Annual Report
2016
Corporate
Directory
Directors
Ian Macliver
Dan Lougher
David Southam
Richard Yeates
Craig Readhead
Tim Netscher
Company Secretary
Joseph Belladonna
Auditors
Crowe Horwath
Level 5
45 St Georges Terrace
Perth WA 6000
Bankers
ANZ Banking Group Limited
77 St Georges Terrace
Perth WA 6000
Stock Exchange
Australian Securities Exchange Limited
Code: WSA
Solicitors
Ashurst
Level 10 & 11
123 St Georges Terrace
Perth WA 6000
Registered Office
Level 2
2 Kings Park Road
West Perth WA 6005
PO Box 1891
West Perth WA 6872
Phone: +61 (0) 8 9334 7777
+61 (0) 8 9486 7866
Fax:
info@westernareas.com.au
Email:
ABN: 68 091 049 357
Share Registry
Computershare Investor
Services Pty Ltd
Level 11
172 St Georges Terrace
Perth WA 6000
Competent Person’s Statement:
The information in the Annual Report was compiled by Western Areas management, but the information as it relates to mineral resources and reserves was prepared by Mr Charles
Wilkinson, Mr Daniel Lougher and Mr Andre Wulfse who are Competent Persons and members of the Australian Institute of Mining and Metallurgy (AusIMM). They are full-time
employees of Western Areas Ltd and have sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which they are
undertaking to qualify as Competent Persons as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’(2012
JORC Code). Mr Wilkinson, Mr Lougher and Mr Wulfse consent to the inclusion in the report of the matters based on the information in the form and context in which it appears. The
information contained in this report in relation to the New Morning Deposit was prepared and first disclosed under the 2004 Edition of the JORC Code. It has not been updated since to
comply with the 2012 JORC Code on the basis that the information has not materially changed since it was last reported.
Forward Looking Statement:
This Annual Report contains certain forward-looking statements including nickel production targets. Often, but not always, forward looking statements can generally be identified by the
use of forward looking words such as “may”, “will”, “expect”, “intend”, “plan”, “estimate”, “anticipate”, “continue”, and “guidance”, or other similar words and may include, without limitation,
statements regarding plans, strategies and objectives of management, anticipated production and expected costs. These forward-looking statements are subject to a variety of risks and
uncertainties beyond the Company’s ability to control or predict which could cause actual events or results to differ materially from those anticipated in such forward-looking statements.
This Annual Report does not include reference to all available information on the Company and should not be used in isolation as a basis to invest in Western Areas. Any potential investors
should refer to Western Area’s other public releases and statutory reports and consult their professional advisers before considering investing in the Company.
02
Contents
Highlights 2015-2016
Chairman’s Letter
Managing Director’s Report
Operations Review
Explorations Review
Ore reserve/mineral resource statement
Directors Report
Remuneration Report (Audited)
Auditor’s independence declaration
Consolidated income statement
Consolidated statement of comprehensive income
Consolidated statement of financial position
Consolidated statement of changes in equity
Consolidated statement of cash flows
Notes to the financial statements
Directors Declaration
Independant Auditor’s Opinion
Tenements listing
Shareholder Information
05
06
07
11
22
27
29
35
44
45
46
47
48
49
50
83
84
86
90
03
From Mine To Port
Western Areas is Australia’s highest grade, lowest cash cost nickel
producer and its main asset, the 100% owned Forrestania Nickel
Project, is located 400km east of Perth in Western Australia.
Western Areas is also Australia’s second largest sulphide nickel
miner producing approximately 25,000 nickel tonnes per annum
from its Flying Fox and Spotted Quoll mines - two of the lowest
cost and highest grade nickel operations in the world.
An active nickel explorer at the Cosmos Nickel Complex and
the Western Gawler region in Australia, the Company also holds
significant exploration interests in Canada, Finland and Greenland
through shareholdings in Mustang Minerals and FinnAust Mining
Plc. The Board remains focused on the core business of low cost,
long life nickel production, new nickel discoveries and generating
returns to shareholders. It has put in place the cost structure and
capabilities to prosper throughout the cycle by adopting prudent
capital management strategies and an opportunistic approach to
project assessment.
04
04
Highlights 2015-2016
Safety
Environmental
Maintained an industry leading safety record.
Zero Lost Time Injuries recorded for FY16.
Continued support of local and regional programs, including
local schools and associations, the Western Quoll enclosure
at the Perth Zoo and the Starlight Children’s Foundation.
Cosmic Boy Concentrator
Production Costs
Record throughput from the Cosmic Boy Concentrator,
processing 616,279 tonnes of ore during the year.
Forrestania operations continued to generate positive
operating cash flow. Sustainable cost reductions, improved
efficiency and innovation resulted in a unit cash cost of
A$2.26/lb of nickel in concentrate.
Spotted Quoll Mine
Flying Fox Mine
Record production from Spotted Quoll, production
in excess of 15,000 nickel tonnes.
Flying Fox continues to deliver consistent production,
mining over 12,000 tonnes of nickel for FY16.
Exploration
Balance Sheet
The Cosmos Nickel Complex and Western Gawler
project offering exciting growth and exploration opportunities.
Western Areas remains debt free with a reported
net cash position of A$75.7m at 30 June 2016.
05
05
Chairman’s
Letter
Ian Macliver
Independent
Non-Executive Chairman
Dear Fellow Shareholder,
On behalf of your Board of Directors, I am pleased to present
to you the Annual Report for the year ended 30 June 2016.
Western Areas has had a solid year operationally, meeting
production guidance and maintaining an excellent safety record.
This operational performance coupled with our strong balance
sheet and high quality assets leaves the Company extremely well
positioned to endure a difficult nickel price environment.
Western Areas financial results show that the Company has
remained cash flow positive throughout the period, a major
achievement in light of nickel price weakness. The nickel price
has had an impact on profitability through it’s direct impact on
revenues and indirect impact on write-offs and impairments on
some non-core assets.
Western Areas has been extremely focussed on controlling costs
to further optimise its business and respond to the nickel price
environment. Continued operational efficiency and cost reduction
programs have lowered cash costs of production and delivered
positive operating margins and cash flow from operations, an
outstanding achievement in a difficult environment. We expect to
continue this strong focus on cash margins in the coming year.
Operationally, Western Areas is in a very strong position with
the Company reporting record mill throughput in 2016 and
record Spotted Quoll ore tonnes. Western Areas is a consistent
performer and is pleased to have met or exceeded its production
guidance for the last 6 years. The Company is extremely proud of
its safety record and is over 2 years LTI free. The Company is also
very proud to report positive operational cash flow even at the
current low nickel price.
Western Areas has been a prudent manager of shareholder
capital, ensuring the Company is in a solid position to weather
nickel price weakness. The Board has decided not to pay a
dividend for the full year, a decision that is consistent with the
previous half and the Company’s dividend policy. Western Areas
has a track record of paying-dividends over the last five years and
while it is the Board’s desire to pay dividends it must consider the
prevailing nickel price and future capital requirements.
06
To provide further balance sheet strength, Western Areas
completed a capital raising of $75 million and during the year
deferred $34 million of capital costs from FY16 to FY17. These
measures have given the Company flexibility at a time of low
nickel prices and allowed us to remain debt free at the end of
the year. Western Areas is now extremely well positioned with
$76 million in cash at bank and zero debt at the end of the
reporting period.
There is no doubt that the current nickel price environment is
challenging, in fact, the nickel price is now trading below the
50th percentile on the cost curve, implying that more than 60%
of producers are losing money. That said, the Company’s high
grade assets and low cost of production places us in a favourable
position to deal with nickel price weakness. In the medium to
longer term, the nickel outlook is brighter with many analysts
predicting demand increases to outstrip supply, in part driven by
fast growing markets for nickel such as the battery sector.
Going forward, the Company’s focus will be on continuing to
preserve financial strength, manage operations carefully with a
specific emphasis on cash generation rather than raw production
numbers. Western Areas is also looking into the future and
remains committed to development of Cosmos and continued
exploration at both Cosmos and Western Gawler region.
In closing, I would like to acknowledge and thank the Company’s
Managing Director, Dan Lougher, the executive team and all
of the employees, contractors and suppliers of Western Areas
for their hard work and dedication throughout the year.
The valuable insights and hard work of my fellow directors
has been instrumental in keeping the focus on the core
business of low cost, long life nickel production and new
discoveries for Western Areas.
Ian Macliver
Independent Non-Executive Chairman
Managing Director’s
Report
Daniel Lougher
Managing Director
& Chief Executive Oficer
The 2016 financial year (FY16) has been a strong year
operationally for Western Areas. The Company has delivered
financial results that are underpinned by significant reductions in
spending factors under management control in response to the
challenging nickel price environment. The Company’s operations
remained cash flow positive through this period, which is a
significant achievement and a testament to the high grade mines,
outperforming mill and the management approach to ensuring
low cash cost operations. Importantly, all of this was achieved with
no Lost Time Injuries (LTI’s) recorded across the Company.
Western Areas remains debt free and reported a net cash position
of A$75.7m at year-end. During the year the Company repaid
A$125m of convertible bond debt which significantly reduced the
interest charges in FY16. On 31 March the Company announced
an underwritten A$60m share placement followed in April by a
Share Purchase Plan of A$15.0m. The funds raised allowed the
Company to repay the A$25m corporate facility held with the
ANZ Bank as well as completing the final payment of A$12.7m
for the acquisition of the Cosmos Nickel Project (Cosmos).
For the sixth consecutive year, Western Areas reported key
operational metrics that either met or exceeded guidance
demonstrating the exceptional consistency of the Company’s
operations. The guidance result in FY16 was assisted by record
production from the Spotted Quoll mine and record throughput
from the Cosmic Boy Concentrator above name plate capacity.
Flying Fox and Spotted Quoll mines, based on reported Ore
Reserves, have mine lives of five and eight years respectively and
remain two of the highest grade nickel mines in the world.
As a Company we are exceptionally proud of our safety record
with ZERO LTI’s for FY16, taking the Company to over two years
without an LTI. A particularly pleasing outcome was achieved at
Spotted Quoll mine and Cosmic Boy Concentrator, where they
have successfully operated four years and three years respectively
without an LTI and a full year without a Medically Treated Injury.
This is an outstanding achievement and great credit must be given
to the teams involved.
Controlling costs and optimising operations was a key focus
which will continue into the coming year. The Company has
continued to drive down its operational and corporate cost base,
whilst improving efficiency through many staff driven initiatives
and innovation. As a result, the Company was able to deliver a
reduction in unit cash costs of production of nickel in concentrate
to A$2.26/lb. These actions have ensured that positive operating
margins and cash flow from operations were maintained in FY16
despite the external influence of decade low nickel prices. This
demonstrated resilience has helped the Company maintain
its position as one of the world’s lowest cost pure-play nickel
producers.
Department
Lost Time Injury Frequency Rate
(LTIFR)
FY16
FY15
0.0
0.0
Total Ore Mined (tns)
590,246
540,268
Average Mined Grade
4.7%
4.9%
Contained Nickel Mined (tns)
27,607
26,524
Total Ore Processed (tns)
616,279
609,727
Average Processed Grade
Average Recovery
4.5%
90%
4.7%
90%
Contained Nickel Processed (tns)
25,009
25,801
Nickel Sold (tns)
24,793
26,036
Average Nickel Price Received
(US$/tn)
Cash Costs before smelting/refining
(A$/tn)
Average Exchange Rate USD/AUD
9,083
14,514
2.26
0.73
2.31
0.84
07
During the year the Company announced a prudent approach
to capital expenditure and exploration spend given the nickel
price headwinds. This resulted in the deferral of $34.0m of
capital spend which was only possible due to the significant
investment in capital in prior years. As part of that deferral the
Mill Enhancement Project was postponed, however due to our
confidence in the fundamentals of this project, all long lead items
were ordered and have been subsequently delivered to site.
Notwithstanding the ongoing challenging nickel price
environment, the Forrestania operations continued to generate
positive operating cash flow, with additional benefits from the
capital deferral program being fully implemented during the year.
The measured approach to discretionary exploration expenditure
continued at both Cosmos and Western Gawler projects.
The decline in the nickel price over FY16 is no doubt well
understood by our shareholders. However, Western Areas was
able to insulate itself to a degree by virtue of its high grade assets,
low cost of production, debt free balance sheet and the support
of shareholders. There are a number of factors which influenced
the nickel price in FY16 including record high LME and Chinese
nickel stockpiles, the ramp up for Filipino laterite exports
following the Indonesian nickel laterite export ban and Chinese
nickel pig iron production. However, history and logic suggests
that nickel prices are not sustainable at this level and we can see
a number of potential catalysts for nickel price improvements,
some of which have transpired post FY16. Some potential
catalysts include recent comments and actions by the Philippines
government regarding stronger environmental controls being
imposed on nickel laterite operators. Furthermore, we see
encouraging signs of continuing growth in 300 series stainless
steel demand, which contains the highest nickel content of any
stainless steel product.
Potential further drivers to a price improvement include a
reduction in supply due to some closures of high cost mines
(some of which occurred in late FY16), an upturn in global
stainless steel demand and the use of nickel in lithium-ion
batteries that power electric vehicles. We are confident that
the nickel price cycle will turn and whilst we cannot control the
timing we can control the operational and corporate aspects of
our business to ensure Western Areas is best positioned for this
price upswing.
Consistent with past practice, the Company will be commencing
a formal tender process during the first half of FY17 for its nickel
concentrate off-take contracts beyond CY16. This will be the first
year that both the Jinchuan and the bulk of the BHPB contracts
will mature together. In anticipation of off-take becoming
available, the Company has been working with globally significant
commodity companies on developing alternative markets for nickel
concentrates whilst also actively marketing our highly sought after
concentrate to traditional smelters and commodity traders.
Western Areas has delivered on its previously stated intention
to invest in exploration at Forrestania, Western Gawler JV and
the newly acquired Cosmos project. During the year, Cosmos
transitioned from care and maintenance to an exploration site
with progress highlights including the commencement of drilling
at Ulysses, completion of a Surface Moving Loop EM (MLEM)
survey and continuation of near mine target generation activities.
The Company is also pleased to have completed an update to
the Xstrata scoping study for the Odysseus Project and has now
commenced a pre-feasibility study. The Company continues to
believe that Cosmos is one of the most prospective nickel belts in
Australia and is significantly under-explored.
At our Western Gawler project, the Company earned 100%
ownership in the Monax tenements and continued its earn-in
into the Strandline JV tenements. Extensive geophysical surveys
(fixed and MLEM and gravity surveys), combined with reverse
circulation drilling were also completed over various targets.
Initial drilling results exceeded expectations with prospective
mafic intrusions identified during the first round of RC drilling.
The Company is very committed to the long term exploration
investment in this region and believes that there is potential to
find a significant discovery in this belt.
At Forrestania, exploration and resource extension drilling
activities continued at Spotted Quoll, Flying Fox and the New
Morning project, with the pace of activity moderated in line with
the Company focus on cash flow and controlling costs. Studies
completed to date indicate that the New Morning Project may
be amenable to an open pit mine at improved nickel prices. The
Company is undertaking comprehensive metallurgical test-work
to evaluate the potential for the use of the Bioheap technology in
the nickel extraction process.
During the year there has been significant activity in the
Lithium space. Western Areas consequently received a number
of corporate approaches and enquiries regarding the Lithium
potential of our tenements. Accordingly, the Company has
commenced some limited and low key activities to determine
the lithium endowment potential. Initial results from re-assaying
historical core has delivered interesting results as reported in the
Quarterly Reports. On completion of work in early FY17, it is the
Company’s intention to identify the most appropriate solution to
maximise value of these tenements, with the understanding that
Lithium is likely to be a non-core activity for the Company.
A high standard of environmental management has been
maintained during the financial year across the Company
with no major reportable environmental incidents. Ongoing
environmental monitoring programs of the declared rare flora
health adjacent to the Spotted Quoll mine operations and
Western Quoll population surveys continued. Environmental
weed and feral animal eradication programs were ongoing during
the year in conjunction with seed collection for rehabilitation.
Approximately 9.5kg of seed was processed and stored which
has the potential to produce approximately 50,000 plants and
rehabilitate 45 hectares of land.
08
The Company also continued to support a number of programs
relevant to its corporate social responsibilities. Some examples
included the sponsorship of the Chuditch (Western Quoll)
enclosure at the Perth Zoo, and supporting fundraising activities
for the Starlight Children’s Foundation. More locally we
hosted school groups and supported important programs in the
Forrestania area.
Western Areas recently released key operational and financial
guidance metrics for FY17. Looking ahead, the Company’s
focus will be on continuing to maintain a strong balance sheet,
managing operations safely and priority given to cash generation
rather than raw production numbers. The Company will continue
to focus on prudent capital management but will maintain
sufficiently flexibility to increase productivity should market
conditions improve. Exploration efforts will be focussed on
the three organic growth projects of Forrestania, Cosmos and
Western Gawler. Feasibility work is focussed on the Odysseus
Pre-Feasibility Study which is scheduled for completion towards
the end of CY16.
In conclusion, Western Areas has attractive organic growth
options, a strong balance sheet, low production costs and high
grade assets, putting it in an exceptional position to benefit
from an improvement in the nickel price. I would like to take this
opportunity to thank all of our staff, contractors and suppliers for
their support throughout the year. I look forward to be working
with you all again in the coming year in what should be a year
of better commodity prices and hopefully less volatile market
conditions.
Daniel Lougher
Managing Director and Chief Executive Officer
09
09
Our operation remains
extremely resilient with
positive operating
cashflow and a workforce
continuing to drive
innovation and productivity
improvements across the
business.
10
10
Western Areas 2016 Annual Report Operations
Review
Group Overview
Western Areas is an Australian based high grade, low cash
cost nickel producer. The Company is listed on the Australian
Securities Exchange (ASX) under the ticker symbol “WSA” and
has been a member of the ASX 200 for many years.
The Company’s main asset is the 100% owned Forrestania Nickel
Project located 400km east of Perth in Western Australia.
Western Areas is also Australia’s second largest sulphide nickel
miner producing approximately 25,000 nickel tonnes per annum
from its Flying Fox and Spotted Quoll mines which are two of the
lowest cost and highest grade nickel operations in the world.
The high grade nickel ore mined is processed through the
Cosmic Boy Concentrator (CBC) and sold into offtake
agreements with BHP Billiton for 12,000tpa nickel in
concentrate and 13,000tpa with Jinchuan for a total
25,000tpa nickel in concentrate.
The Company is an active nickel explorer at both the
Cosmos Nickel Complex located in Western Australia
and Western Gawler region located in
South Australia and the Company also holds significant
exploration interests in Canada, Finland and Greenland through
shareholdings in Mustang Minerals and FinnAust Mining Plc.
The Board remains focused on the core business of low cost,
long life nickel production, new nickel discoveries and generating
returns to shareholders. It has put in place the cost structure and
capabilities to prosper throughout the cycle by adopting prudent
capital management and an opportunistic approach to joint
venture opportunities and asset acquisition.
Structure
Western Areas Ltd is a company limited by shares that is
incorporated and domiciled in Australia. Western Areas Ltd
has prepared a consolidated financial report incorporating the
material entities that it controlled during the financial year,
which are shown below along with the principal assets of each.
Bacterial Heap Leach
Worldwide Patents
Full Laboratory and
Management Team
Bioheap
100%
Finland
Polymetallic UMS deposits
Greenland
Mineral Sands Exploration
FinnAust
Mining PL C
37%
Makwa - Ni/PGM
Mayville (M2) - Cu/PGM
M
C
u
o
r
s
t
a
p
o
r
a
n
g
C
M
tio
in
e
r
a
n
a
n (1
d
a
9.9
als
)
%
Mt Alexander JV - Ni
Southern Cross
Goldfield JV - Ni
Western Gawler - JV
- Ni, Cu, Au
Aust
Exploration
Assets
Western Areas Ltd
2 Operating Mines
Flying Fox - Ni
Spotted Quoll - Ni
Australian
Nickel
Investement
Pty Ltd
(100%)
Cosmos Nickel
Complex
Forestania
(100%)
Lounge Lizard - Ni
Diggers South - Ni
New Morning - Ni
Forestania
(70 %)
Mt Gibb - Ni, Au
Lake King JV - Ni
Sunrise - Ni
Cosmic Boy - Ni
Gold Rights
11
Western Areas 2016 Annual ReportOperations Review Western Areas Safety
There were no Lost Time Injuries (LTI) for FY16 which is an
excellent achievement considering the Forrestania Nickel
Operations (FNO) runs a concentrator, two deep underground
mines, surface exploration program and a trucking logistics
function from FNO to Kambalda and Esperance Port. Two
significant milestones were achieved during the year; firstly,
the CBC achieved three years with no LTI’s and secondly, the
concentrator and the Spotted Quoll mine achieved 12 months
without a LTI, medically treated injury (MTI) and restricted duty
injury (RDI).
A summary detailing the LTI free days by operating department
at year end is shown in the table below.
Rope Rescue exercise
Department
Surface Exploration
Spotted Quoll UG mine
Cosmic Boy Village
Cosmic Boy Concentrator
Flying Fox UG mine
Surface Haulage
LTI free days
2,921
1,904
1,612
1,103
1,086
820
The Company set an ambitious target of reducing the combined
FNO work-place Total Recordable Injury Frequency Rate
(TRIFR; recordable injuries are those which require medical
treatment, restricted duty or result in lost time) by 25% for the
year and managed to achieve an excellent 32% decrease from
15.2 to 10.4.
Senior managers and department safety representatives have
been active and visible in the workplace with a 20% increase in
work-place safety inspections and audits (118 from 96). Reviews
of safety plans, procedures and other documents continue in
order to improve the safety management system. All FNO
departments and contractors continue to ensure that safety and
risk management remain a high priority in the workplace.
During the year the Department of Mines and Petroleum (DMP)
focussed on work-place mental health with a subsequent FNO
mental health audit completed by the DMP inspectors in April.
The audit resulted in an excellent rating for the Company. As part
of our commitment to continuous improvement in this area, our
emergency response co-ordinators have completed dedicated
workplace mental health training to better equip our personnel.
12
Breathing Apparatus exercise
Hazardous Materials scenario
Fire fighting exercise
Western Areas 2016 Annual ReportOperations Review The Emergency Response Team (ERT) took part in its second
Perth based WA Mines Emergency Response Competition in
November, where the team performed very well with a third
place in the Breathing Apparatus exercise and Emergency
Response Readiness exercises plus a second place in the Fire
Fighting exercise.
In November and December the ERT assisted the Department of
Fire and Emergency Services (DFES) teams and local community
fire-fighting volunteers to control and extinguish bush-fires to
the north of FNO. Despite hot weather and difficult conditions
over a three week period, the fires were effectively managed with
no injuries sustained.
Forrestania Environmental Activities
Environmental compliance was maintained at a high standard
throughout the financial year with only five minor environmental
incidents reported which included a small hydrocarbon spill, two
small water spills, one procedural and one vegetation incident.
The environmental impact from these was minimal and the causes
addressed to prevent re-occurrence.
The Department of Environment Regulation (DER) revised the
Prescribed Premises Licence in April 2016 to streamline licence
conditions. As part of the licence revision, the permitted annual
throughput of the process plant was increased by 80,000t to
680,000t/year.
Various environmental permitting applications for surface
infrastructure upgrades were submitted and approved by the
relevant regulators throughout the year, which included the
WA Department of Mines and Petroleum (DMP) and
Department of Environmental Regulation (DER) approval for
the raise of the Cosmic Boy Tailings Storage Facility (TSF),
CBC scats storage area and Spotted Quoll return-airway raise-
bore shaft. In addition, a number of clearing permits to cover
exploration and infrastructure works in environmentally sensitive
areas were also granted.
Rehabilitation activities were ongoing with the collection and
development of approximately 10kg of native seed during the
year, sufficient to propagate 50,000 plants and rehabilitate
45ha of land. Vegetation transect monitoring continued during
the year as well as the monitoring of Declared Rare Flora.
Monitoring programs for Malleefowl (Leipoa ocellata) and
Chuditch (Dasyurus geoffroii) continued during the year using
motion sensor cameras with good success. Monitoring efforts
for Malleefowl, in particular, are continuing to improve the
knowledge of the species in the area. Both the Malleefowl and
the Chuditch are listed as Schedule 1 Threatened Fauna at a State
level and as ‘vulnerable’ at a Commonwealth level and Western
Areas is committed to supporting these activities as part of the
Company’s sustainability programme.
The Company also continued its involvement with the Carbon
Disclosure Project (CDP) by submitting carbon emission data
as part of CDPs annual reporting requirements.
Community
During the financial year, the Company re-committed to
sponsorship agreements with the Perth Zoo for the Western
Quoll enclosure, the Department of Parks and Wildlife (DPaW)
in support of the Western Shield wildlife recovery program, the
WA Museum for the Caraby’s Cockatoo Research Program and
Eastern Wheatbelt Biosecurity Group for feral animal control.
Western Areas has developed an excellent relationship with
the Tjiwarl Claimant Group at Cosmos. As an extension of this
relationship, Western Areas recently presented a package of
sewing machines and aboriginal material to the Leonora Women’s
Group, nyunnga gu. The nyunnga gu womens group aims to
empower local women by providing a safe environment to learn
new life skills and socialise, and therefore avoid local issues such as
drug and alcohol abuse and high suicide rates.
Being a long-term supporter of the Starlight Children’s
Foundation (Starlight), Western Areas enjoys getting involved
with various fundraising initiatives that assists Starlight to
continue to deliver vital in-hospital and community programs for
sick kids, teens and their families. The Company also provided
sponsorship to Hyden Primary School in support of their small
marsupial conservation initiative and supported the Forrestdale
primary school year 6 careers initiative as shown below.
Forrestdale Primary School careers visit
13
Western Areas 2016 Annual ReportOperations Review Cosmos
Western Areas conducted care and maintenance environmental
monitoring of the Cosmos mine-site following purchase and
possession of site in October 2015. Environmental compliance
was maintained at a high standard throughout the financial year
which included water quality and groundwater depths associated
with key infrastructure and aquifers plus weed management and
feral animal control.
Community consultation also commenced in November with
the local Tjiwarl native title claimant group who have a registered
native title claim over an area of land which includes the Cosmos
mine-site. The Company is committed to developing and
maintaining a good working relationship with the traditional
owners of the land and a number of meetings were held during
the year with the Tjiwarl claimant group and their representatives,
Central Desert Native Title Services.
The Tjiwarl group also provided cross cultural awareness training
to Company staff which was informative and well received. In
June, the Company entered into a Deed of Agreement with
the Tjiwarl group to allow heritage surveys of the Lake Miranda
area. Subsequently the Tjiwarl group cleared a number of surface
exploration drill-hole sites and the Company looks forward to
future good working relationships with the Tjiwarl group.
Flying Fox Mine
The Streeter Decline advanced 144m for the year, with 826m of
associated lateral capital development to establish the 230 and
215 stope blocks and intersect ore at the 180 level. There was also
25m of capital vertical development to extend the escape-way
ladder system from the 230 to 245 level.
The lowest development level now sits at 1,262m below surface.
At the end of the financial year, the T4 ore body was mined out
from the 655 level to the 760 level leaving the 615, 630 and
640 levels which were completed by September 2016.
Flying Fox production continued to be sourced predominantly
via longhole methods from the T5 area of the 385, 410, 527, 515
(finished), 335, 255, 295 and 285 stopes plus minimal flat-back
stoping at the 230 level. Narrow vein stoping using specialist
contractors supplemented production with high-grade ore from
the 760 and 730 stopes.
Retro-fitted surface to underground paste-fill capability was
successfully commissioned in July with 53,300m3 of paste-fill
poured for the year. This has allowed the mine at the 285 level,
to transition from a ‘bottom-up’ with rock-fill to a ‘top-down’
with paste-fill stoping sequence which is more suited to the
geotechnical environment in the lower levels of the mine.
Flying Fox mine is now in its 10th year of ore production with a
remaining reserve mine life of 5yrs. It continues to be one of the
highest grade nickel mines in the world.
14
Massive ore in the 200 south ore drive with an average face grade of 5.0 nickel
Flying Fox Infrastructure
A second sand pit was established in the last quarter to maintain
sand supply for paste-fill blends. The pit is located 2.5km from
Flying Fox and 6.0km from Spotted Quoll mine-sites and will
provide lower haulage costs compared to the original sand pit
located on the internal haul road to CBC.
The seismic network expansion included the addition of four
additional sensors located in the deeper areas of the mine to
cover new development and future stoping, plus extra computer
hardware to accommodate the additional processing
of information.
An extension to the main paste reticulation network to the
230 level plus replacement of the 600m surface to
underground sacrificial paste bore-hole casing was completed
in the third quarter.
Spotted Quoll Mine
The Hanna Decline advanced to a depth of 662m (738m RL)
below the surface and accessed the 750 level by June 2016.
