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Hudbay Minerals ANNUAL REPORT2018ANNUAL REPORT 2018Registered Office Level 2, 2 Kings Park Road West Perth WA 6005PO Box 1891 West Perth WA 6872Phone: +61 (0) 8 9334 7777 Fax: +61 (0) 8 9486 7866 Email: info@westernareas.com.au westernareas.com.au HIGHLIGHTSImproved full year nickel price results in A$12m Net Profit after Tax and A$11m free cashflowMill Recovery Enhancement Project constructed on time and on BudgetIndustry leading Lost Time Injury Frequency Rate (LTIFR) of 0.91Strong debt free balance sheet maintained20.5kt contained nickel shipped to customersOdysseus project early works programme commenced targeted at returning the project to development ready status CORPORATE
DIRECTORY
DIRECTORS
Ian Macliver (Chairman)
Daniel Lougher
David Southam
Richard Yeates
Craig Readhead
Timothy Netscher
Natalia Streltsova
COMPANY SECRETARY
Joseph Belladonna
AUDITORS
Crowe Horwath
Level 5
45 St Georges Terrace
Perth WA 6000
BANKERS
REGISTERED OFFICE
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
Level 2
2 Kings Park Road
West Perth WA 6005
PO Box 1891
West Perth WA 6872
Phone: +61 (0) 8 9334 7777
Fax: +61 (0) 8 9486 7866
Email: info@westernareas.com.au
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 within this report as it relates to exploration results, mineral resources and ore reserves is based on information compiled by Mr Graeme Gribbin, Mr
Andre Wulfse and Mr Marco Orunesu Preiata of Western Areas Ltd. Mr Gribbin is a member of AIG, Mr Wulfse and Mr Orunesu Preiata are members of AusIMM, they
are all full time employees of the Company. Mr Gribbin, Mr Wulfse and Mr Orunesu Preiata 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.’ Mr Gribbin, Mr Wulfse and Mr Orunesu Preiata consent to the inclusion in the report of
the matters based on the information in the form and context in which it appears.
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.
CONTENTSWESTERN AREAS HAS AUSTRALIA'S HIGHEST GRADE NICKEL MINES AND IS A LOW UNIT CASH COST PRODUCER. ITS MAIN ASSET, THE 100% OWNED FORRESTANIA NICKEL PROJECTS, LOCATED 400KM EAST OF PERTH IN WESTERN AUSTRALIA. WESTERN AREAS IS ALSO AUSTRALIA’S SECOND LARGEST SULPHIDE NICKEL MINER PRODUCING APPROXIMATELY 22,000 TO 25,000 NICKEL TONNES IN ORE PER ANNUM FROM ITS FLYING FOX AND SPOTTED QUOLL MINES - TWO OF THE LOWEST COST AND HIGHEST GRADE NICKEL OPERATIONS IN THE WORLD.The Company’s key growth project is the Odysseus deposit which is located at the 100% owned Cosmos Nickel Complex. A feasibility study on the Odysseus deposit is currently nearing completion. Demonstrating the Company’s confidence that Odysseus will become its third mining operation, an early works program has already commenced to return the project to development ready status.An active nickel explorer at Forrestania, Cosmos and Western Gawler in Australia, the Company also holds exploration interests in Canada through shareholdings in Grid Metals (formerly Mustang Minerals). Additionally the Company has exposure to the emerging lithium market via its shareholding in Kidman Resources Ltd. 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.Chairman’s Letter 4Managing Director’s Report 6Operations Review 10Exploration Review 22Ore Reserve / Mineral Resource Statement 28FINANCIAL STATEMENTS 31Directors' Report 32Auditor's Independence Declaration 52Consolidated Statement of Profit or Loss and Other Comprehensive Income 53Consolidated Statement of Financial Position 54Consolidated Statement of Changes In Equity 55Consolidated Statement of Cash Flows 56Notes to the Financial Statements 57Directors Declaration 95Independent Auditor's Report 96Tenement Listing 101Shareholder Information 104 4WESTERN AREAS ANNUAL REPORT 2018Dear 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 2018. Western Areas had a safe and strong year demonstrated by significant achievements with the completion of the Mill Recovery Enhancement Project (MREP) construction and excellent progress at Cosmos, where the Definitive Feasibility Study (DFS) for Odysseus is nearing completion and early capital works for the project are underway. The Company remained focused on efficiency and productivity, and this ensured it was well positioned to capitalise on the upswing in the nickel price over the year. Our operations have been supported globally by increased demand for nickel, particularly as the Electric Vehicle (EV) market continues to grow. The Company was pleased to announce in April that the MREP was commissioned and began producing premium high grade nickel sulphide utilising our world class bacterial processing intellectual property. The plant was completed on time and within budget. The filtration and bagging facilities are now complete which will enable the high grade sulphide product to be sold into new offtake contracts. Throughout the year, Western Areas received significant in-bound interest for this uncontracted product, mainly from participants in the EV battery market, which the Company expects will enable premium pricing terms compared to its existing contracts. This is a huge achievement for Western Areas, adding increased value to our nickel products, as well as demonstrating commercial application of our patented BioHeap™ process. The decision to purchase Cosmos in late 2015, a counter-cyclical move, is now proving to be a significant organic growth project for the Company. The Odysseus DFS work has yielded a number of positive outcomes, most importantly a larger project than initially expected with a longer mine life beyond 10 years. The progress at Odysseus has rapidly increased confidence that the project will become Western Areas’ third operating mine and second production centre. As announced in April, an eighteen-month early capital works programme commenced. The A$32m programme will focus on building evaporation ponds, mine camp readiness, dewatering and decline rehabilitation. Odysseus is one of the only nickel sulphide projects that will be coming into production in a timeframe that will enable it to deliver into a growing demand profile we see globally, particularly with the looming shortage of nickel sulphides product in the market. The nickel market demonstrated positive signs of growth over the financial year, with Chinese stainless-steel demand and the growth potential of the EV market being the main drivers. From a pricing standpoint, this translated through to a strengthening nickel price, which increased over the financial year from around US$4 per pound in early July 2017 to a three year high of over US$7 per pound in June 2018. While nickel price volatility remains present, market fundamentals and a clear positive sentiment bodes well for the nickel price outlook. The higher nickel price and strong cost control resulted in net profit after tax of A$11.8m and positive free cashflow generation for the full financial year. This enabled the Board to declare a 2 cent per share fully franked final dividend based on these improved results. The already strong debt free balance sheet was enhanced with an increase in cash at bank to A$151.6m at the end of the financial year, despite significant investment in organic growth projects and capital infrastructure investments. We remain well placed to fund the near term expenditure requirements, as we move our Odysseus project forward and advance the various exploration programmes. During the prior year Western Areas traded certain tenements and lithium rights at Forrestania to Kidman Resources Limited (“Kidman”) in return for Kidman equity and being free-carried during an exploration programme. Western Areas remains a shareholder in Kidman and as such retains ongoing exposure to any lithium upside. The lithium sector has continued to attract significant interest over the course of the year and Western Areas is pleased to be generating clear value out of this non-core asset. CHAIRMAN’S LETTER Ian MacliverIndependent Non-Executive Chairman 5WESTERN AREAS ANNUAL REPORT 2018Looking forward, Western Areas will focus on further optimisation of our core business while pursuing organic growth opportunities that strengthen our position in the market. This includes our significant exploration potential at Forrestania, Cosmos and Western Gawler where increased funding is being dedicated to active programmes. The Company will also continue to strongly commit to providing a safe working environment for all our staff and contractors.In closing, I would like to take this opportunity to thank all our staff, contractors and suppliers for their support throughout the year. The continued hard work and dedication demonstrated by all staff is instrumental to the ongoing success of Western Areas.Ian Macliver Independent Non-Executive Chairman NICKEL SULPHIDE CONCENTRATE MANAGING
DIRECTOR’S
REPORT
The Company’s direction for the
2018 Financial Year (FY18) was to
focus on organic growth through a
variety of strategic initiatives that
continue to strengthen Western
Areas’ position in the market. The
aim has been to strive to achieve a
safe working environment,
productivity and efficiency
throughout our operations. In line
with this, the completion of our
MREP was a significant
achievement in FY18 and allows us
to capture more value from every
tonne of nickel mined.
Our initiatives have been bolstered
by a strengthening nickel price that
increased quarter on quarter and
averaged A$7.53 per pound for
FY18, up from A$6.11 per pound in
FY17. It was a strong year financially
with the Company able to capitalise
on the upswing in the nickel price
and generate increased profits and
cashflow. The achievements
throughout the year would not have
been possible without the
continued hard work and dedication
of everyone across the Company.
The Company has consistently
delivered into its guidance metrics
over many years. For FY18 the
underground mines reported
24.5kt’s of nickel in ore, with the
concentrator producing 21kt's of
nickel in concentrate at a low mine
gate production cost of A$2.63/lb
from the Forrestania Nickel
Operation. Nickel contained in
concentrate delivered to offtake
customers totalled 20.5kt’s for the
full year, resulted in revenue of
A$248.3m being recognised.
A stronger year on year nickel price
and the continued focus on
controllable costs have marked a
return of underlying net profit after
tax from ordinary activities and a
continuation of absolute free
cashflow generation. The solid
earnings and cashflow result has
enabled the declaration of a 2 cents
per share final dividend payable to
shareholders, marking the second
consecutive year that a final
dividend has been declared based
on positive full year financial results.
The Company continues to maintain
a strong balance sheet, with
$151.6m cash at bank and remaining
debt free. This position is
considered prudent given the
expected investment into organic
growth projects as we move
forward with our near term mine
development projects.
Pleasingly free cashflow has been
maintained during FY18 despite
significant capital expenditure into
the production centre at Forrestania
for projects such as the MREP and
Spotted Quoll return airway shaft.
Furthermore, investments have
accelerated into the Company’s
growth projects such as the early
works programme for the Odysseus
deposit at Cosmos and
advancement of the exploration
programme across the portfolio.
In line with the strategy of organic
growth, Western Areas’ MREP was
completed during March 2018, on
time and within budget. The MREP
construction was subsequently
commissioned and is producing
premium high grade nickel sulphide
at the planned specification. The
focus now turns to ramping up MREP
production and utilising the newly
established filtration and bagging
6
WESTERN AREAS ANNUAL REPORT 2018
facilities to enable a high grade
sulphide product to be sold into
separate new offtake contracts that
are expected to attract premium
pricing above the Company’s existing
offtake contract terms. These new
offtake contracts will target EV
battery precursor suppliers or
producers. Since completion of
MREP, discussions have been active
with several potential offtake parties
and has included site visits to
Forrestania. While discussions are
ongoing, the short-term plan is to
blend the product with existing
concentrate from the Cosmic Boy Mill
and sell it into the existing offtake
agreements with Tsingshan and BHP
Nickel West.
The Cosmos Nickel Complex
continues to develop into a
significant organic growth asset, the
Company is confident that Odysseus
will become Western Areas' third
operating mine and second
production centre. The decision to
purchase Cosmos in late 2015 was
counter-cyclical but is proving to be a
catalyst for new production in WA,
particularly as the demand for Class 1
nickel sulphides in the battery and
EV market is forecast to grow
substantially over coming years.
In April the Company commenced
an eighteen-month early capital
works programme consisting of
three major stages, at an estimated
cost of A$32m, which will bring
Odysseus to development ready
status. The first programme is
focused on the refurbishment of
existing evaporation ponds,
pipeline upgrades and continuation
of pit dewatering. An existing mine
camp at Odysseus with a 520 bed
capacity will also be upgraded in
readiness to cater for up to 100
contractors and employees.
The second work programme will
involve the construction of two new
evaporation ponds and dewatering
of the decline, with the final stage
encompassing infrastructure
required to support the rehabilitation
of the decline from the portal to
500 metres below the surface.
Odysseus has advanced to the early
works programme due to the overall
confidence Western Areas has in the
project and in the future growth of
the nickel sulphide market.
Western Areas continued to
advance the New Morning/Daybreak
(NMD) project and completed an
internal Scoping Study during the
March quarter 2018. Using Western
Areas’ patented BioHeap™ process,
the ore from the NMD open pit is
expected to be leached to produce
a nickel sulphate solution that can
be treated via the MREP sulphide
precipitation circuit. The capacity of
the sulphidation circuit of the MREP
plant is potentially up to 4,000
tonnes of contained nickel per
annum, meaning the MREP does
not require expansion to meet any
of the potential New Morning nickel
production.
The Company is pursuing the
prospective exploration potential of
the Western Gawler region through
systematic evaluation of targets
undercover, using modern
geophysical techniques and targeted
drilling campaigns. Key exploration
initiatives to date have included
air-core drilling and a Moving-Loop
Electro Magnetic (MLEM) survey
across multiple target areas with
bedrock conductors identified. In
addition, a state of the art,
helibourne electromagnetic survey
has been completed. The survey
across five priority areas has covered
a total area of 900km². Results of
exploration completed to date have
confirmed the prospectivity of the
Western Gawler region for intrusive-
related nickel, copper (and gold)
mineralisation.
The Company owns 17.4m shares
in Kidman. Kidman has increased in
value throughout FY18 and is a
good liquid asset adding to our
balance sheet strength. It ensures
the Company has a significant
stake in an emerging lithium
company while retaining direct
exposure to the lithium upside on
our tenements, with no expenditure
requirements.
Lost Time Injury Frequency Rate (LTIFR)
Total Ore Mined (tns)
Average Mined Grade
Contained Nickel Mined (tns)
Total Ore Processed (tns)
Average Processed Grade
Average Recovery
Contained Nickel Processed (tns)
Nickel Sold (tns)
Average Nickel Price Received (US$/tn)
Cash Costs before smelting/refining (A$/tn)
Average Exchange Rate USD/AUD
FY18
0.9
FY17
1.1
607,120
591,778
4.0%
4.4%
24,442
25,996
616,598
617,808
4.0%
87%
4.2%
89%
21,060
23,005
20,549
22,639
12,875
10,164
2.63
0.77
2.38
0.75
WESTERN AREAS ANNUAL REPORT 2018
7
MANAGING DIRECTOR’S REPORT
At Western Areas, the safety of its
employees is fundamental to the
success and sustainability of its
operations. In FY18 there was one
Lost Time Injury (LTI) recorded,
resulting in a LTI frequency rate of
0.91 for the year. The key safety
management initiatives conducted
throughout the year included
facilitation of operational risk
management, wildfire management
readiness, a preventative awareness
programme addressing fitness-for-
work and road safety. The Company
also conducted safety re-induction
sessions at both underground mines
for 120 personnel who had been on
site for two years or more.
A high standard of environmental
management has been maintained
across the Company during the
financial year with no major
reportable environmental incidents.
As the NMD project progresses,
Western Areas completed
stygofauna baseline environmental
monitoring and preliminary planning
commenced for other environmental
studies to support the approvals
process for an open pit mine.
Western Areas conducts
progressive rehabilitation at the
Forrestania Nickel Operation each
year. The Company collects native
seeds from around the project area
which are then propagated into
seedlings at a local nursery. The
annual rehabilitation planting
programme was completed in July
2017 with 16,000 seedlings planted
on the Spotted Quoll waste rock
dump, rehabilitating approximately
3ha. The Company has successfully
rehabilitated over 200 hectares in
total as part of the progressive
rehabilitation programme.
