of
comprehensive income from the date the Group gains control until the date the Group ceases to control the
subsidiary.
Profit or loss and each component of other comprehensive income (OCI) are attributed to the equity holders of the
parent of the Group and to the non-controlling interests, even if this results in the non-controlling interests having
a deficit balance. When necessary, adjustments are made to the financial statements of subsidiaries to bring their
accounting policies into line with the Group’s accounting policies. All intra-group assets and liabilities, equity,
income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on
consolidation.
A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity
transaction. 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; and
• 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 120.
(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 a Competent
Person(s) 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.
PAGE 70 | 2018 ANNUAL REPORT
Notes to the consolidated financial statements
30 June 2018
Notes to the consolidated financial statements
30 June 2018
When the Group has less than a majority of the voting or similar rights of an investee, the Group considers all
relevant facts and circumstances in assessing whether it has power over an investee, including:
•
The contractual arrangement with the other vote holders of the investee;
• Rights arising from other contractual arrangements; and
The Group’s voting rights and potential voting rights.
•
The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are
changes to one or more of the three elements of control. Consolidation of a subsidiary begins when the Group
obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. Assets, liabilities,
income and expenses of a subsidiary acquired or disposed of during the year are included in the statement of
comprehensive income from the date the Group gains control until the date the Group ceases to control the
subsidiary.
consolidation.
Profit or loss and each component of other comprehensive income (OCI) are attributed to the equity holders of the
parent of the Group and to the non-controlling interests, even if this results in the non-controlling interests having
a deficit balance. When necessary, adjustments are made to the financial statements of subsidiaries to bring their
accounting policies into line with the Group’s accounting policies. All intra-group assets and liabilities, equity,
income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on
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; and
• 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 120.
(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 a Competent
Person(s) 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.
(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 expenditure 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 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 mine development expenditure and
mine properties expenditure 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 expenditure 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 dispose’ (FVLCD).
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.
2018 ANNUAL REPORT | PAGE 71
Notes to the consolidated financial statements
30 June 2018
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 Note 13:
Non-current assets - Property, plant and equipment for further information.
(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 for decomissioning and rehabilitation as at 30 June 2018 was $26.810
million (2017: $29.715 million). The Group estimates that the costs would be realised towards the end of the
respective mine lives and calculates the provision using the discounted cash flow method based on expected
costs to be incurred to rehabilitate the disturbed area. These costs are discounted at 2.46% (2017: 2.03%).
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 35.
(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.
PAGE 72 | 2018 ANNUAL REPORT
Notes to the consolidated financial statements
30 June 2018
Notes to the consolidated financial statements
30 June 2018
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 Note 13:
Non-current assets - Property, plant and equipment for further information.
(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 for decomissioning and rehabilitation as at 30 June 2018 was $26.810
million (2017: $29.715 million). The Group estimates that the costs would be realised towards the end of the
respective mine lives and calculates the provision using the discounted cash flow method based on expected
costs to be incurred to rehabilitate the disturbed area. These costs are discounted at 2.46% (2017: 2.03%).
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 35.
(f) Revenue recognition
(i) Sale of concentrates/ore
(ii) Interest income
(iii) Dividends
(g) Borrowing costs
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:
A sale is recorded when risk and reward of ownership of the concentrates/ore has passed to the buyer.
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.
Dividends are recognised as revenue when the right to receive payment is established.
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.
(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 (if applicable)
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) 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.
2018 ANNUAL REPORT | PAGE 73
Notes to the consolidated financial statements
30 June 2018
(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 (if applicable) - cost of direct mining and a proportion of site overheads; and
concentrates and work in progress (if applicable) - cost of direct mining, processing, transport and labour and
a proportion of site overheads.
Net realisable value (if applicable) is the estimated selling price in the ordinary course of business, less estimated
costs of completion and the estimated costs necessary to make the sale. Cost of parts and consumables is
accounted for using average cost.
(ii) Spares for production
Inventories of consumable supplies and spare parts expected to be used in production are valued at weighted
average cost. Obsolete or damaged inventories of such items are valued at net realisable value.
(m) Derivative financial instruments and hedging (if applicable)
When in production, 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.
PAGE 74 | 2018 ANNUAL REPORT
30 June 2018
(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 (if applicable) - cost of direct mining and a proportion of site overheads; and
concentrates and work in progress (if applicable) - cost of direct mining, processing, transport and labour and
a proportion of site overheads.
Net realisable value (if applicable) is the estimated selling price in the ordinary course of business, less estimated
costs of completion and the estimated costs necessary to make the sale. Cost of parts and consumables is
accounted for using average cost.
(ii) Spares for production
Inventories of consumable supplies and spare parts expected to be used in production are valued at weighted
average cost. Obsolete or damaged inventories of such items are valued at net realisable value.
(m) Derivative financial instruments and hedging (if applicable)
When in production, 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.
Notes to the consolidated financial statements
Notes to the consolidated financial statements
30 June 2018
Amounts deferred in equity are recycled in the income statement in the periods when the hedged item is
recognised in the income statement.
Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated, or exercised, or no
longer qualifies for hedge accounting. At that time, any cumulative gain or loss deferred in equity at that time
remains in equity and is recognised when the forecast transaction is ultimately recognised in the income
statement. When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was
deferred in equity is recognised immediately in the income statement.
The Group tests each of the designated cash flow hedges for effectiveness at the inception of the hedge and then
at each reporting date both prospectively and retrospectively using the dollar offset method. This is done by
comparing the changes in the present value of the cash flow arising from hedged forecast sale at the forward rate,
compared to changes in the fair value of the forward contract. Measurement of the cash flow changes is based on
the respective forward curve over the hedge horizon.
At each balance sheet date, the Group measures ineffectiveness using the ratio offset method. For cash flow
hedges if the risk is over-hedged, the ineffective portion is taken immediately to the income/expense in the
income statement.
(ii) Derivatives that do not qualify for hedge accounting
Certain derivative instruments do not qualify for hedge accounting. Changes in the fair value of any derivative
instruments that do not qualify for hedge accounting are recognised immediately in the income statement.
(n) Foreign currency translation
Both the functional and presentation currency of Panoramic Resources Limited and its Australian subsidiaries is
Australian dollars (A$).
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).
2018 ANNUAL REPORT | PAGE 75
Notes to the consolidated financial statements
30 June 2018
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 76 | 2018 ANNUAL REPORT
Notes to the consolidated financial statements
30 June 2018
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
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
profit or loss.
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.
Notes to the consolidated financial statements
30 June 2018
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.
(i) 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.
2018 ANNUAL REPORT | PAGE 77
Notes to the consolidated financial statements
30 June 2018
(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.
(i) Depreciation and amortisation
Depreciation and amortisation is calculated on a straight line basis over the estimated useful lives of the asset.
The estimated useful lives used for each class of asset are as follows:
Office equipment
Office furniture and fittings
Plant and equipment under hire purchase
Plant and equipment under finance lease
Process plant and buildings
3 - 4 years
5 years
over the lease term
over the lease term
lesser of life of mine and life of asset
(ii) Impairment
The carrying values of plant and equipment are reviewed for impairment when events or changes in
circumstances indicate the carrying value may not be recoverable.
If any such indication exists and where the carrying values exceed the estimated recoverable amount, the assets
or cash-generating units are written down to their recoverable amount.
For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for
the cash-generating unit to which the asset belongs.
The recoverable amount of plant and equipment is the greater of fair value less costs to dispose and value in use.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax
discount rate that reflects current market assessments of the time value of money and the risks specific to the
asset.
Property, plant and equipment that suffered an impairment are tested for possible reversal of the impairment
whenever events or changes in circumstances indicate that the impairment may have reversed.
(iii) Derecognition and disposal
An item of property, plant and equipment is derecognised upon disposal or when no further future economic
benefits are expected from its use or disposal.
Any gain or loss arising on derecognition of the asset (calculated as the difference between net disposal proceeds
and the carrying amount of the asset) is included in profit or loss in the year the asset is derecognised.
(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.
PAGE 78 | 2018 ANNUAL REPORT
Notes to the consolidated financial statements
30 June 2018
Notes to the consolidated financial statements
30 June 2018
(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.
(i) Depreciation and amortisation
Depreciation and amortisation is calculated on a straight line basis over the estimated useful lives of the asset.
The estimated useful lives used for each class of asset are as follows:
Office equipment
Office furniture and fittings
Plant and equipment under hire purchase
Plant and equipment under finance lease
Process plant and buildings
3 - 4 years
5 years
over the lease term
over the lease term
lesser of life of mine and life of asset
(ii) Impairment
The carrying values of plant and equipment are reviewed for impairment when events or changes in
circumstances indicate the carrying value may not be recoverable.
If any such indication exists and where the carrying values exceed the estimated recoverable amount, the assets
or cash-generating units are written down to their recoverable amount.
For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for
the cash-generating unit to which the asset belongs.
The recoverable amount of plant and equipment is the greater of fair value less costs to dispose and value in use.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax
discount rate that reflects current market assessments of the time value of money and the risks specific to the
asset.
Property, plant and equipment that suffered an impairment are tested for possible reversal of the impairment
whenever events or changes in circumstances indicate that the impairment may have reversed.
(iii) Derecognition and disposal
An item of property, plant and equipment is derecognised upon disposal or when no further future economic
benefits are expected from its use or disposal.
Any gain or loss arising on derecognition of the asset (calculated as the difference between net disposal proceeds
and the carrying amount of the asset) is included in profit or loss in the year the asset is derecognised.
(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 expenditure 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 dispose 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.
(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.
2018 ANNUAL REPORT | PAGE 79
Notes to the consolidated financial statements
30 June 2018
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 expenditure
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 expenditure 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 dispose
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.
PAGE 80 | 2018 ANNUAL REPORT
Notes to the consolidated financial statements
30 June 2018
Notes to the consolidated financial statements
30 June 2018
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 expenditure
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
specific to the asset.
its fair value.
The carrying value of capitalised mine properties expenditure 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 dispose
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
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
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.
(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.
2018 ANNUAL REPORT | PAGE 81
Notes to the consolidated financial statements
30 June 2018
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.
(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.
PAGE 82 | 2018 ANNUAL REPORT
Notes to the consolidated financial statements
30 June 2018
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.
(x) Employee benefits
(i) Short term benefits
(ii) Long service leave
Liabilities for short term benefits expected to be wholly settled within 12 months of the reporting date are
recognised in other payables in respect of employees services up to the reporting date. They are measured at the
amounts expected to be paid when the liabilities are settled. Liabilities for non-accumulating sick leave are
recognised when the leave is taken and are measured at the rates paid or payable.
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
transactions’).
model.
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
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
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.
Notes to the consolidated financial statements
30 June 2018
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
When applicable, 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.
(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.
2018 ANNUAL REPORT | PAGE 83
Notes to the consolidated financial statements
30 June 2018
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
When applicable, 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; and
•
Expenses, including its share of any expenses incurred jointly.
•
2 Segment information
(a) Business segments
The Group has identified its operating segments based on the internal reports that are reviewed and used by the
executive management team (the chief operating decision makers) in assessing performance and in determining
the allocation of resources.
The reportable segments are based on aggregated operating segments determined by the similarity of the
products produced and sold, as these are the sources of the Group's major risks and have the most effect on the
rates of return.
The Group has identified five operating segments being: (1) Nickel, the Savannah 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 and the Lanfranchi Nickel Project, when in production, all mine nickel ore. 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. Both mines remained in care and maintenance
during the period other than the Lanfranchi camp being leased out. At 30 June 2018, the Lanfranchi Nickel Project
was reclassified as asset held for sale and is excluded from this segment.
PAGE 84 | 2018 ANNUAL REPORT
Notes to the consolidated financial statements
30 June 2018
Notes to the consolidated financial statements
30 June 2018
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.
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
(ac) Government grants
useful life of the related asset.
(ad) Joint Operations
When applicable, 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; and
•
Expenses, including its share of any expenses incurred jointly.
•
•
•
2 Segment information
(a) Business segments
the allocation of resources.
rates of return.
Nickel
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 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
The Group has identified five operating segments being: (1) Nickel, the Savannah 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.
The Savannah Nickel Project and the Lanfranchi Nickel Project, when in production, all mine nickel ore. 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. Both mines remained in care and maintenance
during the period other than the Lanfranchi camp being leased out. At 30 June 2018, the Lanfranchi Nickel Project
was reclassified as asset held for sale and is excluded from this segment.
Gold
The 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. 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.
In October 2016, the Gum Creek Gold Project was sold to the Company's wholly owned subsidiary, Horizon Gold
Limited. In December 2016, Horizon Gold Limited was listed on the Australian Stock Exchange (ASX) and raised
$15 million in new capital. The Company has retained a 51% controlling equity in Horizon Gold Limited.
Platinum Group Metals (PGM)
In July 2012, the Company completed 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 undertook evaluation studies to re-optimise the mining method and mineral
processing route contained in the 2011 Scoping Study/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. RTEC is able to earn a 70% interest in the TBN by spending C$20 million over a five year period
to January 2020.
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 greenfield exploration and evaluation activities currently cover the regional areas of Western
Australia.
The Group's GM - Exploration is responsible for budgets and expenditure by the Group's exploration team. The
exploration division does not normally derive any income. Should a project generated by the exploration division
commence generating income or lead to the construction or acquisition of a mining operation, that operation
would then be disaggregated from the exploration and become a separate reportable segment.
Accounting policies
Segment information is prepared in conformity with the accounting policies of the entity as disclosed in note 1 and
Accounting Standard AASB 8 Operating Segments.