Mining of the North lode orebody was completed in the year,
with a preliminary final total production of 68,750 tonnes of
ore at an average grade of 4.8% nickel for 3,290 nickel tonnes.
This has removed the requirement to maintain the 1155 and 1215
North lode ore drive access floor pillars allowing stoping of the
1140 level.
The majority of the ore production for the year was sourced
from the 1020 to 915m RL and mainly from the 1005, 997,
990, 971 and 962 levels. Production continued between the
1125 to 1020m RL with the completion of the 1065, 1050
and 1035 levels.
Western Areas 2016 Annual ReportOperations Review The single-boom jumbo area (932 to 710m RL) using specialist
contractors, successfully commenced long-hole production
from the 911 panel 1 stope in early March. Smaller ore drive
development (nominal 3.5m x 3.5m profile) continued from the
881 to 852 levels and 832 to 812 levels.
The mine continues to plan production from three main lode
stopes concurrently to ensure a continuous flow of ore. Split
firing at the narrower ends of the lower ore drives has proved
successful with additional high grade ore extracted, thereby
ensuring no economic mineralisation is left behind.
The now well established ‘top-down’ longhole benching using
paste-fill continues to be a reliable, safe and productive stoping
method with nearly 76,000m3 poured for the financial year.
The paste-fill allows for quicker stope void filling resulting in
more efficient turnaround times for stopes.
Spotted Quoll Infrastructure
Site establishment for the surface to underground 4.5m diameter
raisebore return-airway (RAW) shaft commenced in January
2016 with raisebore collar and sub footings. The pre-pilot drill-
hole (640mm diameter) was successfully drilled though the
50m weathered and transitional zones to primary rock. This was
subsequently cement cased and the pilot hole (480mm diameter)
commenced using the self-steering directional “rotary vertical
drilling system” (RVDS) to minimise drill-hole deviation. At the
end of June the pilot hole was at 410m depth below surface and
on schedule to break through into the 790 level (design depth
610m). The completion of the RAW will occur during the first
half of FY17 and represents the last remaining, large one-off
sustaining capital items at the mine.
Mine Ore Production
Tonnes Mined
Flying Fox
Ore Tonnes Mined
Grade
Ni Tonnes Mined
Spotted Quoll - Underground
Ore Tonnes Mined
Grade
Ni Tonnes Mined
Total - Ore Tonnes Mined
Grade
Total Ni Tonnes Mined
Tns
Ni %
Tns
Tns
Ni %
Tns
Tns
Ni %
Tns
Sep Qtr
Dec Qtr
Mar Qtr
Jun Qtr
2014/2015
67,400
4.7%
3,155
80,702
4.8%
3,905
76,163
4.2%
3,183
81,318
4.6%
3,734
62,017
4.6%
2,876
82,711
4.7%
3,922
68,161
4.7%
3,218
71,774
5.0%
3,614
148,102
157,481
144,728
139,935
4.8%
7,060
4.4%
6,917
4.7%
6,798
4.9%
6,832
YTD
Total
273,741
4.5%
12,432
316,505
4.8%
15,175
590,246
4.7%
27,607
15
Western Areas 2016 Annual ReportOperations Review Flying Fox Production
Spotted Quoll Production
Flying Fox mined a total of 273,741 ore tonnes at an average
grade of 4.5% nickel for 12,426 contained nickel tonnes which
included 95,108 ore tonnes @ 4.5% for 4,319 nickel tonnes from
the Lounge Lizard tenement. Total nickel produced was ahead of
plans with lower dilution achieved, helping to increase the overall
ore grade.
Spotted Quoll mined a total of 316,505 ore tonnes at an average
grade of 4.8% for 15,175 contained nickel tonnes, which was the
highest annual production of both ore and nickel tonnes to date.
Production Co-ordinator Peter Burrows conducting a tailings storage facility (TSF) survey
Maintenance Technicians Luke Hamon & Rob Watts testing the new Crusher Mantle
Maintenance Frame
Cosmic Boy Mill Production
Tonnes Milled and Sold
2014/2015
Sep Qtr
Dec Qtr
Mar Qtr
Jun Qtr
YTD
Total
Ore Processed
Grade
Ave. Recovery
Ni Tonnes in Concentrate
Total Nickel Sold
Tns
%
%
Tns
Tns
153,540
152,435
156,190
154,114
616,279
4.6%
89%
6,252
6,233
4.6%
89%
6,256
6,281
4.4%
90%
6,180
6,011
4.5%
90%
6,321
6,268
4.5%
90%
25,009
24,793
The CBC processed a record 616,279 tonnes of ore at an average grade of 4.5% nickel which is an exceptional achievement given that
its nameplate capacity is 550kt. A total of 162,038 tonnes of concentrate was produced at 15.4% nickel containing 25,009 nickel
tonnes with an average recovery of 90%. This excellent result is largely due to the well planned and executed preventative maintenance
program (98% mechanical availability) plus a process improvement to the grinding circuit, which involved the installation of a control
valve enabling better density control in the ball mill and therefore a throughput increase. During the month of June this process
improvement enabled the CBC to achieve a record monthly throughput of 55,386 tonnes (77tph) which is approximately 20% above
the original CBC nameplate capacity (64tph or 550,000tpa).
16
Western Areas 2016 Annual ReportOperations Review Mill Recovery Enhancement Project
Nickel Sales
The Company decided to minimise capital expenditure due to the
sustained low nickel price and consequently the Mill Recovery
Enhancement Project (MREP) was restricted to purchasing long
lead items and completing detailed engineering for a total cost of
approximately $6.5m. The long lead items have all been delivered
to CBC in readiness for a recommencement of the project.
While the MREP is on hold, a study to investigate downstream
processing to produce a nickel sulphate product from the MREP
nickel sulphide precipitate was commenced, with encouraging
test-work results. A nickel sulphate precipitate would enable the
Company to generate two well sought-after nickel products,
being either high grade nickel sulphide concentrate or a relatively
pure nickel sulphate precipitate to target the growing lithium ion
battery market.
Western Areas continued to deliver its high quality and sought
after nickel concentrate into the off-take contracts of its two
current customers, BHPB Nickel West (NW) and Jinchuan
Group. A total of 162,643 tonnes of concentrate was delivered
during FY16 which contained 24,793 tonnes of nickel. Both
the main NW agreement and the Jinchuan agreement for
concentrate offtake are expected to be completed by December
and negotiations have commenced with these parties for contract
renewals. Notwithstanding, demand is also coming from potential
new customers and accordingly a new tender process will be
conducted.
Nickel sulphate produced by BioHeap.
Cost of Production
The unit cash cost of production of nickel in concentrate (excluding smelting/refining charges, concentrate logistic and royalties)
was A$2.26/lb (US$1.64/lb) for the full year. This result at the lower end of the full year guidance range has been achieved following
significant cost reductions and positive ore tonnes and grade reconciliations above those used to generate the full year guidance range.
The Company is maintaining focus on embedding cost reductions into the operation for the long term, across all cost centres in the
business.
Financial Statistics
Group Production Cost/lb
Mining Cost (*)
Haulage
Milling
Admin
By product credits
Cash cost Ni in Con (**)
A$/lb
A$/lb
A$/lb
A$/lb
A$/lb
A$/Ib
Cash cost Ni in Con/lb (**)
US$/lb
Exchange Rate US$/A$
US$/A$
Sep Qtr
Dec Qtr
Mar Qtr
Jun Qtr
2015/2016
1.58
0.06
0.45
0.19
(0.02)
2.26
1.64
0.73
1.63
0.05
0.41
0.17
(0.02)
2.24
1.61
0.72
1.66
0.05
0.41
0.17
(0.02)
2.27
1.64
0.72
1.60
0.05
0.44
0.18
(0.02)
2.25
1.68
0.75
(*) Mining Costs are net of deferred waste costs and inventory stockpile movements
(**)
Payable terms are not disclosed due to confidentiality conditions of the offtake agreements. Cash costs exclude
royalties and concentrate logistics costs.
Note: Grade and recovery estimates are subject to change until the final assay data are received.
YTD
Total
1.62
0.05
0.43
0.18
(0.02)
2.26
1.64
0.73
17
Western Areas 2016 Annual ReportOperations Review Flying Fox Ore Reserves/
Mineral Resources
Spotted Quoll Ore Reserves/
Mineral Resources
During the year, there was further upgrading of the Mineral
Resource and Ore Reserve at Flying Fox which has resulted
in an increased Ore Reserve and mine life.
The Flying Fox Mineral Resource and Ore Reserve Summaries
at the end of the financial year are as follows;
The Spotted Quoll Mineral Resource and Ore Reserve
Summaries at the end of the financial year are as follows:
• Mineral Resource: 2.27 million tonnes of ore at a grade of
5.3% for 119,756 nickel tonnes; and
• Ore Reserve: 2.42 million tonnes of ore at a grade of 4.0%
• Mineral Resource: 2.02 million tonnes of ore at a grade of
for 97,030 nickel tonnes.
5.0% nickel for 102,212 tonnes of nickel; and
• Ore Reserve: 1.20 million tonnes of ore at a grade of 4.0%
nickel for 48,280 tonnes of nickel.
The longitudinal section below shows the Flying Fox mine with
mineral resources and reserves depleted for mining production
during the year.
The longitudinal section below shows the Spotted Quoll Mine
with mineral resources and reserves depleted for mining
production for the year.
18
Western Areas 2016 Annual ReportOperations Review Western Areas 2016 Annual Report
New Morning/Daybreak
As part of our future planning for Western Areas, the Company has been steadily working on potential start-up and trade-off studies
associated with New Morning/Daybreak deposit.
Further shallow (less than 70m deep) surface drilling to test the open-pit potential of the New Morning/Daybreak orebody was
completed. A total of ten surface drill-holes using large diameter core (PQ) were completed for a total of 668m along the strike length
of the New Morning and Daybreak deposits (see long-section schematic below).
Preliminary resource models using nominal cut off grades of 0.5% Ni and 0.7% Ni respectively, were completed with encouraging
results showing a significant increase in nickel by volume (+ 20%) when compared to the previous models.
19
Western Areas 2016 Annual ReportOperations Review Cosmos Nickel Complex (“Cosmos”)
Cosmos was acquired from Xstrata Australasia Nickel Operations
Pty Ltd (XNAO), a subsidiary of Glencore plc with settlement
and site possession completed on the 1st October 2015, which
has provided the following advantages to the Company:
• Substantial exploration potential in a highly endowed nickel
province;
• A potential third underground mine with Odysseus high grade
deposit, hosting a total Mineral Resource of 7.3 million tonnes
@ 2.4% nickel containing 174,000 tonnes of nickel;
• Extensive surface infrastructure with a 450ktpa
concentrator, new SAG mill & 520 person Village to
support an early start up.
Cosmos transitioned from a ‘care and maintenance’ status to
an exploration site with a geophysical team and Boart Longyear
operating a surface diamond drill rig. The Village capacity is
currently 25 rooms with a fully functioning dry mess to cater
for the small on-site team, which can be increased at relatively
short notice.
The update of the Odysseus Xstrata Scoping Study was
completed early in the June quarter which recommended
transitioning to a Prefeasibility Study (PFS). Following Board
approval, the PFS started in May, focussing on the Odysseus and
Odysseus North metallurgical, geotechnical and mining sections,
with planned completion in the December 2016 quarter. At this
juncture, the Board will make a decision on whether to proceed to
a definitive feasibility study.
View of the Cosmos mill at sunset
20
Western Areas 2016 Annual ReportOperations Review 2121
Western Areas 2016 Annual Report Cosmos Nickel Complex (100% WSA)
On 1 October 2015, the Company announced that, through
its 100% owned subsidiary Australian Nickel Investments Pty
Ltd, it had completed the acquisition of Cosmos from XNAO, a
subsidiary of Glencore Plc. Exploration activities, of a purpose-fit
program that has been designed to be conducted over a 24 month
period, commenced immediately after the Cosmos acquisition.
These activities have already been successful in generating
prospective targets to be drill tested in the coming year.
Three key areas were identified as exploration priorities, Figure
below, and included;
• Surface Moving Loop EM (MLEM) surveys using the best
new electro-magnetic (EM) methods and technologies
available to cover most of the prospective ultramafic host
stratigraphy;
• Drill testing the Ulysses target area, which lies to the north
of the Odysseus ore bodies; and
• The application of three-component DHEM to refine the
known, untested EM anomalies, and to identify potential new
high grade mineralisation along the near-mine corridor.
Explorations
Review
Western Areas has an active, targeted and balanced exploration
program directed at both replacing existing resources and
reserves and also targeting new discoveries in known areas and
new or greenfield terrains.
With the acquisition of the Cosmos Nickel Complex (“Cosmos”)
from Xstrata Australasia Nickel Operations Pty Ltd (“XNAO”)
in October 2015 this project became a key component of the
Company’s exploration portfolio. The Company believes the
Cosmos tenements host large, cumulative, ultramafic bodies
associated with high tenor nickel sulphides, and accordingly is
encouraged by the strong prospectivity of the area. Work to
date has already been successful in defining drill worthy targets.
Cosmos will provide Western Areas with substantial additional
exploration upside and a potential second mining operation to sit
alongside its premium mines and exploration opportunities at the
Company’s existing Forrestania Nickel Operation.
Significant progress was also made on the Company’s ground
holding in the Western Gawler region of South Australia.
This included the identification of the right host rocks for
mineralisation and geochemical anomalism in a number of areas,
as well as the identification of further potential prospective
target areas. With an expanded portfolio the Company now holds
some 4,450km2 of the prospective Western Gawler terrain. The
Company considers the area has the potential to host significant
mafic-ultramafic, intrusive-related poly-metallic (nickel, copper
+/- PGEs) deposits.
During the year BHP Billiton sold its interest in the Mt
Alexander Joint Venture tenure to St George Mining Limited
(SGQ). The Joint Venture (in regard to E29/638 only) is held
by SGQ (75%), with SGQ as the Manager of the Project, and
Western Areas retaining a 25% non-contributing interest in the
Project until there is a decision to mine. SGQ announced they
have intersected further high grade nickel (+/- copper) massive
sulphides at the Cathedrals and Strickland prospects.
In addition, work was undertaken focussing on locating high
grade nickel sulphide mineralisation associated with komatiitic
lava flows within its Forrestania tenement package. This large
tenement holding, comprising some 900km2, covers over 125km
strike length of ultramafic hosting stratigraphy and is made up of
both wholly owned Western Areas and Joint Venture tenements,
Figure on page 25. The majority of the work in FY16 was directed
at assessing the Eastern Ultramafic Belt (EUB) including existing
projects and a number of new areas. Outside of traditional nickel
exploration, some early stage work was conducted on the EUB
for Lithium. This work was driven by numerous approaches from
third parties to obtain access, purchase or joint venture Western
Areas’ Lithium rights. The initial work has already identified a
number of areas for follow-up with very high grade intersections
of Li2O assayed from historical samples.
Again it is worth noting that the Company’s exploration
activities were completed LTI free and with no reportable
environmental incidents.
22
Western Areas 2016 Annual ReportExplorations Review MLEM survey work commenced late in 2015 covering most
of the prospective ultramafic host stratigraphy, including the
high priority Neptune area, which lies south of the Prospero and
Tapinos high grade nickel deposits. This area is interpreted
to contain the highest volume of cumulate ultramafics in
the Cosmos Nickel Belt. The survey work was also extended
to the north.
A number of MLEM anomalies were identified from the survey,
some in highly favorable stratigraphic settings. Three single peak
anomalous responses were observed in the survey in the Neptune
area. Encouragingly these anomalies occur along the western
(basal) margin of the interpreted ultramafic package, where there
has been minimal deep drill testing. In addition to the above, a
number of moderate to weak, short strike length anomalies were
also detected in the Apollo area. Some of these lie adjacent to
the interpreted Camelot ultramafic stratigraphy and in areas of
other known ultramafic rocks. These anomalies have not been
explained by previous drilling. These anomalies and the ultramafic
stratigraphy in the Apollo area, as well as those in the Neptune
area, will be tested in the coming year.
A drilling focused heritage clearance survey was conducted
around the Neptune area in conjunction with the Tjiwarl Native
Title Claimant group. A total of 8 sites have been cleared for
drilling, including key locations to test the high priority MLEM
anomalies that were defined in the previous phase of exploration
(Figure on page 22). The planned exploration program will include
the first deep drilling to test the prospective ultramafics at depth
and below the dry lake, and will also provide a platform for further
down-hole geophysics (DHEM/DHMMR).
Exploration at Ulysses targeted untested historical EM
anomalies with the potential to extend the Odysseus ultramafic
and disseminated nickel sulphides to the north. Two drill holes
WAD001 and WAD001a, a wedge from WAD001, successfully
intersected the target area, but no ultramafics rocks, instead
encountering pegmatite, mixed with intermittent rafts of felsic
volcanic host rocks. WAD001 and WAD001a have confirmed
the extensive nature of the pegmatite to the north of the
Odysseus Complex, likely marks a regional scale structure with
a potentially large offset. The possibility still remains that any
ultramafic (and associated nickel mineralisation) may be offset or
displaced from the main mineralised trend and, as such, remains a
compelling target. A review and modelling of the felsic intrusives
and structures in the area is underway to assess the potential for
further mineralisation in the Ulysses area.
Significant volumes of disseminated nickel sulphides, with zones
of network textured sulphides, are located between the Cosmos/
Alex Maires and the Prospero/Tapinos orebodies. Only about
30% of the basal contact of the main mineralisation trend has
been tested by previous drilling. Some of the untested EM targets
may represent accumulations of massive nickel sulphides.
Whilst most of the historic drill holes were routinely surveyed
with DHEM, these surveys used technology that is more limited
in capability and effectiveness than the modern, digital, three
component DHEM instrumentation used today, particularly
in the detection of highly conductive massive nickel sulphides.
A detailed review of the near-mine and brownfield DHEM
opportunities has highlighted a number of untested existing
anomalies. The application of three-component DHEM will
aim to refine the known, untested EM anomalies, and to identify
potential new high grade mineralisation along the near-mine
corridor. Drilling activities aimed at cleaning out old drill holes
and assisting with the DHEM surveys have already commenced
and will continue into the new financial year.
Western Gawler Nickel-Copper Joint
Venture (WSA 100% and earning up to
90% interest)
In October 2014, the Company executed separate Farm-in and
Joint Venture Agreements with Gunson Resources Limited (now
Strandline Resources Limited) and Monax Mining Limited in a
number of key tenements within the Western Gawler region of
South Australia. Since that time the Company has gained a 100%
interest in the Monax ground and continues with the staged
program to acquire up to 90% in the Strandline tenements.
The Company also continued to consolidate its land holding in
the Western Gawler Project area with the addition of exploration
license EL 5688. This license forms one of two new additions
(ELA 2014/252 is still under application) that cover prospective
ground on the western margin of the Fowler Domain, to the west
of the initial project area. With a combined area of approximately
4,450km2 the Company holds a strategic position in the Western
Gawler region, an area of increasing interest for gold and
base-metal exploration.
The Western Gawler region is known to host mafic-ultramafic
intrusive rocks and determining the extent, exact age and
prospectivity of these is the primary objective of the exploration
activities. The results from the initial phases of exploration are
very encouraging, with the identification of olivine gabbro-norite
intrusive rocks and geochemical anomalism in a number of
areas. The results confirm the initial observations regarding the
prospectivity of the Western Gawler region for intrusive related
nickel, copper and gold mineralisation. These types of mafic
intrusives are well known for hosting significant nickel and
copper orebodies in western and central Australia, including
Nova-Bollinger and Nebo-Babel.
23
Western Areas 2016 Annual ReportExplorations Review Important milestones and key highlights have been achieved in
the project. These include;
• Drilling of 115 holes for 10,430.6m;
• Funding ($100,000) by the South Australian Government
as part of the PACE Discovery Drilling 2015;
• Prospective mafic/ultramafic intrusions have been identified
in multiple areas;
• Potential for other metal types e.g. gold and copper
mineralisation highlighted,
• Systematic gravity surveys commenced and in progress;
• Completion of targeted Electro Magnetic (EM) in key areas;
and
• Follow-up drilling in progress.
A comprehensive review of the geochemical data collected from
the initial extensive broad scale drilling (RC/air-core) program
completed to date was undertaken. The anomalous element
concentrations identified from the drill assays are (as expected)
below economic levels but have been found to form coherent
trends, both chemically and spatially. As the drilling is widely
spaced, these results are highly encouraging for the project and
further follow-up exploration has commenced. Importantly, new
areas of interest have been identified by the latest review, and
these will also be targeted in the current exploration program.
Detailed surface gravity surveys have also commenced, with the
aim of generating new targets, and adding to the current project
wide-geophysical datasets. The gravity surveys, in conjunction
with detailed magnetics, can help delineate features that may
represent mafic/ultramafic intrusions. The initial surveys have
been designed to cover key areas known to host prospective
intrusions, and to extend the geological interpretation into
unexplored areas. A number of features have already been
identified and ranked for follow-up, and these are being tested,
along with a number of other targets, in the current drilling
program. The current target and reconnaissance drilling is shown
on Coordinate System - GDA 1994 MGAZ53. Any positive
results will be followed up with further RC and diamond drilling,
and geophysics.
Western Areas continues to build its relationships with
the traditional owners and the Far West Coast Aboriginal
Corporation (FWCAC), with heritage clearance surveys being
completed in support of the drilling programs. The FWCAC
has also been supporting the exploration program by assisting
with rehabilitation activities in the Yellabinna Regional Reserve.
Ongoing dialogue with the Aboriginal Land Council continues
to facilitate sustained exploration into the existing and new areas
of the region.
24
Western Areas 2016 Annual ReportExplorations Review Forrestania Project (100% WSA)
During the reporting period, considerable effort went into
assessing the Eastern Ultramafic Belt (EUB). Exploration
activities aimed at locating economic nickel sulphide
mineralisation were undertaken at Mount Hope, Northern
Estates, Parker Dome, Cosmic Boy, Cosmic Boy South (Hang
Dog), South Ironcap, West Quest and South Quest areas/
prospects. Whilst the work was successful in locating cumulate
ultramafic rocks, intersecting the basal contact, and locating
disseminated lower grade nickel sulphide mineralisation, no
significant massive nickel sulphides were intersected in this work.
Work also continued on the Western Ultramafic Belt (WUB)
particularly south of the Spotted Quoll mine.
A technical review to evaluate the lithium potential at
Western Areas’ Forrestania tenements was commenced
with positive results generated from re-sampling previously
drilled holes at the South Ironcap prospect.
The prospectivity of the Mt Hope area, located approximately
30km northeast of Flying Fox, was assessed during the year.
The area contains a significant volume of cumulate ultramafic
rocks (known as the Mt Hope Dunite) over a strike length of
8km. Previous work identified the upper cumulate contact as
being prospective. Hole MHD036, drilled during the FY15
September quarter, returned 12m @1.1% nickel from 529m
close to the upper contact at 556m depth. Despite encouraging
results, further drilling of the upper contact did not intersect
economic nickel sulphides. Geological logging indicates the
contact is often faulted and consequently is not always preserved.
The data from the recent holes was integrated with DHEM
surveys without further targets being generated.
The Company commenced drill testing anomalous responses from
the previously completed EM ground geophysical surveys over
the approximate 10km strike length of ultramafic stratigraphy
in the West Quest and South Quest prospect areas. Drilling
also targeted a number of stratigraphic/geochemical targets
coincident favourable basal ultramafic stratigraphy in this limited
drilled section of the EUB. A total of 13 RC/DDH holes were
drilled during the reporting period for a total of 2,369m.
Thick ultramafic sequences were encountered in several holes
in the central portion of the drilling accompanied by localised
intervals of disseminated sulphide. Follow up drilling failed to
enhance the level of nickel mineralisation intersected in the
first phase of drilling.
In addition, work was carried out on the WUB, south of
Spotted Quoll mine, where six diamond holes were drilled and
subsequently assessed with DHEM. Whilst the results from the
DHEM did not return any significant conductors associated
with the logged basal ultramafic contacts, a subsequent hole
BD059 intersected 2.08m @ 1.16% Ni from 578m. A thorough
reinterpretation of the geology and structures across this
portion of the Western Ultramafic Belt, with the overall aim of
understanding how it relates to the Spotted Quoll mineralised
system further to the north is in progress.
LOW RES
Plan showing Forrestania tenements; mines and key prospects – to be updated
25
Western Areas 2016 Annual ReportExplorations Review During the later portion of FY16, a technical review to evaluate
the lithium potential at Western Areas’ Forrestania tenements
and pursue options that will maximise the value of these assets
to the Company was commenced.
5. The true distribution of the pegmatites is currently difficult
to assess as the information relies heavily on the drilling
from historic nickel exploration which is biased towards
the ultramafic stratigraphy; and
The key results from the above work indicates:
6. There are large parts of the tenement holding that have
1. The Forrestania tenement package does contain strongly
Li2O mineralised (spodumene) pegmatites;
2. There are numerous occurrences of granites and
pegmatites throughout the Forrestania geological succession,
typically flat lying or very shallowly dipping, with a flat or
arcuate strike;
3. Lithium bearing pegmatites were only returned from
the EUB;
4. Western Areas holds a considerable extent of the EUB
(some 170km strike length) under licence;
not been assessed with regard to lithium.
Sampling of some existing holes from the South Ironcap area
returned numerous intercepts of pegmatites containing grades
>1% Li2O (see table below). The assay results confirm that the
southern deeper portions of the pegmatite, with wide widths
(30-50m) over a strike length of at least 900m, at a depth of
150-200m below surface. Importantly assay results reported in
the June quarter indicate the pegmatites are shallowing to the
north. This northern area will be drill tested in the coming year to
confirm the nature and extent of the shallower pegmatites and
potential for further lithium mineralisation.
Whilst the initial results from the lithium potential evaluation
are very encouraging, further work (geological compilation,
re-sampling of existing drilling and new drilling) is being
undertaken to assess and realise the true potential for
economic lithium deposits within the tenement holding.
HOLE ID Easting
Northing
RL
EOH(m)
Type
SID014
760432
6380128
429
281.2
DD
760431.7 6380128
SID014
SID018
760671.4 6379838
SID020A 760881.4 6379526
760719.2 6379711
SID023
760349.8 6380080
SID025
760348.1 6380079
SID029
6380165
760242
SID032
429.3
418.3
409.1
420.9
432.2
432.2
431.2
281.2
450.7
285.0
351.3
461.9
528.7
469.0
DD
DD
DD
DD
DD
DD
DD
DIP
-58
-58
-70
-55
-55
-63
-72
-65
Azimuth Width (m) Li20 %
From (m)
62
including
90
86
85
86
89
91
89
50.6
9
21.5
23.6
33.8
21.9
6.7
5.7
9.37
0.95
2.58
1.61
1.36
1.22
1.48
1.82
1.43
1.14
176.8
202
250.3
178.4
215.0
269.5
183.5
177.5
118.23
Lake King Joint Venture (WSA 70%)
The Lake King Joint Venture tenements cover a 40km long
nickel prospective belt located approximately 70km south of
Forrestania. Work on the project area during the last 12 months
concentrated on the ultramafic rocks along the prospective
Nickel Hill trend.
Black Oak (formally Southern Cross
Goldfields) Joint Venture (WSA 70%
interest)
Western Areas has acquired 70% of Southern Cross Goldfields
Limited (Black Oak Ltd- BOK) nickel rights across much of its
3,300km2 tenement portfolio in the Marda and Southern Cross
regions of Western Australia. The BOK tenement package covers
the north western portion of the Southern Cross-Bullfinch
Greenstone Belt within the ‘Central Yilgarn Nickel Province’.
The Company continues to review the prospectivity of the Joint
Venture tenure, particularly those tenements adjacent to the
Forrestania project.
26
Western Areas 2016 Annual ReportExplorations Review Ore reserve/mineral resource statement
Ore reserves at the 30th of June 2016 were the following:
30/06/2016
Deposit
Flying Fox Area
Spotted Quoll
Digger South
Diggers Rock
Tonnes
1,200,080
236,950
2,179,880
2,016,000
93,000
Total Ore Reserves
5,725,910
Grade Ni%
4.0
4.2
4.0
1.4
2.0
3.2
Ni Tns
48,280
9,940
87,090
28,950
1,850
176,110
Ore reserves at the 30th of June 2015 were the following:
30/06/2015
Deposit
Flying Fox Area
Spotted Quoll
Digger South
Diggers Rock
Tonnes
1,525,506
338,860
2,366,413
2,016,000
93,000
Total Ore Reserves
6,339,779
Grade Ni%
4.2
4.4
4.0
1.4
2.0
3.2
Ni Tns
64,146
14,961
95,186
28,950
1,850
205,093
JORC Classification
Probable Ore Reserves
JORC Code
2012
Proved Ore Reserves
Probable Ore Reserves
Probable Ore Reserves
Probable Ore Reserves
2012
2012
2004
2004
JORC Classification
Probable Ore Reserves
JORC Code
2012
Proved Ore Reserves
Probable Ore Reserves
Probable Ore Reserves
Probable Ore Reserves
2012
2012
2004
2004
During Financial Year 2016, the planned mined volumes were
extracted and new data collected from Spotted Quoll
and Flying Fox mines. The combination of planned depletion
of the assets, as per budgeted targets, and the mineral resources
models built from interpretation of new data resulted in the
estimation for Financial Year 2017.