At Cosmos the Company continues
to develop a strong and productive
working relationships with the
traditional owners of the land, the
Tjiwarl group, completing multiple
heritage surveys, ongoing cultural
awareness training and employing
local contractors to complete
evaporation pond rehabilitation.
This year Western Areas released its
first Corporate Social Responsibility
(CSR) Report, reaffirming the
commitment we have made to
minimise our impact and ensure we
are operating responsibly in the
community. The Company continues
to support various programmes,
including the sponsorship
agreements with the Perth Zoo for
the Western Quoll enclosure and
Western Shield. Western Shield is
the Department of Biodiversity
Conservation and Attractions' lead
animal conservation programme,
and one of the largest wildlife
conservation programmes ever
undertaken in Australia. The
programme aims to return the
balance and mix of native animals in
selected areas of WA’s environment
to levels comparable to pre-
European settlement. Western
Areas believes this is a fantastic
initiative and in light of this we have
committed to sponsor Western
Shield for five years from 2015-2020.
Looking ahead, the Company will
continue to focus on providing a
safe workplace for all employees
and encourage a strong safety and
environmental culture. In addition,
Western Areas has several organic
growth potential opportunities at
our Forrestania and Cosmos
operations, and we look forward to
advancing these as the expected
demand for premium nickel sulphide
increases. In particular, the
opportunities at the Odysseus
Project and the regional exploration
potential that the greater Cosmos
Nickel Complex and Western Gawler
demonstrates in both base and
precious metals put the Company in
a strong position going forward.
Finally, I would like to take this
opportunity to thank our Board, all of
our staff, contractors and suppliers
for their support throughout the year.
We will continue to strive to maximise
our margins and develop our organic
projects to ensure Western Areas is
in a good position to capitalise on the
strengthening of the nickel market.
Daniel Lougher
Managing Director
and Chief Executive Officer
8
WESTERN AREAS ANNUAL REPORT 2018
9WESTERN AREAS ANNUAL REPORT 2018MANAGING DIRECTOR’S 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 owns a 100%
interest in both the Forrestania
Nickel Operation (“Forrestania”)
and the Cosmos Nickel Complex
(“Cosmos”) which are both located in
Western Australia.
The Company’s main operational
asset at Forrestania is located 400km
east of Perth in Western Australia.
Western Areas is a sulphide nickel
miner producing approximately
22,000 to 25,000 nickel ore tonnes
per annum from its Flying Fox and
Spotted Quoll underground 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 Tsingshan
Group, China’s largest stainless steel
producer, for a minimum delivery of
10,000tpa nickel in concentrate and
BHP Billiton for a further 12,000tpa.
The Company continues to foster
innovation within the Group
such as the recently constructed
MREP at Forrestania’s CBC that
is commercialising the Company’s
100% owned proprietary BioHeap™
bacterial leaching technology. The
introduction of filtering and bagging
infrastructure has now enabled
production of a value added, high
grade, nickel product which may
potentially directly supply the
emerging battery market.
Western Areas’ primary growth
asset is the Odysseus Project at
Cosmos. Odysseus is expected
to provide the Company a third
operating mine in the years
ahead. The definitive mining
feasibility study for Odysseus is
nearing completion with a larger
longer life mine expected. Such
is the Company’s confidence in
the project that early works have
commenced to ensure the site is
development ready.
The Company is an active base
and precious metal explorer at
both Cosmos and Forrestania, with
significant interests in the Western
Gawler area located in South
Australia.
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 through commodity
price cycles that includes a prudent
capital management strategy
and an opportunistic approach to
joint venture opportunities and
value based asset acquisition
assessment.
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. These are shown
below along with the principal
assets of each.
FORRESTANIA (100%)
Lounge Lizard - Ni
Diggers South - Ni
New Morning - Ni
Sunrise - Ni
Cosmic Boy - Ni
WESTERN AREAS LTD
2 Operating Mines
Flying Fox Ni
Spotted Quoll Ni
AUST
EXPLORATION
ASSETS
Mt Alexander JV - Ni
Western Gawler
(including Strandline
JV) - Ni, Cu, Au
BIOHEAP (100%)
Bacterial
Heap Leach
Worldwide Patents
Full Laboratory and
Management Team
GRID METALS CORP.
(12.10%)
CANADA
Makwa - Ni/PGM
Mayville (M2)
- Cu/PGM
FORRESTANIA
(90%)
Mt Gibb - Ni, Au
AUSTRALIAN NICKEL
INVESTMENT
PTY LTD (100%)
Cosmos Nickel
Complex
10
WESTERN AREAS ANNUAL REPORT 2018
WESTERN AREAS
SAFETY
The Forrestania Nickel Operations
(FNO) had a good safety
performance for FY18, with only one
LTI sustained during the year at
the Cosmic Boy Concentrator. The
year ended with an LTI frequency
rate of 0.91. The Total Recordable
Injury Frequency Rate (TRIFR) at
year end was 8.32 (TRIFR includes
recordable injuries which require
medical treatment, or result in
restricted duties or lost time). This
was an excellent achievement by
the operations team at Forrestania.
A summary detailing the LTI free
days by operating department at
year end is shown in the table below.
Department
Surface Exploration
Spotted Quoll UG mine
Cosmic Boy Village
Surface Haulage
Flying Fox UG mine
Cosmic Boy Concentrator
LTI free
days
3,592
2,636
2,343
1,551
475
53
The approach this year to safety
was to conduct ‘hands-on’ training
that prepare our staff for any
event or incident that could occur
on site. We created a simulated
underground fire training facility
that enabled the FNO emergency
response team to conduct exercises
in challenging real-world simulated
conditions.
A high level of safety performance is
our highest priority and year on year
we review our safety management
initiatives and look for new ways
to improve on our training offered
to employees. General health and
wellbeing was also a key focus; the
Company introduced complimentary
health campaigns on dehydration,
diabetes and seasonal issues
around mental health and wellbeing.
Three nature trails were also
established using existing tracks east
of the village by the environmental
and safety departments as a healthy
exercise option.
FORRESTANIA
ENVIRONMENTAL
ACTIVITIES
Environmental compliance was
maintained at a high standard
throughout the financial year with
no reportable incidents and minor
environmental incidents contained
and managed internally.
All regulatory commitments
were completed, including
environmental monitoring and
submitting key environmental
reports to the relevant state and
federal departments, including
water quality, groundwater level
monitoring, declared rare flora, and
rehabilitation monitoring.
The annual rehabilitation programme
involved a successful seed collection
programme with approximately
34,000 seedlings delivered to
a central wheatbelt nursery for
seedling propagation (increase of
50% compared to last year).
The seeds were returned to FNO in
June 2018 and transferred to the
local FNO hot-house facility prior to
planting in three selected areas,
(approximately 3.5 hectares in total),
i.e. Spotted Quoll Waste Dump
(South) and two former gravel pits.
Seedling planting was undertaken
by a specialist contractor after
preparation works including deep
ripping and topsoil spreading.
Successful feral animal control
(including baiting) campaigns
were conducted that resulted in
reduced feral animal sightings,
plus monitoring programmes for
Malleefowl (Leipoa ocellata) and
Chuditch (Dasyurus geoffroii) using
motion sensor cameras. Both the
Malleefowl and the Chuditch are
listed as Schedule 1 Threatened
Fauna at a State level and as
‘vulnerable’ at a Commonwealth
level.
The Company submitted carbon
emission data as part of Carbon
Disclosure Project annual reporting
requirements.
COLM HARKIN (SENIOR ENVIRONMENTAL ADVISOR)
ACCEPTING SEEDLING DELIVERY FROM DUSTIN MCCREERY
(CHATFIELDS NURSERY OWNER)
WESTERN AREAS ANNUAL REPORT 2018
11
OPERATIONS REVIEW
COMMUNITY
COSMOS
The Company supported its
relationship with the Perth Zoo
by sponsoring the Western Quoll
enclosure and the Company’s
ongoing sponsorship of the Western
Shield programme which supports
protecting the endangered numbat.
The Company continues to support
the various primary schools, sporting
clubs and community groups that
surround the Forrestania operations.
The Company was pleased to
donate raffia basket weaving
supplies and additional aboriginal
material to the Leonora Women’s
Group called “nyunnga gu”
(translated as “women belong to”).
Environmental compliance was
maintained at a high standard
throughout the financial year with no
reportable environmental incidents.
Cosmos transitioned from care and
maintenance during the first half
of the year to the commencement
of the Early Works infrastructure
programme early in 2018.
In January, Stage One dewatering
of the Cosmos open pit commenced
with water discharging to a
network of evaporation ponds.
The dewatering programme
initiated an expanded compliance
monitoring programme including
water quality and groundwater
depths, with new water level data
loggers installed on each monitoring
bore to improve the monitoring
network around the ponds. A
network of seepage recovery bores
surrounding the water management
ponds (WMP) were refurbished
and recommissioned to manage
groundwater levels.
ABORIGINAL HERITAGE SURVEYS WERE
CONDUCTED DURING THE YEAR WITH
THE TJIWARL ABORIGINAL CORPORATION.
A ground disturbance permit (GDP)
process was implemented as an
additional management control for
the Early Works programme and
aboriginal heritage areas. The GDP
will ensure that all environmental
and heritage risks are considered
and approvals are in place before
any disturbance can proceed.
A number of aboriginal heritage
surveys of exploration and
key infrastructure areas were
conducted during the year with
the Tjiwarl Aboriginal Corporation.
Tjiwarl heritage monitors continued
to oversee a number of exploration
drilling programmes and the
Company continued its excellent
working relationship with the Tjiwarl
people.
ABORIGINAL HERITAGE SURVEY WITH THE TJIWARL ABORIGINAL CORPORATION
12
WESTERN AREAS ANNUAL REPORT 2018
FLYING FOX MINE
Capital development was kept at a
minimum with only 188m of lateral
capital development completed at
the 230 and 215 levels, The lowest
level of the mine remains at 1,262m
below surface.
Production for the year was sourced
from the T5 orebody (410 to 215
levels) and predominately from
long-hole stoping (84%) with the
remainder from a combination of
454m of ore development (180
and 200 levels plus 370 to 410
pegmatite lodes) and 157m of flat-
back stoping over existing lateral
development to rehabilitate areas in
preparation for stoping. There was
also 309m of paste development to
facilitate slot drilling.
OPERATIONS REVIEW
SPOTTED QUOLL
MINE
SPOTTED QUOLL
INFRASTRUCTURE
The mining of the decline
re-commenced in January and
advanced to a depth of 830m below
the surface by year end. The decline
established the first ‘Stage Two’ ore
drive accesses (660 and 640) that
resulted in three ore drives (675,
660 and 627) and has also recently
started the 570 access. The ‘Stage
Two’ district of the mine is located
below and laterally offset from the
single-boom area (SBA).
Ore production was split almost
evenly between the two stoping
areas (twin boom jumbo area (TBA)
and SBA). The TBA production was
sourced from the 955 to 932 levels
with the successful re-opening of
the 1215 and 920 plus completing
the 1125, 962 and 955 levels.
Production from the SBA (911
to 710m RL) using specialist
contractors completed the 901,
890, 881 and 841 levels with
ongoing production from the 871
to 804 levels. Smaller ore drive
development (nominal 3.5m x 3.5m
‘shanty’ profile) continued from the
832 to 757 levels with the same
development (795 to 777 levels)
over 15m past the northern ore
reserve boundary.
The ‘sink and line’ section of the
surface to 795 level primary return
air way (RAW) shaft was completed
late in December, which involved
56m (44m to 100m to top-of-collar)
of 4.5m diameter concrete lining
using drill and blast techniques,
with a headframe and winder for
material movement via a kibble to
surface.
The surface primary fan plinths
and electrical switch room
concrete footings were installed
in late January followed by the
two primary fans and electrical
switch room installed in late
April. The Stage One electrical
and mechanical commissioning
was completed in May with the
final Stage Two commissioning
completed early in FY19.
The underground primary
ventilation RAW network was
extended to the 660 level with
the excavation of two vertical
(730 to 700 and 700 to 660) RAW
long-hole rises. The escape-way
network necessary to commence
Stage Two stoping was extended,
with escape ladder-ways installed
in dedicated 1.0m raise-bore shafts
from the 660 to 640 levels.