Segment revenues, expenses, assets and liabilities are those that are directly attributable to a segment and the
relevant portion that can be allocated to the segment on a reasonable basis. Segment assets include all assets
used by a segment and consist primarily of operating cash, receivables, inventories, derivative financial
instruments, property, plant and equipment and development and mine properties. Segment liabilities consist
primarily of trade and other creditors, employee benefits, derivative financial instruments, finance leases and
borrowings and provision for rehabilitation.
2018 ANNUAL REPORT | PAGE 85
Notes to the consolidated financial statements
30 June 2018
(b) Operating business segments
2018
Other revenue
Total segment revenue
Total segment results
Total segment assets
Total segment liabilities
Impairment of assets
Depreciation and amortisation
Exploration and evaluation written off
Interest expense
Interest income
Nickel
$'000
Gold
$'000
Platinum
Group
Metals
$'000
Australian
Exploration
$'000
Overseas
Exploration
$'000
Total
$'000
21
21
(5,066)
24,654
19,602
-
274
-
419
(21)
189
189
(14,764)
24,234
10,437
12,569
-
619
463
(189)
1
1
(32,723)
10,647
93
32,583
-
-
-
(1)
-
-
(30)
22,583
7
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
211
211
(52,583)
82,118
30,139
45,152
274
619
882
(211)
In 2018, an impairment loss of $45.152 million was recognised to decrease the carrying amount of exploration
and evaluation. As a result, $45.152 million has been recognised in the income statement.
2017
Sales to external customers
Other revenue
Total segment revenue
Total segment results
Total segment assets
Total segment liabilities
Reversal of impairment loss
Depreciation and amortisation
Interest expense
Interest income
Nickel
$'000
Gold
$'000
Platinum
Group
Metals
$'000
Australian
Exploration
$'000
Overseas
Exploration
$'000
Total
$'000
8,409
139
8,548
(6,447)
29,337
22,431
(53,869)
-
450
351
(139)
-
186
186
7,371
38,709
10,059
(56,325)
(9,178)
-
139
(186)
-
1
1
(31)
42,828
80
(42,878)
-
-
-
(1)
-
-
-
(84)
26,465
7
(26,388)
-
-
-
-
-
-
-
(132)
2
-
130
-
-
-
-
8,409
326
8,735
677
137,341
32,577
(179,330)
(9,178)
450
490
(326)
In 2017, a reversal of impairment loss of $9.178 million was recognised to increase the carrying amount of
exploration and evaluation. As a result, $9.178 million was recognised in the income statement
(c) Other segment information
(i) Segment revenue
Segment revenue reconciles to total revenue from continuing operations as follows:
Total segment revenue
Unallocated revenue
Consolidated revenue (note 3)
Segment revenues are allocated based on the country in which the customer is located.
.
2018
$'000
211
1,050
1,261
2017
$'000
8,735
231
8,966
PAGE 86 | 2018 ANNUAL REPORT
Notes to the consolidated financial statements
30 June 2018
Notes to the consolidated financial statements
30 June 2018
(b) Operating business segments
2018
Other revenue
Total segment revenue
Total segment results
Total segment assets
Total segment liabilities
Impairment of assets
Depreciation and amortisation
Exploration and evaluation written off
Interest expense
Interest income
Nickel
$'000
Gold
$'000
Platinum
Group
Metals
$'000
Australian
Exploration
Overseas
Exploration
$'000
$'000
Total
$'000
21
21
(5,066)
24,654
19,602
-
-
274
419
(21)
189
189
(14,764)
24,234
10,437
12,569
-
619
463
(189)
1
1
(32,723)
10,647
93
32,583
-
-
-
(1)
(30)
22,583
-
-
-
-
-
-
-
-
-
-
211
211
(52,583)
82,118
30,139
45,152
274
619
882
(211)
In 2018, an impairment loss of $45.152 million was recognised to decrease the carrying amount of exploration
and evaluation. As a result, $45.152 million has been recognised in the income statement.
Nickel
$'000
Gold
$'000
Platinum
Group
Metals
$'000
Australian
Exploration
$'000
Overseas
Exploration
$'000
Total
$'000
8,409
139
8,548
(6,447)
29,337
22,431
(53,869)
-
450
351
(139)
-
186
186
7,371
38,709
10,059
(56,325)
(9,178)
-
139
(186)
(31)
42,828
80
(42,878)
-
1
1
-
-
-
(1)
(84)
26,465
(132)
(26,388)
130
-
-
-
2
-
-
-
-
-
8,409
326
8,735
677
137,341
32,577
(179,330)
(9,178)
450
490
(326)
In 2017, a reversal of impairment loss of $9.178 million was recognised to increase the carrying amount of
exploration and evaluation. As a result, $9.178 million was recognised in the income statement
-
-
7
-
-
-
-
-
-
-
-
7
-
-
-
-
2017
Sales to external customers
Other revenue
Total segment revenue
Total segment results
Total segment assets
Total segment liabilities
Reversal of impairment loss
Depreciation and amortisation
Interest expense
Interest income
(c) Other segment information
(i) Segment revenue
Total segment revenue
Unallocated revenue
Consolidated revenue (note 3)
.
In 2018, total revenue derived from interest income in Australia is $0.211 million.
In 2017, total revenue derived from the sale of goods to external customers in China was $8.409 million. Sales of
goods 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.
In 2017, the Group had two customers to which it delivered nickel concentrate. The Group's most significant
customer accounted for $4.351 million of external revenue. The next most significant customer accounted for
$4.058 million of revenue.
(ii) Segment results
A reconciliation of segment results to loss for the year is provided as follows:
Segment results
Corporate charges
Revenue and expenses directly associated with assets held for sale
Loss for the year
2018
$'000
(52,583)
(3,418)
7,962
(48,039)
2017
$'000
677
(5,447)
-
(4,770)
At 30 June 2018, the Lanfranchi Nickel Project was classified as an asset held for sale. For further details, see
Note 10.
(iii) Segment assets
Reportable segments' assets are reconciled to total assets as follows:
Segment assets
Intersegment eliminations
Unallocated assets
Assets held for sale
Total assets as per the consolidated balance sheet
2018
$'000
82,118
117
21,694
17,002
120,931
2017
$'000
137,341
118
8,726
-
146,185
Total non-current assets located in Australia is $92.059 million (2017: $109.746 million), and the total of these non-
current assets located in Canada is $4.084 million (2017: $36.439 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 revenue reconciles to total revenue from continuing operations as follows:
2018
$'000
211
1,050
1,261
2017
$'000
8,735
231
8,966
Segment liabilities
Intersegment eliminations
Unallocated liabilities
Liabilities directly associated with assets held for sale
Total liabilities as per the consolidated balance sheet
2018
$'000
30,139
117
1,253
3,502
35,011
2017
$'000
32,577
118
1,368
-
34,063
Segment revenues are allocated based on the country in which the customer is located.
2018 ANNUAL REPORT | PAGE 87
Notes to the consolidated financial statements
30 June 2018
3 Revenue
Sales revenue
Sale of goods
Other revenue
Rents and sub-lease rentals
Interest income
4 Other income
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 goods sold/produced
Royalties
Finance costs
Interest and finance charges paid/payable
Unwinding of discount - rehabilitation
Rental expense relating to operating leases
Minimum lease payments
Other
Net (gain)/loss on disposal of property, plant and equipment
Net foreign currency exchange loss/(gain)
Write down / (reversal of write-down) on inventory
Depreciation - property, plant and equipment not used in production
Depreciation - finance lease and hire purchase assets not used in production
Breakdown of employee benefits expenses
Salaries and wages
Payroll tax
Superannuation
Redundancies
Others
Share based payments expense
PAGE 88 | 2018 ANNUAL REPORT
2018
$'000
-
794
467
1,261
1,261
2018
$'000
50
403
453
2018
$'000
-
-
-
22
921
943
606
606
2018
$'000
-
-
14
430
-
444
3,567
206
328
78
-
160
4,339
2017
$'000
8,409
-
557
557
8,966
2017
$'000
198
502
700
2017
$'000
8,473
490
8,963
53
437
490
1,187
1,187
2017
$'000
(150)
62
(433)
735
25
239
3,791
317
390
1,300
271
473
6,542
Notes to the consolidated financial statements
30 June 2018
3 Revenue
Sales revenue
Sale of goods
Other revenue
Rents and sub-lease rentals
Interest income
4 Other income
5 Expenses
expenses:
Cost of sales of goods
Cost of goods sold/produced
Royalties
Gain on measurement of rehabilitation liability
Sundry income
Loss before income tax includes the following specific
Finance costs
Interest and finance charges paid/payable
Unwinding of discount - rehabilitation
Rental expense relating to operating leases
Minimum lease payments
Other
Net (gain)/loss on disposal of property, plant and equipment
Net foreign currency exchange loss/(gain)
Write down / (reversal of write-down) on inventory
Depreciation - property, plant and equipment not used in production
Depreciation - finance lease and hire purchase assets not used in production
Breakdown of employee benefits expenses
Salaries and wages
Payroll tax
Superannuation
Redundancies
Others
Share based payments expense
2018
$'000
-
794
467
1,261
1,261
2018
$'000
50
403
453
2018
$'000
-
-
-
22
921
943
606
606
-
-
14
430
-
444
2018
$'000
3,567
206
328
78
-
160
4,339
2017
$'000
8,409
-
557
557
8,966
2017
$'000
198
502
700
2017
$'000
8,473
490
8,963
53
437
490
1,187
1,187
2017
$'000
(150)
62
(433)
735
25
239
3,791
317
390
1,300
271
473
6,542
Notes to the consolidated financial statements
30 June 2018
6
Income tax benefit
(a) Income tax benefit
Relating to origination and reversal of temporary differences in current year
Deferred tax asset not recognised
Utilisation of unrecognised deferred tax asset
(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% (2017 - 30.0%)
Tax effect of amounts which are not deductible (taxable) in calculating
taxable income:
Entertainment expense
Share based payments
Adjustments in relation to research and development
Other
Utilisation of unrecognised deferred tax asset
Deferred tax asset de-recognised
Income tax benefit
(c) 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
2018
$'000
-
-
-
-
2018
$'000
(48,039)
(14,412)
2
48
(78)
9,902
-
4,538
-
48,039
2018
$'000
-
23,639
878
121,906
43,927
2017
$'000
(3,422)
2,967
455
-
2017
$'000
(4,770)
(1,431)
1
142
62
771
455
-
-
4,770
2017
$'000
1,789
23,695
878
121,006
44,210
2018
$'000
2,605
22,825
25,430
2017
$'000
1,860
18,790
20,650
(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:
Cash at bank and in hand and deposits at call
2018
$'000
25,430
2017
$'000
20,650
2018 ANNUAL REPORT | PAGE 89
Notes to the consolidated financial statements
30 June 2018
(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 1.85% (2017: 1.84%).
(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
2.5% (2017: 2.5%).
(d) Fair value
The carrying amount for cash and cash equivalents equals the fair value.
8 Current assets - Trade and other receivables
Other receivables
2018
$'000
421
2017
$'000
545
(a) 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.
(b) Fair value and credit risk
Information on credit risk is provided in note 37.
9 Current assets - Inventories
Spares for production
- at cost
2018
$'000
184
184
2017
$'000
3
3
10 Assets and liabilities classified as held for sale
(a) Lanfranchi Nickel Project
With the improvement in nickel prices and the Company’s increasing focus on the restart of operations at the
Savannah Nickel Project, the Company has reviewed the future options for the Project, including retaining
ownership and exploring for additional resources, seeking a joint venture partner to help fund exploration activities
and/or divestment of the asset. In April 2018, the Company appointed Hartley Limited to assist in this process,
including seeking expressions of interest to purchase the Project.
Leading up to the end of the financial period, there have been several interested parties that have reviewed the
Project’s assets. With the increasing likelihood that the Project will be sold over the 2018/19 financial year, the
Project has been classified as an asset held for sale at 30 June 2018.
The major classes of assets and liabilities of the Project classified as held for sale consists of property, plant and
equipment, exploration and evaluation properties, mine development and mineral properties and rehabilitation
provision totalling to a net of $13.500 million as at 30 June 2018.
Immediately before the classification of the Project as assets held for sale, the recoverable amount was estimated
for the assets of the Project and a reversal of a previous impairment loss was required. Following the
classification, an impairment reversal of $7.260 million was recognised on 30 June 2018 to increase the carrying
value of the assets in the Project to their fair value. This reversal of impairment loss was recognised in the
consolidated income statement.
PAGE 90 | 2018 ANNUAL REPORT
Notes to the consolidated financial statements
30 June 2018
(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 1.85% (2017: 1.84%).
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
The carrying amount for cash and cash equivalents equals the fair value.
8 Current assets - Trade and other receivables
(c) Deposits at call
2.5% (2017: 2.5%).
(d) Fair value
Other receivables
(a) 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.
(b) Fair value and credit risk
Information on credit risk is provided in note 37.
9 Current assets - Inventories
Spares for production
- at cost
2018
$'000
421
2017
$'000
545
2018
$'000
184
184
2017
$'000
3
3
10 Assets and liabilities classified as held for sale
(a) Lanfranchi Nickel Project
With the improvement in nickel prices and the Company’s increasing focus on the restart of operations at the
Savannah Nickel Project, the Company has reviewed the future options for the Project, including retaining
ownership and exploring for additional resources, seeking a joint venture partner to help fund exploration activities
and/or divestment of the asset. In April 2018, the Company appointed Hartley Limited to assist in this process,
including seeking expressions of interest to purchase the Project.
Leading up to the end of the financial period, there have been several interested parties that have reviewed the
Project’s assets. With the increasing likelihood that the Project will be sold over the 2018/19 financial year, the
Project has been classified as an asset held for sale at 30 June 2018.
The major classes of assets and liabilities of the Project classified as held for sale consists of property, plant and
equipment, exploration and evaluation properties, mine development and mineral properties and rehabilitation
provision totalling to a net of $13.500 million as at 30 June 2018.