Governance and Internal Controls
Western Areas geology and mining departments have
implemented a set of rules and working practices to control
the mineral resource and ore reserves estimation and
reconciliation process, as well as the quality of the data used.
The Mineral Resources and Ore Reserves are reported in
accordance with the ‘Australasian Code for Reporting of
Exploration Results, Mineral Resources and Ore Reserves’
(the JORC Code) 2012 Edition. Mineral Resources are quoted
inclusive of Ore Reserves. Competent Persons named are
Members of the Australasian Institute of Mining and Metallurgy
and qualify as Competent Persons as defined in the JORC Code.
The Western Areas risk management program includes
assessment of the risks associated with the estimations of
mineral resources and ore reserves and the controls in place to
ensure that robust resource and reserve calculations are reported.
The risk management processes measures the likelihood of errors
or misstatement and monitors the controls in place that mitigate
this outcome.
27
27
Western Areas 2016 Annual ReportOre Reserve/Mineral Resource Ore Reserves
1. Flying Fox Area
2. Spotted Quoll Area
3. Diggers Area
Digger South
Digger Rocks
Total Forrestania Ore Reserve
Mineral Resources
1. Flying Fox Area
T1 South
T1 North
OTZ Sth Massive Zone
OTZ Sth Massive Zone
T4 Massive Zone
T5 Massive Zone + Pegs
T6 Massive Zone
T7 Massive Zone
Total High Grade
T5 Flying Fox Disseminated Zone
T5 Lounge Lizard Disseminated Zone
Total Disseminated Flying Fox/Lounge Lizard
Total FF/LL
New Morning / Daybreak
Massive Zone
Disseminated Zone
Total New Morning / Daybreak
2. Spotted Quoll Area
Spotted Quoll
Total Spotted Quoll
Beautiful Sunday
Total Western Belt
3. Cosmic Boy Area
Cosmic Boy
Seagull
Total Cosmic Boy Area
4. Diggers Area
Diggers South - Core
Diggers South - Halo
Digger Rocks - Core
Digger Rocks - Core
Digger Rocks - Halo
Purple Haze
Total Diggers Area
Total Forrestania Mineral Resource
5. Cosmos Area
AM5
AM6
Odysseus
Odysseus North - Disseminated
Odysseus North - Massive
Total Cosmos Area
6. Mt Goode Area
Mt Goode
Diggers South - Halo
Digger Rocks - Core
Total Mt Goode Area
Total Cosmos Mineral Resource
Tonnes Grade Ni% Ni Tonnes
Classification
JORC Code
1,200,080
236,950
2,179,880
2,016,000
93,000
5,725,910
64,550
35,200
55,779
20,560
162,338
154,748
1,226,930
47,840
256,977
2,024,922
197,200
357,800
4,428,000
4,983,000
7,007,922
321,800
93,100
1,069,800
659,200
2,143,900
616,537
1,440,082
212,089
2,268,708
480,000
11,900,530
180,900
195,000
375,900
3,000,000
4,800,000
54,900
172,300
1,441,000
560,000
10,028,200
22,304,630
479,914
26,922
1,704,548
329,443
3,884,857
169,165
1,631,495
1,586,175
48,043
9,860,562
13,563,000
27,363,000
12,009,000
52,935,000
62,795,562
4.0
4.2
4.0
1.4
2.0
3.2
4.0
4.9
5.9
4.1
4.0
5.8
5.7
5.3
2.1
5.0
0.8
1.0
0.8
0.8
2.9
3.7
3.5
0.9
0.9
1.4
5.7
5.1
5.4
5.3
1.4
2.5
2.8
2.0
2.4
1.5
0.7
3.7
1.1
0.7
0.9
1.0
1.8
2.6
1.9
2.7
2.5
2.2
2.1
2.8
2.2
11.6
2.4
0.8
0.6
0.5
0.6
0.9
48,280
Probable Ore Reserve
Proved Ore Reserve
Probable Ore Reserve
Probable Ore Reserve
Probable Ore Reserve
Indicated Mineral Resource
Inferred Mineral Resource
Indicated Mineral Resource
Inferred Mineral Resource
Indicated Mineral Resource
Indicated Mineral Resource
Indicated Mineral Resource
Indicated Mineral Resource
Inferred Mineral Resource
Indicated Mineral Resource
Inferred Mineral Resource
Indicated Mineral Resource
Indicated Mineral Resource
Inferred Mineral Resource
Indicated Mineral Resource
Inferred Mineral Resource
Measured Mineral Resource
Indicated Mineral Resource
Inferred Mineral Resource
Indicated Mineral Resource
Indicated Mineral Resource
Indicated Mineral Resource
Indicated Mineral Resource
Indicated Mineral Resource
Indicated Mineral Resource
Inferred Mineral Resource
Inferred Mineral Resource
Indicated Mineral Resource
Indicated Mineral Resource
Inferred Mineral Resource
Indicated Mineral Resource
Inferred Mineral Resource
Indicated Mineral Resource
Inferred Mineral Resource
Indicated Mineral Resource
Inferred Mineral Resource
Indicated Mineral Resource
Measured Mineral Resource
Indicated Mineral Resource
Inferred Mineral Resource
9,940
87,090
28,950
1,850
176,110
2,560
1,720
3,290
843
6,574
8,921
70,476
2,525
5,303
102,212
1,590
3,460
36,000
41,050
143,262
12,010
3,260
9,650
5,780
30,700
35,370
72,866
11,520
119,756
6,720
300,438
5,050
3,900
8,950
44,700
35,600
2,030
1,850
10,350
5,040
99,570
408,958
12,430
509
45,171
8,203
84,301
3,603
45,519
35,054
5,563
240,353
105,791
158,705
62,447
326,943
567,296
2012
2012
2012
2004
2004
2004
2004
2012
2012
2012
2012
2012
2012
2012
2004
2004
2004
2004
2004
2004
2004
2012
2012
2012
2004
2004
2004
2004
2004
2004
2004
2004
2004
2012
2012
2012
2012
2012
2012
2012
2012
2012
2012
2012
2012
TOTAL WESTERN AREAS MINERAL RESOURCE
85,100,192
1.1
976,254
28
Western Areas 2016 Annual ReportOre Reserve/Mineral Resource
Directors Report
Directors Report
The Directors of Western Areas Limited submit herewith the financial report of the Company for the financial year ended 30 June
2016. Unless noted, all amounts in this report refer to Australian dollars. In order to comply with the provisions of the
Corporations Act 2001, the Directors’ report follows:
Information about the Directors
The following persons were directors of Western Areas Ltd for the entire financial year and up to the date of this report unless
otherwise stated.
Ian Macliver
Non-Executive
Independent Chairman
Mr Macliver is a Chartered Accountant with many years experience as a senior executive and
Director of both resource and industrial companies, with particular responsibility for capital
raising and other corporate development initiatives. Mr Macliver is Managing Director of Grange
Consulting Group Pty Limited which provides specialist corporate advisory services to both listed
and unlisted companies. Mr Macliver is a member of the Audit and Risk, Treasury, Remuneration
and Nomination Committee.
Daniel Lougher
Managing Director & CEO
Mr Lougher is a qualified Mining Engineer with over 30 years experience in all facets of mining
project exploration, feasibility, development and operational activities in Australia and overseas.
Mr Lougher is a member of the Australasian Institute of Mining & Metallurgy. Mr Lougher serves
on the Nomination Committee.
David Southam
Executive Director
Mr Southam is a Certified Practicing Accountant with over 20 years experience in accounting,
banking and finance across the resources and industrial sectors. Mr Southam has been responsible
for completing significant capital management initiatives and commodity offtake contracts with
large domestic and international companies.
Richard Yeates
Non-Executive &
Independent Director
Mr Yeates is a Geologist with more than 30 years mining industry experience in various roles and has
significant experience across a wide range of resource projects around the world. He is familiar with
the ASX regulatory environments and has had exposure to international resource funds and financial
institutions. Mr Yeates is Chairman of the Remuneration and Nomination Committee.
Craig Readhead
Non-Executive &
Independent Director
Tim Netscher
Non-Executive &
Independent Director
Mr Readhead is a lawyer with over 30 years legal and corporate advisory experience with
specialisation in the resources sector, including the implementation of large scale mining projects
both in Australia and overseas. Mr Readhead is a former president of the Australian Mining and
Petroleum Law Association and until recently was a partner of specialist mining and corporate
law firm, Allion Legal. Mr Readhead is a member of the WA Council of the Australian Institute of
Company Directors. Mr Readhead is Chairman of the Treasury and Audit & Risk Management
Committees.
Mr Netscher has significant broad-based international resources experience at senior levels, in roles
spanning marketing, operations management, project management and business development in
Australia and Internationally. Mr Netscher has considerable experience in the nickel industry with
senior executive roles at Impala Platinum Ltd, PT Inco and QNI Pty Ltd. Mr Netscher is a Chartered
Engineer and holds a BSc in Chemical Engineering, Bachelor of Commerce, a MBA, is a fellow
of the Institution of Chemical Engineers and is a member of the Australian Institute of Company
Directors. Mr Netscher is a member of the Treasury, Audit & Risk and Remuneration Committees.
Julian Hanna
Non-Executive Director
Mr Hanna resigned as a Director of Western as at 15 June 2016.
29
Western Areas 2016 Annual ReportDirectors Report Directorships of Other Listed Companies
Name
Company
I Macliver
Otto Energy Ltd
J Hanna
D Lougher
D Southam
R Yeates
C Readhead
T Netscher
Rent.com.au Ltd (Ceased)
Range Resources Ltd (Ceased)
JCurve Solutions Limited (Ceased)
MOD Resources Ltd
Mustang Minerals Corp (Ceased)
FinnAust Mining Plc
Mustang Minerals Corp (Ceased)
Troy Resources Ltd
Sundance Resources Ltd (Ceased)
Middle Island Resources Ltd
Atherton Resources Limited (Ceased)
Beadell Resources Ltd
Eastern Goldfields Ltd - (Formerly Swan Gold Mining Ltd)
Redbank Copper Ltd
General Mining Corporation Ltd (Ceased)
Heron Resources Ltd (Ceased)
Galaxy Resources Ltd (Ceased)
St Barbara Ltd
Gold Road Resources Ltd
Toro Energy Ltd (Ceased)
Deep Yellow Ltd (Ceased)
Aquila Resources Ltd (Ceased)
Gindalbie Metals Ltd (Ceased)
(*) Date co-insides with de-listing from the Australian Stock Exchange.
30
Period of Directorship
Since January 2004
September 2010 – June 2015
June 2014 – August 2014
July 2000 – October 2013
Since January 2013
December 2006 – February 2015
December 2013 – March 2016
January 2011 – October 2015
Since July 2016
September 2013 – January 2016
Since March 2010
October 2014 – November 2015
Since April 2010
Since March 2013
Since April 2013
August 2007 – October 2015
January 2000 – April 2015
June 2006 - November 2013
Since February 2014
Since September 2014
October 2015 – August 2016
January 2013 – December 2015
November 2013 – July 2014 (*)
April 2011 – October 2013
Western Areas 2016 Annual ReportDirectors Report Interests in Shares and Options
of the Company
Indemnification of Officers
and Directors
As at 30 June 2016, the interest of the Directors or associates
of the Directors in the shares and options of the Company are:
Name
Ordinary Shares
I Macliver
D Lougher
J Hanna (ii)
D Southam
R Yeates
C Readhead
36,448
246,178
400,091
128,135
10,000
-
T Netscher
(i) None of the performance rights had vested at 30 June 2016.
(ii) Shareholding of Mr Hanna as at 15 June 2016.
7,000
Performance
Rights (i)
970,640
546,093
-
-
-
-
-
All equity transactions with Directors and Executives, other
than those arising from the employee share scheme, have been
entered into under terms and conditions no more favourable than
those the entity would have adopted if dealing at arm’s length.
Share Options
During the financial year, the parent entity paid a premium
under a contract insuring all Directors and Officers of the
Company against liability incurred in that capacity. Disclosure
of the nature of liabilities insured and the premium is subject to
a confidentiality clause under the contract of insurance.
The Company has not otherwise, during or since the end of the
financial year, except to the extent permitted by law, indemnified
or agreed to indemnify an officer or auditor of the Company
against a liability incurred as such an officer or auditor.
Directors’ Benefits
No Directors of the Consolidated Entity have, since the end of
the previous financial year, received or become entitled to receive
a benefit (other than a benefit included in the total amount of
emoluments received or due and receivable by Directors shown
on page 41 of the Directors Report) by reason of a contract
made by the parent entity or a related body corporate with the
director or with any entity in which the director has a substantial
financial interest, with the exception of benefits that may be
deemed to have arisen in relation to the transactions entered
into in the ordinary course of business as disclosed in Note 29
to the accounts.
No options were issued, cancelled or remained outstanding
during the financial year.
Directors’ Meetings
The following table sets out the number of meetings of the parent
entity’s Directors and meetings of the sub-committees of the
Board held during the year ended 30 June 2016 and the number
of meetings attended by each Director.
Company Secretary
Mr J Belladonna is a Certified Practicing Accountant and has
been employed at Western Areas Limited since 2005, originally
as Financial Controller and then as the Company Secretary
and Chief Financial Officer. In his time at the Company he
has been intimately involved in the accounting, debt financing,
corporate governance, capital raising and financial initiatives at
the Company. Mr Belladonna has over 15 years experience in the
resources industry including listed gold and base metal companies
in a range of management positions.
Directors Meetings Audit & Risk Mgmt
Remuneration
Nomination
Treasury
Meetings held :
Meetings attended :
I Macliver
D Lougher
D Southam
J Hanna (i)
R Yeates
C Readhead
13
13
13
13
12
13
13
2
2
-
-
-
-
2
T Netscher
(i) Mr Hanna resigned from the Board on 15 June 2016, attending all Board meetings until that date.
13
2
2
2
-
-
-
2
-
2
1
1
1
-
-
1
-
-
1
1
-
-
-
-
1
1
31
Western Areas 2016 Annual ReportDirectors Report Remuneration of Directors and Senior
Management
Information about the remuneration of directors and senior
management is set out in the remuneration report of this
Directors’ Report on page 35.
Performance Rights Granted to
Directors and Senior Management
The nickel concentrator processed a record 616,279 ore tonnes
compared to the 609,727 ore tonnes for the previous financial
year, with the variance attributed to improved mill throughput
rates and increased plant availability.
The Company continued its exceptional safety performance
across the group maintaining a lost time injury frequency rate
of zero for the financial year. In addition, the continued high
level of environmental management has resulted in no significant
environmental incidences occurring throughout the year.
Performance Rights granted to directors and senior management
during the financial year ended 30 June 2016 is set out in the
Remuneration Report of this Directors’ Report on page 42.
Financial Metrics
Income Statement
Proceedings on behalf of the Company
Full Financial Year – Earnings Results Summary
No person has applied for leave of the Court to bring proceedings
on behalf of the Company or intervene in any proceedings
to which the Company is a party for the purpose of taking
responsibility on behalf of the Company for all or any part of
those proceedings.
The Company was not a party to any such proceedings during
the year.
Principal Activities
The principal activities of the Consolidated Entity during the
year consisted of mining, processing and sale of nickel sulphide
concentrate, the continued assessment of development feasibility
of the high grade nickel mines and the exploration for nickel
sulphides, other base metals and platinum group metals.
Review of Operations
Operational metrics
The Company provides detailed operating reports at the end of
every quarter outlining quarterly and year to date production and
sales statistics, some of which are shown below.
Financial Year - Physical Summary
2015/16 2014/15
Tonnes Mined
Tns 590,246 540,268
Nickel Grade (average)
%
4.7%
4.9%
Tonnes Milled
Milled Grade (average)
Recovery
Tns 616,279 609,727
%
%
4.5%
90%
4.7%
90%
Revenue
Gross (Loss)/Profit
(LBIT)/EBIT
(Loss)/Profit Before Tax
Net (Loss)/Profit After Tax
2015/16
2014/15
Change
$M
$M
$M
209.1
312.7
(103.6)
(5.7)
(36.0)
(38.5)
(29.8)
76.2
63.5
48.1
35.0
(81.9)
(99.5)
(86.6)
(64.8)
Consolidated net loss after tax (NLAT) for the group was $29.8
million, a decrease of $64.8 million from the results reported in
the previous financial year. The overriding factor impacting the
change in earnings was the substantial decline in the nickel price.
Accordingly, consolidated revenue for the year was down
$103.6 million with the main contributor being the 28% fall
in the average realised nickel price compared to the prior year.
The average realised nickel price for the year decreased from
US$6.58/lb (A$7.87) in the prior financial year to US$4.14/
lb (A$5.69) for the year ended 30 June 2016. The Company
continued to have an unrelenting focus on key controllable items,
being cost management and productivity improvements. This
focus resulted in cost of sales reducing by $21.7 million for the
year, with the bulk of these savings embedded into future periods.
Other pre-tax non-cash items which impacted NLAT of
$29.8 million for the year included:
• Depreciation charges of $17.0 million;
• Amortisation charges of $45.2 million;
• Write-off of non-current assets of $7.8 and
•
Impairment losses of $7.0 million.
Nickel in Concentrate
Tns
25,009
25,801
These non-cash items amounted to $77.0 million.
Nickel Sales in
Concentrate
Tns
24,793
26,036
Total mine ore production increased year on year due to the
Spotted Quoll mine reaching full production allowing mining
rate optimisation for delivery of a consistent and reliable ore
feed blend to the concentrator, while maintaining appropriate
stockpile levels.
32
Western Areas 2016 Annual ReportDirectors Report Statement of Financial Position
Statement of Cash Flows
Full Financial Year - Balance Sheet Summary
Full Financial Year – Cashflow Summary
2015/16 2014/15
Change
$M
$M
$M
Cash at bank
75.7
195.4
(119.7)
Net Operating Cashflow
Current Assets
Total Assets
Current Liabilities
Total Liabilities
Net Equity
119.9
489.2
26.3
55.2
434.0
234.7
597.6
168.6
196.5
401.1
(114.8)
(108.4)
(142.3)
(141.3)
32.9
Cash at bank decreased by $119.7 million to finish the year at
$75.7 million. This was mainly due to the scheduled repayment
of the $125.0 million of convertible bonds early in the financial
year, the completion of the Cosmos acquisition payments of
$24.2 million and lower receipts due to record low nickel prices.
This was partially offset by a $75.0 million capital raising and
share purchase plan completed in April 2016.
Total assets at reporting date were $489.2 million, representing a
decrease of $108.4 million from the prior year, primarily driven
by the decrease in cash of $119.7 million. Mine development
decreased by $16.9 million as a result of amortisation charges
of $43.7 million being offset by new development of $27.8
million. Capitalised exploration and evaluation expenditure
increased by $19.4 million, the increase due to recognition of
the newly acquired Cosmos exploration assets valued at $27.1
million, offset by the deconsolidation of $11.5 million FinnAust
exploration assets and $7.0 million impairment provision raised
against the FinnAust exploration assets. Exploration expenditure
for the year of $12.9 million related to the Company’s ongoing
investment in exploration at Forrestania and the other regional
projects. Inventories decreased by $8.6 million mainly as a result
of a decrease in ore stockpiles.
Total liabilities of $55.2 million represented a decrease of
$141.3 million from the prior year, due to the repayment of
the Company’s final convertible bonds and a decrease in income
tax liabilities.
Total equity attributable to the shareholders increased by
$32.9 million to $434.0 million, primarily due to a capital
raising of $75.0 million, offset by the NLAT of $29.8 million.
2015/16 2014/15
Change
$M
15.6
(72.4)
(62.8)
$M
$M
148.5
(132.9)
(71.9)
(111.8)
(0.5)
49.0
Net Investing Cashflow
Net Financing Cashflow
Net Cashflow
(119.6)
(35.2)
(84.4)
As outlined earlier in the Directors Report, the 28% reduction in
the nickel price for the year had a significant impact on the cash
generation of the Company. Notwithstanding, decisive action was
taken throughout the year which included a significant reduction
in operating costs and the deferral of mine development, capital
projects and exploration expenditure.
In respect of capital and exploration expenditure, the
Company reduced its spend by $22.0 million versus the prior
financial year with a significant portion of this saving generated
in the second half.
Furthermore the Company became debt free for the first
time in many years following the repayment of $125.0 million
in convertible bonds in July. The flow on impact of this debt
reduction was a significant fall in interest payments of
$6.8 million.
Working capital movements included a higher debtors balance
at the end of financial year mainly reflected timing differences
with June sales.
33
Western Areas 2016 Annual ReportDirectors Report Material Business Risks
Strategic Long Term Economic Risks
• Exploration
In order to maintain and enhance our economic base
of mineral resources, the Company continues to invest
in exploration. It must be recognised that investing in
exploration does not guarantee that additional mineral
resources will be discovered. However exploration is essential
in order to sustain ore reserves at the Forrestania Nickel
Operations and establish new profit generating projects.
Strategically the Company continues to invest in the
application of modern exploration techniques within proven
nickel regions such as the Forrestania Nickel Operations
(“FNO”), the Cosmos Nickel Complex (“Cosmos”) and the
highly prospective green field West Gawler Project.
•
Inorganic Growth & Investment
Western Areas’ strategy includes investment in business
development activities (joint ventures, mergers, acquisitions
and innovation) to enhance the current project portfolio.
Western Areas is debt free and continues to generate positive
cash flows from FNO. With any transaction there is a risk
that through the lifecycle of the project, the investment
does not deliver the forecast returns to the Company. Any
material investment is subject to strict governance and due
diligence processes to ensure the opportunities and risks are
understood and managed in a way that provides the greatest
level of return to shareholders.
• Metal & Currency Markets
As a mining company, Western Areas is exposed to currency
and nickel price fluctuations. Over the past twelve months
the Company has managed to maintain a financially robust
business in the face of historically low nickel prices. Being
debt free, and having high grade operations, provides
a significant level of resilience against adverse market
conditions. The Company has a number of strategies available
to smooth out the effects of a low Australian dollar nickel
price, including hedging when market conditions permit.
Operating Risks
• Business Interruption
A significant disruption to FNO could have a significant
adverse effect on Western Areas revenue from operating
activities. FNO consists of the Spotted Quoll and Flying
Fox underground mines, the Cosmic Boy concentrator and
fully developed supporting infrastructure. These assets are all
within the same geographic area, and are our only revenue
generating assets at this time. Therefore, a significant failure
event at one of these assets has the potential to substantially
reduce nickel production and consequent revenue from nickel
sales. Western Areas has well established risk and business
continuity management practices that mitigate and respond
to known business interruption risks. This resilience extends
throughout our supply chain to the point of delivery to
customers.
• Offtake Parties
Western Areas relies on nickel offtake customers to purchase
and financially settle on nickel concentrate deliveries. The
financial failure of one or more of our offtake customers could
result in delayed payments receipts or new/revised offtake
contract terms. Western Areas conducts due diligence prior
to entering into nickel offtake contracts and maintains strong
relationships with its customers. The Company stays abreast
of the nickel concentrate market, while also monitoring
alternative and emerging markets for nickel products.
• Counter Parties
Western Areas relies on a number of contractor entities to
support exploration and production activities. The financial
failure of a key contractor could result in interruptions to
production plans, and affect the operating costs. Western
Areas conducts due diligence prior to awarding contracts, and
continues to actively manage and monitor the activities of our
contractors and suppliers. In addition, through the Company’s
Risk Management Framework there are contingency plans in
place for such events.
Sustainability Risks
• Safety
The safety and well-being of people undertaking activities
on behalf of the Company is a key priority. There are a
number of inherent hazards associated with exploration,
mining, mineral processing and logistics that require ongoing
management and assurance to ensure our safety performance
is in line with the high standards expected. Western Areas
continues to demonstrate excellence in safety performance
and continues to work with our contractors and partners to
ensure Western Areas is a safe and rewarding place to work.
• License to Operate
The Company has a number of statutory and regulatory
obligations to fulfil including corporate, financial, heritage,
health and safety, environmental, land management, tenure,
and human resources. Western Areas readily accepts that
fulfilling compliance obligations is a necessary and important
part of maintaining its license to operate. Compliance
management is built into planning processes and day to day
activities, and is an accepted part of Western Areas culture.
Subsequent Events
Other than matters detailed above, there have been no
subsequent events after 30 June 2016 which have a
material effect on the financial statements for the year
ended 30 June 2016.
Dividends Paid or Recommended
No dividends have been declared or paid in relation to the
30 June 2016 financial year.
In respect of the financial year ended 30 June 2015, the
Board declared and paid a final 4 cent, fully franked dividend.
34
Western Areas 2016 Annual ReportDirectors Report
Remuneration Report
(Audited)
This report outlines the remuneration arrangements in place
for Non-Executive Directors, Executives and other Key
Management Personnel of Western Areas Ltd. There has been
no material change to the remuneration structures or incentive
programmes during the 2016 financial year (FY16).
Other Key Management Personnel (‘KMP’) of the Company
during the financial year were:
Mr J Belladonna Chief Financial Officer & Company Secretary
Mr W Jones
General Manager Operations
Key 2016 financial year changes
•
10% reduction in all Director and Key Management Personnel
base salaries effective 1 March 2016 in recognition of the low
nickel price environment. This returns base salary levels to
pre-financial year 2012 equivalents.
• Base salaries have been frozen for the 2017 financial
year (FY17). There has only been one base salary increase
in the last 5 years.
• Non-executive director remuneration frozen at the
reduced levels.
• Reduction in number of Non-Executive Directors resulting
in a further director fee reduction.
The report is comprised of the following key sections:
• Section A: Who this report covers
• Section B: Remuneration governance and philosophy
• Section C: 2015 Annual General Meeting voting
• Section D: Use of remuneration consultants
• Section E: Executive remuneration framework
• Section F: Non-executive director remuneration
• Section G: Service contracts
• Section H: Link between performance and remuneration
outcomes
• Section I: Details of remuneration
SECTION B: REMUNERATION GOVERNANCE
AND PHILOSOPHY
Remuneration Committee
The Remuneration Committee is responsible for assisting the
Board in fulfilling its responsibilities relating to the remuneration
of Directors, the Managing Director and KMP, remuneration
practices, strategies and disclosures generally.
Remuneration levels and other terms of employment for the
Directors and the senior management team are reviewed at
least annually by the Remuneration Committee, having regard
to performance against goals set each year, qualifications
and experience, relevant market conditions and independent
remuneration benchmarking reports.
The Remuneration Committee assesses the appropriateness of
remuneration levels to ensure the Company is able to attract and
retain high quality Executives. The Remuneration Committee
utilises independent salary reports to assist in this regard.
Remuneration Philosophy
The Company recognises that it operates in a global environment
and to prosper in such an environment, it must attract, motivate
and retain personnel of the highest calibre.
The principles supporting the Company’s remuneration policy
are that:
• Reward reflects the competitive global market in which we
operate;
SECTION A: WHO THIS REPORT COVERS
The following persons acted as directors of the Company during
the financial year:
Mr I Macliver
Independent Non-Executive Chairman
•
Individual reward is based on performance across a range
of disciplines that apply to delivering results and executing
strategies for the Company;
• Executive remuneration is linked to the creation of
shareholder value; and
Mr D Lougher Managing Director
Mr D Southam
Executive Director
• Remuneration arrangements are equitable, fair and facilitate
the deployment of senior management across the Company.
Mr R Yeates
Independent Non-Executive Director
Mr C Readhead
Independent Non-Executive Director
SECTION C: 2015 ANNUAL GENERAL
MEETING VOTING
Mr T Netscher
Independent Non-Executive Director
Mr J Hanna
Non-Executive Director
(Resigned - 15 June 2016)
Western Areas received 97% “yes” votes for the Remuneration
Report resolution at the 2015 Annual General Meeting and
remuneration practices have remained consistent with the prior
year. The Company did not receive any specific feedback at the
AGM or throughout the year on its remuneration practices.
However, various advisory groups and associations publish
critiques and opinions on a subscription basis.
35
Western Areas 2016 Annual ReportRemuneration Report (Audited) In the event of serious misconduct or a material misstatement
in the Company’s financial statements, the Remuneration
Committee can cancel or defer performance based remuneration
that has not yet been vested or paid. There is currently no formal
claw back of performance based remuneration paid in prior
financial years. The Company notes that the STI performance
indicators are a blend of physical and financial targets which
limits the target reward potentially payable based on financial
targets or metrics.