MINE AND MILL PRODUCTION AND CASH COSTS
2017/2018
Sep Qtr
Dec Qtr
Mar Qtr
Jun Qtr
YTD Total
TONNES MINED
Flying Fox
Ore Mined
Grade
Flying Fox Nickel Mined
tonnes
Spotted Quoll
Ore Mined
Grade
tonnes
%
Spotted Quoll Nickel Mined tonnes
tonnes
60,890
%
4.1%
2,510
78,561
4.3%
3,345
65,681
3.7%
2,453
77,795
4.5%
3,517
66,858
67,236
260,665
3.7%
2,466
3.9%
2,625
3.9%
10,054
96,621
3.9%
3,770
93,478
4.0%
3,756
346,455
4.2%
14,388
Total Ore Mined
tonnes
139,451
143,476
163,479
160,714
607,120
Grade
Total Nickel Mined
%
tonnes
4.2%
5,855
4.2%
5,970
3.8%
6,236
4.0%
6,381
4.0%
24,442
WESTERN AREAS ANNUAL REPORT 2018
13
14WESTERN AREAS ANNUAL REPORT 2018OPERATIONS REVIEWFLYING FOX PRODUCTIONFlying Fox mined a total of 260,665 ore tonnes at an average grade of 3.9% nickel for 10,054 contained nickel tonnes. The total mined nickel exceeded mine plans due to diligent control of waste dilution that increased the overall ore grade. The Lounge Lizard ore tonnes mined for the year was 158,459 ore tonnes at a grade of 3.7% nickel for 5,938 nickel tonnes.SPOTTED QUOLL PRODUCTIONSpotted Quoll mined a total of 346,455 ore tonnes at an average grade of 4.2% nickel for 14,388 contained nickel tonnes which surpassed last year as the highest annual production of both ore and nickel tonnes to date.COSMIC BOY NICKEL CONCENTRATORTONNES MILLED AND SOLD2017/2018YTD TotalSep QtrDec QtrMar QtrJun QtrOre Processed – Mined Oretonnes141,151136,816144,925152,425575,317Ore Sorter & Low Grade Stockpile tonnes13,72124,4023,158-41,281Total Ore Milledtonnes154,872161,218148,083152,425616,598Grade%4.0%4.0%3.9%4.0%4.0%Ave. Recovery%87%86%86%89%87%Nickel in Concentrate Producedtonnes5,3385,5274,8275,36821,060Nickel in Concentrate Soldtonnes5,3485,2754,7505,17620,549The Cosmic Boy Concentrator (CBC) processed 616,598 tonnes of ore at an average grade of 4.0% nickel, despite its nameplate capacity of 550kt, which included the reminder of the ore sorter ‘Fines’ material (41,281t @ 1.4% nickel) in the first half of the year. A total of 137,927 tonnes of concentrate was produced at 15.3% nickel containing 21,060 nickel tonnes with an average recovery of 87%.The ability to process above nameplate is largely due to the well planned and executed preventative maintenance programme with 98% plant availability achieved for the year. CBC CONCENTRATOR AT DAWNTHE ABILITY TO PROCESS ABOVE NAMEPLATE IS LARGELY DUE TO THE WELL PLANNED AND EXECUTED PREVENTATIVE MAINTENANCE PROGRAMME. WESTERN AREAS ANNUAL REPORT 201815OPERATIONS REVIEWMILL RECOVERY ENHANCEMENT PROJECT The MREP commenced construction in April 2017, which uses the Company’s wholly owned BioHeapTM’s patented process technology to recover nickel from a waste stream produced in the CBC. The nickel recovered is converted into a high grade nickel sulphide product which can either be mixed with the CBC concentrate or sold as a separate product suitable to be processed in a refinery, which has attracted a lot of international interest from refiners of products which are destined to supply the electric vehicle (EV) market.The MREP construction was completed and project commissioned in mid-January and has produced nickel sulphide product grading 47% nickel, 0.3% Fe and less than 200 ppm As. This material is within design and is currently being combined with the CBC’s flotation concentrate. The project will continue in ramp up mode during the first half of FY19. A separate dewatering and bagging facility has been constructed to enable the sale of the high grade nickel sulphide as a separate product.MREP PLANTTHE PROJECT WILL CONTINUE IN RAMP UP MODE DURING THE FIRST HALF OF FY19. 16WESTERN AREAS ANNUAL REPORT 2018OPERATIONS REVIEWNICKEL SALESThe delivery of concentrates has been maintained into the two existing offtake agreements. A total of 136,400 tonnes of concentrate was delivered containing 20,549 tonnes of nickel.During the year the mode of transport for export concentrate changed from utilising half height sea containers (HHC) to lined general purpose sea containers. This has resulted in a cost reduction due to using a newer and consequently less maintenance intensive fleet of general purpose containers and not incurring a re-position charge to return empty HHC’s back to Australia. COST OF PRODUCTIONThe unit cash cost of production of nickel in concentrate (excluding smelting/refining charges, concentrate logistic and royalties) was A$2.63/lb (US$2.03/lb) for the full year, which was within the full year guidance range. This has been impacted by an increased proportion of ore development production tonnes (versus cheaper stoping tonnes) from both underground mines in the second half of the financial year, as development of the Spotted Quoll Stage Two mining levels are sequentially brought online and ore development drives are established at Flying Fox to access new production stopes. Contractual rise and fall charges have also trended higher across the operation due to increases in the oil, consumables, foreign exchange and wages inputs. FINANCIAL STATISTICS2017/2018YTDSep QtrDec QtrMar QtrJun QtrGroup Production Cost/lbMining Cost (*)A$/lb1.751.811.892.031.87HaulageA$/lb0.060.070.070.070.07MillingA$/lb0.510.470.570.520.52AdminA$/lb0.200.180.210.210.20By Product CreditsA$/lb(0.03)(0.03)(0.03)(0.03)(0.03)Cash Cost Ni in Con (***)A$/lb2.492.502.712.802.63Cash Cost Ni in Con (***)US$/lb(**)1.971.922.132.122.03Exchange Rate US$ / A$0.790.770.790.760.77(*) Mining Costs are net of deferred waste costs and inventory stockpile movements. (**) US$ FX for Relevant Quarter is RBA average daily rate (Jun Qtr = A$1:US$0.76).(***) Payable terms are not disclosed due to confidentiality conditions of the offtake agreements. Cash costs exclude royalties and concentrate logistics costs.THE COMPANY IS MAINTAINING FOCUS ON EMBEDDING COST REDUCTIONS INTO THE OPERATION FOR THE LONG TERM. WESTERN AREAS ANNUAL REPORT 201817OPERATIONS REVIEW OPERATIONS REVIEW
FLYING FOX MINERAL
RESOURCES AND ORE
RESERVES
The Flying Fox high grade Mineral
Resource and Ore Reserve estimates
(depleted for mining) at the end of the
financial year are as follows;
• Mineral Resource: 1.85 million
tonnes of ore at a grade of 4.8%
nickel for 88,910 tonnes of nickel;
and
• Ore Reserve: 0.75 million tonnes
of ore at a grade of 3.9% nickel for
29,170 tonnes of nickel.
The longitudinal section shows the
Flying Fox mine with mineral resources
and reserves depleted for mining
production during the year.
SPOTTED QUOLL
MINERAL RESOURCES
AND ORE RESERVES
The Mineral Resource and Ore Reserve
estimates (depleted for mining) at the
end of the financial year as follows:
• Mineral Resource: 1.87 million
tonnes of ore at a grade of 5.6%
for 105,257 nickel tonnes; and
• Ore Reserve: 1.80 million tonnes of
ore at a grade of 4.0% for 71,930
nickel tonnes.
The long section shows the Spotted
Quoll Mine with mineral resources and
reserves depleted for the year.
18
WESTERN AREAS ANNUAL REPORT 2018
OPERATIONS REVIEW
NEW MORNING /
DAYBREAK
RESOURCE
An updated Mineral Resource
Estimate for the NMD deposits was
completed in the first half of FY18.
This involved further surface drilling
of the hanging wall disseminated
mineralisation, which resulted in a
substantial increase of the lower
grade resource as shown in the
table below:
NEW MORNING /
DAYBREAK OPEN-PIT
SCOPING STUDY
An internal Scoping Study (Study)
was completed early in FY18
delineating a potential open pit
to mine the shallow ore at New
Morning. The indicative open pit
schedule would mine to a depth
of 110m over a three to four year
period. The Study assumed that
the mined ore would be trucked
to nearby pads where it would be
crushed and agglomerated and
placed into leach-pads.
RESOURCE ESTIMATE AS AT 30 JUNE 2018
NMDB Low Grade at 0.5%Ni COG
RESOURCE CATEGORY
Inferred
Indicated
Total
TONNES
2,496,658
3,318,468
5,815,126
NMDB High Grade at 2.0% COG
RESOURCE CATEGORY
TONNES
Inferred
Indicated
Total
78,067
340,126
418,193
Ni %
1.3%
1.2%
1.2%
Ni %
3.9%
3.3%
3.6%
Ni t
32,498
41,181
73,679
Ni t
3,025
11,224
14,249
Using Western Areas’ patented
BioHeapTM process, the ore would
be leached to liberate a nickel
sulphate pregnant liquor (PLS),
which would then be pumped to
the MREP plant for processing
into a 45-50% nickel sulphide.
Production capacity at the back
end (sulphidation section) of the
MREP plant is potentially up to
4,000 tonnes of contained nickel
per annum, meaning that the MREP
does not require expansion to meet
potential New Morning throughput.
Indicative capital estimates for
the project are expected to be
relatively low given the shallow
nature of the orebody. The current
target is to produce a feasibility
study by the end of FY19. Part
of that feasibility study involves
further agglomeration and column
test-work on the hanging-wall
disseminated ore, regulatory
environmental base-line flora and
fauna surveys, plus hydrological
and geotechnical reviews.
WESTERN AREAS ANNUAL REPORT 2018
19
OPERATIONS REVIEW
COSMOS NICKEL
COMPLEX (“COSMOS”)
ODYSSEUS DEFINITIVE
FEASIBILITY STUDY
The study progressed well during
the year with selection of the
‘top-down’ long-hole stoping
strategy using paste fill as the
primary mining method. This is
underpinned by the updated
mine wide mining rock mass
model and definition of geo-
technically significant structures.
Detailed modelling has now been
completed on paste fill and rock
mass performance for a variety
of conditions. Various decline and
shaft access scenarios have been
investigated with a larger longer
life project expected.
In the base case mine development
design option, the hoisting shaft
is located centrally between the
north and south orebodies with
a mid-shaft loading level being
considered to assist the initial mine
development programme.
During April benchmarking visits
were conducted by the project
team to a number of similar mining
operations in Canada which
provided invaluable data for the
study. Final scheduling is showing
the mine production will be in the
order of 12 years including a ramp
up to steady state production over
a 3 year period.
EARLY WORKS
As previously released to the
market, a programme of early
works was approved for the
Odysseus Project in April FY18. As
part of the feasibility hydrological
studies, pumping from the Cosmos
open pit commenced in January,
with water being discharged into
the existing WMP. By the end of
the financial year, the water level
had dropped by 8.5m with an
average pumping rate of over
45 litres/sec.
The Early Works programme
comprises Three Stages over a
period of 18 months;
•
•
•
Stage 1: Refurbishment of
the existing WMP 1 to 5,
construction of two new
WMP’s, pipeline upgrades
and continuation of in-pit
dewatering. The existing
Cosmos village, with a 520 room
capacity, will also be upgraded
in readiness to cater for up to
100 contractors and employees
(completed by year end).
Stage 2: Construction of two
new WMP’s (additional capacity
of 1 million m3) and dewatering
of the Ilias Decline (started).
Stage 3: Infrastructure required
for the rehabilitation of Ilias
Decline from the portal located
in the Cosmos open-pit to
500m below surface.
Once the work programmes
are complete, Odysseus will be
development ready based on the
Pre-feasibility Study schedule.
Importantly, the Company will
maintain complete flexibility
to suspend the programme at
any time should there be an
unforeseen requirement to do so.
LONG SECTION OF ODYSSEUS
20
WESTERN AREAS ANNUAL REPORT 2018
OPERATIONS REVIEW
The preliminary results have
indicated the material is a low acid
consumer and initial leaching data
has indicated that a minimum of
70% of the total available nickel is
expected to be extracted from the
scats product. Further columns
commenced during FY18 to confirm
operating conditions for the
potential heap leach. Currently, the
scats stockpile is reported to be at
more than 250,000 tonnes with an
average nickel grade of 1.5%.
Further work to evaluate the
placement and costs of the
BioHeapTM leach will take place in
first half of FY19. The successful
implementation of this project will
add additional nickel into the metal
recovery circuit of the MREP.
COSMIC BOY
SCATS LEACHING
TESTWORK PROGRAMME
BioHeapTM has looked at a method
to treat a waste stream from the
CBC known as ‘scats’. This material
is hard critical size pebbles that are
ejected from the ball mill during
processing. The scats also contain
remnants of grinding media which
would damage the CBC crushers if
the scats were re-fed back into the
concentrator. Hence the scats are
stockpiled on site as a waste
product.
The scats are of ideal size for a
BioHeapTM leach (6-8mm) which
would be a low cost method to
recover the nickel locked in this
material. To determine the extraction
rate of nickel from the scats,
BioHeapTM performed a column leach
test programme. This test simulates
the possible performance from a
BioHeapTM leach.
BIOHEAPTM LIMITED
The BioHeapTM management team
has continued marketing campaign
to promote the BioHeap™
technology. Alliances and working
relationships with research
institutes, engineering firms and
test work facilities continue to be
formed and strengthened.
BioHeapTM conducted testwork
during the year for external
companies who are interested in
pursuing the technology for
sulphide projects. These works
were conducted under strict
commercial confidentiality
arrangements.
LABORATORY
BioHeapTM has received several
samples for testing using the
BioHeapTM process as a result of
discussions with potential parties
interested in battery materials.
For the past 7 years, the BioHeapTM
laboratory testing facilities have
been located as part of CSIRO in
Waterford, Perth. The lease for this
laboratory was terminated in
September 2018 and BioHeapTM
has relocated to a new laboratory
facility in the Technology/Industrial
area of Canning Vale, Perth.
NEW MORNING /
DAY BREAK LEACHING
TESTWORK PROGRAMME
Additional drilling at the NMD mine
has generated material for
BioHeapTM to conduct the next
stage of testwork for the Project.
This will include further
agglomeration studies and column
leaching on specific areas of the
orebody. This work will be
undertaken during FY19, as part of
the New Morning feasibility study.
WESTERN AREAS ANNUAL REPORT 2018
21
EXPLORATION
Western Areas understands the
importance of adopting a balanced
exploration programme across
its portfolio of tenements. The
Company continues to strongly
advance exploration activities
across all projects, with a focus on
replacing existing resources and
reserves, identifying new near-
mine opportunities to support mine
plans, whilst actively promoting
regional exploration programmes
targeting greenfields discoveries.
Cosmos continues to play a key role
in driving the Company towards
its broader exploration strategy of
identifying new mineral resources,
by assessing opportunities both
proximal to existing deposits and
within the surrounding tenement
package. The Neptune project has
formed the key focus for targeting
over FY18, with the realisation that
this corridor, extending south from
the Prospero-Tapinos deposit, is
interpreted to contain the largest
volumes of ultramafic bodies across
the Cosmos Nickel Complex. Building
on early success in FY17, recent
drilling has confirmed the existence
of thick sequences of high-tenor,
cumulate ultramafic hosted
disseminated nickel sulphides, with
the potential for extensions along
strike and at depth. The Company
believes that Cosmos will continue
to provide Western Areas with
substantial additional exploration
upside and a potential second
mining operation to sit alongside
its premium mines and exploration
opportunities at FNO.
A significant increase in regional
exploration targeting activities
occurred across the Western
Gawler group of tenements in
South Australia, with the Company
achieving this through its ongoing
collaborative relationship with
the Far West Coast Aboriginal
Corporation (FWCAC) and the
Aboriginal Lands Trust (ALT). The
Company considers that the
Western Gawler area has the
potential to host significant mafic-
ultramafic, intrusive-related poly-
metallic (nickel, copper, +/- PGEs
and gold) deposits.
To realise this potential, work in
FY18 has centred on undertaking
several focused drilling programmes,
prioritising target locations displaying
discrete bedrock conductors
(acquired from surface MLEM
surveys), that are proximal to areas
previously identified as hosting
geochemically favourable mafic /
ultramafic intrusive bodies. This
work, in conjunction with ongoing
litho-structural interpretation of
regional geophysical imagery, has
seen ongoing exploration efforts
at Western Gawler advance from
a regional, to a more focused,
prospect-scale targeting approach.
Activities across the Forrestania
Nickel Belt have centred on both
near-mine and regional targets,
testing both base metals and gold
opportunities. Near-mine exploration,
testing the down-plunge extension
potential for mineralisation at the
Flying Fox Mine advanced towards
the end of FY18, with work ongoing.
The Company also shifted its
exploration focus to the north within
the Parker Dome region, where
both reverse circulation and air-core
drilling programmes were completed,
testing interpreted ultramafic and
structural corridors. Owing to the
relatively underexplored nature
of this belt, the Company recently
engaged the services of SkyTEM to
complete a regional-scale heli-borne
electromagnetic survey, to test for
the presence of shallow, bedrock
conductors.
The Company is proud to confirm
that exploration remained LTI free
for the FY18 reporting period.
MT ALEXANDER
JOINT VENTURE
(WSA 25% NON-
CONTRIBUTING INTEREST)
With regard to E29/63, Western
Areas Limited is in a Joint Venture
with St George Mining Limited
(SGQ). SGQ is the Manager
of the Project and has a 75%
interest. WSA retains a 25% non‐
contributing interest in the Project
until there is a decision to mine.