Immediately before the classification of the Project as assets held for sale, the recoverable amount was estimated
for the assets of the Project and a reversal of a previous impairment loss was required. Following the
classification, an impairment reversal of $7.260 million was recognised on 30 June 2018 to increase the carrying
value of the assets in the Project to their fair value. This reversal of impairment loss was recognised in the
consolidated income statement.
Notes to the consolidated financial statements
30 June 2018
The major classes of assets and liabilities of Cherish Metals Pty Ltd (the owner of the Lanfranchi Nickel Project)
classified as held for sale as at 30 June 2018 are as follows:
Assets
Cash at bank and in hand
Other receivables
Inventory
Prepayments
Property, plant and equipment
Exploration and evaluation
Development properties
Mine properties
Asset held for sale
Liabilities
Trade and other payables
Rehabilitation provision
Liabilities directly associated to asset held for sale
Net assets
11 Current assets - Prepayments
Prepayments
12 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
Fair value gain/(loss) recognised in other comprehensive income
At end of year
2018
$'000
246
2018
$'000
2,703
2018
$'000
1,200
81
1,422
2,703
2018
$ '000
146
8
23
51
1,650
8,605
1,953
4,566
17,002
275
3,227
3,502
13,500
2017
$'000
226
2017
$'000
1,200
2017
$'000
677
-
523
1,200
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.
2018 ANNUAL REPORT | PAGE 91
Notes to the consolidated financial statements
30 June 2018
13 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 2018
Opening net book amount
Additions
Reclass to assets held for sale
Depreciation charge
Transfer (to) from other asset class
Disposals
Closing net book amount
At 30 June 2018
Deemed cost
Accumulated depreciation and impairment
Net book amount
Year ended 30 June 2017
Opening net book amount
Acquisition of subsidiary
Additions
Depreciation charge
Reversal of impairment loss
Foreign currency exchange adjustments
Closing net book amount
At 30 June 2017
Cost or fair value
Accumulated depreciation
Net book amount
2018
$'000
2017
$'000
163,547
(153,180)
10,367
203,873
(192,575)
11,298
365
(365)
-
241
22
263
10,630
Plant and
equipment
$'000
Leased plant
and
equipment
$'000
Construction
in progress
$'000
11,298
1,144
(1,649)
(430)
59
(55)
10,367
163,547
(153,180)
10,367
9,255
(543)
199
(696)
3,084
(1)
11,298
59
-
-
-
(59)
-
-
365
(365)
-
123
-
-
(64)
-
-
59
203,873
(192,575)
11,298
7,316
(7,257)
59
198
65
-
-
-
-
263
241
22
263
145
-
53
-
-
-
198
176
22
198
7,316
(7,257)
59
176
22
198
11,555
Total
$'000
11,555
1,209
(1,649)
(430)
-
(55)
10,630
164,153
(153,523)
10,630
9,523
(543)
252
(760)
3,084
(1)
11,555
211,365
(199,810)
11,555
PAGE 92 | 2018 ANNUAL REPORT
Notes to the consolidated financial statements
30 June 2018
13 Non-current assets - Property, plant and equipment
Plant and equipment
Deemed cost
Accumulated depreciation and impairment
Leased plant & equipment
Accumulated depreciation
Construction in progress
Cost
Cost
Accumulated impairment
Year ended 30 June 2018
Opening net book amount
Additions
Reclass to assets held for sale
Depreciation charge
Transfer (to) from other asset class
Disposals
Closing net book amount
At 30 June 2018
Deemed cost
Net book amount
Accumulated depreciation and impairment
Year ended 30 June 2017
Opening net book amount
Acquisition of subsidiary
Additions
Depreciation charge
Reversal of impairment loss
Foreign currency exchange adjustments
Closing net book amount
At 30 June 2017
Cost or fair value
Accumulated depreciation
Net book amount
10,630
11,555
Leased plant
Plant and
equipment
$'000
and
Construction
equipment
in progress
$'000
$'000
2018
$'000
2017
$'000
163,547
(153,180)
10,367
365
(365)
-
241
22
263
203,873
(192,575)
11,298
7,316
(7,257)
59
176
22
198
Total
$'000
11,555
1,209
(1,649)
(430)
-
(55)
10,630
164,153
(153,523)
10,630
9,523
(543)
252
(760)
3,084
(1)
11,555
211,365
(199,810)
11,555
11,298
1,144
(1,649)
(430)
59
(55)
10,367
163,547
(153,180)
10,367
9,255
(543)
199
(696)
3,084
(1)
11,298
59
(59)
-
-
-
-
-
-
-
-
-
-
365
(365)
123
(64)
59
203,873
(192,575)
11,298
7,316
(7,257)
59
198
65
-
-
-
-
263
241
22
263
145
53
-
-
-
-
198
176
22
198
Notes to the consolidated financial statements
30 June 2018
(a) Impairment of assets
Savannah Nickel Project
On 16 July 2018, the Company's Board made the formal decision to restart operations at the Savannah Nickel
Project, as a result of this decision, the consolidated entity has commenced Phase Two of the pre-production
activities at the Project and is targeting to export the first shipment of Savannah bulk concentrate to China early in
the March 2019 quarter.
It is expected that the refurbishment of the Savannah process plant and other site infrastructure will be completed
during the December 2018 quarter. At that time, the Company will engage an external valuer to determine the
market value of property, plant and equipment. Any adjustments to the carrying values, will be made at that time.
Lanfranchi Nickel Project
At 30 June 2018, the Lanfranchi Nickel Project was classified as an asset held for sale. The major classes of
assets of the Project classified as held for sale consists of property, plant and equipment, capitalised exploration
and evaluation, mine development and mineral properties expenditure totalling $17.002 million as at 30 June
2018.
Immediately before the classification of the Lanfranchi Nickel Project's assets being held for sale, the recoverable
amounts were estimated for the property, plant and equipment of the Project and it was determined that the
recoverable amount estimated approximated its carrying value and that no adjustment was required.
Gum Creek Gold Project
The deficiency in market capitalisation of Horizon Gold Limited (which owns the Gum Creek Gold Project)
compared to its net assets during the year ended 30 June 2018 led to the Group to make an assessment of the
recoverability of the carrying value of Horizon's assets at 30 June 2018 under AASB 136 Impairment of Assets.
The carrying value of the Gum Creek Gold Project CGU was assessed to ensure that the assets within the CGU
were being carried at lower of its carrying value (adjusted for depreciation and amortisation) and recoverable
amount (being its fair value less cost to dispose (FVLCD)). It was determined that the FVLCD of property, plant
and equipment of the Project approximated its carrying value and that no adjustment was required.
The FVLCD of the Gum Creek Gold Project has been determined 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 were made in relation to the underlying resources/reserves and the valuation multiple. Any change in
these estimates could impact the FVLCD of the underlying "cash generating unit" (CGU).
(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. At 30 June 2017, the carrying amounts of assets pledged as security
for current and non-current borrowings were $0.059 million.
14 Non-current assets - Deferred tax assets
The balance comprises temporary differences attributable to:
Tax losses
Employee benefits
Provisions
Depreciation and amortisation
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 21)
Net deferred tax assets
2018
$'000
43,927
268
10,404
7,547
14
4,091
727
(47,012)
19,966
(19,966)
-
2017
$'000
36,302
293
8,915
-
53
4,091
(57)
(44,540)
5,057
(5,057)
-
2018 ANNUAL REPORT | PAGE 93
Notes to the consolidated financial statements
30 June 2018
15 Non-current assets - Exploration and evaluation, development and mine properties
2018
$'000
2017
$'000
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
Year ended 30 June 2018
Opening net book amount
Additions
Reclass to assets held for sale
(Reversal of) / impairment loss
Written off to profit and loss
Re-measurement of rehab provision
Closing net book amount
At 30 June 2018
Deemed cost
Accumulated amortisation and impairment
Net book amount
Year ended 30 June 2017
Opening net book amount
(Reversal of) / impairment loss
Expenditure incurred
Reversal of impairment loss (net)
Foreign currency exchange adjustments
Closing net book amount
At 30 June 2017
Cost or fair value
Accumulated depreciation
Net book amount
225,118
(207,896)
17,222
116,983
(71,220)
45,763
1,795
(1,768)
27
63,012
Mine
Development
Expenditure
$'000
Exploration
and
Evaluation
$'000
Mine
(Mineral)
Properties
$'000
17,028
2,697
(1,953)
-
-
(550)
17,222
225,118
(207,896)
17,222
18,019
(403)
262
(850)
-
17,028
91,772
4,297
(8,605)
(41,082)
(619)
-
45,763
116,983
(71,220)
45,763
80,201
-
5,075
6,943
(447)
91,772
1,403
-
(4,566)
3,190
-
-
27
1,795
(1,768)
27
1,403
-
-
-
-
1,403
349,963
(332,935)
17,028
121,910
(30,138)
91,772
89,703
(88,300)
1,403
110,203
Total
$'000
110,203
6,994
(15,124)
(37,892)
(619)
(550)
63,012
343,896
(280,884)
63,012
99,623
(403)
5,337
6,093
(447)
110,203
349,963
(332,935)
17,028
121,910
(30,138)
91,772
89,703
(88,300)
1,403
561,576
(451,373)
110,203
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.
PAGE 94 | 2018 ANNUAL REPORT
Notes to the consolidated financial statements
30 June 2018
Notes to the consolidated financial statements
30 June 2018
15 Non-current assets - Exploration and evaluation, development and mine properties
(a) Impairment of assets
Savannah Nickel Project
2018
$'000
2017
$'000
225,118
(207,896)
17,222
116,983
(71,220)
45,763
1,795
(1,768)
27
63,012
1,403
(4,566)
3,190
-
-
-
27
1,795
(1,768)
27
1,403
-
-
-
-
1,403
349,963
(332,935)
17,028
121,910
(30,138)
91,772
89,703
(88,300)
1,403
110,203
Total
$'000
110,203
6,994
(15,124)
(37,892)
(619)
(550)
63,012
343,896
(280,884)
63,012
99,623
(403)
5,337
6,093
(447)
110,203
Mine
Exploration
Mine
Development
Expenditure
Evaluation
and
$'000
(Mineral)
Properties
$'000
$'000
17,028
2,697
(1,953)
-
-
(550)
17,222
225,118
(207,896)
17,222
18,019
(403)
262
(850)
-
17,028
91,772
4,297
(8,605)
(41,082)
(619)
-
45,763
116,983
(71,220)
45,763
80,201
-
5,075
6,943
(447)
91,772
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
Year ended 30 June 2018
Opening net book amount
Additions
Reclass to assets held for sale
(Reversal of) / impairment loss
Written off to profit and loss
Re-measurement of rehab provision
Closing net book amount
At 30 June 2018
Deemed cost
Net book amount
Accumulated amortisation and impairment
Year ended 30 June 2017
Opening net book amount
(Reversal of) / impairment loss
Expenditure incurred
Reversal of impairment loss (net)
Foreign currency exchange adjustments
Closing net book amount
At 30 June 2017
Cost or fair value
Accumulated depreciation
Net book amount
349,963
(332,935)
17,028
121,910
(30,138)
91,772
89,703
(88,300)
1,403
561,576
(451,373)
110,203
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.
On 16 July 2018, the Company's Board made the formal decision to restart operations at the Savannah Nickel
Project. As a result of this decision, the consolidated entity has commenced Phase Two of the pre-production
activities at the Project and is targeting to export the first shipment of Savannah bulk concentrate to China early in
the March 2019 quarter. In December 2018 quarter, the recoverable amount of the mine operation at the cash
generating unit level will be determined based on a value in use calculation using cash flow projections based on
financial budgets covering the life of the project incorporating current market assumptions approved by the
Company's Directors. Any adjustments to the exploration and evaluation, mine development and mineral
properties expenditure carrying values will be made at that time.
Lanfranchi Nickel Project
At 30 June 2018, the Lanfranchi Nickel Project was classified as an asset held for sale. The major classes of
assets the Project classified as held for sale consists of property, plant and equipment, exploration and evaluation
properties, mine development and mineral properties expenditure totalling to $17.002 million as at 30 June 2018.
Immediately before the classification of the Project's assets being held for sale, the recoverable amount was
estimated for the exploration and evaluation expenditure, mine development and mineral properties expenditure
and it was determined that a reversal of impairment loss was required. An impairment loss reversal of $7.260
million was recognised at 30 June 2018 to increase the carrying value of the exploration and evaluation
expenditure and mineral properties expenditure to their fair value. This impairment loss reversal has been
recognised in the consolidated income statement.
Gum Creek Gold Project
The deficiency in market capitalisation of Horizon Gold Limited (the owner of the Gum Creek Gold Project)
compared to net assets during the year ended 30 June 2018 led to the Group to make an assessment of the
recoverability of the carrying value of Horizon's assets at 30 June 2018 under AASB 136 Impairment of Assets.
An external party was engaged to determine the fair value less costs to dispose (FVLCD) of the Gum Creek Gold
Project. The FVLCD was then compared against the carrying value (adjusted for depreciation and amortisation) of
capitalised exploration and evaluation expenditure. As a result of this comparison, an impairment loss of $12.569
million was recognised to reduce the carrying amount of exploration and evaluation expenditure. This amount has
been recognised in the consolidated income statement.
The fair value less cost to dispose of the Project's assets were determined by a valuation performed by an
external party based on a review of comparable market transactions that were completed between 2015 and
2018. 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 assets of the underlying "cash generating unit" (CGU).
2018 ANNUAL REPORT | PAGE 95
Notes to the consolidated financial statements
30 June 2018
Thunder Bay North Project
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
16 January 2019, 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.
In January 2017, RTEC confirmed that it had exceeded the minimum spend of C$5 million.