Fixed remuneration
Fixed remuneration consists of base salary, superannuation,
allowances, and any salary sacrifice components. The fixed
remuneration component is reviewed annually by the
Remuneration Committee. Base salary for each Executive is
benchmarked against market data for comparable roles in the
market and the Remuneration Committee refers to external
independent salary reports to ensure that the remuneration levels
are set to meet the objectives of the Company while remaining
competitive in the wider employment market.
Effective 1 March 2016 a 10% reduction in KMP base salary
was implemented during FY16 and no remuneration increases
have been awarded for FY17. There is no guaranteed base pay
increases included in any Executives’ contracts.
Short term incentive (‘STI’)
The objective of STI’s is to link Executives’ remuneration with
the achievement of the Company’s key operational and financial
targets. The STI plan provides Executives with an opportunity
to earn a cash bonus on achievement of individual and group
key performance indicators (‘KPIs’). Challenging KPIs are set to
ensure payments are only made to high performing employees.
It is the Company’s policy to cap STI payments at a targeted STI
level. The percentage is applied against the relevant Executive’s
base salary only and excludes all allowances and superannuation.
The KPIs used span across key focus areas of the business
(operations, corporate, resource replenishment and exploration),
and the respective KPIs and their weightings will vary by role and
are designed to align to those measures relevant to the individual’s
area of influence.
The full list of KPIs set for Executives in FY16 is opposite.
For each Executive, KPIs relevant to their area of influence
are selected from the list below and assigned each year.
Rarely is 100% of target STI achieved, which the Company
believes demonstrates the challenging nature of the KPI targets.
SECTION D: USE OF REMUNERATION
CONSULTANTS
Western Areas engaged PwC as Remuneration Consultants
during FY16 to provide assistance with documentation
management and ongoing market trend monitoring and
development in relation to the Long Term Incentive (“LTI”) plan,
however no ‘remuneration recommendations’ as defined in the
Corporation Act 2001 were made or supplied by PwC.
SECTION E: EXECUTIVE REMUNERATION
FRAMEWORK
The Company aims to reward Executives with a level and mix of
remuneration commensurate with their position, experience and
responsibilities within the Company. The objective is to:
• Reward Executives for their individual performance against
targets set by reference to appropriate benchmarks;
• Align the interests of Executives with those of the
shareholders; and
• Ensure that total remuneration is competitive by market
standards.
The Company’s Executive reward structure provides a
combination of fixed and variable pay, and is comprised of:
• Fixed remuneration, inclusive of base pay, superannuation,
allowances, and salary-sacrifice components;
• Short term incentives; and
• Long term incentives.
Remuneration mixes
In accordance with the Company’s objective to ensure that
executive remuneration is aligned to Company performance,
a significant portion of executives’ remuneration is placed “at
risk”. The relative proportion of target FY16 total remuneration
packages split between fixed and variable remuneration is shown
below:
Fixed
Remuneration
Target
STI
Target
LTI
Executive Directors
Mr D Lougher
Mr D Southam
Executives
Mr J Belladonna
Mr W Jones
39%
43%
43%
53%
22%
24%
24%
21%
39%
33%
33%
26%
Calculation based on 1 July 2015 salary level prior to the 10%
salary reduction
The target remuneration mix of higher level KMP has been
designed with emphasis on LTI exposure. This further aligns
executives with shareholders and a focus on long term value
generation. Refer to Section H: Link between performance
and remuneration outcomes for details of Executives’ actual
remuneration mix for FY16.
36
Western Areas 2016 Annual ReportRemuneration Report (Audited) Operations
Forrestania safety performance
Overview KPI
Why KPI was set
Based on Lost Time Injury performance in
each quarter.
Motivate and reward the continued focus
on safety standards and procedures.
Forrestania environmental incidents
Based on a minimum reportable
environmental incidents quarter.
Forrestania unit cash cost
Forrestania nickel in ore production
Forrestania mill recoveries
Focused on average unit cash costs for
Flying Fox (FF) and Spotted Quoll (SQ)
mines per pound of nickel produced.
Performance better than budget is
required.
Must exceed the budgeted nickel
metal in ore production target from
FF and SQ mines.
Achieve a set threshold recovery
above budget levels for the combined
ore feed from FF and SQ mines.
Motivate and reward the continued
focus on best practice environmental
management.
Motivate and reward the stringent
management of production costs
outcomes that exceed the Board set
business plan.
Motivate and reward nickel production
outcomes that exceed Board set business
plans.
Motivate and reward nickel production
outcomes that exceed Board set business
plans.
Forrestania nickel in concentrate sales
Sale of nickel metal in concentrate to
exceed a set tonnage target.
Motivate and reward nickel sales outcomes
that exceed Board set business plans.
Corporate
Earnings
Cashflow
Business development
Mineral Resources and Exploration
Nickel resource
New nickel resources
New nickel discovery
Achieve EBIT target above budget.
Motivate and reward financial outcomes
that exceed Board set business plans.
Achieve pre-funding cashflow target
above budget.
Motivate and reward financial outcomes
that exceed Board set business plans.
Based on business development activities
and project pipeline development that
provides opportunities to add value or
protect value in the Company and for the
shareholders.
Motivate and reward business development
initiatives that provide market intelligence
and enhance corporate growth opportunity
identification.
Establishing replacement nickel reserves or
mining inventory tonnages.
Motivate and reward mine life extension
outcomes at Board set levels.
Establishing new published nickel
resources exceeding a targeted nickel
tonnage levels.
Discovery of a new Nickel deposit.
Motivate and reward economic nickel
discovery.
Motivate and reward economic nickel
discovery.
The Remuneration Committee is responsible for determining the
STI to be paid based on an assessment of whether the KPIs are
met. To assist in this assessment, the Remuneration Committee
receives detailed reports on performance which are verified
against outcomes.
Based on the achievements of the Company in FY16, the
Remuneration Committee determined that Executives
achieved between 50% to 65% of their target STI opportunity.
It is noted that no employee achieved 100% of their target
STI award and no financial based STI payments were triggered
or awarded in FY16 due to the lower than budgeted nickel
price and its impact on earnings.
In making this assessment, the Remuneration Committee
considered the following factors:
• An exceptional safety performance across the group and a
continued lost time injury frequency rate of zero;
• The high level of environmental management and no
significant environmental incidences;
• Mine and concentrator nickel production and sales volume
were above the Board set budgeted expectation due to
productivity and efficiency gains;
• Achievement of specific corporate objectives,
recommendations and outcomes related to business
development activities; and
• Achievement of challenging operating cost parameters.
37
Western Areas 2016 Annual ReportRemuneration Report (Audited) Performance achieved during the year against the above KPIs has resulted in Executives earning the following STI payments:
Name
Target STI quantum (% of
base salary)
Target FY16 STI quan-
tum ($)
STI quantum earned ($)
STI quantum Forfeited
($)
Executive Directors
Mr D Lougher
Mr D Southam
Executives
Mr J Belladonna
55%
55%
55%
Mr W Jones
Target STI was calculated based on 1 July 2015 base salary prior to the 10% salary reduction
40%
$404,000
$303,000
$204,000
$160,000
$204,000
$175,000
$122,000
$100,000
$200,000
$128,000
$82,000
$60,000
Long Term Incentive (‘LTI’)
The LTI plan was reapproved by shareholders at the 2014 Annual General Meeting and has been in operation since FY12. All grants
are measured against a 3 year TSR period such that no vesting occurs until the end of the third year. This ensures executives are
focused on long-term shareholder value generation.
Grant frequency and quantum
Under the remuneration structure, Executives will receive a grant of Performance Rights each year, such that the LTI now forms a key
component of Executives’ Total Annual Remuneration.
The LTI dollar value that Executives will be entitled to receive is set at a fixed percentage of their base salary, ranging from
50% to 100%, depending on the participant’s position within the Company. This level of LTI remains in line with current market
practice.
The number of Performance Rights to be granted is determined by dividing the LTI dollar value of the award by the fair value of a
Performance Right as calculated by an independent valuation expert.
The quantum of LTI grants made during FY16 was as follows:
Name
Executive Directors
Mr D Lougher
Mr D Southam
Executives
Mr J Belladonna
LTI quantum
(% of base
salary)
(i)
LTI quantum
($)
Number of
Performance
Rights issued
(ii)
Fair value per
Performance
Right at grant
date (iii)
Exercise date
Expiry date
100%
$734,400
299,750
$2.45 Upon receipt of
a vesting notice
issued in FY19
30/6/19
75%
$413,185
168,640
$2.45
As above
30/6/19
75%
$278,400
113,630
$2.45
As above
30/6/19
Mr W Jones
(i) of base salary was calculated on salary applicable 1 July 2015.
(ii) The number of Performance Rights to be issued to each participant is determined by undertaking an indicative valuation at 1 July of each respective year for allocation and Board
ratification purposes rounded to zero. The FY16 valuation at 1 July 2015 was $2.45/right.
(iii) Fair value as required under AASB 2. Valuation is determined at the date of the Annual General Meeting held in each respective year.
$200,200
As above
81,710
$2.45
50%
30/6/19
38
Western Areas 2016 Annual ReportRemuneration Report (Audited)
Performance conditions
Careful consideration was given to the selection of the
performance conditions attached to Performance Rights. Based
on market practice and the factors controllable by executives, the
Board decided that the most appropriate performance measure
to track shareholder outcomes is via a relative total shareholder
return (‘TSR’) measure. TSR measures the return received by
shareholders from holding shares in a company over a particular
period and is calculated by taking into account the change in
a company share price over the period as well as the dividends
received during that period.
Western Areas TSR performance for the FY16 grant will be
assessed against a customised peer group comprising the following
24 companies:
Aditya Birla Minerals Ltd
Mt Gibson Iron
Aquarius Platinum Ltd
Northern Star Resources Ltd
Altona Mining Ltd
Alumina Ltd
OM Holdings Ltd
Oz Minerals Ltd
Beadell Resources Ltd
Paladin Energy Ltd
Bouganville Copper Ltd
Panoramic Resources Ltd
Cudeco Ltd
Poseidon Nickel Ltd
Gindalbie Metals Ltd
Rex Minerals Ltd
Hillgrove Resources Ltd
Sandfire Resources Ltd
Independence Group NL
Syrah Resources Ltd
Medusa Mining Ltd
Talisman Resources Ltd
Mincor Resources NL
Zimplats Holdings Ltd
No Performance Rights will vest unless the percentile ranking
of the Company’s TSR for the relevant performance year, as
compared to the TSR’s for the peer group companies, is at or
above the 50th percentile.
The following table sets out the vesting outcome based on the
Company’s relative TSR performance:
Relative TSR performance
Less than 50th percentile
Performance Vesting
Outcomes
0% vesting
At the 50th percentile
50% vesting
Between 50th and 75th
percentile
Pro-rata / progressive vesting
from 50% - 100%
At or above 75th percentile
100% vesting
Performance period and vesting
FY16 grants made under the LTI plan will only vest subject
to meeting the minimum service period and the relative TSR
performance condition tested against the peer group over a 3
year period (1 July 2015 to 30 June 2018).
The FY16 grants service based vesting condition provides
that, notwithstanding the passing of the performance test, no
Performance Rights will vest and become exercisable into shares
unless the participant remains employed as at 30 June 2018.
Share trading policy
The trading of shares issued to participants under any of the
Company’s employee equity plans is subject to, and conditional
upon, compliance with the Company’s employee share trading
policy contained in the Corporate Code of Conduct. Executives
are prohibited from entering into any hedging arrangements over
unvested performance rights under the LTI plan. The Company
would consider a breach of this policy as gross misconduct which
may lead to disciplinary action and potentially dismissal.
SECTION F: NON-EXECUTIVE DIRECTOR
REMUNERATION
Non-Executive Director remuneration policy and
structure
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 that is
acceptable to shareholders.
The aggregate remuneration of Non-Executive Directors
(‘NEDs’) is determined from time to time by shareholders in
a General Meeting. An amount not exceeding the approved
amount is then divided between the Directors as determined by
the Remuneration Committee.
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 and the Remuneration
Committee considers independent salary reports as well as the
fees paid to NEDs of comparable companies when undertaking
this annual review.
It is an objective of the Company to encourage Directors to own
shares in Western Areas. However share based payments in the
form of options or equity in the Company are not offered to
NEDs as encouraged by Corporate Governance guidelines.
There is no scheme to provide retirement benefits to NEDs,
other than statutory superannuation.
Non-Executive Director fees limits
NED fees are determined within an aggregated fee limit of
$1,000,000, which was approved by shareholders at the 2012
AGM. The following fees (including statutory superannuation)
were applicable for the year:
Fees
Actual
Fin. Year
Board Chair
Board
Member
2016
$186,855
$161,570
NED’s agreed to a 10% reduction in Directors fees, effective
from 1 March 2016.
Non-Executive Directors fee structure
NED remuneration consists of a base Directors fee for their
role as Board members, and is inclusive of compensation for
any role on nominated Board sub-committees. That is, no
separate committee fees are payable. NEDs do not receive any
performance-based pay.
39
Western Areas 2016 Annual ReportRemuneration Report (Audited) SECTION G: SERVICE CONTRACTS
Executives
A summary of the key contractual provisions for each of the current executives as at 30 June 2016 is set out below, noting a
10% base salary reduction was implemented as at 1 March 2016:
Name & job title
Base salary
Notice period
Termination provision
$660,960
3 months
Super-
annuation
11%
Contract
duration
No fixed term
$495,823
11%
No fixed term
3 months
$334,080
11%
No fixed term
3 months
12 months termination payment
and accrued leave entitlements
12 months termination payment
and accrued leave entitlements
6 months termination payment
and accrued leave entitlements
D Lougher,
Managing Director*
D Southam,
Executive Director*
J Belladonna,
Chief Financial
Officer / Company
Secretary*
11%
$360,360
W Jones,
General Manager
Operations
*In the event that there is a takeover of, or merger with, the Company, the Company must pay the Executive a bonus within 10 days of that takeover or merger occurring.
The amount of the takeover bonus will be calculated as follows:
(a)
The positive difference (expressed as a percentage of the 20 day VWAP) between the bid price for the Company’s shares as a result of a takeover or merger bid, and the volume
weighted share price of the Company’s share price for the 20 days immediately preceding the takeover or merger bid; and
(b)
Multiplied by 3, as a percentage of the Executive’s base annual salary at the time that such a bid is completed.
(This contractual position is a legacy item that has not been applicable to any new executive appointment in over 5 years.)
6 months termination payment
and accrued leave entitlements
No fixed term
1 month
All other senior management contracts are as per the group’s standards terms and conditions and there are no contracted entitlements
to cash bonuses, options or performance rights.
Non-Executive Directors
Non-Executive Directors receive a letter of appointment before commencing duties on the Board. The letter outlines compensation
arrangements relevant to the Director. Non-Executive appointments have no end date, retirement, redundancy or minimum notice
periods included in their contracts.
SECTION H: LINK BETWEEN PERFORMANCE AND REMUNERATION OUTCOMES
The remuneration framework detailed above has been tailored with the objective of attracting and retaining the highest calibre staff
who contribute to the success of the Company, while maintaining alignment between Company performance and individual rewards.
The remuneration policies seek a balance between the interests of stakeholders and competitive market remuneration levels.
Company Performance
FY16 has been a challenging year with regard to nickel price, seeing the lowest nickel price environment for more than 10 years.
Controllable metrics have been consistent or improved year on year on year despite the commodity price challenges.
Year Ended 30 June
Lost time injury frequency rate
Nickel tonnes Sold (tns)
Nickel Price – US$
Reported Cash Cost US$/lb (*)
Net Profit / (Loss) after Tax (‘000)
EPS
Dividend Cents/share
Market capitalisation ($)
Closing share price ($)
2016
0
24,793
$4.14/lb
$1.64/lb
(29,783)
(12.3)
-
582M
2.15
TSR – 3 year peer ranking (%’ile)
(*) Cash cost of production before smelting & refining, concentrate haulage and royalties.
74th
2015
0
26,036
$6.58/lb
$1.94/lb
35,013
15.1
7.0
753M
3.23
84th
2014
1.9
25,756
$7.46/lb
$2.28/lb
25,460
12.2
5.0
1,073M
4.62
93rd
2013
0.83
27,819
$7.30/lb
$2.75/lb
(94,105)
(49.8)
2.0
457M
2.32
75th
2012
1.5
26,637
$8.06/lb
$2.50/lb
40,181
22.4
11.0
730M
4.06
39th
40
Western Areas 2016 Annual ReportRemuneration Report (Audited) The table below represents the Executives’ actual remuneration mix of fixed remuneration, short-term incentives and long-term
incentives based upon remuneration paid or expensed during FY16. It is the Company’s policy to ensure that a suitable portion
of executive remuneration is placed ‘at-risk’ and subject to performance against appropriately set targets.
Executive Directors
Mr D Lougher
Mr D Southam
Executives
Mr J Belladonna
Mr W Jones
1
LTI refers to the value of Performance Rights that were expensed during FY16.
SECTION I: DETAILS OF REMUNERATION
Fixed
Remuneration
48%
51%
54%
60%
STI
12%
13%
14%
13%
Short Term Employee Benefits
Post
Employ-
ment
Long Term
Employee Benefits
(accounting valuation)
Base Salary
STI
Payments /
Bonuses (ii)
Allowances
Non
Monetary
Super-
annuation
Long
Service
Leave
Share Based
Payments
LTI (i)
LTI1
40%
36%
32%
27%
Total
Non-executive Directors
I Macliver
FY2015
167,952
173,743
C Readhead
145,559
FY2015
T Netscher
FY2015
R Yeates
FY2015
J Hanna (iv)
FY2015
R Dunbar
FY2015
167,142
161,570
153,213
145,559
150,578
139,912
150,578
-
83,570
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Executive Directors
D Lougher (iii)
753,009
204,000
FY2015
780,180
341,000
D Southam
561,130
175,000
FY2015
581,514
275,000
Executive Officers
J Belladonna
368,298
122,000
FY2015
W Jones
FY2015
382,032
187,000
394,630
100,000
409,444
157,000
4,000
4,000
4,000
4,000
4,000
4,000
1,900
1,900
51,785
48,262
51,013
51,032
42,107
50,595
35,302
38,408
18,475
19,112
16,011
-
-
-
16,011
16,564
15,390
16,564
-
-
35,000
35,000
27,500
30,000
30,000
30,000
35,000
35,000
-
-
-
-
-
-
-
186,427
192,855
161,570
167,142
161,570
153,213
161,570
167,142
155,302
167,142
-
83,570
-
-
-
-
-
-
-
16,512
705,741
1,770,047
12,203
562,311 1,782,956
12,386
459,291
1,290,320
9,154
292,709 1,243,409
8,346
6,168
9,002
6,653
274,613
849,364
202,406
862,201
218,392
794,226
145,948
794,353
Total FY2016 5,530,396
Total FY2015 5,613,983
(i)
(ii)
(iii)
LTI refers to the value of Performance Rights that were expensed during the FY16. No Options were granted or remain outstanding at the end of the financial year.
Includes all paid and/or accrued bonuses for the applicable year.
Mr Lougher received a payment in lieu of annual leave in October 2015 to the value of $67,932, this was for the purpose of reducing the balance sheet liability for accrued leave and
did not affect the Income Statement.
(iv) Mr Hanna resigned from the Board on 15 June 2016.
41
Western Areas 2016 Annual ReportRemuneration Report (Audited) Related Party Transactions
There were no related party transactions with KMP during FY16. However, Mr Craig Readhead was a partner of Allion Legal until 30
June 2015. Allion is a law firm that the Company engages from time to time for the provision of legal services and advice in relation to
operational matters. Fees paid to Allion during FY16 totalled $47,124 (FY15 - $121,080). Mr Readhead provided some services as
a consultant to Allion during the financial year, none of which involved any matters related to Western Areas.
Mr Readhead ceased consulting to Allion by the end of FY16 and has no ongoing relationship with Allion. Western Areas uses global
law firm Ashurst for all corporate, capital raising or substantial legal matters. Ashurst is by far the dominant supplier of legal services to
the Company.
Shareholding by Key Management Personnel
The number of shares held by KMP (and their related parties) in the Group during the financial year is as follows:
Balance at
1 July 2015
Granted as
Remuneration
On Vesting of
Performance Rights
Other Changes
During the Year
Balance at
30 June 2016
I Macliver
D Lougher
D Southam
J Hanna (i)
R Yeates
T Netscher
J Belladonna
W Jones
Total
28,948
126,378
36,735
600,091
10,000
-
70,000
-
872,152
-
-
-
-
-
-
-
-
-
-
294,800
165,900
-
-
104,074
83,476
648,250
7,500
(175,000)
(74,500)
(200,000)
7,000
7,500
-
-
36,448
246,178
128,135
400,091
10,000
7,000
181,574
83,476
(427,500)
1,092,902
(i) Shareholding of Mr Hanna as at 15 June 2016.
Options held by Key Management Personnel
There were no options held by key management at any time during FY16.
Performance Rights held by Key Management Personnel
Details of Performance Rights held by KMP and granted but not yet vested under the LTI plan at 30 June 2016 are outlined below:
Balance at 1
July 2015
965,690
448,990
346,223
271,247
Number
granted as
Remuneration
299,750
168,640
113,630
81,710
Number
vested
(294,800)
(165,900)
(104,074)
(83,476)
Number
expired /
Other(*)
-
94,363
-
-
970,640
546,093
355,779
269,481
2,032,150
663,730
(648,250)
94,363
2,141,993
D Lougher
D Southam
J Belladonna
W Jones
Total
-
-
-
-
-
100%
100%
100%
100%
100%
Balance at 30
June 2016
Portion vested
(%)
Portion
unvested (%)
(*) Rights granted related to prior financial years that were approved at the 2015 Annual General Meeting.
All Performance Rights issued during FY16 were allotted in accordance with the shareholder approved Western Areas LTI plan.
The rights were granted on 27 November 2015 and have a zero exercise price. No Performance Rights will vest unless they meet a
relative TSR measure for the period 1 July 2015 to 30 June 2018 as measured against the peer group and satisfaction of the service
based vesting condition which requires the participant remains employed as at 30 June 2018. Upon satisfaction of the performance
and service condition, the Performance Rights will vest upon receipt of a vesting notice during the 2019 financial year.
End of audited Remuneration Report.
42
Western Areas 2016 Annual ReportRemuneration Report (Audited) Significant Changes in the State of Affairs
No significant changes in the consolidated group’s state of affairs occurred during the financial year.
Future Developments
Disclosure of information regarding likely developments in the operations of the consolidated entity in future financial years and the
expected results of those operations is likely to result in unreasonable prejudice to the consolidated entity. Accordingly, this information
has not been disclosed in this report.
Environmental Regulation and Performance
The Consolidated Entity has conducted exploration and development activities on mineral tenements. The right to conduct these
activities is granted subject to State and Federal environmental legislation and regulations, tenement conditions and Mining Proposal
commitments. The Consolidated Entity aims to ensure that a high standard of environmental management is achieved and, as a
minimum, to comply with all relevant legislation and regulations, tenement conditions and Mining Proposal commitments.
The Company has achieved a high level of compliance with all environmental conditions set for its projects and actively strives for
continual improvement.
Auditor’s Independence Declaration
The Auditor’s Independence Declaration to the Directors of Western Areas Ltd on page 44 forms part of the Directors’ Report for the
year ended 30 June 2016.
Non – Audit Services
The entity’s auditor, Crowe Horwath, provided non-audit services, related to renewable energy lodgements, amounting to $4,500
during FY16 (FY15: $13,750). The Board has the following procedures in place before any non-audit services are obtained from
the auditors:
•
•
all non audit services are reviewed and approved by the Board and the Audit & Risk Management Committee prior to
commencement to ensure they do not adversely affect the integrity and objectivity of the auditor; and
the nature of the services provided does not compromise the general principles relating to auditor independence as set out in
APES 110: Code of Ethics for Professional Accountants set by the Accounting Professional and Ethical Standards Board.
Rounding of Amounts
The Company is a company of the kind referred to in ASIC Class Order 98/100, dated 10 July 1998, and in accordance with that
Class Order amounts in the directors’ report and the financial statements are rounded off to the nearest thousand dollars, unless
otherwise indicated.
Signed in accordance with a resolution of the Board of Directors.
D Lougher
Managing Director
Perth, 25 August 2016
43
Western Areas 2016 Annual ReportRemuneration Report (Audited) Auditor’s independence declaration
44
Western Areas 2016 Annual ReportAuditor’s Independence Declaration AUDITOR’S INDEPENDENCE DECLARATIONIn accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor for the audit of Western Areas Ltd for the year ended 30 June 2016, I declare that, to the best of my knowledge and belief, there have been: (a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and (b) no contraventions of any applicable code of professional conduct in relation to the audit. CROWE HORWATH PERTH CYRUS PATELL Partner Signed at Perth, 25 August 2016 Crowe Horwath Perthis a member of Crowe Horwath International, a Swiss verein. Each member of Crowe Horwath is a separate and independent legal entity. Liability limited by a scheme approved under Professional Standards Legislation other than for the acts or omissions of financial services licensees. AUDITOR’S INDEPENDENCE DECLARATIONIn accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor for the audit of Western Areas Ltd for the year ended 30 June 2016, I declare that, to the best of my knowledge and belief, there have been: (a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and (b) no contraventions of any applicable code of professional conduct in relation to the audit. CROWE HORWATH PERTH CYRUS PATELL Partner Signed at Perth, 25 August 2016 Crowe Horwath Perthis a member of Crowe Horwath International, a Swiss verein. Each member of Crowe Horwath is a separate and independent legal entity. Liability limited by a scheme approved under Professional Standards Legislation other than for the acts or omissions of financial services licensees. Consolidated income statement
Year Ended 30 June 2016
Sales
Cost of sales
Other income
Profit on deconsolidation
Finance costs
Employee benefit expense
Foreign exchange gain/(loss)
Write off of non-current assets
Share based payments
Impairment losses
Realised derivative gain
Changes in fair value of derivatives
Administration expenses
Care and maintenance expense
Share of loss of associates accounted for using the equity method
Expense related to deconsolidated entity
(Loss)/profit before income tax
Income tax benefit/(expense)
(Loss)/profit for the year
(Loss)/profit attributable to:
Members of the parent entity
Non controlling interest
Basic (loss)/earnings per share (cents per share)
Diluted (loss)/earnings per share
(cents per share)
The accompanying notes form part of these financial statements.
Notes
2
4
6,11,12
30
11
4
4
8
7
19
19
Consolidated Entity
2016
$’000
209,117
2015
$’000
312,680
(214,762)
(236,474)
2,670
875
(2,546)
(9,569)
670
(7,820)
(2,507)
(6,963)
-
-
(6,231)
(592)
(140)
(747)
(38,545)
8,762
(29,783)
(26,700)
(3,083)
(29,783)
(12.3)
(12.3)
5,517
-
(15,472)
(9,967)
(1,468)
-
(1,569)
(247)
2,181
231
(6,642)
-
-
(704)
48,066
(13,053)
35,013
35,761
(748)
35,013
15.1
14.9
45
Western Areas 2016 Annual ReportConsolidated Statements Consolidated statement of
comprehensive income
Year Ended 30 June 2016
(Loss)/profit for the year
Other comprehensive (loss)/income, net of tax
Items that may be reclassified to profit or loss
Changes in fair value of hedging instruments
Changes in financial assets at fair value through other comprehensive income
Exchange differences on translation of foreign controlled entities
Notes
Consolidated Entity
2016
$’000
(29,783)
394
327
(1,191)
2015
$’000
35,013
281
(426)
1,114
Total comprehensive (loss)/income for the year
(30,253)
35,982
Total Comprehensive (loss)/income attributable to:
Members of the parent entity
Non controlling interest
The accompany notes form part of these financial statements.
(27,170)
(3,083)
(30,253)
36,730
(748)
35,982
46
Western Areas 2016 Annual ReportConsolidated Statements Consolidated statement of financial
position
As At 30 June 2016
Current Assets
Cash and cash equivalents
Trade and other receivables
Inventories
Derivative financial instruments
Total Current Assets
Non Current Assets
Property, plant and equipment
Intangible assets
Exploration & evaluation expenditure
Mine properties
Financial assets at fair value through other comprehensive income
Investments accounted for using the equity method
Total Non Current Assets
Total Assets
Current Liabilities
Trade and other payables
Borrowings
Provisions
Current tax liabilities
Derivative financial instruments
Total Current Liabilities
Non Current Liabilities
Borrowings
Provisions
Deferred tax liabilities
Total Non Current Liabilities
Total Liabilities
Net Assets
Equity
Contributed equity
Other reserves
Retained earnings
Equity attributable to members of the parent entity
Non controlling interest
Total Equity
The accompanying notes form part of these financial statements.