22
WESTERN AREAS ANNUAL REPORT 2018
KIDMAN RESOURCES
LIMITED FARM-IN
AND JOINT VENTURE
(LITHIUM)
Western Areas Limited continues
its Farm-in and Joint Venture
Agreement with Kidman Resources
Limited covering the Company’s
northern group of tenements at
Forrestania. Kidman has now entered
into the second year within a Stage
1 opportunity to earn 50% lithium
rights. Western Areas retains all non-
lithium rights over this ground.
SOUTHERN CROSS
GOLDFIELDS JOINT
VENTURE
(WSA 100% NICKEL RIGHTS
INTEREST)
In August 2011, as part of the
Southern Cross Goldfields Joint
Venture, Western Areas acquired
70% nickel rights from Southern
Cross Goldfields Limited (now Black
Oak Minerals) across much of a
3,300km² tenement portfolio mainly
located in the northern portion
of the Southern Cross - Bullfinch
Greenstone Belt and parts of the
Marda-Diemals Belt within the
‘Central Yilgarn Nickel Province’ of
Western Australia. In March 2018,
Western Areas opted to relinquish
its 70% nickel rights across all
tenements that formed part of
the original agreement, with the
exception of tenements E77/1965
and E77/2091, where the Company
negotiated to acquire the remaining
30%, bringing the total nickel rights
ownership to 100%. E77/1965 and
E77/2091 are contiguous with
Western Areas Limited’s pending
tenement E77/2261, which lies at the
northern end of the Parker Dome.
THE COMPANY IS
PROUD TO CONFIRM
THAT EXPLORATION
REMAINED LTI
FREE FOR THE FY18
REPORTING PERIOD.
23WESTERN AREAS ANNUAL REPORT 2018EXPLORATIONCOSMOS NICKEL COMPLEX (100% WSA)Since the acquisition of Cosmos from Xstrata Nickel Australasia Operations (XNAO) in October 2015, the Company has embarked on numerous exploration campaigns, including geophysics and drilling. Incorporating extensive MLEM surveys and subsequent drilling campaigns, the Company’s aim is to make new discoveries at Cosmos and to grow the existing mineral resource base. Commencing in FY17, and continuing into FY18, the key focus for exploration activities has centred on the Neptune project. Located approximately 2km south of the Prospero high grade nickel mine, the area is interpreted to contain the highest volume of cumulate ultramafic bodies within the Cosmos Nickel Complex.Through FY18, the Company has continued to place a strong emphasis on growing its relationship with the Tjiwarl Group native title holders at Cosmos, by maintaining respectful, transparent and consultative communications. Two separate heritage surveys were completed in FY18, with a December quarter survey primarily supporting ongoing drilling programmes at Neptune and a second survey coordinated in the June quarter as part of the planning and approvals process for a targeted gold programme. Additional to the aforementioned heritage surveys, the Company has worked closely with traditional owner by engaging heritage monitoring across all facets of on-ground exploration activities. Across FY17 and into the September quarter of FY18, the Company, through its Phase 1 drilling campaign at Neptune, was successful in delineating a broad zone of cumulate-ultramafic hosted disseminated nickel sulphides, extending over an initial strike-length of 800m. Building on this success, a second phase of drilling commenced in the FY18 June quarter.EXPLORATION DRILLING AT COSMOS (NEPTUNE)Key findings from this second phase of drilling at Neptune included:• Further delineation of high-tenor, disseminated nickel sulphide mineralisation extending over 1000m strike length.• Returned results from an additional two drill-holes confirming a thickening in the mineralisation envelope at a depth of 400-500m below surface, suggestive that this zone is approaching the edge of a prospective channelised corridor.• Identification of additional thin localised stringer style mineralisation with grades >2% nickel supporting the Company’s belief in the potential for this corridor to host elevated accumulations of nickel sulphide.• Shallowing of ultramafic host stratigraphy at depth, aiding further exploration testing to the east. EXPLORATION REVIEW
In total, seven diamond holes (for
5,990m) were completed in the
June quarter at Neptune, with
drill testing focusing on a 1.5km
corridor extending north towards
6939000mN. The Company has
identified that the mineralised
channel hosting the Prospero
deposit has the potential to extend
south towards the Neptune project
area. Subsequently, drilling over the
FY18 period (representing Neptune
Phase 2) has centred on testing a
1.5km long north-south striking zone,
targeting the interpreted ultramafic
basal contact environment,
commencing from the 0m RL position
(defined as 460m below surface).
An escalation in drilling activities into
the June quarter enabled testing
to commence below the 0m RL
position, into the zone interpreted
to represent the edge of the
prospective channel location. Of the
nine Neptune drill-holes completed
in FY18, assays have been returned
from two holes, with results
confirming the continuation of two
broad zones of cumulate-ultramafic
hosted, disseminated nickel sulphide
mineralisation, extending down-dip
in excess of 600m. Results from
drill-hole WCD013 were significant,
returning a broad interval of 108.4m
@ 0.80% Ni (commencing from 415m
downhole), with a secondary zone
of 53m @ 0.66% Ni (from 540m
downhole). Of note was a localised
thin accumulation of stringer
sulphides returning 0.3m @ 4.64% Ni
(from 472.55m).
Down-hole EM investigations
continued within all holes at
Neptune in FY18. Although the
predominantly disseminated nature
of mineralisation at Neptune is not
amenable to detect with EM, the
potential for off-hole conductors
associated with a rapid transition
from disseminated to massive
sulphides over short distances
(as has been observed in other
mineralised domains at Cosmos
including Odysseus) requires ongoing
persistence with DHEM surveying.
The Company is encouraged by
these results, with Neptune Phase
2 entering an important stage as
drill targeting advances northwards
and down-plunge, testing for the
presence of additional disseminated,
stringer and massive nickel sulphide
accumulations.
NEPTUNE INTERPRETED CROSS SECTION 6938500MN
NEPTUNE INTERPRETED LONG SECTION (LOOKING WEST)
24
WESTERN AREAS ANNUAL REPORT 2018
WESTERN GAWLER
NICKEL-COPPER
JOINT VENTURE
(WSA 100% AND EARNING
UP TO 90% INTEREST)
In October 2014, WSA executed
a Farm-in and Joint Venture
Agreements with Gunson
Resources Limited (now Strandline
Resources Limited) over a key
tenement (EL 5880) along the
eastern margin of the Western
Gawler region of South Australia
and continued with the staged
programme to acquire up to 90%
in this Strandline tenement. The
Company has a consolidated land
holding with 100% interest covering
five tenements across the broader
Western Gawler Project. With a
combined area of approximately
4,450km², the Company maintains a
strategic position in Western Gawler,
an area of increasing interest for
gold and base metal exploration.
The Western Gawler Project
lies within the Fowler Domain
of western South Australia. The
Fowler Domain is a Proterozoic
age orogenic belt overlain by
recent sedimentary cover, which is
known to host mafic and ultramafic
intrusive rocks. Similarly aged
orogenic belts in Australia contain
significant mafic-ultramafic related
intrusive nickel and copper deposits
including Nova-Bollinger and Nebo-
Babel. The Company’s exploration
strategy is to explore for these
deposits through systematic
evaluation of targets which lie
below cover sequences, using
modern geophysical techniques
and targeted drilling campaigns.
Results of exploration completed to
date have identified the presence
of mafic-ultramafic intrusive rocks
(including olivine gabbro-norites) and
associated geochemical anomalism,
confirming the prospectivity of
the Western Gawler Project for
intrusive-related base metals and
structurally associated, hydrothermal
gold mineralisation. During the year,
ongoing surface electromagnetic
(EM) programmes have identified
anomalous bedrock conductors that,
in conjunction with existing magnetic
and gravity datasets, have allowed
planned drilling programmes to evolve
from a regional approach to more
focused, prospect-scale targeting.
EXPLORATION REVIEW
Increased surface drilling and
geophysical exploration activities
completed in 2017-2018 have
resulted in a significant progression
in the Company’s understanding
of the geological setting of the
Western Gawler Project, enabling
a more targeted approach to
ongoing exploration campaigns. Key
highlights from this work include;
•
•
•
Completion of 217 air-core drill-
holes (for 13,658m).
A total of 149 line kilometres
of targeted MLEM ground
surveying covering 15
prospects.
Re-processing of aeromagnetic
geophysical datasets
leading to the refinement of
geological interpretations and
identification of new targets.
•
•
•
•
Potential for other metal
types e.g. gold and copper
mineralisation highlighted.
Co-ordination of a project-
scale heritage survey and
rehabilitation activities with
the Far West Coast native title
holders and the Aboriginal
Lands Trust.
Target generation and
planning for future drilling
programmes including
regional-scale heli-borne EM
surveys.
The identification of the
broader Thunderdome region
as an emerging corridor with
the potential for hosting
numerous prospective mafic
and ultramafic intrusive bodies.
FY18 COMPLETED DRILLING AT WESTERN GAWLER
WESTERN AREAS ANNUAL REPORT 2018
25
In the FY18 September quarter,
a review of historical drilling and
mapping datasets, coupled with
targeting from aeromagnetic
imagery, identified several
corridors considered prospective
for ultramafic stratigraphy within
tenement E77/1734. A series of
targeted east-west drill lines was
designed to test prospective
ultramafic host stratigraphy, on
100m spaced centres. In total, 113
air-core drill-holes were completed
for 4297m. Several anomalous
intersections were returned,
predominantly within saprolitic
clays, with highest intersections
including 4m @ 0.89% Ni (from
24m) within PDAC068 and 12m @
0.59% Ni (from 11m) within PDAC075.
Localised anomalous gold values
were also noted from air-core
drilling including 2m @ 0.44g/t Au
(from 43m) within PDAC059, with a
broader interval of 6m @ 0.21g/t Au
(from 44m) noted in PDAC021.
In the March quarter 2018, a follow-
up reverse circulation (RC) drilling
programme (incorporating 14 drill-
holes for 2288m) was conducted
to further assess some of these
anomalous results at depth, and
to gain a greater understanding
of the geological setting. Although
additional anomalous values were
not identified, thicker sequences of
ultramafic rocks were intersected
than previously noted from air-core
drilling. Combined with observed
cumulate textures and localised
favourable Ni/Cr ratios (>1), these
observations are supportive of this
area being prospective for fertile
ultramafic bodies that may host
accumulations of nickel sulphide.
EXPLORATION REVIEW
Western Areas continues to build
its relationships with the traditional
owners, the Far West Coast
Aboriginal Corporation (FWCAC) and
the Aboriginal Lands Trust (ALT).
During the year, agreement was
reached to incorporate EL 5688
and EL 5939 under the existing
Native Title Mining Agreement with
a renewal agreement granted by
the ALT to explore within the Yalata
Aboriginal Reserve.
Furthermore, the FWCAC has
been supporting the Company’s
exploration programmes by
assisting with rehabilitation and
monitoring activities across the
Western Gawler Project. Ongoing
dialogue with the ALT continues
to facilitate sustained exploration
within existing and new areas of
exploration.
FORRESTANIA
PROJECT (100% WSA)
The Company acknowledges the
importance of the Forrestania
Nickel Belt as a district with the
potential for future discoveries,
along with the opportunity to
discover additional nickel resources
proximal to current operations. Over
the course of the reporting period,
the Company has advanced several
projects, with a focus on drilling
and geophysical surveys covering
the northern group of tenements
centred on Parker Dome. Additional
programmes testing the potential
for extensions of mineralisation at
the Flying Fox deposit were also
initiated in FY18.
The Parker Dome Project, lying
20km north of the Bounty Gold
camp, is represented by a
continuous group of tenements
held by the Company, incorporating
the southern and eastern portions
of the Parker Dome greenstone
sequence. By comparison with the
main Forrestania Nickel Belt, this
region is relatively under-explored,
and the Company believes this
ground is prospective for both
komatiite-hosted nickel sulphides
and gold.
A regionally extensive air-core
drilling programme was completed
during the year, testing multiple
prospect-scale EM targets and
geochemical anomalies defined
from previous drilling programmes,
along with newly interpreted target
areas. Drilling was completed
in conjunction with surface
geophysics, allowing evaluation of
new EM targets to be completed.
Drilling at Thunderdome has
confirmed the presence of several
discrete mafic intrusive bodies over
a 10km long trend. Drill programmes
targeted four subtle EM anomalies
which were interpreted to be
associated with mafic intrusive
units, with anomalous copper
and platinum group element
(PGE) values associated with
low levels of sulphides identified
within several holes. These results
have elevated the prospectivity
of the Thunderdome area, with
additional high priority targets
identified for follow-up in the
coming year. Prospective mafic
host rocks associated with subtle
EM anomalies were also identified
within the Mystic prospect area.
These target areas will be a priority
focus for work programmes in FY19.
Surface geophysics continued during
the year with high-powered surface
EM surveys completed across fifteen
high priority aeromagnetic and gravity
features that are interpreted to be
possible mafic-ultramafic intrusions.
These broad-spaced EM surveys are
capable of screening large target
areas to detect bedrock conductors
to a depth of 600m. During EM
work at Thunderdome, four subtle
anomalies were detected within the
vicinity of coincident magnetic and
gravity anomalies. Air-core drilling
has confirmed that these locations
are associated with mafic intrusions
containing low levels of sulphide and
anomalous geochemistry. At Bullet
Farm, a broad low-conductance
EM response was modelled on the
margin of a regionally significant co-
incident magnetic / gravity anomaly.
Drilling intersected predominantly
granite and intermediate gneiss, with
minor mafic and ultramafic rocks,
lowering the prospectivity of this
area. Integration and interpretation
of new geophysical data is ongoing
and results from this work will be
used to target new areas for further
geophysics and drilling.
26
WESTERN AREAS ANNUAL REPORT 2018
EXPLORATION REVIEW
In the June quarter, as part of
a broader strategy to assess
the regional prospectivity of the
northern Forrestania package of
tenements (incorporating Parker
Dome), the Company executed
two key geophysical programmes
aimed at efficiency assessing
shallow base metal and gold
opportunities. The first set of
work involved merging, image
reprocessing and enhancing of
the existing mosaic of magnetic
surveys across the region into
a new set of image layers. This
work will allow the Company to
advance detailed structural and
lithostratigraphic interpretations
into FY19. The company also
engaged the services of SkyTEM
to conduct a 1400 line kilometre
heli-borne regional EM survey.
Western Areas became the
first company in Australia to
use SkyTEM’s high-power, low
frequency (12.5Hz) SkyTEM312 HP
system. This innovative system,
which combines high current and
low frequency provides a regional-
scale screening tool for identifying
shallow bedrock conductors
through conductive overburden.
As part of the Company’s ongoing
strategy to identify additional
resources and reserves, an
opportunity existed to assess the
potential for the down-plunge
extension of the Flying Fox
mineralised channel below existing
mine workings. Work commenced
late in the March quarter on a
three drill-hole underground
programme (two parent holes and
one daughter). To date, one hole
has been completed (LUG088),
with a second hole (LUG087)
close to target by the end of the
reporting period, with a total of
1734m drilled. LUG088 successfully
intersected the faulted basal
contact; however, no accumulation
of nickeliferous sulphide was
encountered. Down-hole EM
(DHEM) surveys will be carried
out on completion of the first two
holes.