During the 2017/18 financial year, RTEC continued to fund activities on the TBN Project under the earn-in
arrangement of the Agreement. The three part-time employees of TBN assisted RTEC as required and continued
to undertake various consulting work for locally based exploration companies to assist in offsetting the costs of
running the Thunder Bay Office.
The Company continued to hold discussions with RTEC on the future plans and strategy for the Project. As at the
date of this report, these discussions are continuing.
The recoverable amount of the Project has been determined based an internal review of comparable market
transactions for Platinum Group Metals (PGM) projects that were completed between 2010 and 2018.
In recognition of the uncertainty over the future of the Project, the Company reviewed and compared the carrying
values of the TBN Projects assets against their estimated recoverable values as at 30 June 2018. As a result of
this comparison, an impairment loss of $32.583 million was recognised to reduce the carrying amount of the
exploration and evaluation properties. This amount has been recognised in the consolidated income statement.
16 Non-current assets - Other non-current assets
Others
2018
$'000
1,303
1,303
At 30 June 2018, $1.303 million (2017: $1.803 million) is cash backed against the drawn amount on the
Company's performance bond facility.
17 Current liabilities - Trade and other payables
Trade payables
Accrued expenses
Trade payables are non-interest bearing and are normally settled on 30-day terms.
2018
$'000
2,154
1,610
3,764
2017
$'000
1,803
1,803
2017
$'000
1,674
859
2,533
Due to the short-term nature of these payables, their carrying value is assumed to approximate their fair value.
PAGE 96 | 2018 ANNUAL REPORT
-
-
769
769
Notes to the consolidated financial statements
30 June 2018
18 Current liabilities - Borrowings
2018
$'000
2017
$'000
Secured
Lease liabilities (note 28)
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 37.
(b) Fair value disclosures
Details of the fair value of borrowings for the Group are set out in note 37.
(c) Security and fair value disclosures
Details the Group's security relating to non-current borrowings are set out in note 20.
Notes to the consolidated financial statements
30 June 2018
Thunder Bay North Project
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
16 January 2019, 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.
In January 2017, RTEC confirmed that it had exceeded the minimum spend of C$5 million.
During the 2017/18 financial year, RTEC continued to fund activities on the TBN Project under the earn-in
arrangement of the Agreement. The three part-time employees of TBN assisted RTEC as required and continued
to undertake various consulting work for locally based exploration companies to assist in offsetting the costs of
running the Thunder Bay Office.
The recoverable amount of the Project has been determined based an internal review of comparable market
transactions for Platinum Group Metals (PGM) projects that were completed between 2010 and 2018.
In recognition of the uncertainty over the future of the Project, the Company reviewed and compared the carrying
values of the TBN Projects assets against their estimated recoverable values as at 30 June 2018. As a result of
this comparison, an impairment loss of $32.583 million was recognised to reduce the carrying amount of the
exploration and evaluation properties. This amount has been recognised in the consolidated income statement.
At 30 June 2018, $1.303 million (2017: $1.803 million) is cash backed against the drawn amount on the
Company's performance bond facility.
17 Current liabilities - Trade and other payables
Others
Trade payables
Accrued expenses
2018
$'000
1,303
1,303
2018
$'000
2,154
1,610
3,764
2017
$'000
1,803
1,803
2017
$'000
1,674
859
2,533
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.
The Company continued to hold discussions with RTEC on the future plans and strategy for the Project. As at the
date of this report, these discussions are continuing.
19 Current liabilities - Provisions
16 Non-current assets - Other non-current assets
20 Non-current liabilities - Borrowings
Employee benefits - long service leave
Employee benefits - annual leave
2018
$'000
506
417
923
2017
$'000
510
461
971
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.
Secured
Lease liabilities (note 28)
2018
$'000
-
2017
$'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 revert to the lessor in the event of default.
At 30 June 2017, the carrying amounts of assets pledged as security for current and non-current borrowings were
$0.059 million.
(b) Other loans
Finance lease liabilities
In 2017, finance lease liabilities had an average term of 3 years. The average interest rate implicit in the hire
purchase liability was 4.59%. Secured finance lease liabilities were 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
(2017: $2.0 million) with a drawdown amount at reporting date of $1.3 million (2017: $1.8 million) and $0.7 million
(2017: $0.2 million) available to be used. The $1.3 million drawn amount is cash-backed with a financial institution
(note 16).
2018 ANNUAL REPORT | PAGE 97
Notes to the consolidated financial statements
30 June 2018
(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.
2018
Trade and other payables (note 17)
Lease liabilities (notes 18 and 20)
Floating
interest
rate
$'000
-
-
-
1 year
or less
$'000
-
-
-
Fixed interest rate
Over
1 to 2
years
$'000
-
-
-
Over
2 to 3
years
$'000
-
-
-
Over
3 to 4
years
$'000
-
-
-
Non-
interest
bearing Total
$'000 $'000
3,764 3,764
-
3,764 3,764
-
Weighted average interest rate
-
-
-
-
-
N/A
2017
Floating
interest
rate
$'000
1 year
or less
$'000
Fixed interest rate
Over
2 to 3
years
$'000
Over
1 to 2
years
$'000
Over
3 to 4
years
$'000
Trade and other payables (note 17)
Lease liabilities (notes 18 and 20)
-
-
-
-
769
769
-
68
68
Weighted average interest rate
(d) Fair value
The carrying amounts and fair values of borrowings at balance date are:
4.59%
-
4.60%
-
-
-
-
Non-
interest
bearing Total
$'000
$'000
2,533 2,533
837
2,533 3,370
-
N/A
-
-
-
-
On-balance sheet (i)
Non-traded financial liabilities
Lease liabilities
2018
Carrying
amount
$'000
Fair value
$'000
2017
Carrying
amount
$'000
Fair value
$'000
-
-
-
-
837
837
837
837
(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 98 | 2018 ANNUAL REPORT
30 June 2018
(c) Interest rate risk exposures
2018
Trade and other payables (note 17)
Lease liabilities (notes 18 and 20)
Weighted average interest rate
2017
Trade and other payables (note 17)
Lease liabilities (notes 18 and 20)
On-balance sheet (i)
Non-traded financial liabilities
Lease liabilities
(i) On-balance sheet
Floating
interest
rate
$'000
1 year
or less
$'000
Fixed interest rate
Over
1 to 2
years
$'000
Over
2 to 3
years
$'000
Over
3 to 4
years
$'000
Non-
interest
bearing Total
$'000 $'000
3,764 3,764
-
-
3,764 3,764
N/A
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Fixed interest rate
Floating
interest
rate
$'000
1 year
or less
$'000
Over
1 to 2
years
$'000
Over
2 to 3
years
$'000
Over
3 to 4
years
$'000
Non-
interest
bearing Total
$'000
$'000
-
769
769
-
68
68
2,533 2,533
-
837
2,533 3,370
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2018
Carrying
amount
$'000
Fair value
$'000
2017
Carrying
amount
$'000
Fair value
$'000
-
-
-
-
837
837
837
837
Weighted average interest rate
-
4.59%
4.60%
N/A
(d) Fair value
The carrying amounts and fair values of borrowings at balance date are:
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.
Notes to the consolidated financial statements
Notes to the consolidated financial statements
30 June 2018
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.
21 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
Asset classified held for sale
Foreign exchange
Set-off of deferred tax liabilities pursuant to set-off provisions (note 14)
Net deferred tax liabilities
Movements:
Opening balance
Charged/credited:
- profit or loss
22 Non-current liabilities - Provisions
Employee benefits - long service leave
Rehabilitation
2018
$'000
-
2,417
-
2
15,274
2,273
-
19,966
(19,966)
-
5,057
14,909
19,966
2018
$'000
12
26,810
26,822
2017
$'000
256
-
3
3
4,637
-
158
5,057
(5,057)
-
4,602
455
5,057
2017
$'000
7
29,715
29,722
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.
2018 ANNUAL REPORT | PAGE 99
Notes to the consolidated financial statements
30 June 2018
(a) Movements in provisions
Movements in each class of provision during the financial year, other than employee benefits, are set out below:
2018
Carrying amount at start of year
- unwinding of discount
- reclass to liabilities directly associated to assets held for sale
- reversal of unutilised provisions
Carrying amount at end of year
Rehabilitation
$'000
29,715
921
(3,226)
(600)
26,810
Rehabilitation
$'000
29,883
437
(605)
29,715
2017
Carrying amount at start of year
- unwinding of discount
- reversal of unutilised provisions
Carrying amount at end of year
23 Contributed equity
(a) Share capital
Ordinary shares
Ordinary shares - fully paid
2018
Shares
2017
Shares
2018
$'000
2017
$'000
491,592,889 428,567,271
188,860
169,044
(b) Movements in ordinary share capital
Date
Details
1 July 2016
30 June 2017
1 July 2017
1 August 2017
1 March 2018
30 June 2018
Opening balance
Balance
Opening balance
Performance rights issue
Share Issue
Transaction costs, net of tax
Balance
Number of
shares
Issue
price
428,567,271
428,567,271
428,567,271
1,575,012
61,450,606
-
491,592,889
$0.34
$'000
169,044
169,044
169,044
-
20,893
(1,077)
188,860
PAGE 100 | 2018 ANNUAL REPORT
Notes to the consolidated financial statements
30 June 2018
Notes to the consolidated financial statements
30 June 2018
Movements in each class of provision during the financial year, other than employee benefits, are set out below:
- reclass to liabilities directly associated to assets held for sale
Rehabilitation
$'000
29,715
921
(3,226)
(600)
26,810
$'000
29,883
437
(605)
29,715
Rehabilitation
(a) Movements in provisions
2018
Carrying amount at start of year
- unwinding of discount
- reversal of unutilised provisions
Carrying amount at end of year
2017
Carrying amount at start of year
- unwinding of discount
- reversal of unutilised provisions
Carrying amount at end of year
23 Contributed equity
(a) Share capital
Ordinary shares
Ordinary shares - fully paid
2018
Shares
2017
Shares
2018
$'000
2017
$'000
491,592,889 428,567,271
188,860
169,044
(b) Movements in ordinary share capital
Date
Details
1 July 2016
30 June 2017
1 July 2017
1 August 2017
1 March 2018
Opening balance
Balance
Opening balance
Performance rights issue
Share Issue
Transaction costs, net of tax
30 June 2018
Balance
Number of
shares
Issue
price
428,567,271
428,567,271
428,567,271
1,575,012
61,450,606
-
491,592,889
$0.34
$'000
169,044
169,044
169,044
-
20,893
(1,077)
188,860
(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 2018 was nil (2017: 0.50%).
The Group has put in place a Group Cash Management Policy to ensure that up to 180 days (2017: 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 37 Financial risk management)
The Group is not subject to any externally imposed capital requirements.
Management considers 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 2018, this was $85.92 million
(2017: $112,959,000).
24 Reserves
(a) Reserves
Mineral properties revaluation reserve
Available-for-sale financial assets
Share-based payments
Foreign currency translation
Other reserves
2018
$'000
19,845
2,274
21,716
1,200
(446)
44,589
2017
$'000
19,845
852
21,556
761
(446)
42,568
2018 ANNUAL REPORT | PAGE 101
Notes to the consolidated financial statements
30 June 2018
(b) Nature and purpose of reserves
(i) Mineral properties revaluation reserve
In 2009, the Company increased the Group's interest in the Lanfranchi Project from 75% to 100%. This required a
revaluation of the original interest in the project when acquired in 2004. The asset revaluation reserve resulted
from the increase in the fair value of the original interest.
(ii) 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.
(iii) 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 or asset.
(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.
25 Dividends
(a) Ordinary shares
No final dividend was paid for the year ended 30 June 2018.
No interim dividend was paid for the half year ended 31 December 2017.
(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% (2017: 30%).
Consolidated entity
2018
$'000
10,503
2017
$'000
10,503
PAGE 102 | 2018 ANNUAL REPORT
Notes to the consolidated financial statements
30 June 2018
Notes to the consolidated financial statements
30 June 2018
(b) Nature and purpose of reserves
(i) Mineral properties revaluation reserve
In 2009, the Company increased the Group's interest in the Lanfranchi Project from 75% to 100%. This required a
revaluation of the original interest in the project when acquired in 2004. The asset revaluation reserve resulted
from the increase in the fair value of the original interest.
(ii) 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
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
The foreign currency translation reserve is used to record exchange differences arising from the translation of the
investment is derecognised or impaired.
(iii) Share-based payments reserve
as part of the acquisition of an entity or asset.
(iv) Foreign currency translation
financial statements of foreign subsidiaries.
25 Dividends
(a) Ordinary shares
No final dividend was paid for the year ended 30 June 2018.
No interim dividend was paid for the half year ended 31 December 2017.
(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% (2017: 30%).
Consolidated entity
2018
$'000
10,503
2017
$'000
10,503
26 Remuneration of auditors
Amounts received or due and receivable by Ernst & Young for:
Audit and review of financial statements
Other services in relation to the Company and other entity of the consolidated
entity:
Tax compliance and other services
27 Guarantees and contingencies
2018
$
99,000
-
95,493
194,493
2017
$
114,744
-
92,560
207,304
(a) Guarantees
At 30 June 2018, the Company had bank guarantees with a financial institution with a face value of $0.709 million
(2017: $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 and Cherish Metals Pty Ltd in regard 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 nil (2017: $0.837 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
There Group had no contingent liabilities at 30 June 2018.
Power Purchase Agreement
In 2016/17 financial year, the Company and a supplier were in discussions over power back charges and the
termination date in relation to the supply of electricity to the Lanfranchi Nickel Project. In January 2018. the
Company and the supplier agreed to settle on the termination date and on any amounts owing.