Notes
20 (b)
5
6
17
9,10
10,11
12
8
14
15
16
17
15
10,16
13
18
31
Consolidated Entity
2016
$’000
75,706
29,275
14,761
171
2015
$’000
195,355
15,974
23,407
-
119,913
234,736
96,365
506
80,360
183,579
1,281
7,164
369,255
489,168
22,723
196
3,363
-
-
99,981
506
60,979
200,453
954
-
362,873
597,609
29,364
126,786
2,457
9,795
224
26,282
168,626
123
22,649
6,113
28,885
55,167
210
13,523
14,135
27,868
196,494
434,001
401,115
442,963
15,403
(24,365)
434,001
-
434,001
369,936
32,757
(7,473)
395,220
5,895
401,115
47
Western Areas 2016 Annual ReportConsolidated Statements Consolidated statement
of changes in equity
Year Ended 30 June 2016
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T
Western Areas 2016 Annual ReportConsolidated Statements
Consolidated statement of cash flows
Year Ended 30 June 2016
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Interest received
Royalties paid
Other receipts
Interest paid
Realisation on settlement of derivatives
Income tax paid
Net cash inflow from operating activities
20(a)
Cash flows from investing activities
Payments for property, plant and equipment
Proceeds from insurance refund of property, plant & equipment
Mine development expenditure
Exploration & evaluation expenditure
Purchase of Cosmos Nickel Complex
Purchase of financial assets at fair value through other comprehensive income
Net cash outflow from investing activities
Cash flows from financing activities
Repayment of borrowings
Proceeds from issues of shares
Share issue transaction costs
Finance lease payments
Borrowing costs
Dividends paid to company’s shareholders
Net cash outflow from financing activities
Net decrease in cash and cash equivalents held
Cash and cash equivalents as at the beginning of the financial year
Cash and cash equivalents at end of financial year
The accompanying notes form part of these financial statements.
Notes
Consolidated Entity
2016
$’000
2015
$’000
198,117
(154,482)
778
(12,938)
396
(4,289)
728
(12,747)
15,563
(8,603)
1,584
(27,615)
(13,592)
(24,158)
-
(72,384)
331,073
(154,039)
5,109
(15,951)
768
(11,113)
1,828
(9,206)
148,469
(13,610)
(40)
(42,403)
(15,723)
-
(117)
(71,893)
(125,000)
(95,198)
75,000
(1,973)
(262)
(1,256)
(9,337)
(62,828)
(119,649)
195,355
75,706
-
-
(268)
(11)
(16,281)
(111,758)
(35,182)
230,537
195,355
49
Western Areas 2016 Annual ReportConsolidated Statements Notes to the financial
statements
For The Year Ended 30 June 2016
Note 1: Statement of Significant
Accounting Policies
These consolidated financial statements and notes represent
those of Western Areas Ltd and Controlled Entities (the
“consolidated group” or “group”).
The separate financial statements of the parent entity, Western
Areas Ltd, have not been presented within this financial report
as permitted by amendments made to Corporation Act 2001
effective as at 28 June 2010.
The group is a for profit entity for financial reporting purposes
under Australian Accounting Standards.
The Financial Report was approved by the Board of Directors on
25 August 2016.
Basis of Preparation
These general purpose financial statements have been prepared
in accordance with Australian Accounting Standards, Australian
Accounting Interpretations, other authoritative pronouncements
of the Australian Accounting Standards Board (AASB) and the
Corporations Act 2001.
Australian Accounting Standards set out accounting policies
that the AASB has concluded would result in a financial report
containing relevant and reliable information about transactions,
events and conditions. Compliance with Australian Accounting
Standards ensures that the financial statements and notes also
comply with International Financial Reporting Standards. Material
accounting policies adopted in the preparation of this financial
report are presented below and have been consistently applied
unless stated otherwise.
Except for cash flow information, the financial statements have
been prepared on an accruals basis and are based on historical
costs, modified, where applicable, by the measurement at fair
value of selected non-current assets, financial assets and
financial liabilities.
Adoption of new and revised Accounting Standards
The consolidated entity has adopted all of the new, revised or
amending Accounting Standards and Interpretations issued by
the Australian Accounting Standards Board (‘AASB’) that are
mandatory for the current reporting period.
The adoption of these Accounting Standards and Interpretations
did not have any significant impact on the financial performance
or position of the consolidated entity.
(a) Principles of Consolidation
The consolidated financial statements incorporate the assets and
liabilities of all subsidiaries of Western Areas Limited (‘company’
or ‘parent entity’) as at 30 June 2016 and the results of all
subsidiaries for the year then ended. Western Areas Limited
and its subsidiaries together are referred to in these financial
statements as the ‘consolidated entity’.
Subsidiaries are all those entities over which the consolidated
entity has control. The consolidated entity controls an entity
when the consolidated entity is exposed to, or has rights to,
variable returns from its involvement with the entity and has
the ability to affect those returns through its power to direct
the activities of the entity. Subsidiaries are fully consolidated
from the date on which control is transferred to the
consolidated entity. They are de-consolidated from the date
that control ceases.
Intercompany transactions, balances and unrealised gains on
transactions between entities in the consolidated entity are
eliminated. Unrealised losses are also eliminated unless the
transaction provides evidence of the impairment of the asset
transferred. Accounting policies of subsidiaries have been
changed where necessary to ensure consistency with the policies
adopted by the consolidated entity.
The acquisition of subsidiaries is accounted for using the
acquisition method of accounting. A change in ownership
interest, without the loss of control, is accounted for as an equity
transaction, where the difference between the consideration
transferred and the book value of the share of the non-controlling
interest acquired is recognised directly in equity attributable to
the parent.
Non-controlling interest in the results and equity of subsidiaries
are shown separately in the income statement and statement
of comprehensive income, statement of financial position and
statement of changes in equity of the consolidated entity. Losses
incurred by the consolidated entity are attributed to the non-
controlling interest in full, even if that results in a deficit balance.
Where the consolidated entity loses control over a subsidiary, it
derecognises the assets including goodwill, liabilities and non-
controlling interest in the subsidiary together with any cumulative
translation differences recognised in equity. The consolidated
entity recognises the fair value of the consideration received and
the fair value of any investment retained together with any gain
or loss in profit or loss.
(b) Segment reporting
Operating segments are reported in a manner consistent with
the internal reporting provided to the chief operating decision
maker. The chief operating decision maker, who is responsible for
allocating resources and assessing performance of the operating
segments, has been identified as the board of directors.
(c) Foreign Currency Transactions and Balances
The financial statements are presented in Australian dollars, which
is Western Areas Limited’s functional and presentation currency.
Foreign currency transactions
Foreign currency transactions are translated into Australian
dollars using the exchange rates prevailing at the dates of the
50
Western Areas 2016 Annual ReportNotes To The Financial Statements transactions. Foreign exchange gains and losses resulting from
the settlement of such transactions and from the translation
at financial year-end exchange rates of monetary assets and
liabilities denominated in foreign currencies are recognised in
profit or loss.
Foreign operations
The assets and liabilities of foreign operations are translated into
Australian dollars using the exchange rates at the reporting date.
The revenues and expenses of foreign operations are translated
into Australian dollars using the average exchange rates, which
approximate the rates at the dates of the transactions, for the
period. All resulting foreign exchange differences are recognised
in other comprehensive income through the foreign currency
reserve in equity.
The foreign currency reserve is recognised in profit or loss when
the foreign operation or net investment is disposed of.
(d) Revenue recognition
Revenue is recognised when it is probable that the economic
benefit will flow to the consolidated entity and the revenue can
be reliably measured. Revenue is measured at the fair value of the
consideration received or receivable.
Sale of Goods
Revenue from the sale of nickel is recognised when the risks and
rewards of the products pass to the buyer, currently being the
point at which the product is delivered on site to the buyer or
passes the ships’ rail or as otherwise agreed between Western
Areas and the buyer. Revenue is recognised at estimated sales
value. The estimated sales value is determined by reference to
the estimated metal content, metal recovery, the metal price and
exchange rate. An adjustment is made to reflect the final sales
value when the actual metal content and metal recovery
has been determined. The final metal content and metal
recovery is generally known between 30 and 90 days after
delivery to the customer.
Interest
Interest revenue is recognised on a proportional basis taking
into account the interest rates applicable to the financial assets.
All revenue is stated net of the amount of goods and services
tax (GST).
Other revenue
Other revenue is recognised when it is received or when the
right to receive payment is established.
(e) Finance Costs
Finance costs attributable to qualifying assets are capitalised
as part of the asset. All other finance costs are expensed in the
period in which they are incurred.
(f) Inventories
Inventories are measured at the lower of cost and net realisable
value. Costs, including an appropriate portion of fixed and variable
overhead expenses, are assigned to inventories on hand by the
method most appropriate to each class of inventory with the
majority being valued on an average cost basis. Net realisable
value represents the estimated selling price less all estimated
costs of completion and costs to be incurred in marketing,
selling and distribution.
The cost of mining stocks includes direct materials, direct labour,
transportation costs and variable and fixed overhead costs relating
to mining activities.
The cost of consumables and spare parts includes cost of materials
and transportation costs.
(g) Property, Plant and Equipment
Each class of property, plant and equipment is carried at cost
as indicated less, where applicable, any accumulated depreciation
and impairment losses.
Property
Land and buildings are carried at cost, less accumulated
depreciation for buildings.
Plant and Equipment
Plant and equipment are measured on the cost basis and
therefore carried at cost less accumulated depreciation and any
accumulated impairment. In the event the carrying amount of
plant and equipment is greater than the estimated recoverable
amount, the carrying amount is written down immediately to
the estimated recoverable amount and impairment losses are
recognised either in profit or loss or as a revaluation decrease
if the impairment losses relate to a revalued asset. A formal
assessment of recoverable amount is made when impairment
indicators are present (refer to Note 1(o) for details of
impairment).
The carrying amount of plant and equipment is reviewed annually
by directors to ensure it is not in excess of the recoverable
amount from these assets. The recoverable amount is assessed on
the basis of the expected net cash flows that will be received from
the asset’s employment and subsequent disposal. The expected
net cash flows have been discounted to their present values in
determining recoverable amounts.
The cost of fixed assets constructed within the consolidated group
includes the cost of materials, direct labour, borrowing costs
and an appropriate proportion of fixed and variable overheads.
Subsequent costs are included in the asset’s carrying amount
or recognised as a separate asset, as appropriate, only when it is
probable that future economic benefits associated with the item
will flow to the Group and the cost of the item can be measured
reliably. All other repairs and maintenance are recognised as
expenses in profit or loss during the financial period in which they
are incurred.
Depreciation
The depreciable amount of all property, plant and equipment
is depreciated on a straight line basis over their useful lives or t
he estimated life of mine, if shorter. Land is not depreciated.
The depreciation rates used for each major type of depreciable
assets are:
Class of Fixed Asset
Property
Plant and equipment
Depreciation Rate
2-20%
2-33% or unit of production
basis over the life of mine
Motor vehicles
Furniture and fittings
20%
6-27%
51
Western Areas 2016 Annual ReportNotes To The Financial Statements The assets’ residual values and useful lives are reviewed, and
adjusted if appropriate, at the end of each reporting period.
An asset’s carrying amount is written down immediately to its
recoverable amount if the carrying amount is greater than its
estimated recoverable amount.
Gains and losses on disposals are determined by comparing
proceeds with the carrying amount. These gains and losses are
recognised in profit or loss in the period in which they arise.
(h) Exploration and Evaluation Expenditure
Exploration and evaluation expenditures incurred are capitalised
in respect of each identifiable area of interest. These costs are
only capitalised for areas of interest where rights of tenure are
current, to the extent that they are expected to be recovered
through the successful development of the area or where
activities in the area have not yet reached a stage that permits
reasonable assessment of the existence of economically
recoverable reserves and active and significant operation in
relation to the area of interest are continuing.
Accumulated costs in relation to an abandoned area are written
off in full against profit or loss in the year in which the decision to
abandon the area is made.
When production commences, the accumulated costs for
the relevant area of interest are amortised over the life of the
area according to the rate of depletion of the economically
recoverable reserves.
A regular review is undertaken of each area of interest to
determine the appropriateness of continuing to carry forward
costs in relation to that area of interest. Where it is determined
that uncertainty exists as to the ability to recoup carry forward
exploration, evaluation and development costs an impairment loss
will be raised against the asset and charged against profit in the
year that determination is made.
(i) Mine Properties
Development expenditure incurred by or on behalf of the
consolidated entity is accumulated separately for each area of
interest in which economically recoverable resources have been
identified. Such expenditure comprises costs directly attributable
to the construction of a mine, the related infrastructure and
expenditure transferred from the capitalised exploration and
evaluation expenditure phase.
Amortisation is charged using the units-of production method,
with separate calculations being made for each area of interest.
The units-of-production basis results in a amortisation charge
proportional to the depletion of proved and probable reserves.
Mine properties are tested for impairment in accordance with the
policy in note 1 (o).
Costs of site restoration are provided for over the life of the
facility from when exploration commences and are included in the
costs from that stage. Site restoration costs include obligations
relating to dismantling and removing mining plant, reclamation,
waste dump rehabilitation and other costs associated with
restoration and rehabilitation of the site. Such costs have been
determined using estimates for current costs and current legal
requirements and technology.
Any changes in the estimates for the costs are accounted for on
a prospective basis. In determining the costs of site restoration,
52
there is uncertainty regarding the nature and extent of the
restoration due to community expectations and future legislation.
Accordingly the costs have been determined on the basis that
the restoration will be completed within one year of abandoning
the site.
(j) Income Tax
The income tax expense or benefit for the period is the tax
payable on that period’s taxable income based on the applicable
income tax rate for each jurisdiction, adjusted by changes in
deferred tax assets and liabilities attributable to temporary
differences, unused tax losses and the adjustment recognised for
prior periods, where applicable.
Deferred tax assets and liabilities are recognised for temporary
differences at the tax rates expected to apply when the assets are
recovered or liabilities are settled, based on those tax rates that
are enacted or substantively enacted, except for:
• When the deferred income tax asset or liability arises from
the initial recognition of goodwill or an asset or liability in a
transaction that is not a business combination and that, at the
time of the transaction, affects neither the accounting nor
taxable profits; or
• When the taxable temporary difference is associated with
interests in subsidiaries, associates or joint ventures, and the
timing of the reversal can be controlled and it is probable that
the temporary difference will not reverse in the foreseeable
future.
Deferred tax assets are recognised for deductible temporary
differences and unused tax losses only if it is probable that future
taxable amounts will be available to utilise those temporary
differences and losses.
The carrying amount of recognised and unrecognised deferred
tax assets are reviewed each reporting date. Deferred tax assets
recognised are reduced to the extent that it is no longer probable
that future taxable profits will be available for the carrying
amount to be recovered. Previously unrecognised deferred tax
assets are recognised to the extent that it is probable that there
are future taxable profits available to recover the asset.
Deferred tax assets and liabilities are offset only where there is
a legally enforceable right to offset current tax assets against
current tax liabilities and deferred tax assets against deferred tax
liabilities; and they relate to the same taxable authority on either
the same taxable entity or different taxable entity’s which intend
to settle simultaneously.
Western Areas Limited (the ‘head entity’) and its wholly-owned
Australian subsidiaries have formed an income tax consolidated
group under the tax consolidation regime. The head entity
and each subsidiary in the tax consolidated group continue to
account for their own current and deferred tax amounts. The
tax consolidated group has applied the ‘separate taxpayer within
group’ approach in determining the appropriate amount of taxes
to allocate to members of the tax consolidated group.
In addition to its own current and deferred tax amounts, the
head entity also recognises the current tax liabilities (or assets)
and the deferred tax assets arising from unused tax losses and
unused tax credits assumed from each subsidiary in the tax
consolidated group.
Assets or liabilities arising under tax funding agreements with the
tax consolidated entities are recognised as amounts receivable
Western Areas 2016 Annual ReportNotes To The Financial Statements from or payable to other entities in the tax consolidated group.
The tax funding arrangement ensures that the intercompany
charge equals the current tax liability or benefit of each tax
consolidated group member, resulting in neither a contribution
by the head entity to the subsidiaries nor a distribution by the
subsidiaries to the head entity.
(k) Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the
amount of GST, except where the amount of GST incurred
is not recoverable from the Australian Tax Office. In these
circumstances the GST is recognised as part of the cost of
acquisition of the asset or as part of an item of the expense.
Receivables and payables in the statement of financial position
are shown inclusive of GST.
Cash flows are presented in the cash flow statement on a gross
basis, except for the GST component of investing and financing
activities, which are disclosed as operating cash flows.
(l) Employee Benefits
Short-term employee benefits
Liabilities for wages and salaries, including non-monetary benefits,
annual leave and long service leave expected to be settled within
12 months of the reporting date are measured at the amounts
expected to be paid when the liabilities are settled.
Other long-term employee benefits obligations
The liabilities for long service leave and annual leave that are not
expected to be settled wholly within 12 months after the end of
the period in which the employees render the related service are
recognised as non-current liabilities and are therefore measured
at the present value of expected future payments to be made in
respect of services provided by employees up to the end of the
reporting period. 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 end of the reporting period of government
bonds with terms and currencies that match, as closely as
possible, the estimated future cash outflows.
The obligations are presented as current liabilities in the balance
sheet if the entity does not have an unconditional right to defer
settlement for at least twelve months after the reporting period,
regardless of when the actual settlement is expected to occur.
Defined contribution superannuation expense
Contributions to defined contribution superannuation plans are
expensed in the period in which they are incurred.
Share-based payments
The consolidated entity has provided benefits to its Key
Management Personnel in the form of share-based payments,
whereby services were rendered partly or wholly in exchange
for shares or rights over shares. The Remuneration Committee
approved the grant of performance rights as incentives to attract
Executives and to maintain their long term commitment to the
Company. These benefits are awarded at the discretion of the
Board, or following approval by shareholders (equity-settled
transactions).
The costs of these equity-settled transactions are measured by
reference to the fair value of the equity instruments at the date
on which they are granted. The fair value of performance rights
granted is determined using the Black Scholes Option Pricing
Model (“BSM”) that includes a Monte Carlo Simulation Model
to value the Rights, further details of which are disclosed in
Note 30.
The costs of these equity-settled transactions is recognised,
together with a corresponding increase in equity, over the period
in which the performance and / or service conditions are fulfilled
(the vesting period), ending on the date on which the relevant
employees become fully entitled to the equity instrument
(vesting date).
At each subsequent reporting date until vesting, the cumulative
charge to the income statement is the product of (i) the fair value
at grant date of the award; (ii) the current best estimate of the
number of equity instruments that will vest, taking into account
such factors as the likelihood of employee turnover during the
vesting period and the likelihood of non-market performance
conditions being met and (iii) the expired portion of the vesting
period. The charge to the income statement for the period is
the cumulative amount as calculated above less the amounts
already charged in previous periods. There is a corresponding
credit to equity.
Until an equity instrument has vested, any amounts recorded will
be adjusted if more or fewer equity instruments vest than were
originally anticipated to do so. Any equity instrument subject to
a market condition is considered to vest irrespective of whether
or not that market condition is fulfilled, provided that all other
conditions are satisfied.
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. An
additional expense is recognised for any modification that increases
the total fair value of the share based payment arrangement, or is
otherwise beneficial to the recipient of the award, as measured at
the date of modification.
If an equity-settled transaction is cancelled (other than a grant
cancelled by forfeiture when the vesting conditions are not
satisfied), 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 equity instrument is substituted
for the cancelled award and designated as a replacement award on
the date that it is granted, the cancelled and new equity instrument
are treated as if they were a modification of the original award, as
described in the preceding paragraph.
(m) Leases
The determination of whether an arrangement is or contains a
lease is based on the substance of the arrangement and requires
an assessment of whether the fulfilment of the arrangement
is dependent on the use of a specific asset or assets and the
arrangement conveys a right to use the asset.
A distinction is made between finance leases, which effectively
transfer from the lessor to the lessee substantially all the risks
and benefits incidental to the ownership of leased assets, and
operating leases, under which the lessor effectively retains
substantially all such risks and benefits.
Finance leases are capitalised. A lease asset and liability are
established at the fair value of the leased assets, or if lower, the
present value of minimum lease payments. Lease payments are
allocated between the principal component of the lease liability
and the finance costs, so as to achieve a constant rate of interest
on the remaining balance of the liability.
53
Western Areas 2016 Annual ReportNotes To The Financial Statements Leased assets acquired under a finance lease are depreciated
over the asset’s useful life or over the shorter of the asset’s
useful life and the lease term if there is no reasonable certainty
that the consolidated entity will obtain ownership at the end of
the lease term.
The classification depends on the entity’s business model for
managing the financial assets and the contractual terms of the
cash flows. The group is required to reclassify all affected debt
investments when and only when its business model for managing
those assets changes.
Operating lease payments, net of any incentives received from
the lessor, are charged to profit or loss on a straight-line basis
over the term of the lease.
(n) Financial Instruments
Initial recognition and measurement
Financial assets and financial liabilities are recognised when the
entity becomes a party to the contractual provisions to the
instrument. For financial assets, this is equivalent to the date that
the company commits itself to either the purchase or sale of the
asset (i.e. trade date accounting is adopted).
Financial instruments are initially measured at fair value plus
transaction costs, except where the instrument is classified ‘at fair
value through profit or loss’, in which case transaction costs are
expensed to the income statement immediately.
Classification and Subsequent Measurement
Financial instruments are subsequently measured at either of fair
value, amortised cost using the effective interest rate method, or
cost. Fair value represents the amount for which an asset could
be exchanged or a liability settled, between knowledgeable, willing
parties. Where available, quoted prices in an active market are
used to determine fair value. In other circumstances, valuation
techniques are adopted.
Amortised cost is calculated as:
a). the amount at which the financial asset or financial liability is
measured at initial recognition;
b). less principal repayments;
c). plus or minus the cumulative amortisation of the difference, if
any, between the amount initially recognised and the maturity
amount calculated using the effective interest method; and
d). less any reduction for impairment.
The effective interest method is used to allocate interest income
or interest expense over the relevant period and is equivalent to
the rate that exactly discounts estimated future cash payments
or receipts (including fees, transaction costs and other premiums
or discounts) through the expected life (or when this cannot
be reliably predicted, the contractual term) of the financial
instrument to the net carrying amount of the financial asset
or financial liability. Revisions to expected future net cash
flows will necessitate an adjustment to the carrying value with
a consequential recognition of an income or expense in profit
or loss.
Financial assets at fair value through profit and loss
As from 1 July 2013 the group classifies its financial assets in
the following measurement categories:
those to be measured subsequently at fair value, and
those to be measured at amortised cost.
•
•
54
At initial recognition, the group 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 that are directly
attributable to the acquisition of the financial asset. Transaction
costs of financial assets carried at fair value through profit or loss
are expensed in profit or loss.
A gain or loss on a debt investment that is subsequently measured
at fair value and is not part of a hedging relationship is recognised
in profit or loss and presented net in the income statement
within other income or other expenses in the period in which it
arises. A gain or loss on a debt investment that is subsequently
measured at amortised cost and is not part of a hedging
relationship is recognised in profit or loss when the financial asset
is derecognised or impaired and through the amortisation process
using the effective interest rate method.
The group subsequently measures all equity investments at fair
value. Where the group’s management has elected to present
fair value gains and losses on equity investments in other
comprehensive income, there is no subsequent reclassification
of fair value gains and losses to profit or loss. Dividends from
such investments continue to be recognised in profit or loss as
other revenue when the group’s right to receive payments is
established and as long as they represent a return on investment.
This treatment has been selected as the equity investments in
Mustang Minerals Inc, and St George Mining Limited, as these
are deemed to be strategic equity investments.
Loans and receivables
Loans and receivables are non-derivative financial assets with
fixed or determinable payments that are not quoted in an active
market and are subsequently measured at amortised cost.
Loans and receivables are included in current assets, except for
those which are not expected to mature within 12 months after
the end of the reporting period (all other loans and receivables are
classified as non-current assets).
Financial liabilities
Non-derivative financial liabilities (excluding financial guarantees)
are subsequently measured at amortised cost.
De-recognition
Financial assets are de-recognised where the contractual rights
to receipt of cash flows expires or the asset is transferred to
another party whereby the entity no longer has any significant
continuing involvement in the risks and benefits associated with
the asset. Financial liabilities are de-recognised where the related
obligations are discharged, cancelled or expired. The difference
between the carrying value of the financial liability extinguished
or transferred to another party and the fair value of consideration
paid, including the transfer of non-cash assets or liabilities
assumed, is recognised in profit or loss.
Derivative financial instruments
Derivative financial instruments are used by the consolidated
entity to hedge exposures to commodity prices and foreign
currency exchange rates.
Western Areas 2016 Annual ReportNotes To The Financial Statements The Group documents at the inception of a transaction the
relationship between hedging instruments and hedged items, as
well as its risk management objective and strategy for undertaking
various hedge transactions. The Group also documents its
assessment, both at hedge inception and on an ongoing basis, of
whether the derivatives that are used in hedging transactions have
been and will continue to be highly effective in offsetting changes
in fair values or cash flows of hedged items.
Derivatives are initially recognised at fair value on the date the
contract is entered into and are subsequently remeasured to
their fair value. The method of recognising the resulting gain
or loss depends on whether the derivative is designated as a
hedging instrument, and if so, the nature of the item being
hedged. Hedging derivatives are either Fair Value Hedges or
Cashflow Hedges.
Fair Value Hedges
Changes in the fair value of derivatives classified as fair value
hedges are recognised in the Income Statement, together with
any changes in the fair value of the hedge asset or liability that
are attributable to the hedged risk.
Cash Flow Hedge
Cash flow hedges are used to cover the consolidated entity’s
exposure to variability in cash flows that is attributable to
particular risk associated with a recognised asset or liability
or a firm commitment which could affect profit or loss. The
effective portion of the gain or loss on the hedging instrument
is recognised directly in equity, whilst the ineffective portion
is recognised in profit or loss. Amounts taken to equity are
transferred out of equity and included in the measurement of
the hedged transaction when the forecast transaction occurs.
Cash flow hedges are tested for effectiveness on a regular basis
both retrospectively and prospectively to ensure that each hedge
is highly effective and continues to be designated as a cash flow
hedge. If the forecast transaction is no longer expected to occur,
amounts recognised in equity are transferred to profit or loss.
If the hedging instrument is sold, terminated, expires,
exercised without replacement or rollover, or if the hedge
becomes ineffective and is no longer a designated hedge,
amounts previously recognised in equity remain in equity
until the forecast transaction occurs.
All Other Derivatives
Changes in the fair value of derivatives that do not qualify for
hedge accounting are recognised in the Income Statement.
(o) Impairment of Assets
At the end of each reporting period, the Group assesses
whether there is any indication that an asset may be impaired.
The assessment will include the consideration of external and
internal sources of information including dividends received from
subsidiaries, associates or jointly controlled entities deemed to
be out of pre-acquisition profits. If such an indication exists, an
impairment test is carried out on the asset by comparing the
recoverable amount of the asset, being the higher of the asset’s
fair value less costs to sell and value in use, to the asset’s carrying
value. Any excess of the asset’s carrying value over its recoverable
amount is expensed to the income statement.
Where it is not possible to estimate the recoverable amount of an
individual asset, the Group estimates the recoverable amount of
the cash-generating unit to which the asset belongs.
Reversal of impairment losses
An impairment loss recognised in prior periods for an asset/
CGU is reversed if there has been a change in the estimates used
to determine the asset’s/CGU’s recoverable amount since the
last impairment loss was recognised. When an impairment loss
subsequently reverses, the carrying amount of the asset/CGU is
increased to the revised estimate of its recoverable amount, but
so that the increased carrying amount does not exceed
the carrying amount that would have been determined had
no impairment loss been recognised for the asset/CGU in
prior years.
Impairment testing is performed annually for goodwill and
intangible assets with indefinite lives.
(p) Rounding Amounts
The parent entity has applied the relief available to it under the
ASIC Class Order 98/100 and accordingly, amounts in the
financial report have been rounded to the nearest $1,000.
(q) Cash and Cash Equivalents
Cash and cash equivalents comprise cash-on-hand, cash in
banks and investments in money market instruments, net of
outstanding bank overdrafts.
(r) Provisions
Provisions are recognised where the group has a legal or
constructive obligation, as a result of past events, for which it is
probable that an outflow of economic benefits will result and that
outflow is able to be reliably measured.
(s) Convertible Bonds
The component of the convertible bonds that exhibits
characteristics of a liability is recognised as a liability in the
statement of financial position, net of transaction costs.
On issuance of the convertible bonds, the fair value of the
liability component is determined using a market rate for an
equivalent non-convertible bond and this is carried as a long term
liability. The increase in the liability due to the passage of time is
recognised as a finance cost.
The remainder of the proceeds are allocated and included in
shareholder equity, net of transaction costs. The carrying amount
of the convertible bonds is not remeasured in subsequent years.