PLAN SHOWING FORRESTANIA TENEMENTS;
MINES AND KEY PROSPECTS
WESTERN AREAS ANNUAL REPORT 2018
27
ORE RESERVE / MINERAL
RESOURCE STATEMENT
Ore reserve summary at 30 June 2018
Deposit
Flying Fox Area
Spotted Quoll Area
Digger South
Digger Rocks
Tonnes
749,600
89,600
1,708,500
2,016,000
93,000
Total Forrestania Ore Reserves
4,656,700
Ore reserve summary at 30 June 2017
Grade
Ni%
Ni
Tonnes
JORC
Classification
3.9
3.8
4.0
1.4
2.0
2.8
29,170 Probable Ore Reserve
3,450 Proved Ore Reserve
68,480 Probable Ore Reserve
28,950 Probable Ore Reserve
1,850 Probable Ore Reserve
131,900
Deposit
Flying Fox Area
Spotted Quoll Area
Digger South
Digger Rocks
Total Ore Reserves
Tonnes
965,490
342,210
1,800,490
2,016,000
93,000
5,217,190
Grade
Ni%
Ni
Tonnes
JORC
Classification
4.0
4.1
4.0
1.4
2.0
3.0
38,210 Probable Ore Reserve
14,060 Proved Ore Reserve
71,560 Probable Ore Reserve
28,560 Probable Ore Reserve
1,850 Probable Ore Reserve
154,630
During FY18 the ore reserve/resource was depleted by mining activities.
JORC
Code
2012
2012
2012
2004
2004
JORC
Code
2012
2012
2012
2004
2004
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 (unless
otherwise stated). 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 programme 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 process measures the likelihood of errors or
misstatement and monitors the controls in place that mitigate this outcome.
28
WESTERN AREAS ANNUAL REPORT 2018
WESTERN AREAS ORE MINERAL RESOURCE STATEMENT
- EFFECTIVE DATE 30 JUNE 2018
Tonnes
Grade
Ni%
Ni Tonnes Classification
JORC
Code
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
132,279
55,219
55,779
20,560
162,338
191,535
901,865
75,707
256,977
1,852,259
197,200
357,800
4,428,000
Total Disseminated Flying Fox / Lounge Lizard
4,983,000
Total FF / LL
2. New Morning / Daybreak
Massive Zone
Disseminated Zone
Total New Morning / Daybreak
3. Spotted Quoll Area
Spotted Quoll
Total Spotted Quoll
Beautiful Sunday
Total Western Belt
4. Cosmic Boy Area
Cosmic Boy
Seagull
Total Cosmic Boy Area
5. 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
6. Cosmos Area
AM5
AM6
Odysseus South - Disseminated
Odysseus North - Disseminated
Odysseus North - Massive
Total Cosmos Area
7. Mt Goode Area
Mt Goode
Total Mt Goode Area
TOTAL COSMOS MINERAL RESOURCE
TOTAL WESTERN AREAS MINERAL RESOURCE
6,835,259
340,126
78,067
3,318,468
2,496,658
6,233,319
367,880
1,322,173
181,013
1,871,066
480,000
15,419,644
180,900
195,000
375,900
3,000,000
4,800,000
54,900
172,300
1,441,000
560,000
10,028,200
25,823,744
479,914
26,922
1,704,548
329,443
4,016,949
219,641
3,128,943
225,248
145,830
124,900
10,402,338
13,563,000
27,363,000
12,009,000
52,935,000
63,337,338
89,161,082
4.6
3.9
5.9
4.1
4.0
5.5
5.6
5.2
2.1
4.8
0.8
1.0
0.8
0.8
1.9
3.3
3.9
1.2
1.3
1.4
5.9
5.6
5.6
5.6
1.4
2.1
2.8
2.0
2.4
1.5
0.7
3.7
1.1
0.7
0.9
1.0
1.7
2.6
1.9
2.7
2.5
2.1
2.0
2.6
2.7
6.1
11.2
2.6
0.8
0.6
0.5
0.6
0.9
1.2
6,085 Indicated Mineral Resource
2,154 Inferred Mineral Resource
3,290 Indicated Mineral Resource
843 Inferred Mineral Resource
6,574 Indicated Mineral Resource
10,580 Indicated Mineral Resource
50,177 Indicated Mineral Resource
3,905 Indicated Mineral Resource
5,303 Inferred Mineral Resource
88,910
1,590 Indicated Mineral Resource
3,460 Inferred Mineral Resource
36,000 Indicated Mineral Resource
41,050
129,960
11,224 Indicated Mineral Resource
3,025 Inferred Mineral Resource
41,181 Indicated Mineral Resource
32,498 Inferred Mineral Resource
87,928
21,595 Measured Mineral Resource
73,525 Indicated Mineral Resource
10,137 Inferred Mineral Resource
105,257
2012
2012
2012
2012
2012
2012
2012
2012
2012
2004
2004
2004
2012
2012
2012
2012
2012
2012
2012
6,720 Indicated Mineral Resource
2004
329,865
5,050 Indicated Mineral Resource
3,900 Indicated Mineral Resource
8,950
44,700 Indicated Mineral Resource
35,600 Indicated Mineral Resource
2,030 Indicated Mineral Resource
1,850 Inferred Mineral Resource
10,350 Inferred Mineral Resource
5,040 Indicated Mineral Resource
99,570
438,385
12,430 Indicated Mineral Resource
509 Inferred Mineral Resource
45,171 Indicated Mineral Resource
8,203 Inferred Mineral Resource
84,767 Indicated Mineral Resource
4,302 Inferred Mineral Resource
81,156 Indicated Mineral Resource
6,111 Inferred Mineral Resource
8,836 Indicated Mineral Resource
14,002 Inferred Mineral Resource
265,487
105,791 Measured Mineral Resource
158,705 Indicated Mineral Resource
62,447 Inferred Mineral Resource
2004
2004
2004
2004
2004
2004
2004
2004
2012
2012
2012
2012
2012
2012
2012
2012
2012
2012
2012
2012
2012
326,943
592,430
1,030,815
WESTERN AREAS ANNUAL REPORT 2018
29
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
DIRECTORS’ REPORT
DIRECTORS’ REPORT
The Directors of Western Areas Ltd present the financial report of the Company for the financial year ended
30 June 2018. 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
Mr Macliver is a highly experienced listed company director and Chartered Accountant with
BCom, FCA, SF Fin,
FAICD
significant experience as a senior executive and director of both resource and industrial
companies, with particular responsibility for company strategy development, capital raising and
all other forms corporate development initiatives. Mr Macliver is Executive Chairman of Grange
Consulting Group Pty Ltd which provides specialist corporate advisory services to both listed
Non-Executive
Independent
Chairman
Director appointed
October 2011
and unlisted companies.
Committee responsibilities:
Member of the Audit & Risk, Remuneration, Nomination and Treasury Committee
Other current listed company directorships:
Otto Energy Ltd (since January 2004)
- Member of Audit & Risk Committee
- Member of Remuneration Committee
- Member of Nomination Committee
Former listed company directorships in last three years:
Rent.com.au Ltd (ceased June 2015)
- Chairman of the Board
Daniel Lougher
Mr Lougher is a qualified Mining Geologist and Mining Engineer with over 35 years’ experience in
BSc. (Mining
Geology) Msc. Eng,
MAusIMM
all facets of mining project exploration, feasibility, development and operational activities in
Australia and overseas. Mr Lougher’s experience covers a diverse range of commodities
including gold, platinum and copper.
Committee responsibilities:
Managing Director
Member of the Nomination Committee
& CEO
Other current listed company directorships:
N/A
Director appointed
Former listed company directorships in last three years:
May 2008
Bluejay Mining Plc (formally FinnAust Mining Plc) (ceased March 2016)
- Chairman of the Board
Mustang Minerals Corp (ceased October 2015)
Other relevant experience:
Extensive training in Mine, Planning and Geotechnical Engineering (Chamber of Mines, South
Independent Non-Executive Director, Atherton Resources Ltd (formerly Mungana Goldmines
Africa)
WA Mines Manager Certificate
32
WESTERN AREAS ANNUAL REPORT 2018
David Southam
Mr Southam is a Certified Practicing Accountant with over 25 years’ experience in accounting,
BCom, CPA, MAICD
banking and finance across the resources and industrial sectors. Mr Southam has been
responsible for completing significant capital management initiatives and commodity offtake
Executive Director
Committee responsibilities:
contracts with large domestic and international companies.
N/A
Director appointed
November 2010
Other current listed company directorships:
Kidman Resources Ltd (Nominee Director on behalf of Western Areas Ltd) (since July 2017)
- Chairman of Audit & Risk Committee
- Member of Remuneration & Nomination Committee
Ramelius Resources Ltd (Non-Executive Director) (since 1 July 2018)
- Chairman of Audit & Risk Committee
- Member of Remuneration & Nomination Committee
Former listed company directorships in last three years:
Troy Resources Ltd (ceased December 2016)
- Member of Audit and Nomination & Remuneration Committee
Sundance Resources Ltd (ceased January 2016)
- Member of Audit Committee
Other relevant experience:
Member of the Curtin University Audit & Risk Committee
Richard Yeates
Mr Yeates is an experienced international mining executive with 36 years industry experience,
BSc (Geology),
MAusIMM, GAICD
variously in the fields of mineral exploration, project management, feasibility studies, project
finance audits, project development and transactions. He was a founding director, major
shareholder and principal consultant of Resource Service Group (‘RSG’), subsequently RSG
Non-Executive
Independent
Director
Global and Coffey Mining, growing a boutique Goldfields consulting entity into an international
enterprise over a 20-year period, culminating in the business sale to Coffey International Ltd
(now Intech) in 2006. Mr Yeates’ experience covers a wide range of commodities (including tin,
tungsten, gold, copper, lead zinc, nickel, coal and mineral sands), in 39 countries on five
continents.
Director appointed
Committee responsibilities:
October 2009
Chairman of the Nomination Committee
Member of the Remuneration Committee
Other current listed company directorships:
Middle Island Resources Ltd (since March 2010)
- Managing Director and CEO
- Member of Remuneration Committee
- Member of Nomination Committee
Former listed company directorships in last three years:
Ltd) (ceased December 2015)
- Member of Audit & Risk Committee
- Member of Remuneration Committee
- Member of Nomination Committee
Other relevant experience:
Director, Austmine (ceased October 2009)
Director, Australia-Africa Mining Industry Group (AAMIG, now AAMEG) (ceased November 2016)
Member, Swick Mining Services Ltd R&D Advisory Board (current)
DIRECTORS’ REPORT
DIRECTORS’ REPORT
DIRECTORS’ REPORT
The Directors of Western Areas Ltd present the financial report of the Company for the financial year ended
30 June 2018. 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
Mr Macliver is a highly experienced listed company director and Chartered Accountant with
BCom, FCA, SF Fin,
FAICD
significant experience as a senior executive and director of both resource and industrial
companies, with particular responsibility for company strategy development, capital raising and
all other forms corporate development initiatives. Mr Macliver is Executive Chairman of Grange
Consulting Group Pty Ltd which provides specialist corporate advisory services to both listed
Member of the Audit & Risk, Remuneration, Nomination and Treasury Committee
Non-Executive
Independent
Chairman
and unlisted companies.
Committee responsibilities:
Director appointed
October 2011
Other current listed company directorships:
Otto Energy Ltd (since January 2004)
- Member of Audit & Risk Committee
- Member of Remuneration Committee
- Member of Nomination Committee
Former listed company directorships in last three years:
Rent.com.au Ltd (ceased June 2015)
- Chairman of the Board
Daniel Lougher
Mr Lougher is a qualified Mining Geologist and Mining Engineer with over 35 years’ experience in
all facets of mining project exploration, feasibility, development and operational activities in
Australia and overseas. Mr Lougher’s experience covers a diverse range of commodities
BSc. (Mining
Geology) Msc. Eng,
MAusIMM
including gold, platinum and copper.
Committee responsibilities:
Managing Director
Member of the Nomination Committee
& CEO
Other current listed company directorships:
N/A
Director appointed
Former listed company directorships in last three years:
May 2008
Bluejay Mining Plc (formally FinnAust Mining Plc) (ceased March 2016)
- Chairman of the Board
Mustang Minerals Corp (ceased October 2015)
Other relevant experience:
Africa)
WA Mines Manager Certificate
David Southam
Mr Southam is a Certified Practicing Accountant with over 25 years’ experience in accounting,
BCom, CPA, MAICD
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.
Executive Director
Committee responsibilities:
N/A
Director appointed
November 2010
Other current listed company directorships:
Kidman Resources Ltd (Nominee Director on behalf of Western Areas Ltd) (since July 2017)
- Chairman of Audit & Risk Committee
- Member of Remuneration & Nomination Committee
Ramelius Resources Ltd (Non-Executive Director) (since 1 July 2018)
- Chairman of Audit & Risk Committee
- Member of Remuneration & Nomination Committee
Former listed company directorships in last three years:
Troy Resources Ltd (ceased December 2016)
- Member of Audit and Nomination & Remuneration Committee
Sundance Resources Ltd (ceased January 2016)
- Member of Audit Committee
Other relevant experience:
Member of the Curtin University Audit & Risk Committee
Richard Yeates
Mr Yeates is an experienced international mining executive with 36 years industry experience,
BSc (Geology),
MAusIMM, GAICD
variously in the fields of mineral exploration, project management, feasibility studies, project
finance audits, project development and transactions. He was a founding director, major
shareholder and principal consultant of Resource Service Group (‘RSG’), subsequently RSG
Non-Executive
Independent
Director
Global and Coffey Mining, growing a boutique Goldfields consulting entity into an international
enterprise over a 20-year period, culminating in the business sale to Coffey International Ltd
(now Intech) in 2006. Mr Yeates’ experience covers a wide range of commodities (including tin,
tungsten, gold, copper, lead zinc, nickel, coal and mineral sands), in 39 countries on five
continents.
Director appointed
Committee responsibilities:
October 2009
Chairman of the Nomination Committee
Member of the Remuneration Committee
Other current listed company directorships:
Middle Island Resources Ltd (since March 2010)
- Managing Director and CEO
- Member of Remuneration Committee
- Member of Nomination Committee
Former listed company directorships in last three years:
Extensive training in Mine, Planning and Geotechnical Engineering (Chamber of Mines, South
Independent Non-Executive Director, Atherton Resources Ltd (formerly Mungana Goldmines
Ltd) (ceased December 2015)
- Member of Audit & Risk Committee
- Member of Remuneration Committee
- Member of Nomination Committee
Other relevant experience:
Director, Austmine (ceased October 2009)
Director, Australia-Africa Mining Industry Group (AAMIG, now AAMEG) (ceased November 2016)
Member, Swick Mining Services Ltd R&D Advisory Board (current)
WESTERN AREAS ANNUAL REPORT 2018
33
DIRECTORS’ REPORT
DIRECTORS’ REPORT
DIRECTORS’ REPORT
INFORMATION ABOUT THE DIRECTORS (cont’d)
Craig Readhead
Mr Readhead is a lawyer with over 30 years legal and corporate advisory experience with
B.Juris, LL.B, FAICD
specialisation in the resources sector, including the implementation of large scale mining
projects both in Australia and overseas. Mr Readhead had a distinguished legal career
Non-Executive
Independent
Director
Director appointed
June 2014
specialising in mining and corporate law.