2018 ANNUAL REPORT | PAGE 103
Notes to the consolidated financial statements
30 June 2018
28 Commitments
(a) Capital commitments
Capital expenditure contracted for at the reporting date but not recognised as liabilities is as follows:
2018
$'000
2017
$'000
Mineral tenements expenditure commitments
Not later than one year
Later than one year but not later than five years
Later than five years
3,608
13,614
35,109
52,331
3,815
11,794
32,237
47,846
(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 18)
Non-current (note 20)
(c) Operating lease commitments as lessee
(i) Corporate office
2018
$'000
2017
$'000
-
-
-
-
-
-
-
-
825
34
859
(22)
837
769
68
837
The Group has a commercial lease on its corporate office premises. This non-cancellable lease, originally
expiring on 28 February 2019, was extended to 28 February 2022 on 4 October 2017.
Future minimum rentals payable under the non-cancellable operating leases at 30 June 2018 are as follows:
Within one year
Later than one year and not later than five years
2018
$'000
825
1,024
1,849
2017
$'000
1,701
1,168
2,869
PAGE 104 | 2018 ANNUAL REPORT
Capital expenditure contracted for at the reporting date but not recognised as liabilities is as follows:
Notes to the consolidated financial statements
30 June 2018
28 Commitments
(a) Capital commitments
Mineral tenements expenditure commitments
Not later than one year
Later than one year but not later than five years
Later than five years
(b) Lease commitments: group as lessee
(i) Finance leases
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 18)
Non-current (note 20)
(c) Operating lease commitments as lessee
(i) Corporate office
Future minimum lease payments under finance leases together with the present value of the net minimum lease
The Group has a commercial lease on its corporate office premises. This non-cancellable lease, originally
expiring on 28 February 2019, was extended to 28 February 2022 on 4 October 2017.
Future minimum rentals payable under the non-cancellable operating leases at 30 June 2018 are as follows:
Within one year
Later than one year and not later than five years
2018
$'000
3,608
13,614
35,109
52,331
2017
$'000
3,815
11,794
32,237
47,846
2018
$'000
2017
$'000
-
-
-
-
-
-
-
-
825
34
859
(22)
837
769
68
837
2018
$'000
825
1,024
1,849
2017
$'000
1,701
1,168
2,869
Notes to the consolidated financial statements
30 June 2018
(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 on 28 February 2019.
Future minimum rentals receivable under the non-cancellable operating leases at 30 June 2018 are as follows:
Commitments for minimum lease receipts in relation to non-cancellable operating
leases are as follows:
Within one year
Later than one year but not later than five years
(e) Remuneration commitments
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
29 Related party transactions
2018
$'000
210
-
210
2017
$'000
347
210
557
2018
$'000
2017
$'000
694
629
(a) Compensation of key management personnel of the Group
Key management personnel of the Group (as defined by AASB 124: Related Party Transactions) include the
following:
B M Phillips
P J Harold
J Rowe
P R Sullivan
N L Cernotta
R J Hayward
T R Eton
J D Hicks
T S Mason
Chairman (Non-Executive)
Managing Director
Director (Non-Executive)
Director (Non-Executive)
Director (Non-Executive)
Director (non-Executive)
Chief Financial Officer and Company Secretary
General Manager - Exploration
Manager - Projects
The aggregate compensation made to directors and other members of key management personnel of the Group
is set out below:
Short-term employee benefits
Post-employment benefits
Long-term benefits
Termination/resignation benefits
Share-based payments
2018
$'000
1,491
112
29
-
211
1,843
2017
$'000
1,765
141
38
586
301
2,831
The amounts disclosed in the table are the amounts recognised as an expense during the reporting period related
to key management personnel.
2018 ANNUAL REPORT | PAGE 105
Notes to the consolidated financial statements
30 June 2018
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
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
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 ***
Horizon Gold Limited
Panoramic Gold Pty Ltd
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Finland
Australia
Australia
Australia
Australia
Australia
Australia
Canada
Australia
Australia
Australia
Australia
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Equity holding
2017
%
100
100
100
100
100
100
100
100
100
2018
%
100
100
100
100
-
-
100
-
-
100
100
100
100
-
100
-
-
51
51
100
100
100
100
100
100
100
100
51
51
*
**
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.
*** Deregistered on 30 March 2018.
**** Deregistered on 19 September 2017.
Refer to note 31 for details on deed of cross guarantee signed between certain subsidiaries and Panoramic
Resources Limited.
PAGE 106 | 2018 ANNUAL REPORT
Notes to the consolidated financial statements
30 June 2018
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
2017
Panton Sill Pty Ltd (formerly Panoramic Precious
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
Pindan (Finland) Exploration Ltd ****
Panoramic Copper Pty Ltd ***
Metals Pty Ltd)
Mt Henry Gold Pty Ltd
Mt Henry Mines Pty Ltd
Magma Metals Pty Limited
Greenstone Metals Ltd ***
Magma Metals (Canada) Ltd)
Panoramic Nickel Pty Ltd ***
Panoramic PGMs Pty Ltd ***
Horizon Gold Limited
Panoramic Gold Pty Ltd
Panoramic PGM's (Canada) Ltd (formerly
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Finland
Australia
Australia
Australia
Australia
Australia
Australia
Canada
Australia
Australia
Australia
Australia
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
2018
%
100
100
100
100
100
-
-
-
-
-
-
-
100
100
100
100
100
51
51
%
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
51
51
*
**
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.
*** Deregistered on 30 March 2018.
**** Deregistered on 19 September 2017.
Refer to note 31 for details on deed of cross guarantee signed between certain subsidiaries and Panoramic
Resources Limited.
Notes to the consolidated financial statements
30 June 2018
(b) Non-controlling interests (NCI)
In December 2016, the Company divested of its Gum Creek Gold Project by way of an initial public offering (IPO)
and listing of subsidiary, Horizon Gold Limited ("Horizon"), on the Australian Securities Exchange (ASX). In
October 2016, the Company entered into an Acquisition Agreement with Horizon and Panoramic Gold Pty Ltd
("Pan Gold"), which owns the Gum Creek Gold Project, in which on completion of the capital raising, the
Company sold Pan Gold to Horizon and the Company would be issued 39,030,612 shares in Horizon as
consideration.
In the IPO, Horizon raised $15,000,000 before costs in new equity and issued 37,500,000 shares at $0.40 per
share. Following completion of the capital raising by Horizon, the Company's interest in Horizon has been diluted
from 100% to 51%. The shares in Horizon held by the Company are held in escrow until 18 December 2018.
The financial information of Horizon in which material non-control interest now exist is provided below:
Summarised statement of financial position for the period:
Cash and bank balances (current)
Trade and other receivables
Prepayments (current)
Intercompany payables (current)
Trade and other payables (current)
Provisions (current)
Current net assets
Property, plant and equipment (non-current)
Exploration and evaluation (non-current)
Provisions (non-current)
Non-current net assets
Net assets
Accumulated balances of non-controlling interest (NCI)
Summarised statement of profit and loss for the period:
Other income
Care and maintenance expenses
IPO expenses
Corporate and administration
Reversal of impairment loss
Impairment loss
Exploration expenditure written-off
Finance costs
Profit before tax
Income tax benefit
Total comprehensive income
< blank header row >
Summarised statement of profit and loss for the period:
Profit/(loss) allocated to NCI
< blank header row >
Summarised cashflow information for the period:
Cash flows from operating activities
Cash flows from investing activities
Cash flows from financing activities
Net (decreases) increases in cash and cash equivalents
2018 ANNUAL REPORT | PAGE 107
30 June
2018
$000
7,160
21
15
(27)
(545)
(50)
6,574
4,296
12,741
(9,842)
7,195
13,769
6,740
30 June
2018
$000
224
(774)
-
(563)
-
(12,569)
(619)
(463)
(14,764)
-
(14,764)
30 June
2018
$000
7,236
30 June
2018
$000
(1,354)
(3,102)
(89)
(4,545)
30 June
2017
$000
11,704
71
-
(116)
(650)
(25)
10,984
4,263
22,670
(9,395)
17,538
28,522
13,976
30 June
2017
$000
344
(1,424)
(444)
(286)
9,178
-
-
(138)
7,230
1,714
8,944
30 June
2017
$000
(529)
30 June
2017
$000
(1,433)
(2,287)
15,424
11,704
Notes to the consolidated financial statements
30 June 2018
31 Deed of cross guarantee
Pursuant to ASIC Corporations (wholly-owned companies) Instrument 2016/785, relief has been granted to
Savannah Nickel Mines Pty Ltd and Cherish Metals Pty Ltd from the Corporations Act 2001 requirements for
preparation, audit and lodgement of its financial report.
As a condition of the ASIC Corporations (wholly-owned companies) Instrument 2016/785, 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 (now deregistered) joined as parties to
the Deed of Cross Guarantee. As at the reporting date, the "Closed Group" comprised Panoramic Resources
Limited, Savannah Nickel Mines Pty Ltd and Cherish Metals 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 2018 of the Closed Group (consisting of Panoramic Resources Limited,
Savannah Nickel Mines Pty Ltd and Cherish Metals Pty Ltd).
Loss before income tax includes the following specific items:
Revenue
Other income
Finance cost
Impairment loss reversal on assets held for sale
Consolidated income statement
Loss before income tax
Loss for the year
Consolidated statement of comprehensive income
Other comprehensive income
Loss for the year
Items that may be reclassified to profit or loss
Changes in fair value of available-for-sale financial assets, net of tax
Other comprehensive loss for the period, net of tax
Total comprehensive loss for the year
Accumulated losses at the beginning of the financial year
Loss for the year
Accumulated losses at the end of the financial year
2018
$'000
1,070
386
(479)
7,260
2018
$'000
(3,849)
(3,849)
2018
$'000
2017
$'000
8,778
470
(351)
-
2017
$'000
(11,667)
(11,667)
2017
$'000
(3,849)
(11,667)
1,364
1,364
(2,485)
(100,606)
(3,849)
(104,455)
(536)
(536)
(12,203)
(88,939)
(11,667)
(100,606)
PAGE 108 | 2018 ANNUAL REPORT
31 Deed of cross guarantee
Pursuant to ASIC Corporations (wholly-owned companies) Instrument 2016/785, relief has been granted to
Savannah Nickel Mines Pty Ltd and Cherish Metals Pty Ltd from the Corporations Act 2001 requirements for
preparation, audit and lodgement of its financial report.
As a condition of the ASIC Corporations (wholly-owned companies) Instrument 2016/785, 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 (now deregistered) joined as parties to
the Deed of Cross Guarantee. As at the reporting date, the "Closed Group" comprised Panoramic Resources
Limited, Savannah Nickel Mines Pty Ltd and Cherish Metals 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 2018 of the Closed Group (consisting of Panoramic Resources Limited,
Savannah Nickel Mines Pty Ltd and Cherish Metals Pty Ltd).
Loss before income tax includes the following specific items:
Revenue
Other income
Finance cost
Impairment loss reversal on assets held for sale
Consolidated income statement
Loss before income tax
Loss for the year
Consolidated statement of comprehensive income
Other comprehensive income
Loss for the year
Items that may be reclassified to profit or loss
Changes in fair value of available-for-sale financial assets, net of tax
Other comprehensive loss for the period, net of tax
Total comprehensive loss for the year
Accumulated losses at the beginning of the financial year
Loss for the year
Accumulated losses at the end of the financial year
2018
$'000
1,070
386
(479)
7,260
2018
$'000
(3,849)
(3,849)
2018
$'000
2017
$'000
8,778
470
(351)
-
2017
$'000
(11,667)
(11,667)
2017
$'000
(3,849)
(11,667)
1,364
1,364
(2,485)
(100,606)
(3,849)
(104,455)
(536)
(536)
(12,203)
(88,939)
(11,667)
(100,606)
Notes to the consolidated financial statements
30 June 2018
Notes to the consolidated financial statements
30 June 2018
(b) Consolidated balance sheet
Set out below is a consolidated balance sheet as at 30 June 2018 of the Closed Group (consisting of Panoramic
Resources Limited, Savannah Nickel Mines Pty Ltd and Cherish Metals Pty Ltd).
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Assets held for sale
Total current assets
Non-current assets
Receivables
Available-for-sale investments
Property, plant and equipment
Deferred exploration and evaluation expenditure
Development and mine properties
Other non-current asset
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Interest-bearing loans and borrowings
Provisions
Liabilities directly associated to assets held for sale
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
2018
$'000
18,218
631
184
17,002
36,035
66,713
2,621
6,260
22,500
17,248
1,303
116,645
152,680
3,176
-
829
3,502
7,507
-
16,979
16,979
24,486
128,194
188,861
43,788
(104,455)
128,194
2017
$'000
8,883
494
3
-
9,380
69,840
1,176
7,185
26,440
18,430
1,803
124,874
134,254
1,486
769
883
-
3,138
68
20,345
20,413
23,551
110,703
169,044
42,265
(100,606)
110,703
32 Events occurring after the reporting period
Savannah Nickel Project Restart and execution of Committed Offer for Project Finance Facilities
On 16 July 2018, the Company announced that Board had made the formal decision to restart operations at the
Savannah Nickel Project. The announcement was made concurrently with the execution by the Company, its
wholly owned subsidiary, Savannah Nickel Mines Pty Ltd and Macquarie Bank Limited (“Macquarie”) of a credit
approved “Committed Offer” from Macquarie for Project Finance Facilities (“Facilities”), consisting of a secured
project loan of up to $40 million and nickel and copper hedging lines. The Facilities was the last remaining
precedent to the directors making the decision to restart the Project.