(t) Critical Accounting Estimates and Balances
The preparation of the financial statements requires management
to make judgements, estimates and assumptions that affect the
reported amounts in the financial statements. Management
continually evaluates its judgements and estimates in relation
to assets, liabilities, contingent liabilities, revenue and expenses.
Management bases its judgements, estimates and assumptions
on historical experience and on other various factors, including
expectations of future events, management believes to be
reasonable under the circumstances. The resulting accounting
judgements and estimates will seldom equal the related actual
results. The judgements, estimates and assumptions that have a
significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities (refer to the respective notes)
within the next financial year are discussed below.
55
Western Areas 2016 Annual ReportNotes To The Financial Statements Share-based payment transactions
The consolidated entity 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 using the Black-Scholes model taking into
account the terms and conditions upon which the instruments
were granted. The accounting estimates and assumptions relating
to equity-settled share-based payments would have no impact
on the carrying amounts of assets and liabilities within the next
annual reporting period but may impact profit or loss and equity.
Impairment of non-financial assets other than goodwill and other
indefinite life intangible assets
The consolidated entity assesses impairment of non-financial
assets other than goodwill and other indefinite life intangible
assets at each reporting date by evaluating conditions specific to
the consolidated entity and to the particular asset that may lead
to impairment. If an impairment trigger exists, the recoverable
amount of the asset is determined. This involves fair value less
costs of disposal or value-in-use calculations, which incorporate a
number of key estimates and assumptions.
Provision for impairment of inventories
The provision for impairment of inventories assessment requires a
degree of estimation and judgement. Costs incurred in or benefits
of the productive process are accumulated as stockpiles, nickel
and other metals in process, ore on run of mine ore pads and
product inventory. Net realisable value tests are performed at
least annually and represent the estimated future sales price of
the product based on prevailing metal prices, less estimated costs
to complete production and bring the product to sale.
Stockpiles are measured by estimating the number of tonnes
added and removed from the stockpile, the number contained
metal tonnes based on assay data, and the estimated recovery
percentage based on the expected processing method.
Although the quantity of recoverable metal is reconciled by
comparing the grades of the ore to the quantities of metals
actually recovered (metallurgical balancing), the nature of
the process inherently limits the ability to precisely monitor
recoverability levels. As a result the metallurgical balancing
process is constantly monitored and the engineering estimates
are refined based on actual results over time.
Fair value measurement hierarchy
The consolidated entity is required to classify all assets and
liabilities, measured at fair value, using a three level hierarchy,
based on the lowest level of input that is significant to the
entire fair value measurement, being: Level 1: Quoted prices
(unadjusted) in active markets for identical assets or liabilities
that the entity can access at the measurement date; Level
2: Inputs other than quoted prices included within Level 1
that are observable for the asset or liability, either directly or
indirectly; and Level 3: Unobservable inputs for the asset or
liability. Considerable judgement is required to determine what is
significant to fair value and therefore which category the asset or
liability is placed in can be subjective.
The fair value of assets and liabilities classified as level 3 is
determined by the use of valuation models. These include
discounted cash flow analysis or the use of observable inputs that
require significant adjustments based on unobservable inputs.
Estimation of useful lives of assets
The consolidated entity determines the estimated useful lives
and related depreciation and amortisation charges for its
property, plant and equipment and finite life intangible
assets. The useful lives could change significantly as a result of
technical innovations or some other event. The depreciation and
amortisation charge will increase where the useful lives are less
than previously estimated lives, or technically obsolete or
non-strategic assets that have been abandoned or sold will be
written off or written down.
It is reasonably possible that the underlying metal price
assumption may change which may then impact the estimated life
of mine determinant and may then require a material adjustment
to the carrying value of mining plant and equipment, mining
infrastructure and mining development assets. Furthermore, the
expected future cash flows used to determine the value-in-use
of these assets are inherently uncertain and could materially
change over time. They are significantly affected by a number
of factors including reserves and production estimates, together
with economic factors such as metal spot prices, discount
rates, estimates of costs to produce reserves and future capital
expenditure. At 30 June 2016, there was $7.0M impairment
charge made to Exploration, Evaluation and Development.
Income tax
The consolidated entity is subject to income taxes in the
jurisdictions in which it operates. Significant judgement is
required in determining the provision for income tax. There
are many transactions and calculations undertaken during
the ordinary course of business for which the ultimate tax
determination is uncertain.
Provision for restoration and rehabilitation
Provision is made for the costs of Restoration and rehabilitation
when the related environmental disturbance takes place as
outlined in Note 16. The provision recognised represents
management’s best estimate of the costs that will be incurred,
but significant judgement is required as many of these costs will
not crystallise until the end of the life of the mine. Estimates
are reviewed annually and are based on current regulatory
requirements and the estimated useful life of the mine.
Engineering and feasibility studies are undertaken periodically,
however significant changes in the estimates of contamination,
restoration standards and techniques will result in changes to
provisions from period to period.
Recovery of deferred tax assets
Deferred tax assets are recognised for deductible temporary
differences only if the consolidated entity considers it is probable
that future taxable amounts will be available to utilise those
temporary differences and losses.
Employee benefits provision
As discussed in note (l), the liability for employee benefits
expected to be settled more than 12 months from the reporting
date are recognised and measured at the present value of
the estimated future cash flows to be made in respect of all
employees at the reporting date. In determining the present
value of the liability, estimates of attrition rates and pay increases
through promotion and inflation have been taken into account.
56
Western Areas 2016 Annual ReportNotes To The Financial Statements (u) Contributed equity
Ordinary shares are classified as equity. Incremental costs directly
attributable to the issue of new shares or options are shown in
equity as a deduction, net of tax, from the proceeds. Incremental
costs directly attributable to the issue of new shares or options
for the acquisition of a business are not included in the cost of the
acquisition as part of the purchase consideration.
If the entity reacquires its own equity instruments, for example
as the result of a share buy-back, those instruments are deducted
from equity and the associated shares are cancelled. No gain
or loss is recognised in the profit and loss and the consideration
paid including any directly attributable incremental costs (net of
income taxes) is recognised directly in equity.
(v) Comparative figures
Where necessary, comparative figures have been restated to
conform with changes in presentation for the current year.
(w) Intangibles
Expenditure during the research phase of a project is recognised
as an expense when incurred. Patents and trademarks are
capitalised only when technical feasibility studies identify that the
project will deliver future economic benefits and these benefits
can be measured reliably.
Patents and trademarks have a finite life and are amortised on a
systematic basis matched to the future economic benefits over
the useful life of the project.
(x) Trade and other payables
Trade and other payables represent the liabilities for goods and
services received by the entity that remain unpaid at the end
of the reporting period. The balance is recognised as a current
liability with the amounts normally paid within 30 days of
recognition of the liability.
(y) Business Combinations
The acquisition method of accounting is used to account for
business combinations regardless of whether equity instruments
or other assets are acquired.
The consideration transferred for the acquisition is the sum of
the acquisition-date fair values of the assets transferred, equity
instruments issued or liabilities incurred by the acquirer to former
owners of the acquiree and the amount of any non-controlling
interest in the acquiree. For each business combination, the
non-controlling interest in the acquiree is measured at either fair
value or at the proportionate share of the acquiree’s identifiable
net assets. All acquisition costs are expensed as incurred to profit
or loss.
On the acquisition of a business, the consolidated entity
assesses the financial assets acquired and liabilities assumed for
appropriate classification and designation in accordance with the
contractual terms, economic conditions, the consolidated entity’s
operating or accounting policies and other pertinent conditions in
existence at the acquisition-date.
Where the business combination is achieved in stages, the
consolidated entity remeasures its previously held equity
interest in the acquiree at the acquisition-date fair value and
the difference between the fair value and the previous carrying
amount is recognised in profit or loss.
The difference between the acquisition-date fair value of assets
acquired, liabilities assumed and any non-controlling interest in
the acquiree and the fair value of the consideration transferred
and the fair value of any pre-existing investment in the acquire
is recognised as goodwill. If the consideration transferred and
the pre-existing fair value is less than the fair value of the
identifiable net assets acquired, being a bargain purchase to the
acquirer, the difference is recognised as a gain directly in profit
or loss by the acquirer on the acquisition-date, but only after a
reassessment of the identification and measurement of the net
assets acquired, the non-controlling interest in the acquiree, if
any, the consideration transferred and the acquirer’s previously
held equity interest in the acquirer.
Business combinations are initially accounted for on a provisional
basis. The acquirer retrospectively adjusts the provisional amounts
recognised and also recognises additional assets or liabilities
during the measurement period, based on new information
obtained about the facts and circumstances that existed at the
acquisition-date. The measurement period ends on either the
earlier of (i) 12 months from the date of the acquisition or
(ii) when the acquirer receives all the information possible to
determine fair value.
(z) Trade and other receivables
Trade receivables are recognised initially at fair value and
subsequently measured at amortised cost using the effective
interest method, less provision for impairment. Trade receivables
are generally due for settlement within 30 days. They are
presented as current assets unless collection is not expected for
more than 12 months after the reporting date.
The amount of the impairment loss is recognised in profit or loss
within other expenses. When a trade receivable for which an
impairment allowance had been recognised becomes uncollectible
in a subsequent period, it is written off against the allowance
account. Subsequent recoveries of amounts previously written off
are credited against other expenses in profit or loss.
(aa) Earnings per share
Basic earnings per share
Basic earnings per share are calculated by dividing:
• The profit attributable to equity holders of the company,
excluding any costs of servicing equity other than
ordinary shares.
• By the weighted average number of ordinary shares
outstanding during the financial year, adjusted for bonus
elements in ordinary shares issued during the year (note 19).
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the
determination of basic earnings per share to take into account:
• The after income tax effect of interest and other financing
costs associated with dilutive potential ordinary shares, and
• The weighted average number of additional ordinary shares
that would have been outstanding assuming the conversion of
all dilutive potential ordinary shares.
57
Western Areas 2016 Annual ReportNotes To The Financial Statements In the earlier periods of the lease, the expenses associated with
the lease under AASB 16 will be higher when compared to
lease expenses under AASB 117. However EBITDA (Earnings
Before Interest, Tax, Depreciation and Amortisation) results will
be improved as the operating expense is replaced by interest
expense and depreciation in profit or loss under AASB 16.
For classification within the statement of cash flows, the lease
payments will be separated into both a principal (financing
activities) and interest (either operating or financing activities)
component. For lessor accounting, the standard does not
substantially change how a lessor accounts for leases. The
consolidated entity will adopt this standard from 1 July 2019
but the impact of its adoption is yet to be assessed by the
consolidated entity.
(bb) New Accounting Standards and Interpretations
not yet mandatory or early adopted
AASB 15 Revenue from Contracts with Customers
This standard is applicable to annual reporting periods beginning
on or after 1 January 2017. The standard provides a single
standard for revenue recognition.
The core principle of the standard is that an entity will recognise
revenue to depict the transfer of promised goods or services to
customers in an amount that reflects the consideration to which
the entity expects to be entitled in exchange for those goods or
services.
The standard will require: contracts (either written, verbal or
implied) to be identified, together with the separate performance
obligations within the contract; determine the transaction price,
adjusted for the time value of money excluding credit risk;
allocation of the transaction price to the separate performance
obligations on a basis of relative stand-alone selling price of each
distinct good or service, or estimation approach if no distinct
observable prices exist; and recognition of revenue when each
performance obligation is satisfied.
Credit risk will be presented separately as an expense rather
than adjusted to revenue. For goods, the performance obligation
would be satisfied when the customer obtains control of the
goods. For services, the performance obligation is satisfied when
the service has been provided, typically for promises to transfer
services to customers. For performance obligations satisfied over
time, an entity would select an appropriate measure of progress
to determine how much revenue should be recognised as the
performance obligation is satisfied.
Contracts with customers will be presented in an entity’s
statement of financial position as a contract liability, a contract
asset, or a receivable, depending on the relationship between the
entity’s performance and the customer’s payment. Sufficient
quantitative and qualitative disclosure is required to enable users
to understand the contracts with customers; the significant
judgments made in applying the guidance to those contracts; and
any assets recognised from the costs to obtain or fulfil a contract
with a customer. The consolidated entity will adopt this standard
from 1 July 2017 but the impact of its adoption is yet to be
assessed by the consolidated entity.
AASB 16 Leases
This standard is applicable to annual reporting periods beginning
on or after 1 January 2019. The standard replaces AASB
117 ‘Leases’ and for lessees will eliminate the classifications
of operating leases and finance leases. Subject to exceptions, a
‘right-of-use’ asset will be capitalised in the statement of financial
position, measured as the present value of the unavoidable future
lease payments to be made over the lease term. The exceptions
relate to short-term leases of 12 months or less and leases of
low-value assets (such as personal computers and small office
furniture) where an accounting policy choice exists whereby
either a ‘right-of-use’ asset is recognised or lease payments are
expensed to profit or loss as incurred. A liability corresponding
to the capitalised lease will also be recognised, adjusted for
lease prepayments, lease incentives received, initial direct costs
incurred and an estimate of any future restoration, removal
or dismantling costs. Straight-line operating lease expense
recognition will be replaced with a depreciation charge for the
leased asset (included in operating costs) and an interest expense
on the recognised lease liability (included in finance costs).
58
Western Areas 2016 Annual ReportNotes To The Financial Statements Notes
Note 2: Other income
- Interest income
- Other income
- Insurance proceeds
- Income on sale of carbon credits
Total other income
Note 3: Dividends
Dividends proposed
No final dividend is proposed for the year ended 30 June
2016 (2015: 4 cents fully franked). .
Dividends paid
A fully franked final dividend of 4 cents per share was paid
for the year ended 30 June 2015 (2014: 4 cents).
No interim dividend for 2016 (2015: 3 cent fully
franked) per share
Note 4: Profit before income tax
Profit before income tax includes the following specific
expenses:
- Depreciation of property, plant and equipment
- Depreciation of disposed property, plant and equipment
- Amortisation of mine development asset
- Rental expenditure relating to operating leases
9
9
12
- Realised derivative (gains) / losses
- Changes in fair value of derivatives
- Employee benefits expense
Defined contribution superannuation expense
- Finance costs:
Interest expense – borrowings
Provisions: unwinding of discount
Bond accretion expense
Interest expense – finance leases
Borrowing costs amortised
Total borrowing costs
Note 5: Trade and Other Receivables
Trade debtors
Other debtors
Income tax prepaid
GST refund due
Prepayments
Consolidated Entity
2016
$’000
780
702
1,188
-
2,670
2015
$’000
4,749
-
-
768
5,517
-
9,337
9,337
-
9,337
16,474
515
43,682
1,345
-
-
2,221
267
767
-
21
1,491
2,546
21,300
718
3,448
551
3,258
29,275
9,292
6,989
16,281
15,077
-
50,737
1,403
(2,181)
(231)
2,288
8,046
725
5,429
33
1,239
15,472
11,278
830
-
629
3,237
15,974
There are no balances within trade and other receivables that contain amounts that are past due. It is expected the balances will be
received when due.
59
Western Areas 2016 Annual ReportNotes To The Financial Statements
Note 6: Inventories
Ore stockpiles – at cost
Nickel concentrate stockpiles – at cost
Consumables and spare parts – at cost
Notes
Consolidated Entity
2016
$’000
9,911
958
3,892
14,761
2015
$’000
18,357
1,143
3,907
23,407
Inventory write-off
Due to the continuing low nickel price an inventory stockpile of Flying Fox low grade ore was written off that carried an historic
cost of $4.6 million. This is in accordance with “AASB 102 Inventory” where inventory must be carried at the lower of cost or net
realisable value.
Note 7: Income Tax
The components of the tax expense comprise:
- Current tax
- Deferred tax
- R&D Tax offset
- Adjustment of current tax for prior periods
- Income tax benefit on share based payments
Income tax (benefit)/expense
13
-
(8,022)
(1,656)
1,154
(238)
(8,762)
12,585
2,893
(1,688)
371
(1,108)
13,053
The prima facie tax on the profit from ordinary activities before income tax at the statutory income tax rate compared to the income
tax expense at the groups’ effective income tax rate is reconciled as follows:
Prima facie tax on (loss)/profit before income tax at 30%
(2015: 30%)
(11,564)
14,420
Adjusted for the tax effect of:
- Changes in fair value of derivatives
- Exploration write-off
- Share based payment expense
- Other non allowable items
- Foreign branch losses (FinnAust mining Plc)
- Share issue costs deductible
- Other temporary differences
- Income tax benefit on share based payments
- Convertible bond accretion expense
Tax (Benefit)/Expense
-
686
752
-
2,313
(242)
(469)
(238)
-
(8,762)
(69)
-
471
71
-
(242)
(2,119)
(1,108)
1,629
13,053
60
Western Areas 2016 Annual ReportNotes To The Financial Statements Note 8: Investments Accounted for Using the Equity Method
Non-current assets
Associates:
Consolidated Entity
2016
$’000
7,164
2015
$’000
-
Interests in associates are accounted for using the equity method of accounting. Information relating to associates that are material to
the consolidated entity is set out below:
Name
FinnAust Mining Plc
Country of
Incorporation
United Kingdom
Percentage of equity held
2016
37%
2015
60%
On 8 March 2016, FinnAust Mining Plc completed a placement of 124M shares to Bluejay Mining Limited. Western Areas Ltd did
not participate in the placement. As a result, Western Areas’ shareholding in FinnAust Mining Plc decreased to 37%. In line with AASB
10 “Consolidated Financial Statements”, Western Areas is deemed to have lost control of FinnAust Mining Plc due to:
- Western Areas Ltd owning less than half of the voting power of FinnAust Mining Plc; and
- Not having control of the Board of FinnAust Mining as the majority of board members have no association with Western Areas.
As a result, FinnAust Mining Plc has been deconsolidated as at 8 March 2016, now being accounted for using the equity method
of accounting.
Summarised financial information
Summarised financial information of the subsidiary with non-controlling interests that are material to the consolidated entity
is set out below
FinnAust Mining Pc
Summarised Statement of Financial Position
Current Assets
Non Current Assets
Total Assets
Current Liabilities
Non Current Liabilities
Total Liabilities
Net Assets
Summarised statement of profit or loss and other
comprehensive income for the period 9 March 2016 to
30 June 2016
Revenue
Expenses
Loss before income tax
Income tax
Loss after income tax
Other comprehensive expenses
Total Comprehensive loss
Interest in associate (37%)
2016
$’000
1,083
22,709
23,792
708
673
1,381
22,411
-
(380)
(380)
-
(380)
-
(380)
(140)
2015
$’000
1,734
17,286
19,020
479
128
607
18,413
-
(1,870)
(1,870)
-
(1,870)
-
(1,870)
-
61
Western Areas 2016 Annual ReportNotes To The Financial Statements Note 9: Property, Plant and Equipment
Property – at cost
Accumulated depreciation
Plant & equipment – at cost
Accumulated depreciation
Plant & equipment under lease
Accumulated depreciation
Total property, plant & equipment – at cost
Accumulated Depreciation
Total
FinnAust Mining Pc
2016
$’000
47,177
(24,042)
23,135
150,806
(78,123)
72,683
1,594
(1,047)
547
199,577
(103,212)
96,365
2015
$’000
44,264
(19,530)
24,734
141,000
(66,334)
74,666
1,455
(874)
581
186,719
(86,738)
99,981
Assets Pledged as Security
The property, plant and equipment are assets over which a mortgage has been granted as security over project loans. The terms of the
mortgage preclude the assets from being sold or being used as security for further mortgages without the permission of the existing
mortgagor. Assets under lease are pledged as security for the associated lease liabilities.
Movement in carrying amounts:
Movement in the carrying amounts for each class of property, plant and equipment between the beginning and the end
of the current year:
Consolidated Entity
Property
Written down value at the beginning of the year
- Additions
- Disposals
- Depreciation on disposals
- Depreciation expense
Written down value at the end of the year
Plant & Equipment
Written down value at the beginning of the year
- Additions
- Deconsolidated assets
- Depreciation expense on deconsolidated assets
- Depreciation expense
Written down value at the end of the year
Plant & Equipment under Lease
Written down value at the beginning of the year
- Additions
- Depreciation expense
Written down value at the end of the year
62
2016
$’000
24,734
3,805
(892)
497
(5,009)
23,135
74,666
9,850
(44)
18
(11,807)
72,683
581
139
(173)
547
2015
$’000
25,721
3,203
-
-
(4,190)
24,734
76,003
9,411
-
-
(10,748)
74,666
566
154
(139)
581
Western Areas 2016 Annual ReportNotes To The Financial Statements Note 10: Asset Acquisition
The Cosmos Nickel Complex (“Cosmos”) is located approximately 370 kilometres northwest of Kalgoorlie in Western Australia and
prior to its acquisition by WSA, the project was owned by Xstrata Nickel Australasia Operations Pty Ltd.
On 19 June 2015, the Company announced that it had reached an agreement with Xstrata Nickel Australasia Operations Pty Ltd,
a subsidiary of Glencore International plc to purchase Cosmos subject to certain conditions precedent. On 1 October 2015, these
conditions were satisfied and the transaction was completed.
Under the Sale and Purchase Agreement (“SPA”), the total consideration paid by WSA amounted to $24.5 million, comprising a cash
payment of $11.5 million on completion of the SPA and deferred payments of $7.0 million and $6.0 million to be settled in nine
months and 18 months after completion respectively. The company settled the deferred amount in full on 27 April 2016.
The accounting treatment of the acquisition has been considered not to be a business combination under AASB 3, but the acquisition
of a group of assets that do not constitute a business.
The fair values of the acquired assets and liabilities have been independently assessed as at the acquisition date as per the table below:
Property, plant & equipment
Exploration assets
Rehabilitation liability
Net Assets acquired and liabilities assumed
These have been included on the balance sheet under their respective categories
Note 11: Exploration & Evaluation Expenditure
Exploration & Evaluation Expenditure consists of:
- At cost
- Cosmos exploration at fair value
Total Exploration and Evaluation Expenditure
Consolidated Entity
2016
$’000
53,255
27,105
80,360
Movement in carrying amount:
Movement in the carrying amounts for exploration and evaluation expenditure between the beginning and the end
of the current period:
Written down value at the beginning of the year
- Expenditure incurred during the year
- Cosmos exploration assets valuation
- Deconsolidated exploration assets
- Impairment on deconsolidated exploration assets
- Write-off
Written down value at the end of the year
60,979
12,912
27,105
(11,454)
(6,963)
(2,219)
80,360
$’00 $’000
4,100
27,100
(7,400)
23,800
2015
$’000
60,979
-
60,979
47,008
14,199
-
-
-
(228)
60,979
Carry Forward Exploration & Evaluation Expenditure
The recovery of the costs of exploration and evaluation expenditure carried forward is dependent upon the discovery of commercially
viable mineral and other natural resource deposits and their subsequent development and exploitation or alternatively their sale.
Impairment and write-off
Exploration and evaluation assets are assessed for impairment when facts and circumstances suggest that the carrying amount of an
exploration and evaluation asset may exceed its recoverable amount. Management regularly evaluates the recoverability of exploration
and evaluation assets.
63
Western Areas 2016 Annual ReportNotes To The Financial Statements Note 11: Exploration & Evaluation Expenditure (continued...)
As reported in the Interim Financial Statements at 31 December 2015 the following write off and impairment adjustments were
accounted for:
(i) Exploration and evaluation
In accordance with “AASB 6 Exploration and Evaluation Assets” are regularly assessed for impairment where circumstances suggest
that the carrying amount of an asset may exceed its recoverable amount.
• Regional exploration expenditure in relation to specific areas of interest that have not lead to the discovery of economic mineral
resources, or are currently not scheduled for continued activities, resulted in a $2.2 million write off.
• The company had a 60% interest in FinnAust Mining Plc (FinnAust), an exploration company listed on AIM in the UK and was
consolidated into the group result. FinnAust had announced a new strategic direction and as such the exploration projects were
assessed and historic amounts of exploration and evaluation expenditure that were unlikely to be recovered through successful
development or sale have been impaired by $7.0 million. The company’s interest has subsequently decreased to 37% and as a result
FinnAust has been deconsolidated on 8 March 2016 (note 8).
Note 12: Mine Properties
Capitalised development expenditure consists of:
- Mine development
- Acquisition of mining assets
- Exploration expenditure transfer
- Deferred mining expenditure
- Capitalised restoration costs
- Capitalised interest
- Accumulated amortisation
Total Mine Development
Consolidated Entity
2016
$’000
146,203
59,796
76,000
338,210
11,645
11,175
(459,450)
183,579
2015
$’000
144,544
59,796
76,000
313,061
11,645
11,175
(415,768)
200,453
Movement in carrying amount:
Movement in the carrying amounts for mine development expenditure between the beginning and the end of the current period:
Development Expenditure
Written down value at the beginning of the year
- Additions
- Evaluation and Feasibility write-off for the year
- Amortisation charge for the year
Written down value at the end of the year
200,453
27,772
(964)
(43,682)
183,579
206,434
44,756
-
(50,737)
200,453
Write-off of mine property expenditure
Management has reviewed the recoverable amount of each asset or group of assets within the Group’s Cash Generating Unit
and has written off $1.0 million feasibility expenditure relating to early stage evaluation projects.
64
Western Areas 2016 Annual ReportNotes To The Financial Statements Note 13: Deferred Tax Liabilities
The balance comprises temporary differences
attributable to:
(a) Liabilities
- Exploration & evaluation expenditure
- Property, plant and equipment
- Other
(b) Assets
- Provisions
- Mine development
- Tax losses
- Employee share trust
- Other
Net deferred tax liabilities
(c) Reconciliation
i) Gross movement
The overall movement in the deferred tax account is as
follows:
Opening balance
Debit to income statement
Closing balance
ii) Deferred tax liability
The movement in the deferred tax liabilities for each
temporary difference during the year is as follows:
Exploration & development expenditure
Opening balance
Debit to income statement
Closing balance
Property, plant and equipment
Opening balance
Credit to income statement
Closing balance
Other
Opening balance
(Debit)/credit to income statement
Closing balance
Consolidated Entity
2016
$’000
(50,782)
(1,938)
(286)
(53,006)
5,583
27,673
11,378
965
1,294
46,893
(6,113)
(14,135)
8,022
(6,113)
(46,858)
(3,924)
(50,782)
(3,106)
1,168
(1,938)
(40)
(246)
(286)
2015
$’000
(46,858)
(3,106)
(40)
(50,004)
4,794
29,742
-
1,222
111
35,869
(14,135)
(11,242)
(2,893)
(14,135)
(27,929)
(18,929)
(46,858)
(4,106)
1,000
(3,106)
(376)
336
(40)
65
Western Areas 2016 Annual ReportNotes To The Financial Statements
2015
$’000
4,532
262
4,794
16,571
13,171
29,742
-
-
-
-
-
1,222
1,222
66
45
111
2,421
22,943
4,000
29,364
Note 13: Deferred Tax Liabilities (continued...)
(c) Reconciliation (continued...)
Consolidated Entity
2016
$’000
4,532
1,051
5,583
29,742
(2,069)
27,673
-
11,378
11,378
1,222
(257)
965
111
1,183
1,294
8,555
14,168
-
22,723
iii) Deferred Tax Assets
The movement in the deferred tax assets for each
temporary difference during the year is as follows:
Provisions
Opening balance
Credit to income statement
Closing balance
Mine development
Opening balance
(Debit)/credit to income statement
Closing balance
Tax losses
Opening balance
Credit to income statement
Closing balance
Employee share trust
Opening balance
(Debit)/credit to income statement
Closing balance
Other
Opening balance
Credit to income statement
Closing balance
Note 14: Trade & Other Payables
Trade payables
Accrued expenses
Accrued interest on convertible bonds (note 15b)
66
Western Areas 2016 Annual ReportNotes To The Financial Statements
Note 15: Borrowings
Current
Corporate loan facility
Convertible bonds
Insurance funding
Lease liabilities
Non Current
Lease liabilities
(a) Corporate loan facility
Notes
15 (a)
15 (b)
15 (c) & 21
(b)
15 (c) &
21(b)
Consolidated Entity
2016
$’000
-
-
-
196
196
123
123
2015
$’000
-
125,000
1,568
218
126,786
210
210
The Corporate Loan facility is available for broad company purposes as agreed between the Australia and New Zealand Banking
Group Ltd (ANZ) and Western Areas Ltd. In December 2015, at the Company’s request, a variation to the loan facility was
executed reducing the existing loan facility maximum facility limit to $50M. The amortising available limit as at 30 June 2016 was
$30M, the facility remains undrawn with an expiry date in March 2017.
The carrying value of assets secured under the corporate loan facility is as follows:
Mine properties
Property, plant & equipment
(b) Convertible bonds
Current
183,579
95,818
279,397
200,453
99,400
299,853
Convertible bonds (Issued April 2010)
-
125,000
The convertible bonds issued in April 2010 were repaid on 2 July 2015.