Committee responsibilities:
Chairman of the Audit, Risk and Treasury Committee
Other current listed company directorships:
Beadell Resources Ltd (since April 2010)
- Member of the Remuneration, Nomination & Diversity and Audit & Risk Committee
- Formerly Chairman of the Board (ceased July 2018)
Director appointed
- Chairman of the Risk Committee
January 2017
- Member of the Audit, Nominations and Remuneration Committees
Eastern Goldfields Ltd (since March 2013)
Redbank Copper Ltd (since April 2013)
Former listed company directorships in last three years:
General Mining Corporation Ltd (ceased October 2015)
Other relevant experience:
Formerly President of the Australian Mining and Petroleum Law Association
Previously a member of the WA Council of the Australian Institute of Company Directors
Tim Netscher
Mr Netscher is an experienced international mining executive with extensive operational,
BSc (Eng)
(Chemical), BCom,
MBA, FIChE, CEng,
MAICD
Non-Executive
Independent
Director
Director appointed
August 2014
project development, transactional and sustainability experience gained in senior executive and
board roles over many years. His key executive positions during the past 25 years included
Managing Director and CEO of Gindalbie Metals Ltd, Senior Vice President Asia Pacific Region of
Newmont Inc., Managing Director of Vale Coal Australia, President of P T Inco and Executive
Director of Refining & New Business at Impala Platinum Ltd. Mr Netscher’s experience covers a
wide range of resources including nickel, coal, iron ore, uranium and gold in Africa, Asia and
Australia.
Committee responsibilities:
Chairman of the Remuneration Committee
Member of the Audit, Risk and Treasury Committee
Other current listed company directorships:
Gold Road Resources Ltd (since September 2014)
- Chairman
- Member of Audit & Risk Committee
- Member of Remuneration & Nomination Committee
St Barbara Ltd (since February 2014)
- Chairman of the Health, Safety, Environment and Community Committee
- Member of the Audit and Risk Committee
- Member of the Remuneration and Nomination Committee
Former listed company directorships in last three years:
Chairman, Toro Energy Ltd (ceased September 2016)
- Member of Audit & Risk Committee
- Member of Remuneration Committee
Chairman, Deep Yellow Ltd (ceased December 2015)
- Member of Audit & Risk Committee
- Member of Remuneration Committee
Other relevant experience:
Director, Queensland Resources Council
Director, Minerals Council of Australia
Director, Chamber of Minerals and Energy of Western Australia
34
WESTERN AREAS ANNUAL REPORT 2018
Natalia
Streltsova
MSc, PhD (Chem
Eng), GAICD, MSME,
MCIM
Dr Streltsova is a Chemical Engineer with over 25 years’ experience in the minerals industry.
She has a strong background in mineral processing and metallurgy with specific expertise in
nickel, gold and base metals. Dr Streltsova has held various leadership and technical roles with
major mining houses including Vale SA, BHP Billiton and WMC Resources Ltd. She has broad
international experience, both in technical and in business development capacities, covering
projects in Australia, Africa, South America and in the countries of the Former Soviet Union.
Non-Executive
Independent
Director
Committee responsibilities:
Member of the Nomination Committee
Other current listed company directorships:
Neometals Ltd (since April 2016)
Parkway Minerals NL (since June 2015)
- Chairman of the Nomination Committee
- Member of the Audit & Risk and Remuneration Committees
Other relevant experience:
Director, CRC Parker Centre Ltd
COMPANY SECRETARY
Mr Belladonna is a Certified Practicing Accountant and has been employed at Western Areas Ltd 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, risk
management, 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.
INTERESTS IN SHARES AND OPTIONS OF THE COMPANY
Full details of the Directors’ shareholdings in Western Areas are included in the Remuneration Report section of
this Directors’ Report.
REMUNERATION OF KEY MANAGEMENT PERSONNEL
Information about the remuneration of directors and senior management is set out in the Remuneration Report
of this Directors’ Report.
PERSONNEL
PERFORMANCE RIGHTS GRANTED TO KEY MANAGEMENT
Performance Rights granted to directors and senior management during the financial year ended 30 June 2018
is set out in the Remuneration Report of this Directors’ Report.
INDEMNIFICATION OF OFFICERS AND DIRECTORS
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.
INFORMATION ABOUT THE DIRECTORS (cont’d)
Craig Readhead
Mr Readhead is a lawyer with over 30 years legal and corporate advisory experience with
B.Juris, LL.B, FAICD
specialisation in the resources sector, including the implementation of large scale mining
projects both in Australia and overseas. Mr Readhead had a distinguished legal career
Non-Executive
Independent
Director
Director appointed
June 2014
specialising in mining and corporate law.
Committee responsibilities:
Chairman of the Audit, Risk and Treasury Committee
Other current listed company directorships:
Beadell Resources Ltd (since April 2010)
Eastern Goldfields Ltd (since March 2013)
Redbank Copper Ltd (since April 2013)
Former listed company directorships in last three years:
General Mining Corporation Ltd (ceased October 2015)
Other relevant experience:
Formerly President of the Australian Mining and Petroleum Law Association
Previously a member of the WA Council of the Australian Institute of Company Directors
Tim Netscher
Mr Netscher is an experienced international mining executive with extensive operational,
BSc (Eng)
(Chemical), BCom,
MBA, FIChE, CEng,
MAICD
project development, transactional and sustainability experience gained in senior executive and
board roles over many years. His key executive positions during the past 25 years included
Managing Director and CEO of Gindalbie Metals Ltd, Senior Vice President Asia Pacific Region of
Newmont Inc., Managing Director of Vale Coal Australia, President of P T Inco and Executive
Director of Refining & New Business at Impala Platinum Ltd. Mr Netscher’s experience covers a
wide range of resources including nickel, coal, iron ore, uranium and gold in Africa, Asia and
Non-Executive
Independent
Director
Australia.
Committee responsibilities:
Director appointed
August 2014
Chairman of the Remuneration Committee
Member of the Audit, Risk and Treasury Committee
Other current listed company directorships:
Gold Road Resources Ltd (since September 2014)
- Chairman
- Member of Audit & Risk Committee
- Member of Remuneration & Nomination Committee
St Barbara Ltd (since February 2014)
- Chairman of the Health, Safety, Environment and Community Committee
- Member of the Audit and Risk Committee
- Member of the Remuneration and Nomination Committee
Former listed company directorships in last three years:
Chairman, Toro Energy Ltd (ceased September 2016)
- Member of Audit & Risk Committee
- Member of Remuneration Committee
Chairman, Deep Yellow Ltd (ceased December 2015)
- Member of Audit & Risk Committee
- Member of Remuneration Committee
Other relevant experience:
Director, Queensland Resources Council
Director, Minerals Council of Australia
DIRECTORS’ REPORT
DIRECTORS’ REPORT
DIRECTORS’ REPORT
- Member of the Remuneration, Nomination & Diversity and Audit & Risk Committee
- Formerly Chairman of the Board (ceased July 2018)
Director appointed
January 2017
- Chairman of the Risk Committee
- Member of the Audit, Nominations and Remuneration Committees
Natalia
Streltsova
MSc, PhD (Chem
Eng), GAICD, MSME,
MCIM
Dr Streltsova is a Chemical Engineer with over 25 years’ experience in the minerals industry.
She has a strong background in mineral processing and metallurgy with specific expertise in
nickel, gold and base metals. Dr Streltsova has held various leadership and technical roles with
major mining houses including Vale SA, BHP Billiton and WMC Resources Ltd. She has broad
international experience, both in technical and in business development capacities, covering
projects in Australia, Africa, South America and in the countries of the Former Soviet Union.
Non-Executive
Independent
Director
Committee responsibilities:
Member of the Nomination Committee
Other current listed company directorships:
Neometals Ltd (since April 2016)
Parkway Minerals NL (since June 2015)
- Chairman of the Nomination Committee
- Member of the Audit & Risk and Remuneration Committees
Other relevant experience:
Director, CRC Parker Centre Ltd
COMPANY SECRETARY
Mr Belladonna is a Certified Practicing Accountant and has been employed at Western Areas Ltd 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, risk
management, 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.
INTERESTS IN SHARES AND OPTIONS OF THE COMPANY
Full details of the Directors’ shareholdings in Western Areas are included in the Remuneration Report section of
this Directors’ Report.
REMUNERATION OF KEY MANAGEMENT PERSONNEL
Information about the remuneration of directors and senior management is set out in the Remuneration Report
of this Directors’ Report.
PERFORMANCE RIGHTS GRANTED TO KEY MANAGEMENT
PERSONNEL
Performance Rights granted to directors and senior management during the financial year ended 30 June 2018
is set out in the Remuneration Report of this Directors’ Report.
INDEMNIFICATION OF OFFICERS AND DIRECTORS
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
Director, Chamber of Minerals and Energy of Western Australia
such an officer or auditor.
WESTERN AREAS ANNUAL REPORT 2018
35
DIRECTORS’ REPORT
DIRECTORS’ REPORT
DIRECTORS’ REPORT
DIRECTORS’ BENEFITS
PRINCIPAL ACTIVITIES
No Directors of the Consolidated Entity have, since the end of the previous financial year, received or become
The principal activities of the Consolidated Entity during the year consisted of mining, processing and sale of
entitled to receive a benefit (other than a benefit included in the total amount of emoluments received or due
nickel sulphide concentrate, the continued assessment of development feasibility of the high grade nickel
and receivable by Directors shown on page 49 of the Directors’ Report) by reason of a contract made by the
mines and the exploration for nickel sulphides and other base metals.
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 28 to the accounts.
REVIEW OF OPERATIONS
OPERATIONAL METRICS
DIRECTORS’ MEETINGS
The Company continues to strongly operate in line with plan and achieved its published guidance metrics which
The following table sets out the number of meetings of the parent entity’s Directors and meetings of the
were updated during the year. Detailed quarterly operating reports are provided throughout the year outlining
sub-committees of the Board held during the year ended 30 June 2018 and the number of meetings attended
quarterly and year to date production, cost, sales and operating metrics, some of which are shown below.
by each Director.
Meetings held:
Meetings attended:
I Macliver
D Lougher
D Southam
R Yeates
C Readhead
T Netscher
N Streltsova
Directors
Meetings
Audit & Risk
Management
Remuneration
Nomination
Treasury
Meetings of Committees
11
11
11
11
11
11
11
10
3
3
-
-
-
3
3
-
2
2
-
-
2
-
2
-
1
1
1
-
1
-
-
1
1
1
-
-
-
1
1
-
PROCEEDINGS ON BEHALF OF THE COMPANY
Nickel Sales in Concentrate
20,549
22,639
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.
DIVIDENDS PAID OR RECOMMENDED
In respect of the financial year ended 30 June 2018, the Board of Directors declared a final fully franked
dividend of 2 cents to the holders of fully paid ordinary shares on 22 August 2018.
In relation to the 30 June 2017 financial year, the Board declared a final 2 cent fully franked dividend on
22 August 2017 and paid to shareholders on 6 October 2017.
SUBSEQUENT EVENTS
The Board of Directors, on 22 August 2018, declared a final fully franked dividend of 2 cents to the holders of
mine development.
fully paid ordinary shares.
Other than matters detailed above, there have been no subsequent events after 30 June 2018 which have a
material effect on the financial statements for the year ended 30 June 2018.
36
WESTERN AREAS ANNUAL REPORT 2018
Financial Year – Physical Summary
FY18
FY17
Tonnes Mined
Tns
607,120
591,778
Nickel Grade (average)
4.0%
4.4%
Tonnes Milled
Tns
616,598
617,808
Milled Grade (average)
Recovery
4.0%
87%
4.2%
89%
Nickel in Concentrate
21,060
23,005
%
%
%
Tns
Tns
Total ore mined was materially in line with the prior year, whilst head grade delivered materially matched the
estimated Ore Reserve grades. The Spotted Quoll mine produced 346,455 tonnes of ore at a grade of 4.2%
nickel, with Flying Fox producing 260,665 ore tonnes at an average grade 3.9%.
The nickel concentrator treated a total of 616,598 tonnes of ore during FY18, continuing to operate well above
its 550,000 tonne per annum name plate capacity. As planned, year on year milled grade and nickel production
were slightly lower as a result of the mines producing at Ore Reserve grades and completion of the remaining
ore-sorter material (sourced from low grade Flying Fox stockpiles) in the first half of the financial year. The
overall result of the ore sorter campaign was very positive increasing ore stockpile volumes and allowing
flexibility in selecting the optimum mill feed blends.
Significant asset construction activity to enhance the operational capacity at Forrestania was completed
during the year. The main items included the Mill Recovery Enhancement Project (‘MREP’), that utilises the
Company’s 100% owned Bioheap™ technology, and the return airway shaft at the Spotted Quoll underground
mine, including the mechanical fitout. The Spotted Quoll return airway is the final significant infrastructure
capital item required to support the life of the Spotted Quoll mining, outside of regular sustaining underground
DIRECTORS’ REPORT
DIRECTORS’ REPORT
DIRECTORS’ REPORT
DIRECTORS’ BENEFITS
PRINCIPAL ACTIVITIES
No Directors of the Consolidated Entity have, since the end of the previous financial year, received or become
The principal activities of the Consolidated Entity during the year consisted of mining, processing and sale of
entitled to receive a benefit (other than a benefit included in the total amount of emoluments received or due
nickel sulphide concentrate, the continued assessment of development feasibility of the high grade nickel
and receivable by Directors shown on page 49 of the Directors’ Report) by reason of a contract made by the
mines and the exploration for nickel sulphides and other base metals.
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 28 to the accounts.
REVIEW OF OPERATIONS
OPERATIONAL METRICS
DIRECTORS’ MEETINGS
The following table sets out the number of meetings of the parent entity’s Directors and meetings of the
were updated during the year. Detailed quarterly operating reports are provided throughout the year outlining
sub-committees of the Board held during the year ended 30 June 2018 and the number of meetings attended
quarterly and year to date production, cost, sales and operating metrics, some of which are shown below.
The Company continues to strongly operate in line with plan and achieved its published guidance metrics which
by each Director.
Meetings held:
Meetings attended:
I Macliver
D Lougher
D Southam
R Yeates
C Readhead
T Netscher
N Streltsova
Directors
Meetings
Audit & Risk
Management
Remuneration
Nomination
Treasury
Meetings of Committees
11
11
11
11
11
11
11
10
3
3
-
-
-
3
3
-
2
2
-
-
2
-
2
-
1
1
1
-
1
-
-
1
1
1
-
-
-
1
1
-
PROCEEDINGS ON BEHALF OF THE COMPANY
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.
DIVIDENDS PAID OR RECOMMENDED
In respect of the financial year ended 30 June 2018, the Board of Directors declared a final fully franked
dividend of 2 cents to the holders of fully paid ordinary shares on 22 August 2018.