The nickel and copper hedging facility consists of mandatory and discretionary hedging. The mandatory hedge
program has been completed, being 7,000 tonnes of contained nickel for delivery between February 2019 and
June 2021 at an average achieved forward price of A$8.51 per pound and 3,000 tonnes of contained copper for
delivery between February 2019 and June 2021 at an average achieved forward price of A$3.71 per pound.
As a result of the decision to reopen the Project, the Company has commenced Phase Two of pre-production
activities at the Savannah Nickel Project and is targeting to export the first shipment of Savannah bulk
concentrate to China early in the March 2019 quarter.
2018 ANNUAL REPORT | PAGE 109
Notes to the consolidated financial statements
30 June 2018
Vesting of FY2016 Performance Rights and issue of Ordinary Shares
On 10 August 2018, the Company issued 2,935,093 ordinary shares to executives of the Company following
vesting on 1 July 2018 of FY2016 Performance Rights. Following the issue of new shares for no consideration,
the share capital of the Company has increased to 494,527,982 ordinary shares.
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
Impairment of assets
Reversal of impairment of assets
Net gain on sale of non-current assets
Share based payments
Interest income
Exploration and evaluation written off
Net exchange differences
Gain on re-measurement of liability
Change in operating assets and liabilities:
Decrease/(increase) in trade debtors and others
(Increase)/decrease in prepayments
Increase/(decrease) in trade creditors
(Increase)/decrease in inventories
Increase/(decrease) in provisions
Net cash (outflow) from operating activities
34 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
2018
$'000
(48,039)
430
45,152
(7,260)
-
160
(467)
619
439
(50)
116
(71)
1,316
(203)
922
(6,936)
2017
$'000
(4,770)
760
-
(9,178)
(150)
473
(557)
-
-
(198)
(50)
75
(2,615)
8,470
(122)
(7,862)
2018
Cents
(10.3)
(10.3)
2017
Cents
(1.0)
(1.0)
PAGE 110 | 2018 ANNUAL REPORT
Notes to the consolidated financial statements
30 June 2018
Vesting of FY2016 Performance Rights and issue of Ordinary Shares
On 10 August 2018, the Company issued 2,935,093 ordinary shares to executives of the Company following
vesting on 1 July 2018 of FY2016 Performance Rights. Following the issue of new shares for no consideration,
the share capital of the Company has increased to 494,527,982 ordinary shares.
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
Impairment of assets
Reversal of impairment of assets
Net gain on sale of non-current assets
Share based payments
Interest income
Exploration and evaluation written off
Net exchange differences
Gain on re-measurement of liability
Change in operating assets and liabilities:
Decrease/(increase) in trade debtors and others
(Increase)/decrease in prepayments
Increase/(decrease) in trade creditors
(Increase)/decrease in inventories
Increase/(decrease) in provisions
Net cash (outflow) from operating activities
34 Loss per share
(a) Basic loss per share
From continuing operations attributable to the ordinary equity holders of the
Total basic loss per share attributable to the ordinary equity holders of the
Company
Company
2018
$'000
(48,039)
430
45,152
(7,260)
-
160
(467)
619
439
(50)
116
(71)
1,316
(203)
922
(6,936)
2017
$'000
(4,770)
760
(9,178)
(150)
473
(557)
-
-
-
(198)
(50)
75
(2,615)
8,470
(122)
(7,862)
2018
Cents
(10.3)
(10.3)
2017
Cents
(1.0)
(1.0)
Notes to the consolidated financial statements
30 June 2018
(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
2018
Cents
(10.3)
(10.3)
2018
$'000
(48,039)
(48,039)
(48,039)
(48,039)
2017
Cents
(1.0)
(1.0)
2017
$'000
(4,241)
(4,241)
(4,241)
(4,241)
2018
Number
2017
Number
465,750,375 428,567,271
Performance rights on issue are not considered in the calculation of diluted loss per share as they are considered
to be contingently issuable.
35 Share-based payments
(a) Performance Rights
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”).
From 1 July 2014 until the expiry of the three year exemption on 30 July 2017, executives and senior employees
were invited to receive a new grant of performance rights under the 2010 ES Plan. The number of performance
rights granted each year was 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 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 three year period; and
− 25% of the performance rights will be performance tested against the reserve/resource growth over a
three year period, net of depletion.
2018 ANNUAL REPORT | PAGE 111
Notes to the consolidated financial statements
30 June 2018
For FY2018, no performance rights were granted to key management personnel (KMP) and executives.
Grant
date
Vesting
date
Expiry
date
Balance at
start of the
year
Vested and
exercisable
Expired
at end of
during the
the year
year
Number Number Number Number Number Number Number
Balance at
the end of
the year
Forfeited
during the
year
Exercised
during the
year
Granted
during
the year
Consolidated 2018
27/11/15 30/06/18 01/07/18 3,527,341
12/09/14 30/06/17 01/07/17 1,195,428
904,601
01/07/14 30/06/17 01/07/17
5,627,370
Total
$-
-
-
-
(896,566)
(678,446)
-
- (1,575,012)
$-
-
(592,248) 2,935,093
-
-
(298,862)
-
-
(226,135)
- (1,117,245) 2,935,093
-
-
-
-
$-
Weighted average exercise
price
For FY2017, no performance rights were granted to key management personnel (KMP) and executives.
$-
$-
$-
$-
Grant
date
Vesting
date
Expiry
date
Balance at
start of the
year
Balance at
the end of
the year
Number Number Number Number Number Number
Forfeited
during the
year
Expired
during the
year
Exercised
during
the year
Granted
during
the year
Vested and
exercisable
at end of the
year
Number
Consolidated 2017
27/11/15 30/06/18 01/07/18 4,475,267
12/09/14 30/06/17 01/07/17 1,777,371
904,601
01/07/14 30/06/17 01/07/17
7,157,239
Total
$-
Weighted average exercise
price
-
-
-
-
-
-
-
-
(947,926) 3,527,341
-
(581,943) 1,195,428
-
-
904,601
-
- (1,529,869) 5,627,370
-
-
-
$-
$-
$-
$-
$-
$-
The weighted average remaining contractual life of performance rights outstanding at the end of the period was nil
(2017: 1 year).
(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 performance right (‘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 performance rights 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 performance rights that do not ultimately vest, except for performance rights where
vesting is conditional upon a market condition.
The dilutive effect, if any, of outstanding performance rights is not 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 rights under employee share plan amount to $0.160 million (2017: $0.473 million).
PAGE 112 | 2018 ANNUAL REPORT
Notes to the consolidated financial statements
30 June 2018
36 Parent entity financial information
(a) Summary financial information
The individual financial statements for the Parent entity show the following aggregate amounts:
Balance sheet
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Shareholders' equity
Contributed equity
Reserves
Retained earnings
Capital and reserves attributable to owners of Panoramic Resources
Limited
Loss for the year
Total comprehensive income
2018
$'000
18,980
8,763
27,743
1,250
10
1,260
(81,969)
2017
$'000
7,286
11,987
19,273
1,298
7
1,305
(56,514)
188,860
14,381
(176,758)
171,174
22,419
(175,625)
26,483
8,268
8,268
17,968
5,849
5,849
(b) Guarantees entered into by the parent entity
The parent entity has given financial guarantees in respect of:
(i) leases of subsidiaries amounting to nil (2017: $0.837 million);
(ii) the bank facilities of a subsidiary amounting to $0.250 million (2017: $0.250 million); and
(iii) a rehabilitation bank guarantee of a subsidiary amounting to $2 million (2017: $2 million).
No liability was recognised by the parent entity or the consolidated entity in relation to these guarantees, as the
fair value of the guarantees is immaterial.
There are cross guarantees given by Panoramic Resources Limited, Savannah Nickel Mines Pty Ltd and Cherish
Metals 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.
(c) Contingent liabilities of the parent entity
The parent entity and Group had contingent liabilities at 30 June 2018 in respect of a bank guarantee put in place
with a financial institution with a face value of $0.709 million (2017: $0.709 million) in respect to the leasing of the
office space in Perth CBD.
2018 ANNUAL REPORT | PAGE 113
Notes to the consolidated financial statements
30 June 2018
37 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 used derivative instruments, principally
forward sales contracts and put and call options. The purpose was to manage the commodity price and currency
rate risks arising from the Group’s operations. These derivatives provided economic hedges and qualified 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 were 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.
As 30 June 2018, the Group had the following exposure to USD foreign currency that is not designated in
cashflow hedges.
Cash at bank
2018
$'000
15
2017
$'000
21
PAGE 114 | 2018 ANNUAL REPORT
Notes to the consolidated financial statements
30 June 2018
Sensitivity
The following sensitivity is based on the foreign currency risk exposures in existence at the balance sheet date.
The +/- 5% (2017: +/- 5%) 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 2018, 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% (2017: +5%)
AUD to USD -5% (2017: -5%)
2018
$'000
1
(1)
2017
$'000
1
(1)
2018
$'000
-
-
2017
$'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 (2017: 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
2018
2017
Weighted
average
interest rate
%
1.9%
Weighted
average
interest rate
%
1.9%
Balance
$'000
2,605
Balance
$'000
1,860
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 (2017: +/- 25) 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 three years and management's expectation of future movements.
2018 ANNUAL REPORT | PAGE 115
Notes to the consolidated financial statements
30 June 2018
Sensitivity
At 30 June 2018
Financial assets
Cash and cash equivalents
Total increase/
(decrease)
At 30 June 2017
Financial assets
Cash and cash equivalents
Total increase/
(decrease)
Carrying
amount
$'000
23,983
Carrying
amount
$'000
20,445
Interest rate risk
-0.25%
+0.25%
Profit
$'000
Equity
$'000
Profit
$'000
Equity
$'000
(15)
(15)
-
-
15
15
-
-
Interest rate risk
-0.25%
+0.25%
Profit
$'000
Equity
$'000
Profit
$'000
Equity
$'000
(15)
(15)
-
-
15
15
-
-
(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 2018 the Group does not have any level 3 instruments.
PAGE 116 | 2018 ANNUAL REPORT
Notes to the consolidated financial statements
30 June 2018
The following table presents the fair value measurement hierarchy of the Group's assets and liabilities at 30 June
2018 and 30 June 2017:
At 30 June 2018
Level 1
$'000
Level 2
$'000
Level 3
$'000
Assets
Equity securities
Total assets
Liabilities
Financial liabilities for which fair values are disclosed:
Total liabilities
2,703
2,703
-
-
-
-
-
-
-
At 30 June 2017
Assets
Equity securities
Total assets
Liabilities
Financial liabilities for which fair values are
disclosed:
- Lease liabilities
Total liabilities
Level 1
$'000
Level 2
$'000
Level 3
$'000
1,200
1,200
-
-
-
-
837
837
-
-
-
-
Total
$'000
2,703
2,703
-
Total
$'000
1,200
1,200
837
837
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) Credit risk
Credit risk arises from the financial assets of the Group, which comprise cash and cash equivalents, trade and
other receivables and derivative instruments.
The Group’s maximum exposures to credit risk at reporting date in relation to each class of recognised financial
assets, other than derivatives, is the carrying amount of these assets as indicated in the balance sheet.
2018 ANNUAL REPORT | PAGE 117
Notes to the consolidated financial statements
30 June 2018
In relation to derivative financial instruments, credit risk arose 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 were held with
financial institutions with sound credit rating.
When in production, the Group had 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.
(e) 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% (2017: 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 +/- 100% (2017: 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.
Sensitivity
Available-for-sale financial investment
+100% (2017: +30%)
Available-for-sale financial investment -
100% (2017: -30%)
Impact on post-tax profit
2017
$'000
2018
$'000
Impact on equity
2017
$'000
2018
$'000
-
-
-
-
2,744
(2,744)
360
(360)
PAGE 118 | 2018 ANNUAL REPORT
Notes to the consolidated financial statements
30 June 2018
(f) Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability of
funding when necessary and the ability to close-out market positions.
The Group’s objective is to maintain a balance between continuity of funding and flexibility through the use of
bank loans (when required), finance leases and committed available credit lines.
The Group monitors on a regular basis rolling forecasts of liquidity on the basis of expected cash flow.
The Group has put in place a Group Cash Management Policy to ensure that up to 180 days (2017: 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 a regular 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, 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 2018
Non-derivatives
Trade payables
Total non-derivatives
Contractual maturities of financial liabilities
At 30 June 2017
Non-derivatives
Trade payables
Finance lease liabilities
Total non-derivatives
Less than
1 year
$'000
Between 1
and 5
years
$'000
Total
contrac-
tual
cash
flows
$'000
Carrying
amount
(assets)/
liabilities
$'000
3,764
3,764
-
-
3,764
3,764
3,764
3,764
Less than
1 year
$'000
Between
1 and 5
years
$'000
Total
contrac-
tual
cash
flows
$'000
Carrying
amount
(assets)/
liabilities
$'000
2,533
825
3,358
-
34
34
2,533
859
3,392
2,533
837
3,370
2018 ANNUAL REPORT | PAGE 119
Notes to the consolidated financial statements
30 June 2018
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 2017:
• AASB 2016-1 Amendments to Australian Accounting Standards - Recognition of Deferred Tax Assets for
Unrealised Losses
This Standard makes amendments to AASB 112 Income Taxes to clarify the accounting for deferred tax assets
for unrealised losses on debt instruments measured at fair value.
The adoption of AASB 2016-1 had no effect on the financial position or performance of the Group.
• AASB 2016-2 Amendments to Australian Accounting Standards - Disclosure Initiative: Amendments to AASB
107
The amendments to AASB 107 Statement of Cash Flows are part of the IASB’s Disclosure Initiative and help
users of financial statements better understand changes in an entity’s debt. The amendments require entities to
provide disclosures about changes in their liabilities arising from financing activities, including both changes
arising from cash flows and non-cash changes (such as foreign exchange gains or losses).