(c) Lease liabilities
The lease liabilities are secured over the assets under the lease. The finance leases have an average term of 3 years and an average
implicit discount rate of 4.07%. Refer to note 9 for the carrying value of the assets under lease.
67
Western Areas 2016 Annual ReportNotes To The Financial Statements
Note 16: Provisions
Current
Employee Entitlements
Non Current
Rehabilitation and restoration cost
Opening balance
Additional provision raised
Cosmos rehabilitation provision
Unwinding of discount
Rehabilitation expenditure incurred
during the period
Closing balance
Notes
16 (a)
16 (b)
16 (b)
16 (c)
Consolidated Entity
2016
$’000
3,363
13,523
959
7,400
767
-
22,649
2015
$’000
2,457
12,798
-
-
725
-
13,523
(a) Employee entitlements relate to the balance of annual leave and long service leave accrued by the consolidated entity’s
employees. Recognition and measurement criteria have been disclosed in Note 1.
(b) Rehabilitation and restoration costs relate to an estimate of restoration costs that will result from the development of
the Forrestania Nickel Project. Based on the current known mine life restoration activities are not expected to commence
within the next 10 years, following full exhaustion of mine life rehabilitation activities will be undertaken.
(c) Rehabilitation costs associated with the Cosmos Nickel Complex (note 10) was valued at $7.4M.
Note 17: Derivative financial instruments
Current Assets
Nickel collar options
Foreign exchange options
Total
Current Liabilities
Nickel collar options
Foreign exchange options
Total
28 (c)
28 (c)
-
171
171
-
-
-
-
-
-
-
224
224
Collar options are used to hedge cash flow risk associated with future transactions. Gains and losses arising from changes in the fair
value of derivatives are initially recognised directly in the statement of comprehensive income. At the date of settlement, amounts
included in the hedge reserve are transferred from equity and included in the income statement.
68
Western Areas 2016 Annual ReportNotes To The Financial Statements
Note 18: Issued Capital
270,924,958 fully paid ordinary shares
(2015: 233,149,778)
Movements in issued capital
2016
Balance at beginning of the financial year
- Issued via share placement
- Issued via share purchase plan
- Share issue expense
- Performance rights vested issued as shares
Balance at end of the financial year
2015
Balance at beginning of the financial year
- Performance rights vested issued as shares
Balance at end of the financial year
Consolidated Entity
2016
$’000
2015
$’000
442,963
369,936
Number of shares
$’000
233,149,778
30,000,000
7,500,053
-
275,127
270,924,958
232,310,014
839,764
233,149,778
369,936
60,000
15,000
(1,973)
-
442,963
369,936
-
369,936
Capital management
The Board’s policy is to maintain a strong capital base so as to maintain investor, creditor, and market confidence and to sustain future
development of the business. There were no changes to the consolidated entity’s approach to capital management during the year.
Neither the Company nor any of its subsidiaries are subject to externally imposed capital requirements.
The Board effectively manages the Group’s capital by assessing the Group’s financial risks and adjusting its capital structure in response
to changes in these risks and in the market. These responses include the management of debt levels, distributions to shareholders and
share issues.
Performance rights
Information relating to performance rights issued, exercised, lapsed during the year and the performance rights outstanding at the end
of the year are detailed in Note 30 Share Based Payments.
Terms and conditions of ordinary shares
Ordinary shares have the right to receive dividends as declared and, in the event of winding up the Company, to participate in the
proceeds from the sale of all surplus assets in proportion to the number of and amounts paid upon shares held.
Ordinary shares entitle their holder to one vote, either in person or by proxy, at a meeting of the Company.
69
Western Areas 2016 Annual ReportNotes To The Financial Statements Consolidated Entity
2016
$’000
(29,783)
2016
Number
2015
$’000
35,013
2015
Number
241,940,446
232,559,757
245,133,933
234,847,060
(29,783)
16,989
45,173
(1,188)
-
14,783
875
(458)
2,507
767
906
(1,191)
(2,049)
4,076
(10,335)
(4,000)
(21,509)
-
15,563
35,013
15,077
51,976
-
5,429
247
-
659
1,569
725
304
1,114
(319)
15,914
18,401
(3,034)
3,847
1,547
148,469
75,706
195,355
Note 19: Earnings Per Share
(Loss)/Earnings used to calculate basic / diluted earnings
per share
Weighted average number of ordinary shares outstanding
during the year used in calculating earnings per share
Weighted average number of ordinary shares outstanding
during the year used in calculating dilutive earnings
per share
Note 20: Cash Flow Information
(a) Reconciliation of the net profit after tax to net cash
provided by operating activities
(Loss)/profit after income tax
Depreciation expense
Amortisation expense
Profit on insured assets written off
Convertible bonds accretion expense
Impairment / write-off expenses
Profit on deconsolidation
Other
Share based payment expense
Rehabilitation provision interest unwound
Provision for employee entitlements
Derecognising foreign currency translation reserve
Change in Assets and Liabilities
Decrease in trade and other payables
Decrease / (increase) in inventories
Decrease / (increase) in trade and other receivables
Decrease in interest payable
(Decrease) / Increase in tax liabilities
Movement in non-controlling interest
Net cash provided by operating activities
(b) Reconciliation of Cash and Cash Equivalents
Cash and cash equivalents comprises :
Cash on hand and at bank
70
Western Areas 2016 Annual ReportNotes To The Financial Statements
Note 20: Cash Flow Information (continued...)
(c) Financing Facilities Available
As at the reporting date the Consolidated Entity had the following financing facilities in place:
Banking Facilities:-
ANZ Banking Group
- Cash advance facility*
Performance Guarantees:-
ANZ Banking Group
- Security bond facility
Total Facility
Utilised at Balance Date
Available Facilities (*)
$’000
$’000
$’000
30,000
-
30,000
5,000
35,000
636
636
4,364
34,364
* The Corporate Loan facility is available for broad company purposes as agreed between the Australia and New Zealand Banking Group Ltd (ANZ) and Western Areas Ltd. In December
2015, at the Company’s request, a variation to the loan facility was executed reducing the existing loan facility maximum facility limit to $50M. The amortising available limit as at 30 June
2016 was $30M, the facility remains undrawn with an expiry date in March 2017.
(d) Non Cash Financing Activities
During the year, the consolidated entity acquired plant & equipment by means of a finance lease to the value of $139k
(2015: $154k).
Note 21: Commitments
The Directors are not aware of any commitments as at the date of these financial statements other than those listed below.
(a) Operating Lease Commitments
Non-cancellable operating leases contracted for but not capitalised in the accounts.
- no later than 1 year
- later than 1 year and not later than 5 years
Lease expenditure contracted for at year end
Consolidated Entity
2016
$’000
685
2,602
3,287
2015
$’000
968
2,956
3,924
The operating leases are for miscellaneous office equipment and office premises in West Perth. The West Perth office lease expires
August 2021.
(b) Finance Lease Commitments
- no later than 1 year
- later than 1 year and not later than 5 years
Total Minimum Lease Payments
- future finance charges
Total Lease Liability
- current
- non current
196
123
319
13
332
205
127
332
218
210
428
22
450
227
223
450
The finance lease commitments relate primarily to motor vehicles, but also include some office equipment. Motor vehicles are finance
leased under 3 year contracts at normal commercial rates, balloon payments are generally required at the expiry of the finance lease,
at which point the Company takes ownership of the vehicle.
(c) Capital Expenditure Commitments
- no later than 1 year
- later than 1 year and not later than 5 years
Total minimum commitments
-
15,706
15,706
34,500
11,377
45,877
71
Western Areas 2016 Annual ReportNotes To The Financial Statements
Note 21: Commitments (continued...)
(c) Capital Expenditure Commitments (continued...)
Consolidated Entity
2016
$’000
2015
$’000
On 21 July 2015, the Company announced the commencement of the mill enhancement project with GR Engineering. A total of
$6.5m has been spent on long lead items this financial year. This project has been delayed and is expected commence in the financial
year beginning 1 July 2018.
(d) Exploration Expenditure Commitments
- no later than 1 year
- later than 1 year and not later than 5 years
Total Minimum Payments
6,255
25,020
31,275
4,170
16,678
20,848
Under the terms and conditions of the Company’s title to its various tenements, it has an obligation to meet tenement rents and
minimum levels of exploration expenditure as gazetted by the Department of Mines and Petroleum.
Note 22: Auditor Remuneration
During the year the following fees were paid or payable for
services provided by the auditor of the Company:
- Audit and review of financial statements
- Audit of Jobs and Competitiveness Program Assistance
Application
Note 23: Material Contracts
105
5
110
125
14
139
The Company has two main customers. A summary of the key terms of the off-take agreements entered into with these customers are
detailed below. Credit risk associated with these customers is detailed in note 28.
In May 2009 the Company entered a Concentrate Purchase Agreement (“CPA”) with BHP Billiton Ltd (BHP). Under the terms of
this agreement BHP are entitled to purchase up to 10,000 tonnes per annum of nickel in concentrate produced from the Forrestania
tenements. The agreement is for a term of 7.5 years. In March 2012 a second contract was entered into with BHP for the supply of a
further 2,000 tonnes of nickel in concentrate. The second agreement was for a term of 7 years.
In November 2014, the Company entered into a new Sale and Purchase Agreement for Nickel Concentrates with Jinchuan Group Ltd
(“Jinchuan”) to deliver up to 26,000 tonnes of nickel in concentrate. This equates to approximately 2 years of nickel shipments.
Note 24: Contingent Liabilities
The Directors are not aware of any contingent liabilities as at the date of these financial statements.
Note 25: Subsequent Events
There have been no subsequent events after 30 June 2016 which had a material effect on the financial statements for the year ended
30 June 2016.
Note 26: Statement of Operations by Segments
Identification of reportable segment
The group identifies its operating segments based on the internal reports that are reviewed and used by the board of directors
(chief operating decision makers) in assessing performance and determining the allocation of resources.
Basis of accounting for purposes of reporting by operating segments
Accounting policies adopted
Unless stated otherwise, all amounts reported to the Board of Directors as the chief decision maker is in accordance with
accounting policies that are consistent to those adopted in the annual financial statements of the Group.
72
Western Areas 2016 Annual ReportNotes To The Financial Statements Note 27: Key Management Personnel
Key Management Personnel
Key management personnel of the Consolidated Entity (as defined by AASB 124: Related Party transactions) include the following:
I Macliver
R Yeates
C Readhead
T Netscher
J Hanna
D Lougher
D Southam
J Belladonna
W Jones
Chairman (Non-Executive)
Director (Non-Executive)
Director (Non-Executive)
Director (Non-Executive)
Director (Non-Executive) (Resigned 15 June 2016)
Managing Director
Executive Director
Chief Financial Officer / Company Secretary
General Manager Operations
Refer to the remuneration report contained in the Directors’ report for details of the remuneration paid or payable to each member of
the group’s key management personnel for the year ended 30 June 2016.
The total of remuneration paid to key management personnel of the Consolidated Entity during the year is detailed below:
Short term employee benefits
Share based payments
Post-employment benefits
Consolidated Entity
2016
$’000
3,631
1,658
241
5,530
2015
$’000
4,194
1,203
217
5,614
Note 28: Financial Risk Management
Financial Risk Management Policies
The Treasury Committee consisting of senior management and non executive board members meets on a regular basis to analyse and
discuss amongst other issues, monitoring and managing financial risk exposures of the consolidated entity. The Treasury Committee
monitors the consolidated entity financial risk management policies and exposures and approves financial transactions within the scope
of its authority. It also reviews the effectiveness of internal controls relating to commodity price risk, counter party credit risk, currency
risk, financing risk and interest rate risk.
The Treasury Committee’s overall risk management strategy seeks to assist the consolidated entity in meeting its financial targets,
while minimising potential adverse effects on financial performance. Its functions include the review of the use of hedging derivative
instruments, credit risk policies and future cash flow requirements.
Specific Financial Risk Exposures and Management
The main risks the Group is exposed to through its financial instruments are credit risk, liquidity risk and market risk consisting of
interest rate risk, foreign currency risk and commodity and equity price risk.
(a) Credit Risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the consolidated
entity. The consolidated entity has adopted a policy of only dealing with creditworthy counterparties as a means of mitigating the risk
of financial loss from defaults.
73
Western Areas 2016 Annual ReportNotes To The Financial Statements Note 28: Financial Risk Management (continued...)
(a) Credit Risk (continued...)
The carrying amount of financial assets exposed to credit risk is detailed below:
Cash and cash equivalents
Trade and other receivables
Financial assets at fair value through other
comprehensive income
Derivative financial instruments
Consolidated Entity
2016
$’000
75,706
29,275
1,281
171
2015
$’000
195,355
15,974
954
-
Cash and cash equivalents and derivative financial instruments
The credit risk on liquid funds and derivative financial instruments is limited because the counterparties are banks with high
credit-ratings.
Trade and other receivables
The consolidated entity does not have significant credit risk exposure to trade receivables as the consolidated entity’s customers
are considered to be of high credit quality. There were no balances within trade and other receivables that are past due. It is expected
these balances will be received when due. Export sales are conducted under an irrevocable letter of credit.
Financial assets at fair value through other comprehensive income
Credit risk on financial assets at fair value through other comprehensive income is minimised by undertaking transactions with
recognised counterparties on recognised exchanges.
(b) Liquidity Risk
Liquidity risk arises from the possibility that the Group might encounter difficulty in settling its debts or otherwise meeting its
obligations related to financial liabilities. The Group manages this risk through the following mechanisms which include:
• preparing forward looking cash flow analysis in relation to its operational, investing and financing activities
• using derivatives that are only traded in highly liquid markets
• monitoring undrawn credit facilities, to the extent that they exist
• obtaining funding from a variety of sources
• maintaining a reputable credit profile
• managing credit risk related to financial assets
•
investing surplus cash only with major financial institutions
• comparing the maturity profile of financial liabilities with the realisation profile of financial assets
The tables below reflect an undiscounted contractual maturity analysis for financial assets and liabilities. Cash flows realised from
financial assets reflect management’s expectation as to the timing of realisation. Actual timing may therefore differ from that disclosed.
The timing of cash flows presented in the table to settle financial liabilities reflects the earliest contractual settlement dates and does
not reflect management’s expectations that banking facilities will be rolled forward.
74
Western Areas 2016 Annual ReportNotes To The Financial Statements Note 28: Financial Risk Management (continued...)
(b) Liquidity Risk (continued...)
Financial liability and financial asset maturity analysis
The Consolidated Entity’s contractual maturity analysis of financial assets and financial liabilities is shown below:
2016 Consolidated Entry
1 year or less
$’000
Over 1 to
5 years
$’000
More than
5 Years
$’000
75,706
29,275
-
171
105,152
22,723
196
22,919
82,233
-
-
-
-
-
-
123
123
(123)
-
-
1,281
-
1,281
-
-
1,281
1 year or less
$’000
Over 1 to
5 years
$’000
More than
5 Years
$’000
195,355
15,974
-
211,329
29,364
125,000
1,568
218
224
156,374
54,955
-
-
-
-
-
-
-
210
-
210
(210)
-
-
954
954
-
-
-
-
-
954
Total
contractual
cash flows
$’000
75,706
29,275
1,281
171
106,433
22,723
319
23,042
83,391
Total
contractual
cash flows
$’000
195,355
15,974
954
212,283
29,364
125,000
1,568
428
224
156,584
55,699
Financial Assets – Non Derivative
Cash and Cash Equivalents
Trade and Other Receivables
Financial assets at fair value through
other comprehensive income
Financial Assets –Derivative
Derivative Collar Options (net settled)
Financial Liabilities – Non Derivative
Trade and Other Payables
Lease Liabilities
Net Financial Assets/(Liabilities)
2015 Consolidated Entity
Financial Assets – Non Derivative
Cash and Cash Equivalents
Trade and Other Receivables
Financial assets at fair value through
other comprehensive income
Financial Liabilities – Non Derivative
Trade and Other Payables
Convertible Bonds
Insurance funding
Lease Liabilities
Financial Liabilities –Derivative
Derivative Collar Options (net settled)
Net Financial Assets/(Liabilities)
(c) Market Risk
Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices.
Market risk comprises three types of risk: interest rate risk, price risk and currency risk.
i) Interest Rate Risk
Exposure to interest rate risk arises on financial assets and financial liabilities recognised at reporting date whereby a future change in
interest rates will affect future cash flows or the fair value of fixed rate financial instruments. Interest rate risk is managed using a mix of
fixed and floating rate debt.
75
Western Areas 2016 Annual ReportNotes To The Financial Statements
76
Western Areas 2016 Annual ReportNotes To The Financial StatementsNote 28: Financial Risk Management (continued...)(c) Market Risk (continued...)i) Interest Rate Risk (continued...)At the reporting date, the interest rate risk profile of the consolidated entity’s interest bearing financial instruments was as follows:2016 Consolidated EntryFloatingInterest Rate$’000Fixed Interest maturing in:Non-InterestBearing$’000Total$’000Weighted Average Interest Rate1 year or less$’000Over 1 to 5 years$’000More than 5 Years$’000Financial AssetsCash and Cash Equivalents75,706----75,7062.9%Trade and Other Receivables----29,27529,275Financial assets at fair value through other comprehensive income----1,2811,28175,706---30,556106,262Financial LiabilitiesTrade and Other Payables---(22,723)(22,723)Lease liability-(196)(123)--(319)5.1%-(196)(123)-(22,723)(23,042)Net Financial Assets / (Liabilities)75,706(196)(123)-7,83383,2202015 Consolidated EntityFloatingInterest Rate$’000Fixed Interest maturing in:Non-InterestBearing$’000Total$’000Weighted Average Interest Rate1 year or less$’000Over 1 to 5 years$’000More than 5 Years$’000Financial AssetsCash and Cash Equivalents195,355195,3552.0%Trade and Other Receiva-bles15,97415,974Financial assets at fair value through other comprehensive income954954195,355---16,928212,283Financial LiabilitiesTrade and Other Payables----(29,786)(29,786)Convertible bonds-(125,000)---(125,000)6.4%Insurance funding-(1,568)---(1,568)2.5%Lease liability-(218)(210)--(428)5.1%-(126,786)(210)-(29,786)(156,782)Net Financial Assets/ (Liabilities)195,355(126,786)(210)-(12,858)55,501Interest rate sensitivities have not been included in the financial report as the changes in profit before tax due to changes in interest rate is not material to the results of the Consolidated Entity. Note 28: Financial Risk Management (continued...)
(c) Market Risk (continued...)
ii) Price Risk
a) Equity Price Risk
The consolidated entity is exposed to equity securities price risk. This arises from investments held by the Group and classified
on the statement of financial position as financial assets at fair value through other comprehensive income.
A majority of the consolidated entity’s equity investments are publicly traded and are quoted either on the ASX or the TSX.
The table below summarises the impact of increases/decreases of these two indexes on the Consolidated Entity’s comprehensive
income. The analysis is based on the assumption that the equity indexes had increased by 10% / decreased by 10% (2015 – increased
by 10% / decreased by 10%) and foreign exchange rate increased by 5% / decrease by 5% (2015 increased by 5% / decrease by 5%)
with all other variables held constant and all the Consolidated Entity’s equity instruments moved according to the historical correlation
with the index. The percentages are the sensitivity rates used when reporting equity price risk internally to key management personnel
and represents management’s assessment of the possible change in equity prices.
Financial assets at fair value through other comprehensive income Index
ASX
TSX
Consolidated Entity
30 Jun 2016
$’000
30 Jun 2015
$’000
25
127
7
182
Comprehensive income would increase/decrease as a result of gains/losses on equity securities classified as financial assets at fair value
through other comprehensive income. A decrease in the share price and exchange rate would result in a further decrease in fair value
compared to cost.
b) Commodity Price Risk
The Consolidated Entity is exposed to commodity price risk. Commodity price risk arises from the sale of nickel. The entity manages its
commodity price risk exposure arising from future commodity sales through sensitivity analysis, cash flow management and forecasting
and where appropriate utilise derivative financial instruments to reduce price risk.
The following table details the Consolidated Entity’s sensitivity to a USD 500 / tonne increase and decrease in the nickel price.
USD 500 is the sensitivity rate used when reporting commodity price risk internally to key management personnel and represents
management’s assessment of the possible change in commodity price. The table below assumes all other variables remaining constant.
Sensitivity analysis
Year Ended 30 June 2016
+- $500 / tonne nickel
Year Ended 30 June 2015
+- $500 / tonne nickel
Profit
$’000
+/-996
+/-499
Equity
$’000
+/-996
+/-499
Nickel Collar Options
The consolidated entity enters into financial transactions in the normal course of business and in line with Board guidelines for the
purpose of hedging and managing its expected exposure to nickel prices. The hedges are treated as cashflow hedges in accordance with
AASB 9 “Financial Instruments: Recognition and Measurement”.
There were no nickel collar options and swaps open at 30 June 2016.
iii) Currency Risk
Currency risk arises when future commercial transactions and recognised financial assets and liabilities are denominated in a currency
that is not the entity’s functional currency. The Consolidated Entity manages its foreign currency risk exposure through sensitivity
analysis, cash flow management, forecasting and where appropriate, utilises derivative financial instruments. The carrying amount of
the Consolidated Entity’s foreign currency denominated monetary assets and monetary liabilities at the reporting date is as follows:
77
Western Areas 2016 Annual ReportNotes To The Financial Statements Note 28: Financial Risk Management (continued...)
(c) Market Risk (continued...)
iii) Currency Risk (continued...)
US$ ‘000
UK Stirling ‘000
30 June 2016
30 June 2015
Financial liabilities
-
-
Financial assets Financial liabilities
-
-
6,960
-
Financial assets
24,224
795
The following table details the consolidated entity’s sensitivity to a 5% increase and decrease in the Australian Dollar against the
relevant foreign currencies. 5% is the sensitivity rate used when reporting foreign currency risk internally to key management personnel
and represents management’s assessment of the possible change in foreign exchange rates. The sensitivity analysis includes only
outstanding foreign currency denominated monetary items and adjusts their translation at the period end for a 5% change in foreign
currency rates.
Sensitivity analysis
Year Ended 30 June 2016
+ 5% in $A/$US
- 5% in $A/$US
Year Ended 30 June 2015
+ 5% in $A/$US
- 5% in $A/$US
Profit
$’000
1,082
(979)
612
(554)
Equity
$’000
1,082
(979)
612
(554)
Foreign exchange collar options
The consolidated entity had open foreign exchange collar options at 30 June 2016 relating to highly probable forecast transactions
and recognised financial assets and financial liabilities. These contracts commit the Group to buy and sell specified amounts of foreign
currencies in the future at specified exchange rates. The hedges are treated as cash flow hedges in accordance with AASB 9 “Financial
Instruments: Recognition and Measurement”.
The following table summarises the notional amounts of the consolidated entity’s commitments in relation to foreign exchange collar
options. The notional amounts do not represent amounts exchanged by the transaction counter parties and are therefore not a measure
of the exposure of the consolidated entity through the use of these contracts.
Consolidated Group
Buy AUD / Sell USD
Settlement
less than 6 months
6 months to 1 year
(d) Net Fair Values
Notional Amounts
Exchange Rate
2016
$000
2015
$000
2016
$
2015
$
Put Call
Put Call
15,000
-
40,000
15,000
0.70-0.75
-
0.83-0.72
0.78-0.70
The fair values of financial assets and financial liabilities are presented in the following table and can be compared to their carrying values
as presented in the balance sheet. Fair values are those amounts at which an asset could be exchanged, or a liability settled, between
knowledgeable, willing parties in an arm’s length transaction.
Fair values derived may be based on information that is estimated or subject to judgment, where changes in assumptions may have a
material impact on the amounts estimated. Areas of judgment and the assumptions have been detailed below. Where possible, valuation
information used to calculate fair value is extracted from the market, with more reliable information available from markets that are
actively traded. In this regard, fair values for listed securities are obtained from quoted market bid prices. Where securities are unlisted
and no market quotes are available, fair value is obtained using discounted cash flow analysis and other valuation techniques commonly
used by market participants.
Differences between fair values and carrying values of financial instruments with fixed interest rates are due to the change in discount
rates being applied by the market since their initial recognition by the Group. Most of these instruments which are carried at amortised
cost are to be held until maturity and therefore the net fair value figures calculated bear little relevance to the Group.
78
Western Areas 2016 Annual ReportNotes To The Financial Statements Note 28: Financial Risk Management (continued...)
(d) Net Fair Values (continued...)
Financial Assets
Cash and cash equivalents
Financial assets at fair value through other
comprehensive income
Derivative financial assets
Loans and receivables
Financial Liabilities
Trade and other payables
Convertible bonds
Derivative financial liabilities
Insurance premium facility
Other liabilities
i)
ii)
iii)
i)
i)
iii)
i)
2016
Carrying
Amount
$’000
Net Fair
Value
$’000
2015
Carrying
Amount
$’000
Net Fair
Value
$’000
75,706
75,706
195,355
195,355
1,281
171
29,275
106,433
22,723
-
-
-
319
23,042
1,281
171
29,275
106,433
22,723
-
-
-
319
23,042
954
-
15,974
212,283
29,364
125,000
224
1,568
428
156,584
954
-
15,974
212,283
29,364
125,000
224
1,568
428
156,584
The fair values disclosed in the above table have been determined based on the following methodologies:
i)
Cash and cash equivalents, trade and other receivables and trade and other liabilities are short-term instruments in nature
whose carrying value is equivalent to fair value. Trade and other payables exclude amounts provided for annual leave, which is
not considered a financial instrument.
ii)
Quoted closing bid prices at reporting date.
iii) Fair valuation performed by financial risk management firm which include valuation techniques incorporating observable market
data relevant to the hedged position.
Financial Instruments Measured at Fair Value
The financial instruments recognised at fair value in the statement of financial position have been analysed and classified
using a fair value hierarchy reflecting the significance of the inputs used in making the measurements. The fair value hierarchy
consists of the following levels:
- quoted prices in active markets for identical assets or liabilities (Level 1);
-
inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (as prices) or
indirectly (derived from prices) (Level 2); and
-
inputs for the asset or liability that are not based on observable market data (unobservable inputs) (Level 3).
Level 1
$000
Level 2
$000
Level 3
$000
Level 4
$000
2016
Financial assets:
Financial assets at fair value through other
comprehensive income
Derivative financial instruments
2015
Financial assets:
Financial assets at fair value through other
comprehensive income
Financial liabilities
Derivative financial instruments
1,281
1,281
-
171
171
954
-
-
224
-
-
-
-
1,281
171
1,452
954
224
79
Western Areas 2016 Annual ReportNotes To The Financial Statements Note 29: Related Party Transactions
There were no other related party transactions during the financial year other than those included in the key management
compensation as disclosed in the Remuneration Report contained in the Directors’ Report.
Note 30: Share Based Payments
(a) Expenses arising from share based transactions
Equity settled share options and performance rights granted during:
Year ended 30 June 2016
Year ended 30 June 2015
Year ended 30 June 2014
Year ended 30 June 2013
Total expense recognised as employee costs
(b) Performance Rights
Consolidated Entity
30 Jun 2016
$’000
30 Jun 2015
$’000
655
898
954
-
2,507
-
551
761
257
1,569
Under the Performance Rights plan, executives are granted a right to be issued a share in the future subject to the performance based
vesting conditions being met. The Company’s share price performance is measured via a relative total shareholder return (‘TSR’).
The Company’s TSR will be measured against a customised peer group of companies.
For grants made under the LTI plan during FY14, vesting will occur subject to the meeting of a 3 year service condition to
30 June 2016 and the performance condition tested against the relative TSR measure for the period 1 July 2013 to 30 June 2016.
For grants made under the LTI plan during FY15, vesting will occur subject to the meeting of a 3 year service condition to
30 June 2017 and the performance condition tested against the relative TSR measure for the period 1 July 2014 to 30 June 2017.
For grants made under the LTI plan during FY16, vesting will occur subject to the meeting of a 3 year service condition to
30 June 2018 and the performance condition tested against the relative TSR measure for the period 1 July 2015 to 30 June 2018.
The following table sets out the vesting outcome based on the Company’s relative TSR performance:
Relative TSR performance
Less than 50th percentile
At the 50th percentile
Between 50th and 75th percentile
At or above 75th percentile
Performance Vesting Outcomes
0% vesting
50% vesting
Pro-rata / progressive vesting from 50% - 100%
100% vesting
No Performance Rights will vest unless the percentile ranking of the Company’s TSR for the relevant performance year, as compared
to the TSRs for the peer group companies, is at or above the 50th percentile.
The valuation inputs used in determining the fair value of performance rights issued during the year is detailed below:
2016
$2.45
Nil
2.1%
45%
1.5%
2015
$4.29
Nil
2.5%
45%
1.2%
3.0 years 3.0 years
20
16
Underlying share price
Exercise price of rights
Risk free rate
Volatility factor
Dividend yield
Effective life
Entitled number of employees
80
Western Areas 2016 Annual ReportNotes To The Financial Statements Note 30: Share Based Payments (continued...)