In relation to the 30 June 2017 financial year, the Board declared a final 2 cent fully franked dividend on
22 August 2017 and paid to shareholders on 6 October 2017.
SUBSEQUENT EVENTS
fully paid ordinary shares.
Other than matters detailed above, there have been no subsequent events after 30 June 2018 which have a
material effect on the financial statements for the year ended 30 June 2018.
Financial Year – Physical Summary
FY18
FY17
Tonnes Mined
Tns
607,120
591,778
Nickel Grade (average)
%
4.0%
4.4%
Tonnes Milled
Tns
616,598
617,808
Milled Grade (average)
Recovery
Nickel in Concentrate
Nickel Sales in Concentrate
%
%
Tns
Tns
4.0%
87%
4.2%
89%
21,060
23,005
20,549
22,639
Total ore mined was materially in line with the prior year, whilst head grade delivered materially matched the
estimated Ore Reserve grades. The Spotted Quoll mine produced 346,455 tonnes of ore at a grade of 4.2%
nickel, with Flying Fox producing 260,665 ore tonnes at an average grade 3.9%.
The nickel concentrator treated a total of 616,598 tonnes of ore during FY18, continuing to operate well above
its 550,000 tonne per annum name plate capacity. As planned, year on year milled grade and nickel production
were slightly lower as a result of the mines producing at Ore Reserve grades and completion of the remaining
ore-sorter material (sourced from low grade Flying Fox stockpiles) in the first half of the financial year. The
overall result of the ore sorter campaign was very positive increasing ore stockpile volumes and allowing
flexibility in selecting the optimum mill feed blends.
Significant asset construction activity to enhance the operational capacity at Forrestania was completed
during the year. The main items included the Mill Recovery Enhancement Project (‘MREP’), that utilises the
Company’s 100% owned Bioheap™ technology, and the return airway shaft at the Spotted Quoll underground
mine, including the mechanical fitout. The Spotted Quoll return airway is the final significant infrastructure
capital item required to support the life of the Spotted Quoll mining, outside of regular sustaining underground
The Board of Directors, on 22 August 2018, declared a final fully franked dividend of 2 cents to the holders of
mine development.
WESTERN AREAS ANNUAL REPORT 2018
37
DIRECTORS’ REPORT
DIRECTORS’ REPORT
DIRECTORS’ REPORT
REVIEW OF OPERATIONS (cont’d)
FINANCIAL METRICS
Income Statement
Full Financial Year – Earnings Results Summary
Revenue
EBITDA(1)
EBIT
Profit Before Tax
Net Profit After Tax
FY18
$m
248.3
84.0
18.5
17.2
11.8
FY17
$m
213.9
84.9
18.6
17.4
19.3
Change
$m
34.4
(0.9)
(0.1)
(0.2)
(7.5)
(1) EBITDA is not defined by International Financial Reporting Standards. As such it is a Non-IFRS performance measure.
The A$34.4m increase in Revenue was due to the higher average nickel price for the year at A$7.53/lb (FY17
A$6.11/lb), which was partially offset by a reduction in sales volumes.
Earnings before Interest, Tax, Depreciation and Amortisation (‘EBITDA’) and Profit Before Tax were consistent
with the prior year. Underlying this result was a significant increase in earnings from ordinary business
activities, that was offset by two non-recurring material transactions in the prior year being:
1) The sale of the Company’s investment in Bluejay Mining Plc (A$25.6m); and
2) Recognition of the share based consideration received from Kidman Resources Ltd (A$7.5m).
and finished concentrate awaiting shipment at year end.
When excluding these one-off prior year items, year on year underlying EBITDA increased by A$32.1m and
The increase in non-current assets primarily relates to the favourable revaluation of the Company’s
underlying Net Profit after Tax increased by A$23.4m.
Net Profit After Tax was A$7.5m lower than the prior year due to the increased earnings from ordinary mining
activities that resulted in an increased taxation expense (A$7.3m) as underlying business earnings are subject
to normal corporate income tax.
Statement of Cash Flows
Full Financial Year – Cashflow Summary
Revenue
Payments to suppliers
Other
Net Operating Cashflow
Sale of investments
Capital purchases
Net Investing Cashflow
Net Financing Cashflow
Net Cashflow
Cash at Bank
FY18
$m
237.2
(154.0)
(6.2)
77.0
0.0
(59.8)
(59.8)
(5.8)
11.3
151.6
FY17
$m
226.8
(157.7)
(2.9)
66.2
32.6
(34.0)
(1.4)
(0.2)
64.6
140.3
Change
$m
10.4
3.7
(3.3)
10.8
(32.6)
(25.8)
(58.4)
(5.6)
(53.3)
11.3
Net cash flow of A$11.3m resulted in A$151.6m cash at bank at year end. The free cashflow result was generated
as a result of an increase in nickel sales receipts resulting from a higher average nickel price for the year and
the continued focus on absolute cost management and control. The absolute free cashflow result is an
excellent achievement in the context of the significant year on year increase in capital and development
expenditure at the current production assets located at Forrestania and investment into the Company’s
organic growth projects.
38
WESTERN AREAS ANNUAL REPORT 2018
Net operating cashflow increased by A$10.8m primarily due to the higher average nickel price and lower
payments to suppliers during the year.
The significant year on year change in Investing Cashflow, primarily relates to investments in production assets
at Forrestania, such as the Mill Recovery Enhancement Project and completion of the Spotted Quoll Return
Airway Shaft. The year on year variance is also materially affected by the absences of the non-recurring sale of
the investment in Bluejay Mining Plc (A$32.6m) that occurred in the prior year.
The year on year change in net financing cashflow was due to the reintroduction of a final dividend related to
the FY17 financial results which was paid in the first half of FY18.
Statement of Financial Position
Full Financial Year – Balance Sheet Summary
Current Assets
Total Assets
Current Liabilities
Total Liabilities
FY18
$m
208.7
571.9
47.8
83.1
FY17
$m
181.2
518.9
29.8
59.6
Change
$m
27.5
53.0
18.0
23.5
29.5
Net Equity
488.8
459.3
Current assets increased primarily due to the cash at bank increasing by A$11.3m and the ore stockpile
inventory value increasing by A$13.5m. The increase in inventory value related to both mined ore stockpiles
shareholding in Kidman Resources Ltd, which increased in value by A$21.8m during FY18. Furthermore, non-
current asset investment increased with construction of capital assets at the Forrestania Nickel Operation and
the Odysseus early works programme at Cosmos. Amortisation charges against mine properties of A$47.1m
was partly offset by new development expenditure of A$34.0m. Exploration and evaluation expenditure of
A$10.6m was capitalised during the year as the Company continued to invest in exploration at Cosmos,
Forrestania and Western Gawler. Total assets as at the reporting date were A$571.9m, representing an
increase of A$53.0m as compared to the prior year.
Total liabilities of A$83.1m represented an increase of A$23.5m from the prior year as a result of a general
increase in operating and capital works across the group, which results in higher average payable balances,
and an increased deferred tax liability related to a reduction in offsetting deferred tax assets.
Total equity attributable to the shareholders increased by A$29.5m to A$488.8m, mainly due to a significant
increase in the revaluation reserve related to the Company’s investment in Kidman Resources Ltd and NPAT of
A$11.8m partly offset by the dividend paid during the year related to the FY17 earnings result.
DIRECTORS’ REPORT
DIRECTORS’ REPORT
DIRECTORS’ REPORT
Net operating cashflow increased by A$10.8m primarily due to the higher average nickel price and lower
payments to suppliers during the year.
The significant year on year change in Investing Cashflow, primarily relates to investments in production assets
at Forrestania, such as the Mill Recovery Enhancement Project and completion of the Spotted Quoll Return
Airway Shaft. The year on year variance is also materially affected by the absences of the non-recurring sale of
the investment in Bluejay Mining Plc (A$32.6m) that occurred in the prior year.
The year on year change in net financing cashflow was due to the reintroduction of a final dividend related to
the FY17 financial results which was paid in the first half of FY18.
Statement of Financial Position
Full Financial Year – Balance Sheet Summary
Current Assets
Total Assets
Current Liabilities
Total Liabilities
FY18
$m
208.7
571.9
47.8
83.1
FY17
$m
181.2
518.9
29.8
59.6
Net Equity
488.8
459.3
Change
$m
27.5
53.0
18.0
23.5
29.5
2) Recognition of the share based consideration received from Kidman Resources Ltd (A$7.5m).
and finished concentrate awaiting shipment at year end.
When excluding these one-off prior year items, year on year underlying EBITDA increased by A$32.1m and
The increase in non-current assets primarily relates to the favourable revaluation of the Company’s
Current assets increased primarily due to the cash at bank increasing by A$11.3m and the ore stockpile
inventory value increasing by A$13.5m. The increase in inventory value related to both mined ore stockpiles
shareholding in Kidman Resources Ltd, which increased in value by A$21.8m during FY18. Furthermore, non-
current asset investment increased with construction of capital assets at the Forrestania Nickel Operation and
the Odysseus early works programme at Cosmos. Amortisation charges against mine properties of A$47.1m
was partly offset by new development expenditure of A$34.0m. Exploration and evaluation expenditure of
A$10.6m was capitalised during the year as the Company continued to invest in exploration at Cosmos,
Forrestania and Western Gawler. Total assets as at the reporting date were A$571.9m, representing an
increase of A$53.0m as compared to the prior year.
Total liabilities of A$83.1m represented an increase of A$23.5m from the prior year as a result of a general
increase in operating and capital works across the group, which results in higher average payable balances,
and an increased deferred tax liability related to a reduction in offsetting deferred tax assets.
Total equity attributable to the shareholders increased by A$29.5m to A$488.8m, mainly due to a significant
increase in the revaluation reserve related to the Company’s investment in Kidman Resources Ltd and NPAT of
A$11.8m partly offset by the dividend paid during the year related to the FY17 earnings result.
REVIEW OF OPERATIONS (cont’d)
FINANCIAL METRICS
Income Statement
Full Financial Year – Earnings Results Summary
Revenue
EBITDA(1)
EBIT
Profit Before Tax
Net Profit After Tax
FY18
$m
248.3
84.0
18.5
17.2
11.8
FY17
$m
213.9
84.9
18.6
17.4
19.3
Change
$m
34.4
(0.9)
(0.1)
(0.2)
(7.5)
(1) EBITDA is not defined by International Financial Reporting Standards. As such it is a Non-IFRS performance measure.
The A$34.4m increase in Revenue was due to the higher average nickel price for the year at A$7.53/lb (FY17
A$6.11/lb), which was partially offset by a reduction in sales volumes.
Earnings before Interest, Tax, Depreciation and Amortisation (‘EBITDA’) and Profit Before Tax were consistent
with the prior year. Underlying this result was a significant increase in earnings from ordinary business
activities, that was offset by two non-recurring material transactions in the prior year being:
1) The sale of the Company’s investment in Bluejay Mining Plc (A$25.6m); and
underlying Net Profit after Tax increased by A$23.4m.
Net Profit After Tax was A$7.5m lower than the prior year due to the increased earnings from ordinary mining
activities that resulted in an increased taxation expense (A$7.3m) as underlying business earnings are subject
to normal corporate income tax.
Statement of Cash Flows
Full Financial Year – Cashflow Summary
Revenue
Other
Payments to suppliers
Net Operating Cashflow
Sale of investments
Capital purchases
Net Investing Cashflow
Net Financing Cashflow
Net Cashflow
Cash at Bank
FY18
$m
237.2
(154.0)
(6.2)
77.0
0.0
(59.8)
(59.8)
(5.8)
11.3
151.6
FY17
$m
226.8
(157.7)
(2.9)
66.2
32.6
(34.0)
(1.4)
(0.2)
64.6
140.3
Change
$m
10.4
3.7
(3.3)
10.8
(32.6)
(25.8)
(58.4)
(5.6)
(53.3)
11.3
Net cash flow of A$11.3m resulted in A$151.6m cash at bank at year end. The free cashflow result was generated
as a result of an increase in nickel sales receipts resulting from a higher average nickel price for the year and
the continued focus on absolute cost management and control. The absolute free cashflow result is an
excellent achievement in the context of the significant year on year increase in capital and development
expenditure at the current production assets located at Forrestania and investment into the Company’s
organic growth projects.
WESTERN AREAS ANNUAL REPORT 2018
39
DIRECTORS’ REPORT
DIRECTORS’ REPORT
DIRECTORS’ REPORT
MATERIAL BUSINESS RISKS
Counter Parties
Western Areas is faced with economic and non-economic risks associated with achieving its business strategy
and goals. An existing risk management framework formally deals with risk to ensure that the control
environment is appropriate having consideration for the level of risk exposure. The senior management team
regularly report to the Board on key material risks and the quality of their controls to ensure they exist within
the Board’s risk appetite.
STRATEGIC LONG TERM ECONOMIC RISKS (2–5 YEARS)
Exploration Risk
Organic growth is a key strategic pillar, and we therefore accept the inherent risks associated with mineral
exploration. Our exploration programme is focussed on highly prospective tenements within the regions of
Forrestania, the Cosmos Nickel Complex and the West Gawler region. It is believed that these regions will provide
us with the best opportunity to grow our near mine Resources, and establish new mining areas for the Company.
The Company cannot control the risk of there being no economic resources within the ground we are exploring,
however we apply advance exploration techniques and geological knowledge to provide the best and most
cost-effective way to confirm the existence of economic resources.
Metal & Currency Markets
The Company has no influence over the movement in the nickel price, or foreign exchange rates. Western
Areas does at time hedge a portion of expected nickel sales and foreign exchange exposures in line with the
board approved treasury management policy. Though the Company does not hedge 100% of the exposure, and
believe it is not prudent to do so, a high level of operating and commercial discipline is practiced, which has in
the past resulted in the generation of free cash flows for the business. Western Areas remains one of the
lowest cost nickel producers and is debt free, which provides a significant buffer against the adverse effects of
a deterioration in nickel market fundamentals.
Inorganic Growth & Investment
Western Areas’ strategy includes investment in business development activities (joint ventures, mergers,
acquisitions, innovation) to enhance our current project portfolio. Business development opportunities remain
tightly contested, however we are debt free and continue to generate positive cash flow from the Forrestania
Nickel Operation. Western Areas is in a competitive position to pursue business development opportunities
that can provide the best possible value for our shareholders.
OPERATING RISKS
Business Interruption
A significant disruption to Forrestania Nickel Operations could have a significant adverse effect on Western
Areas’ operating revenue. The Forrestania Nickel Operations consist of the Spotted Quoll and Flying Fox mines,
the Cosmic Boy concentrator and associated infrastructure. There are some single line exposures in our
production chain, including the primary supply of electricity from a third-party provider. A significant failure
event at one of the single line exposures has the potential to significantly reduce nickel production and
consequent revenue from nickel sales. In recent times, bushfires have exposed our operations to some delays
and downtime particularly in relation to infrastructure connected to our operations (power lines and roads).
Forrestania Nickel Operations has well established risk and business continuity management practices that
prevent and respond to known business interruption risks.