The adoption of AASB 2016-2 had no effect on the financial position or performance of the Group.
• AASB 2017-2 Amendments to Australian Accounting Standards - Further Annual Improvements 2014-2016
Cycle
This Standard clarifies the scope of AASB 12 Disclosure of Interests in Other Entities by specifying that the
disclosure requirements apply to an entity’s interests in other entities that are classified as held for sale or
discontinued operations in accordance with AASB 5 Non-current Assets Held for Sale and Discontinued
Operations.
The adoption of AASB 2017-2 had no effect on the financial position or performance of the Group.
(ii) Accounting Standards and Interpretations issued but not yet effective
• AASB 2017-6 Amendments to Australian Accounting Standards - Prepayment Features with Negative
Compensation, effective 1 January 2019
This Standard amends AASB 9 Financial Instruments to permit entities to measure at amortised cost or fair
value through other comprehensive income particular financial assets that would otherwise have contractual
cash flows that are solely payments of principal and interest but do not meet that condition only as a result of a
prepayment feature. This is subject to meeting other conditions, such as the nature of the business model
relevant to the financial asset. Otherwise, the financial assets would be measured at fair value through profit or
loss.
The Standard also clarifies in the Basis for Conclusion that, under AASB 9, gains and losses arising on
modifications of financial liabilities that do not result in derecognition should be recognised in profit or loss
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.
PAGE 120 | 2018 ANNUAL REPORT
120
Notes to the consolidated financial statements
30 June 2018
• AASB 2018-1 Annual Improvements to IFRS Standards 2015-2017 Cycle, effective 1 January 2019
The amendments clarify certain requirements in:
► AASB 3 Business Combinations and AASB 11 Joint Arrangements - previously held interest in a joint
operation
► AASB 112 Income Taxes - income tax consequences of payments on financial instruments classified as
equity
► AASB 123 Borrowing Costs - borrowing costs eligible for capitalisation.
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.
• AASB 9 Financial Instruments, effective 1 January 2018
AASB 9 replaces AASB 139 Financial Instruments: Recognition and Measurement.
Except for certain trade receivables, an entity initially measures a financial asset at its fair value plus, in the case
of a financial asset not at fair value through profit or loss, transaction costs.
Debt instruments are subsequently measured at fair value through profit or loss (FVTPL), amortised cost, or fair
value through other comprehensive income (FVOCI), on the basis of their contractual cash flows and the
business model under which the debt instruments are held.
There is a fair value option (FVO) that allows financial assets on initial recognition to be designated as FVTPL if
that eliminates or significantly reduces an accounting mismatch.
Equity instruments are generally measured at FVTPL. However, entities have an irrevocable option on an
instrument-by-instrument basis to present changes in the fair value of non-trading instruments in other
comprehensive income (OCI) without subsequent reclassification to profit or loss.
For financial liabilities designated as FVTPL using the FVO, the amount of change in the fair value of such
financial liabilities that is attributable to changes in credit risk must be presented in OCI. The remainder of the
change in fair value is presented in profit or loss, unless presentation in OCI of the fair value change in respect
of the liability’s credit risk would create or enlarge an accounting mismatch in profit or loss.
All other AASB 139 classification and measurement requirements for financial liabilities have been carried
forward into AASB 9, including the embedded derivative separation rules and the criteria for using the FVO.
The incurred credit loss model in AASB 139 has been replaced with an expected credit loss model in AASB 9.
The requirements for hedge accounting have been amended to more closely align hedge accounting with risk
management, establish a more principle-based approach to hedge accounting and address inconsistencies in
the hedge accounting model in AASB 139.
Available for sale financial assets will either be designated as fair value through other comprehensive income
(when held for strategic investment reasons) or accounted for as financial assets through profit or loss.
The new standard is not expected to significantly impact the recognition and measurement of financial
instrument as the Group does not have significant financial instruments.
2018 ANNUAL REPORT | PAGE 121
Notes to the consolidated financial statements
30 June 2018
• AASB 15 Revenue from Contracts with Customers, effective 1 January 2018
AASB 15 replaces all existing revenue requirements in Australian Accounting Standards (AASB 111
Construction Contracts, AASB 118 Revenue, AASB Interpretation 13 Customer Loyalty Programmes, AASB
Interpretation 15 Agreements for the Construction of Real Estate, AASB Interpretation 18 Transfers of Assets
from Customers and AASB Interpretation 131 Revenue - Barter Transactions Involving Advertising Services)
and applies to all revenue arising from contracts with customers, unless the contracts are in the scope of other
standards, such as AASB 117 (or AASB 16 Leases, once applied).
Whilst this standard does not have any impact to the Group in the current financial year, the Company is in the
process of evaluating the impact of the above standards when the Company restart operations in 2018/19.
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 an entity expects to be entitled in
exchange for those goods or services. An entity recognises revenue in accordance with the core principle by
applying the following steps:
► Step 1: Identify the contract(s) with a customer
► Step 2: Identify the performance obligations in the contract
► Step 3: Determine the transaction price
► Step 4: Allocate the transaction price to the performance obligations in the contract
► Step 5: Recognise revenue when (or as) the entity satisfies a performance obligation.
• AASB 2016-5 Amendments to Australian Accounting Standards - Classification and Measurement of Share-
based Payment Transactions, effective 1 January 2018
This Standard amends AASB 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.
• AASB 2017-1 Amendments to Australian Accounting Standards - Transfers of Investments Property, Annual
Improvements 2014-2016 Cycle and Other Amendments, effective 1 January 2018
The amendments clarify certain requirements in:
► AASB 1 First-time Adoption of Australian Accounting Standards - deletion of exemptions for first-time
adopters and addition of an exemption arising from AASB Interpretation 22 Foreign Currency Transactions
and Advance Consideration
► AASB 12 Disclosure of Interests in Other Entities - clarification of scope
► AASB 128 Investments in Associates and Joint Ventures - measuring an associate or joint venture at fair
value
► AASB 140 Investment Property - change in use.
• AASB Interpretation 22 Foreign Currency Transactions and Advance Consideration, effective 1 January 2018
The Interpretation clarifies that in determining the spot exchange rate to use on initial recognition of the related
asset, expense or income (or part of it) on the derecognition of a non-monetary asset or non-monetary liability
relating to advance consideration, the date of the transaction is the date on which an entity initially recognises
the non-monetary asset or non-monetary liability arising from the advance consideration. If there are multiple
payments or receipts in advance, then the entity must determine a date of the transactions for each payment or
receipt of advance consideration.
PAGE 122 | 2018 ANNUAL REPORT
Notes to the consolidated financial statements
30 June 2018
• AASB 16 Leases, effective 1 January 2019
AASB 16 requires lessees to account for all leases under a single on-balance sheet model in a similar way to
finance leases under AASB 117 Leases. The standard includes two recognition exemptions for lessees - leases
of ’low-value’ assets (e.g., personal computers) and short-term leases (i.e., leases with a lease term of 12
months or less). At the commencement date of a lease, a lessee will recognise a liability to make lease
payments (i.e., the lease liability) and an asset representing the right to use the underlying asset during the
lease term (i.e., the right-of-use asset).
Lessees will be required to separately recognise the interest expense on the lease liability and the depreciation
expense on the right-of-use asset.
Lessees will be required to remeasure the lease liability upon the occurrence of certain events (e.g., a change in
the lease term, a change in future lease payments resulting from a change in an index or rate used to determine
those payments). The lessee will generally recognise the amount of the re-measurement of the lease liability as
an adjustment to the right-of-use asset.
Lessor accounting is substantially unchanged from today’s accounting under AASB 117. Lessors will continue to
classify all leases using the same classification principle as in AASB 117 and distinguish between two types of
leases: operating and finance leases.
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.
• AASB Interpretation 23 and relevant amending standards, Uncertainty over Income Tax Treatments, effective 1
January 2019
The Interpretation clarifies the application of the recognition and measurement criteria in IAS 12 Income Taxes
when there is uncertainty over income tax treatments. The Interpretation specifically addresses the following:
► Whether an entity considers uncertain tax treatments separately
► The assumptions an entity makes about the examination of tax treatments by taxation authorities
► How an entity determines taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax
rates
► How an entity considers changes in facts and circumstances.
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.
2018 ANNUAL REPORT | PAGE 123
Additional Shareholder Information
As at 30 September 2018
Stock Exchange Listing
Panoramic Resources Limited shares are listed on the Australian Securities 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 2018.
Name of Shareholder
Zeta Resources Limited (including
UIL Limited, General Provincial Life
Pension Fund (L) Limited, Union
Mutual Pension Fund Limited, ICM
Limited and Duncan Saville)
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 (%)
148,215,414
30.15%
Class of Shares and Voting Rights
At 30 September 2018, there were 3,752 holders of 494,527,982 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 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 2018, the number of parcels of shares with a value of less than $500 was 173.
Distribution of Shareholders
As at 30 September 2018
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
225
1,366
669
1,227
265
3,752
83,535
4,062,372
5,246,130
39,058,532
446,077,413
494,527,982
PAGE 124 | 2018 ANNUAL REPORT
Additional Shareholder Information
As at 30 September 2018
Listing of 20 Largest Shareholders
As at 30 September 2018
Name of Ordinary Registered Shareholder
Number of Shares Held
Percentage of
Shares Held %
J P MORGAN NOMINEES AUSTRALIA LIMITED
183,073,312
37.02
CITICORP NOMINEES PTY LIMITED
47,058,036
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
43,725,698
UBS NOMINEES PTY LTD
ZETA RESOURCES LIMITED
NATIONAL NOMINEES LIMITED
SANDHURST TRUSTEES LTD
MR DAVID NORMAN DEITCH
3RD WAVE INVESTORS LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
MR KWOK LEUNG FUNG + MS YUEN MAN MOK
MATSA RESOURCES LIMITED
PATINA RESOURCES PTY LTD
BNP PARIBAS NOMS PTY LTD
WINTON VALE PTY LTD
SPRINGWAY INVESTMENTS PTY LTD
COLENEW PTY LIMITED
DCG STAFF PLAN PTY LTD
MR PETER HAROLD
MRS SUE-ELLEN STUART
24,731,490
22,839,350
13,394,584
5,719,557
5,258,541
5,014,286
4,873,466
4,450,000
4,325,000
3,397,984
3,310,719
2,362,078
1,945,636
1,731,540
1,545,680
1,450,000
1,261,471
9.52
8.84
5.00
4.62
2.71
1.16
1.06
1.01
0.99
0.90
0.87
0.69
0.67
0.48
0.39
0.35
0.31
0.29
0.26
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
TOTAL
381,468,428
77.14
2018 ANNUAL REPORT | PAGE 125
Schedule of Mining Tenements – 30 June 2018
Project
Tenement Status
Current Area
Equity
Tenement
Manager
East Kimberley
E80/4880
Live
East Kimberley
E80/5131
Pending
35
5
East Kimberley
E80/5238
Pending
14
BL