(b) Performance Rights (continued...)
Performance Rights held by Key Management Personnel at 30 June 2016
Balance at
1 July 2015
965,690
448,990
346,223
271,247
2,032,150
Granted as
Remuneration
299,750
168,640
113,630
81,710
663,730
Exercise of
Performance
Rights
(294,800)
(165,900)
(104,074)
(83,476)
(648,250)
Lapsed /
Cancelled /
Other
-
94,363
-
-
94,363
Balance at
30 June 2016
970,640
546,093
355,779
269,481
2,141,993
Performance
Rights Vested
-
-
-
-
-
D Lougher
D Southam
J Belladonna
W Jones
Total
Performance Rights held by Key Management Personnel at 30 June 2015
Balance at
1 July 2014
836,971
434,465
270,584
149,396
1,691,416
Granted as
Remuneration
205,140
86,560
118,859
121,851
532,410
Exercise of
Performance
Rights
(76,421)
(72,035)
(43,220)
-
(191,676)
Expired /
Lapsed /
Cancelled
-
-
-
-
-
Balance at
30 June 2015
965,690
448,990
346,223
271,247
2,032,150
Performance
Rights Vested
-
-
-
-
-
D Lougher
D Southam
J Belladonna
W Jones
Total
(c) Option Plans
There were no options outstanding as at 30 June 2016.
Note 31: Reserves
i) Share Based Payment Reserve
The share based payment reserve records the items recognised as expenses on valuation of employee share options and
performance rights.
ii) Hedge Reserve
The hedge reserve records revaluations of items designated as hedges.
iii) Investment Revaluation Reserve
The investment revaluation reserve records revaluations of financial assets at fair value through other comprehensive income.
iv) Convertible Bond Reserve
The Convertible bond reserve records the equity proportion value of the convertible bonds.
v) Foreign Exchange Reserve
The reserve is used to recognise exchange differences arising from translation of the financial statements of foreign operations
to Australian dollars.
Note 32: Interests in Subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of the following wholly-owned subsidiaries in
accordance with the accounting policy described in note 1:
Name
Western Platinum NL
Australian Nickel Investments Pty Ltd
Bioheap Ltd
Western Areas Nickel Pty Ltd
Western Areas Employee Share Trust
Country of
Incorporation
Australia
Australia
Australia
Australia
Australia
Percentage of equity held
2016
100%
100%
100%
100%
100%
2015
100%
100%
100%
100%
100%
All the entities above are members of the tax consolidated group of which Western Areas Ltd is the head entity. Western Areas Ltd is
the parent entity and is incorporated and domiciled in Australia.
81
Western Areas 2016 Annual ReportNotes To The Financial Statements Note 33: Parent Information
The following information has been extracted from the books of the parent and has been prepared in accordance with the
accounting standards.
Parent Entity
30 Jun 2016
$’000
30 Jun 2015
$’000
Assets
Current Assets
Non Current Assets
Total Assets
Liabilities
Current Liabilities
Non Current Liabilities
Total Liabilities
Net Assets
Equity
Issued capital
Reserves
Retained Earnings
Total Equity
Statement of Comprehensive (Loss)/Income
(Loss)/profit for the year
Total comprehensive (loss)/income for the year
118,016
405,697
523,713
25,726
42,973
68,699
455,014
442,963
15,403
(3,352)
455,014
(31,097)
(30,376)
236,312
398,112
634,424
169,761
45,227
214,988
419,436
369,936
31,565
17,935
419,436
37,371
38,340
Guarantees
Western Areas Ltd has not entered into any guarantees, in the current or previous financial year, in relation to the debts of its
subsidiaries.
Contingent Liabilities
The Directors are not aware of any contingent liabilities as at the date of these financial statements.
Contractual Commitments
Refer to Note 21, all commitments were entered into by Western Areas Ltd.
Note 34: Additional Company Information
Western Areas Ltd is a Public Company, incorporated and domiciled in Australia.
Registered office and Principal place of business:
Level 2
2 Kings Park Road
West Perth WA 6005
Tel: +61 8 9334 7777
Fax: +61 8 9486 7866
Web: www.westernareas.com.au
Email: info@westernareas.com.au
82
Western Areas 2016 Annual ReportNotes To The Financial Statements Directors Declaration
1) In the opinion of the Directors of Western Areas Ltd:
(a)
the Consolidated Entity’s financial statements and notes set out on pages 45 to 82 are in accordance with the Corporations
Act 2001, including:
i)
giving a true and fair view of the Consolidated Entity’s financial position as at 30 June 2016 and of its performance,
for the financial year ended on that date; and
ii) complying with Australian Accounting Standards and the Corporations Regulations 2001;
(b)
the financial report also complies with International Financial Reporting Standards as set out in note 1;
(c)
the remuneration disclosures that are contained in the remuneration report in the Directors’ report comply with Australian
Accounting Standard AASB 124 Related Party Disclosures, the Corporations Act 2001 and the Corporations Regulations
2001;
(d)
there are reasonable grounds to believe that the Consolidated Entity will be able to pay its debts as and when they become
due and payable.
2) the Directors have been given the declarations required by Section 295A of the Corporations Act 2001 from the Chief Executive
Officer, Managing Director, Executive Director and Chief Financial Officer for the financial year ended 30 June 2016.
Signed in accordance with a resolution of the Board of Directors.
D Lougher
Managing Director
Dated – 25 August 2016
83
Western Areas 2016 Annual ReportDirectors Declaration
Independant Auditor’s Opinion
84
Western Areas 2016 Annual ReportIndependant Auditor’s Opinion INDEPENDENT AUDIT REPORT TO THE MEMBERS OF WESTERN AREAS LTD We have audited the accompanying financial report of Western Areas Ltd, which comprises the consolidated statement of financial position as at 30 June 2016, the consolidated income statement, the consolidated statement of comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, notes comprising a summary of significant accounting policies and other explanatory information, and the directors’ declaration of the consolidated entity comprising the company and the entities it controlled at the year’s end or from time to time during the financial year. Directors’ Responsibility for the Financial ReportThe directors of thecompany 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 is free from material misstatement, whether due to fraud or error. In Note 1, the directors also state, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements, that the financial statements comply with International Financial Reporting Standards. Auditor’s ResponsibilityOur responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. Those standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance about whether the financial report is free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation of the financial report that gives a true and fair view 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 entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Independence In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001. Crowe Horwath Perthis a member of Crowe Horwath International, a Swiss verein. Each member of Crowe Horwath is a separate and independent legal entity. Liability limited by a scheme approved under Professional Standards Legislation other than for the acts or omissions of financial services licensees. AUDITOR’S INDEPENDENCE DECLARATIONIn accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor for the audit of Western Areas Ltd for the year ended 30 June 2016, I declare that, to the best of my knowledge and belief, there have been: (a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and (b) no contraventions of any applicable code of professional conduct in relation to the audit. CROWE HORWATH PERTH CYRUS PATELL Partner Signed at Perth, 25 August 2016 Crowe Horwath Perthis a member of Crowe Horwath International, a Swiss verein. Each member of Crowe Horwath is a separate and independent legal entity. Liability limited by a scheme approved under Professional Standards Legislation other than for the acts or omissions of financial services licensees. 85
Western Areas 2016 Annual ReportIndependant Auditor’s Opinion Crowe Horwath Perth is a member of Crowe Horwath International, a Swiss verein. Each member of Crowe Horwath is a separate and independent legal entity. Liability limited by a scheme approved under Professional Standards Legislation other than for the acts or omissions of financial services licensees. Auditor’s Opinion In our opinion: (a)the financial report of Western Areas Ltd is in accordance with the Corporations Act 2001,including: (i) giving a true and fair view of the consolidated entity’s financial position as at 30 June 2016 and of its performance for the year ended on that date; and (ii) complying with Australian Accounting Standards and the Corporations Regulations 2001;and(b)the consolidated financial report also complies with International Financial Reporting Standards as disclosed in Note 1. REPORT ON THE REMUNERATION REPORT We have audited the Remuneration Report included in pages 35 to 42 of the directors’ report for the year ended 30 June 2016. 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. Auditor’s Opinion In our opinion, the Remuneration Report of Western Areas Ltd for the year ended 30 June 2016 complies with section 300A of the Corporations Act 2001. CROWE HORWATH PERTH CYRUS PATELL PartnerSigned at Perth, 25 August 2016 AUDITOR’S INDEPENDENCE DECLARATIONIn accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor for the audit of Western Areas Ltd for the year ended 30 June 2016, I declare that, to the best of my knowledge and belief, there have been: (a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and (b) no contraventions of any applicable code of professional conduct in relation to the audit. CROWE HORWATH PERTH CYRUS PATELL Partner Signed at Perth, 25 August 2016 Crowe Horwath Perthis a member of Crowe Horwath International, a Swiss verein. Each member of Crowe Horwath is a separate and independent legal entity. Liability limited by a scheme approved under Professional Standards Legislation other than for the acts or omissions of financial services licensees. WSA
Interest
Applicant Holder
Name
Lease
Status
Tenements listing
Name
Lease
Status
Forrestania
E74/0470
Granted
E77/1734
Granted
E77/1865
Granted
E77/2099
Granted
G70/0226
Granted
G70/0231
Granted
L70/0111
Granted
L74/0011
Granted
L74/0012
Granted
L74/0025
Granted
L74/0044
Granted
L77/0104
Granted
L77/0141
Granted
L77/0182
Granted
L77/0197
Granted
L77/0203
Granted
L77/0204
Granted
M74/0057 Granted
M74/0058 Granted
M74/0064 Granted
M74/0065 Granted
M74/0081 Granted
M74/0090 Granted
M74/0091 Granted
M74/0092 Granted
M77/0098 Granted
M77/0215 Granted
M77/0216 Granted
M77/0219 Granted
M77/0284 Granted
M77/0285 Granted
M77/0286 Granted
M77/0329 Granted
M77/0335 Granted
M77/0336 Granted
M77/0389 Granted
M77/0399 Granted
M77/0458 Granted
M77/0542 Granted
M77/0543 Granted
M77/0545 Granted
M77/0550 Granted
M77/0568 Granted
86
100%
200%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Western Areas Ltd
Western Areas Ltd
Western Areas Ltd
Western Areas Ltd
Western Areas Ltd
Western Areas Ltd
Western Areas Ltd
Western Areas Ltd
Western Areas Ltd
Western Areas Ltd
Western Areas Ltd
Western Areas Ltd
Western Areas Ltd
Western Areas Ltd
Western Areas Ltd
Western Areas Ltd
Western Areas Ltd
Western Areas Ltd
Western Areas Ltd
Western Areas Ltd
Western Areas Ltd
Western Areas Ltd
Western Areas Ltd
Western Areas Ltd
Western Areas Ltd
Western Areas Ltd
Western Areas Ltd
Western Areas Ltd
Western Areas Ltd
Western Areas Ltd
Western Areas Ltd
Western Areas Ltd
Western Areas Ltd
Western Areas Ltd
Western Areas Ltd
Western Areas Ltd
Western Areas Ltd
Western Areas Ltd
Western Areas Ltd
Western Areas Ltd
Western Areas Ltd
Western Areas Ltd
Western Areas Ltd
M77/0574 Granted
M77/0582 Granted
M77/0583 Granted
M77/0584 Granted
M77/0585 Granted
M77/0586 Granted
M77/0587 Granted
M77/0588 Granted
M77/0589 Granted
M77/0911 Granted
M77/0912 Granted
E77/2127
Pending
E77/2228
Pending
E77/2235
Pending
E77/2236
Pending
E77/2261
Pending
P77/4278
Granted
P77/4279
Granted
WSA
Interest
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
E77/1086
Granted
100%
E77/1399
Granted
100%
E77/1400
Granted
100%
E77/1416
Granted
100%
E77/1436
Granted
100%
E77/1581
Granted
100%
M77/0099 Granted
100%
M77/0324 Granted
100%
M77/0467 Granted
100%
M77/0468 Granted
100%
M77/0544 Granted
100%
P77/3735
Granted
100%
P77/3736
Granted
100%
P77/3737
Granted
100%
P77/3738
Granted
100%
Applicant Holder
Western Areas Ltd
Western Areas Ltd
Western Areas Ltd
Western Areas Ltd
Western Areas Ltd
Western Areas Ltd
Western Areas Ltd
Western Areas Ltd
Western Areas Ltd
Western Areas Ltd
Western Areas Ltd
Western Areas Ltd
Western Areas Ltd
Western Areas Ltd
Western Areas Ltd
Western Areas Ltd
Western Areas Ltd
Western Areas Ltd
Western Areas
Nickel Pty Ltd
Western Areas
Nickel Pty Ltd
Western Areas
Nickel Pty Ltd
Western Areas
Nickel Pty Ltd
Western Areas
Nickel Pty Ltd
Western Areas
Nickel Pty Ltd
Western Areas
Nickel Pty Ltd
Western Areas
Nickel Pty Ltd
Western Areas
Nickel Pty Ltd
Western Areas
Nickel Pty Ltd
Western Areas
Nickel Pty Ltd
Western Areas
Nickel Pty Ltd
Western Areas
Nickel Pty Ltd
Western Areas
Nickel Pty Ltd
Western Areas
Nickel Pty Ltd
Western Areas 2016 Annual ReportTenements Listing Name
Lease
Status
WSA
Interest
Applicant Holder
Name
Lease
Status
WSA
Interest
P77/3743
Granted
100%
P77/3748
Granted
100%
P77/3749
Granted
100%
P77/3750
Granted
100%
P77/3751
Granted
100%
P77/3752
Granted
100%
P77/3758
Granted
100%
P77/3836
Granted
100%
P77/3837
Granted
100%
P77/3838
Granted
100%
P77/3839
Granted
100%
P77/3840
Granted
100%
P77/3846
Granted
100%
P77/3847
Granted
100%
P77/3862
Granted
100%
P77/3865
Granted
100%
P77/4067
Granted
100%
Western Areas
Nickel Pty Ltd
Western Areas
Nickel Pty Ltd
Western Areas
Nickel Pty Ltd
Western Areas
Nickel Pty Ltd
Western Areas
Nickel Pty Ltd
Western Areas
Nickel Pty Ltd
Western Areas
Nickel Pty Ltd
Western Areas
Nickel Pty Ltd
Western Areas
Nickel Pty Ltd
Western Areas
Nickel Pty Ltd
Western Areas
Nickel Pty Ltd
Western Areas
Nickel Pty Ltd
Western Areas
Nickel Pty Ltd
Western Areas
Nickel Pty Ltd
Western Areas
Nickel Pty Ltd
Western Areas
Nickel Pty Ltd
Western Areas
Nickel Pty Ltd
Lake King
JV
E70/2148
Granted
70% Ni
Rights
Swanoak Holdings
Pty Ltd
E70/4029
Granted
E70/4428
Granted
E70/4429
Granted
E70/4430
Granted
70% Ni
Rights
70% Ni
Rights
70% Ni
Rights
70% Ni
Rights
Western Areas Ltd
& Swanoak Holdings
Pty Ltd
Western Areas Ltd
& Swanoak Holdings
Pty Ltd
Western Areas Ltd
& Swanoak Holdings
Pty Ltd
Western Areas Ltd
& Swanoak Holdings
Pty Ltd
Mt Gibb JV E74/0603
PENDING 70%
Western Areas Ltd
Mt
Alexander
BHPB JV
E29/00638 Granted
25%
Cosmos
M36/0127 Granted
100%
St George Mining
Limited
Xstrata Nickel
Australasian
Operations Pty
Limited
M36/0180 Granted
100%
M36/0302 Granted
100%
M36/0303 Granted
80.6%
M36/0305 Granted
100%
M36/0329 Granted
80.6%
M36/0330 Granted
80.6%
M36/0332 Granted
100%
M36/0349 Granted
100%
M36/0371 Granted
100%
M36/0377 Granted
100%
M36/0467 Granted
100%
M36/0632 Granted
100%
M36/0633 Granted
100%
M36/0659 Granted
100%
L36/0042
Granted
L36/0067
Granted
L36/0068
Granted
L36/0069
Granted
200%
100%
100%
100%
Applicant Holder
Xstrata Nickel
Australasian
Operations Pty
Limited
Xstrata Nickel
Australasian
Operations Pty
Limited
Xstrata Nickel
Australasian
Operations Pty
Limited and Alkane
Resources Ltd
Xstrata Nickel
Australasian
Operations Pty
Limited
Xstrata Nickel
Australasian
Operations Pty
Limited and Alkane
Resources Ltd
Xstrata Nickel
Australasian
Operations Pty
Limited and Alkane
Resources Ltd
Xstrata Nickel
Australasian
Operations Pty
Limited
Xstrata Nickel
Australasian
Operations Pty
Limited
Xstrata Nickel
Australasian
Operations Pty
Limited
Xstrata Nickel
Australasian
Operations Pty
Limited
Xstrata Nickel
Australasian
Operations Pty
Limited
Xstrata Nickel
Australasian
Operations Pty
Limited
Xstrata Nickel
Australasian
Operations Pty
Limited
Xstrata Nickel
Australasian
Operations Pty
Limited
Xstrata Nickel
Australasian
Operations Pty
Limited
BHP Billiton
BHP Billiton
BHP Billiton
87
Western Areas 2016 Annual ReportTenements Listing Applicant Holder
Name
Lease
Status
WSA
Interest
Applicant Holder
Name
Lease
Status
L36/0070
Granted
L36/0071
Granted
L36/0072
Granted
L36/0073
Granted
L36/0074
Granted
L36/0075
Granted
L36/0076
Granted
L36/0077
Granted
L36/0078
Granted
L36/0079
Granted
L36/0080
Granted
L36/0081
Granted
L36/0094
Granted
L36/0095
Granted
WSA
Interest
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
L36/0118
Granted
100%
L36/0119
Granted
100%
L36/0145
Granted
100%
L36/0148
Granted
100%
L36/0159
Granted
100%
L36/0171
Granted
100%
L36/0172
Granted
100%
L36/0189
Granted
100%
L36/0194
Granted
100%
L36/0199
Granted
100%
BHP Billiton
BHP Billiton
BHP Billiton
BHP Billiton
BHP Billiton
BHP Billiton
BHP Billiton
BHP Billiton
BHP Billiton
BHP Billiton
BHP Billiton
BHP Billiton
BHP Billiton
BHP Billiton
Xstrata Nickel
Australasian
Operations Pty
Limited
Xstrata Nickel
Australasian
Operations Pty
Limited
Xstrata Nickel
Australasian
Operations Pty
Limited
Xstrata Nickel
Australasian
Operations Pty
Limited
Xstrata Nickel
Australasian
Operations Pty
Limited
Xstrata Nickel
Australasian
Operations Pty
Limited
Xstrata Nickel
Australasian
Operations Pty
Limited
Xstrata Nickel
Australasian
Operations Pty
Limited
Xstrata Nickel
Australasian
Operations Pty
Limited
Xstrata Nickel
Australasian
Operations Pty
Limited
Western
Gawler
EL 4440
EL 5077
EL 5199
EL 5200
Granted
Granted
Granted
Granted
Earning In
Strandline Resources
Limited
100%
100%
100%
Western Areas Ltd
Western Areas Ltd
Western Areas Ltd
88
Southern
Cross
Goldfields
JV
EL 5688
Granted
100%
Western Areas Ltd
ELA2014
/00252
Pending
100%
Western Areas Ltd
E77/1164
Granted
E77/1322
Granted
E77/1376
Granted
E77/1380
Granted
E77/1462
Granted
E77/1474
Granted
E77/1477
Granted
E77/1508
Pending
E77/1509
Granted
E77/1721
Pending
E77/1741
Granted
E77/1791
Pending
E77/1814
Granted
E77/1817
Granted
E77/1911
Granted
E77/1965
Granted
E77/1997
Granted
E77/2025
Granted
E77/2032
Granted
E77/2067
Granted
E77/2077
Granted
E77/2091
Granted
E77/2105
Pending
E77/2109
Granted
E77/2110
Granted
E77/2124
Granted
E77/2141
Granted
70% Ni
rights
70% Ni
rights
70% Ni
rights
70% Ni
rights
70% Ni
rights
70% Ni
rights
70% Ni
rights
70% Ni
rights
70% Ni
rights
70% Ni
rights
70% Ni
rights
70% Ni
rights
70% Ni
rights
70% Ni
rights
70% Ni
rights
70% Ni
rights
70% Ni
rights
70% Ni
rights
70% Ni
rights
70% Ni
rights
70% Ni
rights
70% Ni
rights
70% Ni
rights
70% Ni
rights
70% Ni
rights
70% Ni
rights
70% Ni
rights
Black Oak Minerals
Limited
Black Oak Minerals
Limited
Polaris Metals Pty
Ltd
Black Oak Minerals
Limited
Polaris Metals Pty
Ltd
Black Oak Minerals
Limited
Black Oak Minerals
Limited
Julian Uncovich
Black Oak Minerals
Limited
Polaris Metals Pty
Ltd
Black Oak Minerals
Limited
Black Oak Minerals
Limited
Black Oak Minerals
Limited
Black Oak Minerals
Limited
Black Oak Minerals
Limited
Black Oak Minerals
Limited
Black Oak Minerals
Limited
Black Oak Minerals
Limited
Polaris Metals Pty
Ltd
Black Oak Minerals
Limited
Polaris Metals Pty
Ltd
Black Oak Minerals
Limited
Jayvee Resources
Pty Ltd
Black Oak Minerals
Limited
Black Oak Minerals
Limited
Black Oak Minerals
Limited
Black Oak Minerals
Limited
Western Areas 2016 Annual ReportTenements Listing Name
Lease
Status
E77/2146
Granted
E77/2150
Granted
E77/2171
Granted
E77/2172
Granted
E77/2186
Granted
E77/2242
Granted
E77/2247
Granted
E77/2269
Granted
E77/2272
Granted
E77/2273
Granted
E77/2274
Granted
E77/2275
Granted
E77/2276
Granted
E77/2288
Granted
G77/35
Granted
L77/221
Granted
L77/223
Granted
M77/166
Granted
M77/394
Granted
M77/576
Granted
M77/646
Granted
M77/824
Granted
M77/931
Granted
M77/962
Granted
M77/1025 Granted
M77/1044 Granted
M77/1256 Granted
M77/1264
Pending
P77/3461
Granted
WSA
Interest
70% Ni
rights
70% Ni
rights
70% Ni
rights
70% Ni
rights
70% Ni
rights
70% Ni
rights
70% Ni
rights
70% Ni
rights
70% Ni
rights
70% Ni
rights
70% Ni
rights
70% Ni
rights
70% Ni
rights
70% Ni
rights
70% Ni
rights
70% Ni
rights
70% Ni
rights
70% Ni
rights
70% Ni
rights
70% Ni
rights
70% Ni
rights
70% Ni
rights
70% Ni
rights
70% Ni
rights
70% Ni
rights
70% Ni
rights
70% Ni
rights
70% Ni
rights
70% Ni
rights
Applicant Holder
Name
Lease
Status
Black Oak Minerals
Limited
Polaris Metals Pty
Ltd
Black Oak Minerals
Limited
Black Oak Minerals
Limited
Black Oak Minerals
Limited
Black Oak Minerals
Limited
Black Oak Minerals
Limited
Black Oak Minerals
Limited
Black Oak Minerals
Limited
Black Oak Minerals
Limited
Black Oak Minerals
Limited
Black Oak Minerals
Limited
Black Oak Minerals
Limited
Flatrock Resources
Pty Ltd
Black Oak Minerals
Limited
Black Oak Minerals
Limited
Black Oak Minerals
Limited
Black Oak Minerals
Limited
Black Oak Minerals
Limited
Black Oak Minerals
Limited
Black Oak Minerals
Limited
Black Oak Minerals
Limited
Black Oak Minerals
Limited
Black Oak Minerals
Limited
Black Oak Minerals
Limited
Black Oak Minerals
Limited
Black Oak Minerals
Limited
Black Oak Minerals
Limited
Black Oak Minerals
Limited
P77/3462
Granted
P77/3645
Granted
P77/3801
Granted
P77/3898
Granted
P77/3899
Granted
P77/3901
Granted
P77/3903
Granted
P77/3936
Granted
P77/3994
Granted
P77/4055
Granted
P77/4076
Granted
P77/4101
Granted
P77/4170
Granted
P77/4171
Granted
P77/4179
Granted
P77/4180
Granted
P77/4181
Granted
P77/4185
Granted
P77/4194
Granted
P77/4204
Granted
P77/4226
Granted
P77/4227
Granted
P77/4228
Granted
P77/4229
Granted
P77/4230
Granted
P77/4238
Granted
P77/4239
Granted
P77/4240
Granted
WSA
Interest
70% Ni
rights
70% Ni
rights
70% Ni
rights
70% Ni
rights
70% Ni
rights
70% Ni
rights
70% Ni
rights
70% Ni
rights
70% Ni
rights
70% Ni
rights
70% Ni
rights
70% Ni
rights
70% Ni
rights
70% Ni
rights
70% Ni
rights
70% Ni
rights
70% Ni
rights
70% Ni
rights
70% Ni
rights
70% Ni
rights
70% Ni
rights
70% Ni
rights
70% Ni
rights
70% Ni
rights
70% Ni
rights
70% Ni
rights
70% Ni
rights
70% Ni
rights
Applicant Holder
Black Oak Minerals
Limited
Black Oak Minerals
Limited
Black Oak Minerals
Limited
Black Oak Minerals
Limited
Black Oak Minerals
Limited
Black Oak Minerals
Limited
Black Oak Minerals
Limited
Black Oak Minerals
Limited
Black Oak Minerals
Limited
Black Oak Minerals
Limited
Black Oak Minerals
Limited
Black Oak Minerals
Limited
Black Oak Minerals
Limited
Black Oak Minerals
Limited
Black Oak Minerals
Limited
Black Oak Minerals
Limited
Black Oak Minerals
Limited
Black Oak Minerals
Limited
Black Oak Minerals
Limited
Black Oak Minerals
Limited
Black Oak Minerals
Limited
Black Oak Minerals
Limited
Black Oak Minerals
Limited
Black Oak Minerals
Limited
Black Oak Minerals
Limited
Black Oak Minerals
Limited
Black Oak Minerals
Limited
Black Oak Minerals
Limited
89
Western Areas 2016 Annual ReportTenements Listing Shareholder Information
(as at 31 August 2016)
Distribution of Shareholdings
i. Distribution schedule of holdings
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 – over
Total number of holders
ii. Number of holders of less than a marketable parcel
iii. Number of overseas holders
iv. Percentage held by 20 largest holders
* All ordinary shares carry one vote per share without restriction
Largest Security Holders
Names of the 20 largest holders of Ordinary Shares are listed below:
Name
Wellington Mgt Company
Schroder Investment Mgt - Sydney
Antares Equities
Paradice Investment Mgt
Tribeca Investment Partners
JCP Investment Partners
Ausbil Investment Mgt
Mr & Mrs Allan R Greenwell
Avoca Investment Mgt
BlackRock Investment Mgt
Highclere International Investors
Dimensional Fund Advisors
NovaPort Capital
Martin Currie Australia
Schroder Investment Mgt - London
State Street Global Advisors
Helaba Invest
Vanguard Investments Australia
Colonial First State - Global Resources
Colonial First State - Core Australian Equities
Total
Substantial Shareholders
Name
Commonwealth Bank of Australia
Schroder Investment Mgt
Wellington Mgt Group LLP
Australian Super Pty Ltd
National Australia Bank Limited
90
Ordinary shares*
1913
2145
750
941
100
5849
580
179
56.92%
%
5.58%
4.88%
4.30%
3.88%
3.86%
3.83%
3.56%
3.31%
3.25%
2.83%
2.35%
2.22%
2.12%
1.76%
1.74%
1.58%
1.57%
1.48%
1.46%
1.37%
56.92%
%
9.36%
7.54%
6.76%
6.21%
6.23%
No. of shares
15,204,119
13,289,957
11,697,160
10,561,384
10,511,537
10,427,223
9,684,975
9,009,862
8,855,739
7,698,275
6,387,306
6,043,407
5,781,195
4,778,914
4,735,946
4,288,562
4,264,700
4,021,817
3,972,639
3,730,106
154,944,823
No. of Shares held
25,376,834
20,427,308
18,305,012
16,350,171
14,539,432
Western Areas 2016 Annual ReportShareholder Information This page has been left blank intentionally.
91
Registered Office
Level 2
2 Kings Park Road
West Perth WA 6005
PO Box 1891
West Perth WA 6872
Phone: +61 (0) 8 9334 7777
+61 (0) 8 9486 7866
Fax:
info@westernareas.com.au
Email:
westernareas.com.au