BL
BL
East Kimberley
- Keller Creek
E80/4834
Live
15
BL
Lanfranchi
M15/473
Live
981.7
HA
Lanfranchi
ML15/346
Live
Lanfranchi
ML15/347
Live
120
120
HA
HA
Lanfranchi
ML15/367
Live
119.85
HA
Lanfranchi
ML15/368
Live
120
HA
Lanfranchi
ML15/369
Live
119.5
HA
Lanfranchi
ML15/370
Live
119.75
HA
Lanfranchi
ML15/371
Live
119.5
HA
Lanfranchi
ML15/372
Live
119.9
HA
Lanfranchi
ML15/375
Live
120.7
HA
Lanfranchi
ML15/376
Live
120.2
HA
Lanfranchi
ML15/377
Live
120.25
HA
Lanfranchi
ML15/378
Live
120.6
HA
Lanfranchi
ML15/379
Live
119.85
HA
Lanfranchi
ML15/380
Live
119.7
HA
Lanfranchi
ML15/381
Live
120.3
HA
Lanfranchi
ML15/382
Live
120
HA
Lanfranchi
ML15/383
Live
120.05
HA
Lanfranchi
ML15/384
Live
119.85
HA
Lanfranchi
ML15/385
Live
120.2
HA
Lanfranchi
ML15/386
Live
120.25
HA
Lanfranchi
ML15/387
Live
120
HA
Lanfranchi
ML15/388
Live
119.95
HA
Lanfranchi
ML15/389
Live
120.25
HA
Lanfranchi
ML15/482
Live
120.6
HA
Lanfranchi
ML15/483
Live
120.3
HA
100%
PanRes
100%
PanRes
100%
80% - THX
has 20%
free carried
interest
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
All rights
except Au
All rights
except Au
All rights
except Au
All rights
except Au
PanRes
PanRes
PanRes
PanRes
PanRes
PanRes
PanRes
PanRes
PanRes
PanRes
PanRes
PanRes
PanRes
PanRes
PanRes
PanRes
PanRes
PanRes
PanRes
PanRes
PanRes
PanRes
PanRes
PanRes
PanRes
PanRes
PanRes
PanRes
Panoramic
Commtiment
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
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
Pindan Exploration
Company Pty Ltd
Pindan Exploration
Company Pty Ltd
Pindan Exploration
Company Pty Ltd
Pindan Exploration
Company Pty Ltd 80/100
shares & Thundelarra
Limited 20/100 shares
Cherish Metals Pty Ltd
Cherish Metals Pty Ltd
Cherish Metals Pty Ltd
Cherish Metals Pty Ltd
Cherish Metals Pty Ltd
Cherish Metals Pty Ltd
Cherish Metals Pty Ltd
Cherish Metals Pty Ltd
Cherish Metals Pty Ltd
Cherish Metals Pty Ltd
Cherish Metals Pty Ltd
Cherish Metals Pty Ltd
Cherish Metals Pty Ltd
Cherish Metals Pty Ltd
Cherish Metals Pty Ltd
Cherish Metals Pty Ltd
Cherish Metals Pty Ltd
Cherish Metals Pty Ltd
Cherish Metals Pty Ltd
Cherish Metals Pty Ltd
Cherish Metals Pty Ltd
Cherish Metals Pty Ltd
Cherish Metals Pty Ltd
Cherish Metals Pty Ltd
Cherish Metals Pty Ltd
Cherish Metals Pty Ltd
PAGE 126 | 2018 ANNUAL REPORT
Schedule of Mining Tenements – 30 June 2018
Project
Tenement Status
Current Area
Lanfranchi
ML15/484
Live
120.1
HA
Lanfranchi
ML15/485
Live
120
HA
Lanfranchi
ML15/486
Live
120.25
HA
Lanfranchi
ML15/487
Live
120.25
HA
Lanfranchi
ML15/488
Live
119.85
HA
Lanfranchi
ML15/489
Live
72.15
HA
Lanfranchi
ML15/490
Live
120.3
HA
Lanfranchi
ML15/491
Live
119.6
HA
Lanfranchi
ML15/492
Live
119.7
HA
ML15/493
Live
120.05
HA
M38/101
Live
583.15
HA
M38/159
Live
597.15
HA
M38/342
Live
316.25
HA
M38/363
Live
5.245
HA
M38/364
Live
18.375
HA
M38/37
Live
650
HA
M38/38
Live
280.05
HA
M38/49
Live
945.05
HA
M38/535
Live
464.55
HA
M38/693
Live
48.2176
HA
Lanfranchi
Laverton -
Focus
Laverton -
Focus
Laverton -
Focus
Laverton -
Focus
Laverton -
Focus
Laverton -
Focus
Laverton -
Focus
Laverton -
Focus
Laverton -
Focus
Laverton -
Focus
Panton
Panton
Panton
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
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
Tenement
Manager
PanRes
PanRes
PanRes
PanRes
PanRes
PanRes
PanRes
PanRes
PanRes
PanRes
Focus
Focus
Focus
Focus
Focus
Focus
Focus
Focus
Focus
Focus
M80/103
Live
859.4
HA
100%
PanRes
M80/104
Live
570.3
HA
100%
PanRes
M80/105
Live
828.3
HA
100%
PanRes
Savannah
L80/64
Live
311
HA
100%
PanRes
Savannah
M80/179
Live
241.85
HA
100%
PanRes
Savannah
M80/180
Live
960.3
HA
100%
PanRes
Savannah
M80/181
Live
960
HA
100%
PanRes
Savannah
M80/182
Live
589.4
HA
100%
PanRes
Savannah
Savannah -
Copernicus
Savannah -
Copernicus
Savannah -
Copernicus
M80/183
Live
967.05
HA
100%
PanRes
L80/52
Live
140.313
HA
100%
PanRes
L80/86
Live
0.04
HA
100%
PanRes
M80/540
Live
128.85
HA
100%
PanRes
2018 ANNUAL REPORT | PAGE 127
Panoramic
Commtiment
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
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
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
100% of Commit,
Rents & Rates
100% of Commit,
Rents & Rates
100% of Commit,
Rents & Rates
Current Registered
Holders
Cherish Metals Pty Ltd
Cherish Metals Pty Ltd
Cherish Metals Pty Ltd
Cherish Metals Pty Ltd
Cherish Metals Pty Ltd
Cherish Metals Pty Ltd
Cherish Metals Pty Ltd
Cherish Metals Pty Ltd
Cherish Metals Pty Ltd
Cherish 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
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
Savannah Nickel Mines
Pty Ltd
Savannah Nickel Mines
Pty Ltd
Savannah Nickel Mines
Pty Ltd
Resources and Reserves
NICKEL – MINERAL RESOURCES AS AT 30 JUNE 2018
Resource
Equity
Metal
JORC
Compliance
Measured
Indicated
Inferred
Total
Tonnes
(%)
Tonnes
(%)
Tonnes
(%)
Tonnes
(%)
Metal
Tonnes
Savannah Project
Savannah (above 900)
100%
Savannah (below 900)
100%
Savannah North (Upper)
100%
Savannah North (Lower)
100%
Savannah North (Other)
100%
Lanfranchi Project
Cruikshank
Deacon
Gigantus
Helmut South Ext
John
Lanfranchi
Martin
McComish
Metcalfe
Schmitz
Lower Schmitz
Winner
Total (Equity)
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Nickel
Copper
Cobalt
Nickel
Copper
Cobalt
Nickel
Copper
Cobalt
Nickel
Copper
Cobalt
Nickel
Copper
Cobalt
Nickel
Nickel
Nickel
Nickel
Nickel
Nickel
Nickel
Nickel
Nickel
Nickel
Nickel
Nickel
Nickel
Copper
Cobalt
2012
1,275,000
2012
780,000
2012
2012
2012
2004
2012
2004
2012
2004
2012
2012
2004
2012
2012
2012
2004
-
-
-
-
89,000
-
21,000
-
40,000
-
-
-
30,000
-
-
1.51
0.87
0.07
1.64
0.76
0.10
-
-
-
-
-
-
-
-
-
-
2.99
-
4.54
-
4.12
-
-
-
4.92
-
-
759,000
125,000
4,229,000
2,697,000
242,000
2,018,000
-
-
29,000
-
55,000
47,000
-
280,000
23,000
51,000
14,000
1.20
0.90
0.07
1.72
0.75
0.09
1.64
0.65
0.12
1.96
0.98
0.14
2.22
0.50
0.14
1.42
-
-
2.87
-
4.40
3.58
-
1.99
3.93
5.60
4.40
-
-
1,759,000
853,000
493,000
611,000
134,000
652,000
-
291,000
63,000
7,000
992,000
111,000
16,000
79,000
-
-
-
-
-
-
-
1.25
0.49
0.10
2.02
0.93
0.13
1.67
0.53
0.11
0.79
1.70
1.63
-
1.42
3.49
4.16
1.49
1.35
2.95
4.80
-
2,034,000
905,000
5,987,000
3,549,000
735,000
2,629,000
224,000
652,000
50,000
291,000
158,000
54,000
992,000
391,000
69,000
131,000
14,000
1.39
0.88
0.07
1.65
0.76
0.10
1.53
0.60
0.11
1.97
0.97
0.14
1.85
0.52
0.12
1.28
2.22
1.63
3.59
1.42
3.97
3.66
1.49
1.81
4.14
5.11
4.40
28,300
17,900
1,400
14,900
6,900
900
91,300
36,100
6,800
70,100
34,400
4,900
13,600
3,800
900
33,600
5,000
10,600
1,800
4,100
6,300
2,000
14,800
7,100
2,900
6,700
600
313,600
99,100
14,900
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
•
Lanfranchi Project Resource cutoff grade is 1.00% Ni
•
Cross references to previous Company ASX announcements:
•
•
•
•
•
Savannah (above 900) - refer to ASX announcement of 30 September 2016, titled "Mineral Resources and Ore Reserves at 30 June 2016”
Savannah (below 900) - refer to ASX announcement of 30 September 2015, titled "Mineral Resources and Ore Reserves at 30 June 2015”
Savannah North – refer to ASX announcement of 24 August 2016, titled “Major Resource Upgrade for Savannah North”
Cruickshank - refer to ASX announcement of 28 April 2011, titled “Cruickshank Resource Upgraded 26% to 33,560t Ni”
Deacon, Helmut South Ext, Lanfranchi, Metcalfe - refer to ASX announcement of 30 September 2016, titled "Mineral Resources and Ore
Reserves at 30 June 2016”
Gigantus, John, McComish, Winner - refer to ASX announcement of 12 October 2011, titled “Business Review 2011”
Martin - refer to ASX announcement of 13 September 2013, titled “Resources and Reserves at 30 June 2013 and Exploration Update”
Schmitz - refer to ASX announcement of 30 September 2015, titled "Mineral Resources and Ore Reserves at 30 June 2015”
Lower Schmitz - refer to ASX announcement of 28 April 2016, titled "Quarterly Report for the period ending 31 March 2016”
•
•
•
•
No New Information or Data
The 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 128 | 2018 ANNUAL REPORT
Resources and Reserves
NICKEL – ORE RESERVE AS AT 30 JUNE 2018
Reserve
Equity Metal
JORC
Compliance
Proven
Probable
Total
Tonnes
(%)
Tonnes
(%)
Tonnes
(%)
Savannah Project
Above 900 Fault
100%
Savannah North
100%
Nickel
Copper
Cobalt
Nickel
Copper
Cobalt
2012
1,365,000
2012
-
194,000
6,650,000
1.15
0.66
0.06
-
-
-
Lanfranchi Project
Deacon
Metcalfe
Lanfranchi
Schmitz
Helmut Sth Ext
Total (Equity)
100%
100%
100%
100%
100%
Nickel
Nickel
Nickel
Nickel
Nickel
2012
2012
2012
2012
2012
Nickel
Copper
Cobalt
42,000
113,000
11,000
15,000
27,000
1.24
1.28
0.07
1.24
1.28
0.10
2.67
1.57
2.56
2.96
2.19
1,558,000
6,650,000
42,000
113,000
11,000
15,000
27,000
1.16
0.74
0.06
1.42
0.61
0.10
2.67
1.57
2.56
2.96
2.19
Metal
Tonnes
18,100
11,500
900
94,500
40,900
6,700
1,100
1,800
300
500
600
116,800
52,400
7,600
Notes:
• Figures have been rounded and therefore may not add up exactly to the reported totals
• 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
Cross references to previous Company ASX announcements:
•
•
refer to ASX announcement of 30 September 2016, titled "Mineral Resources and Ore Reserves at 30 June 2016"
refer to ASX announcement of 2 February 2017, titled "Savannah Feasibility Study. Ten year life with minimal restart capital
requirements"
No New Information or Data
The Nickel Ore Reserve 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 the estimates of Ore Reserves, that all material assumptions and technical parameters
underpinning the estimates in the relevant market announcements continue to apply and have not materially changed
2018 ANNUAL REPORT | PAGE 129
Resources and Reserves
PLATINUM GROUP METALS – MINERAL RESOURCES AS AT 30 JUNE 2018
Resource
Equity
JORC
Compliance
Tonnage
Grade
Contained Metal
Pt
(g/t)
Pd
(g/t)
Rh
(g/t)
Au
(g/t)
Ag
(g/t)
Cu
(%)
Ni
(%)
Co
%
Pt-Eq
(g/t)
Pt
(oz ,000)
Pd
(oz ,000)
Thunder Bay North
100%
2004
Open Pit
Indicated
Inferred
Underground
100%
2004
Indicated
Inferred
8,460,000
53,000
1.04
0.96
1,369,000
472,000
1.65
1.32
Sub-total – Thunder Bay North (Equity)
10,354,000
1.13
100%
2012
Panton
Top Reef
Measured
Indicated
Inferred
Middle Reef
100%
2012
Measured
Indicated
Inferred
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
Sub-total – Panton (Equity)
14,320,000
2.19
0.98
0.89
1.54
1.25
1.07
2.83
3.21
2.35
1.09
1.28
1.07
2.39
Total - PGM (Equity)
0.04
0.04
0.08
0.06
0.07
0.07
0.11
0.09
1.50
1.60
2.60
2.10
0.25
0.22
0.43
0.36
0.18
0.18
0.014
0.014
2.13
2.00
0.24
0.19
0.016
0.011
3.67
2.97
-
-
-
-
-
-
0.42
0.38
0.38
0.10
0.10
0.10
-
-
-
-
-
-
0.08
0.09
0.13
0.03
0.04
0.05
0.28
0.31
0.36
0.18
0.19
0.19
-
-
-
-
-
-
-
-
-
-
-
-
283
2
73
20
377
348
363
105
93
75
24
267
2
68
19
355
400
426
118
75
62
21
1,008
1,102
1,385
1,456
Notes
Thunder Bay North 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%.
Thunder Bay North Underground Resource: 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 ASX announcements:
• Thunder Bay North Open Pit Resources – refer to Magma Metals Limited (ASX:MMW) announcement of 7 February 2011, titled “Positive Scoping
Study for Thunder Bay North Project”
• Thunder Bay North Underground Resources – refer to Magma Metals Limited (ASX:MMW) announcement of 23 February 2012, titled “Magma Metals
Increases Mineral Resources at TBN to 790,000 Platinum-Equivalent Ounces”
• Panton - refer to the Company’s ASX announcement of 30 September 2015, titled “Mineral Resources and Ore Reserves at 30 June 2015”
No New Information or Data
The 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 130 | 2018 ANNUAL REPORT
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2018 ANNUAL REPORT | PAGE 131
Corporate Directory
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Peter Harold
Managing Director
John Rowe
Non-Executive Director
Peter Sullivan
Non-Executive Director
Nicholas Cernotta
Non-Executive Director
Rebecca Hayward
Non-Executive Director
MANAGEMENT
Trevor Eton
Chief Financial Officer & Company Secretary
John Hicks
General Manager Exploration
Ben Robinson
General Manager Savannah Project
Tim Mason
General Manager Projects & Innovation
Rochelle Lampard
Human Resources Manager
Robert Parkinson
Manager Business Development
Tim Shervington
Commercial Manager
Andrew Math
Group Financial Controller
Jeremy Smith
Manager Information & Technology
PAGE 132 | 2018 ANNUAL REPORT
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Panoramic Resources Limited
Level 9, 553 Hay Street, Perth WA 6000
Postal Address
PO Box Z5487, Perth WA 6831
Telephone: +61 8 6266 8600
Facsimile: + 61 8 9421 1008
Email: info@panres.com
ABN: 47 095 792 288
www.panoramicresources.com