Western Areas relies on a number of contractor entities to support exploration, mining, logistics and
maintenance activities. The financial failure of one of our key contractors (e.g. a mining contractor) could result
in interruptions to production plans, and affect our operating costs. Western Areas practices a high level of due
diligence prior to awarding a contract, and actively manage our supply chain partners. The Company believes in
building relationships with our supply chain partners to generate long term value.
New Technology/Markets
There is inherent risk of developing new production lines and the Company has been working with offtake
partners to establish appetite for offtake for an enhanced value in use high grade concentrate product that
can be utilised within the growing electric vehicle (‘EV’) battery market. The Mill Recovery Enhancement Project
is new technology that is facilitating the entry into new markets, while realising greater recoveries from nickel
tonnes mined by monetising what would once be sent to waste.
SUSTAINABILITY RISKS
Safety & Health
The safety and well-being of people undertaking activities on behalf of the Company remains an absolute
priority. There are a number of inherent hazards associated with exploration, mining and mineral processing
that require ongoing management and assurance to ensure our safety performance is in line with the high
standards we expect. Western Areas continues to demonstrate excellence in safety performance, and
continues to work with its contractors and partners to make Western Areas a safe place.
Western Areas’ values the contribution of our people and have put in place the required systems and support
to motivate, empower, and reward our people.
People
The attraction and retention of skilled personnel is an emerging risk attributed to the increase in mining and
project activity within West Australia and abroad, along with a loss of capacity within the West Australian job
market due to the recent downturn and an aging workforce. With the growing optimism within the natural
resource industry, the demand for good quality people will continue to be challenging.
Western Areas focuses on recognising and rewarding performance to incentivise individuals, and maintaining a
positive, supportive and open communication to foster a culture of learning and development. The Western
Areas employment offering is an attractive proposition for the skills, experience and expertise the Company
requires.
Compliance
Stakeholders
The Company has a number of statutory and regulatory obligations to fulfil including corporate, financial, health
and safety, environmental, land management, tenure, and human resources. Western Areas readily accepts
that fulfilling compliance obligations is a necessary part of maintaining its license to operate. The governance
framework and compliance management practices are built into roles and responsibilities, planning processes
and day to day activities. Compliance is an accepted part of Western Areas culture.
Western Areas is committed to being a proactive member in the communities where it operates, recognising
the needs of all stakeholder groups and engaging with them to seek positive outcomes. This includes working
closely with relevant government departments, traditional owners, pastoralists, businesses, and community
Within our corporate environment we have made significant strides to enhance the protection of the
members to ensure there is ongoing support for the Company’s activities.
Company’s information technology systems and data.
40
WESTERN AREAS ANNUAL REPORT 2018
DIRECTORS’ REPORT
DIRECTORS’ REPORT
DIRECTORS’ REPORT
MATERIAL BUSINESS RISKS
Counter Parties
Western Areas is faced with economic and non-economic risks associated with achieving its business strategy
and goals. An existing risk management framework formally deals with risk to ensure that the control
environment is appropriate having consideration for the level of risk exposure. The senior management team
regularly report to the Board on key material risks and the quality of their controls to ensure they exist within
Western Areas relies on a number of contractor entities to support exploration, mining, logistics and
maintenance activities. The financial failure of one of our key contractors (e.g. a mining contractor) could result
in interruptions to production plans, and affect our operating costs. Western Areas practices a high level of due
diligence prior to awarding a contract, and actively manage our supply chain partners. The Company believes in
building relationships with our supply chain partners to generate long term value.
STRATEGIC LONG TERM ECONOMIC RISKS (2–5 YEARS)
New Technology/Markets
There is inherent risk of developing new production lines and the Company has been working with offtake
partners to establish appetite for offtake for an enhanced value in use high grade concentrate product that
can be utilised within the growing electric vehicle (‘EV’) battery market. The Mill Recovery Enhancement Project
is new technology that is facilitating the entry into new markets, while realising greater recoveries from nickel
tonnes mined by monetising what would once be sent to waste.
SUSTAINABILITY RISKS
Safety & Health
The safety and well-being of people undertaking activities on behalf of the Company remains an absolute
priority. There are a number of inherent hazards associated with exploration, mining and mineral processing
that require ongoing management and assurance to ensure our safety performance is in line with the high
standards we expect. Western Areas continues to demonstrate excellence in safety performance, and
continues to work with its contractors and partners to make Western Areas a safe place.
Western Areas’ values the contribution of our people and have put in place the required systems and support
to motivate, empower, and reward our people.
People
The attraction and retention of skilled personnel is an emerging risk attributed to the increase in mining and
project activity within West Australia and abroad, along with a loss of capacity within the West Australian job
market due to the recent downturn and an aging workforce. With the growing optimism within the natural
resource industry, the demand for good quality people will continue to be challenging.
Western Areas focuses on recognising and rewarding performance to incentivise individuals, and maintaining a
positive, supportive and open communication to foster a culture of learning and development. The Western
Areas employment offering is an attractive proposition for the skills, experience and expertise the Company
requires.
Compliance
The Company has a number of statutory and regulatory obligations to fulfil including corporate, financial, health
and safety, environmental, land management, tenure, and human resources. Western Areas readily accepts
that fulfilling compliance obligations is a necessary part of maintaining its license to operate. The governance
framework and compliance management practices are built into roles and responsibilities, planning processes
and day to day activities. Compliance is an accepted part of Western Areas culture.
Stakeholders
Western Areas is committed to being a proactive member in the communities where it operates, recognising
the needs of all stakeholder groups and engaging with them to seek positive outcomes. This includes working
closely with relevant government departments, traditional owners, pastoralists, businesses, and community
Within our corporate environment we have made significant strides to enhance the protection of the
members to ensure there is ongoing support for the Company’s activities.
Company’s information technology systems and data.
WESTERN AREAS ANNUAL REPORT 2018
41
the Board’s risk appetite.
Exploration Risk
Organic growth is a key strategic pillar, and we therefore accept the inherent risks associated with mineral
exploration. Our exploration programme is focussed on highly prospective tenements within the regions of
Forrestania, the Cosmos Nickel Complex and the West Gawler region. It is believed that these regions will provide
us with the best opportunity to grow our near mine Resources, and establish new mining areas for the Company.
The Company cannot control the risk of there being no economic resources within the ground we are exploring,
however we apply advance exploration techniques and geological knowledge to provide the best and most
cost-effective way to confirm the existence of economic resources.
Metal & Currency Markets
The Company has no influence over the movement in the nickel price, or foreign exchange rates. Western
Areas does at time hedge a portion of expected nickel sales and foreign exchange exposures in line with the
board approved treasury management policy. Though the Company does not hedge 100% of the exposure, and
believe it is not prudent to do so, a high level of operating and commercial discipline is practiced, which has in
the past resulted in the generation of free cash flows for the business. Western Areas remains one of the
lowest cost nickel producers and is debt free, which provides a significant buffer against the adverse effects of
a deterioration in nickel market fundamentals.
Inorganic Growth & Investment
Western Areas’ strategy includes investment in business development activities (joint ventures, mergers,
acquisitions, innovation) to enhance our current project portfolio. Business development opportunities remain
tightly contested, however we are debt free and continue to generate positive cash flow from the Forrestania
Nickel Operation. Western Areas is in a competitive position to pursue business development opportunities
that can provide the best possible value for our shareholders.
OPERATING RISKS
Business Interruption
A significant disruption to Forrestania Nickel Operations could have a significant adverse effect on Western
Areas’ operating revenue. The Forrestania Nickel Operations consist of the Spotted Quoll and Flying Fox mines,
the Cosmic Boy concentrator and associated infrastructure. There are some single line exposures in our
production chain, including the primary supply of electricity from a third-party provider. A significant failure
event at one of the single line exposures has the potential to significantly reduce nickel production and
consequent revenue from nickel sales. In recent times, bushfires have exposed our operations to some delays
and downtime particularly in relation to infrastructure connected to our operations (power lines and roads).
Forrestania Nickel Operations has well established risk and business continuity management practices that
prevent and respond to known business interruption risks.
DIRECTORS’ REPORT
DIRECTORS’ REPORT
DIRECTORS’ REPORT
REMUNERATION REPORT (AUDITED)
This report outlines the remuneration arrangements in place for Key Management Personnel (KMP) which
includes Non-Executive Directors and Executives of Western Areas Ltd. The remuneration structures of
Western Areas have been extremely well supported by its shareholders based on the Annual General Meeting
SECTION C: REMUNERATION GOVERNANCE AND PHILOSOPHY
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 to ensure that the Company’s remuneration policy:
(AGM) voting results, and the Company has been mindful to monitor market standards and conditions closely.
Reflects the competitive global market in which we operate;
Given the level of support and acceptance, there have been no material changes in remuneration practices or
Retains staff throughout commodity price cycles, which is crucial to ensure achievement of corporate goals
incentive programmes during the 2018 financial year (FY18).
Key points/changes for FY18:
Rewards individuals based on performance across a range of disciplines that apply to delivering results and
The Remuneration Report resolution at the 2017 AGM was incredibly well supported with 99% of votes cast
executing strategies for the Company;
supporting the resolution;
Links executive remuneration to the creation of shareholder value; and
Continuation of the highly successful $1,000 tax exempt share plan offering to all staff (excluding KMP),
aligning all staff to shareholder outcomes and encouraging employees to act like owners of the business;
Following an improvement in market conditions, corporate performance, increasing competition for talent
and positive commodity price outlook, a staged reversal of the 10% base salary reduction for the Executive
Remuneration arrangements are equitable, fair and facilitate the deployment of senior management across
Remuneration levels and other terms of employment are reviewed at least annually by the Remuneration
Committee, having regard to performance against goals set each year, qualifications and experience, relevant
Directors’ and Key Management Personnel was implemented during the FY18 – the initial base salary
market conditions and independent remuneration benchmarking reports.
and objectives;
the Company.
reduction was implemented in March 2016; and
A partial reversal of the 10% reduction in Non-executive Directors’ remuneration was agreed with effect from
1 January 2018. The Non-executive Directors salaries still remain reduced by 5%, which was first implemented
in March 2016.
The report is comprised of the following key sections:
Remuneration governance and philosophy
Section A: Who this report covers
Section B: Use of remuneration consultants
Section C:
Section D:
Section E:
Section F: Non-executive director remuneration
Section G: Service contracts
Section H: Details of remuneration
Executive remuneration framework
Link between performance and remuneration outcomes
SECTION A: WHO THIS REPORT COVERS
The following people acted as directors of the Company during the financial year:
Mr I Macliver
Mr D Lougher
Mr D Southam
Mr R Yeates
Mr C Readhead
Mr T Netscher
Mrs N Streltsova
Independent Non-Executive Chairman
Managing Director
Executive Director
Independent Non-Executive Director
Independent Non-Executive Director
Independent Non-Executive Director
Independent Non-Executive Director
Other KMP’s of the Company during the financial year were:
Mr J Belladonna
Mr W Jones
Chief Financial Officer & Company Secretary
General Manager Operations
SECTION B: USE OF REMUNERATION CONSULTANTS
Western Areas engaged PwC as Remuneration Consultants during FY18 to provide assistance with
documentation management and ongoing market trend monitoring and development in relation to the Long
Term Incentive (‘LTI’) plans. No ‘remuneration recommendations’ as defined in the Corporations Act 2001 were
made or supplied by PwC.
42
WESTERN AREAS ANNUAL REPORT 2018
SECTION D: EXECUTIVE REMUNERATION FRAMEWORK
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 component;
Short term incentives; and
Long term incentives.
Remuneration
element
Description
Performance metrics
Changes for FY19
Potential
opportunity
Fixed
Inclusive of base pay,
Nil
Position at
Reviewed, in line
remuneration
superannuation, allowances
and salary-sacrifice component
median
against market
with market
positioning
STI
Cash bonus on achievement of
KPIs used span across key focus
40% to 55% of
N/A
individual and Company key
areas of the business
base salary
performance indicators (‘KPIs’)
(operations, corporate, resource
replenishment and exploration)
LTI
Performance Rights
Relative TSR over a 3-year period
50% to 100% of
N/A
measured against a custom peer
base salary
group consisting of 24 companies
The relative proportion of target FY18 total remuneration packages split between fixed and variable
Remuneration mixes
remuneration is shown below:
100%
80%
60%
40%
20%
0%
37%
21%
42%
31%
23%
46%
31%
23%
46%
25%
20%
55%
Mr D Lougher
Mr D Southam
Mr J Belladonna
Mr W Jones
Fixed Remuneration
Target STI
Target LTI
DIRECTORS’ REPORT
DIRECTORS’ REPORT
DIRECTORS’ REPORT
REMUNERATION REPORT (AUDITED)
This report outlines the remuneration arrangements in place for Key Management Personnel (KMP) which
includes Non-Executive Directors and Executives of Western Areas Ltd. The remuneration structures of
Western Areas have been extremely well supported by its shareholders based on the Annual General Meeting
Given the level of support and acceptance, there have been no material changes in remuneration practices or
incentive programmes during the 2018 financial year (FY18).
Key points/changes for FY18:
supporting the resolution;
reduction was implemented in March 2016; and
A partial reversal of the 10% reduction in Non-executive Directors’ remuneration was agreed with effect from
1 January 2018. The Non-executive Directors salaries still remain reduced by 5%, which was first implemented
SECTION C: REMUNERATION GOVERNANCE AND PHILOSOPHY
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 to ensure that the Company’s remuneration policy:
(AGM) voting results, and the Company has been mindful to monitor market standards and conditions closely.
Reflects the competitive global market in which we operate;
The Remuneration Report resolution at the 2017 AGM was incredibly well supported with 99% of votes cast
executing strategies for the Company;
Links executive remuneration to the creation of shareholder value; and
Continuation of the highly successful $1,000 tax exempt share plan offering to all staff (excluding KMP),
Remuneration arrangements are equitable, fair and facilitate the deployment of senior management across
aligning all staff to shareholder outcomes and encouraging employees to act like owners of the business;
the Company.
Following an improvement in market conditions, corporate performance, increasing competition for talent
and positive commodity price outlook, a staged reversal of the 10% base salary reduction for the Executive
Remuneration levels and other terms of employment are reviewed at least annually by the Remuneration
Committee, having regard to performance against goals set each year, qualifications and experience, relevant
Directors’ and Key Management Personnel was implemented during the FY18 – the initial base salary
market conditions and independent remuneration benchmarking reports.
Retains staff throughout commodity price cycles, which is crucial to ensure achievement of corporate goals
and objectives;
Rewards individuals based on performance across a range of disciplines that apply to delivering results and
SECTION D: EXECUTIVE REMUNERATION FRAMEWORK
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 component;
Short term incentives; and
Long term incentives.
The following people acted as directors of the Company during the financial year:
LTI
Performance Rights
Description
Performance metrics
Nil
Remuneration
element
Fixed
remuneration
STI
Inclusive of base pay,
superannuation, allowances
and salary-sacrifice component
Cash bonus on achievement of
individual and Company key
performance indicators (‘KPIs’)
Potential
opportunity
Changes for FY19
Position at
median
against market
Reviewed, in line
with market
positioning
KPIs used span across key focus
areas of the business
(operations, corporate, resource
replenishment and exploration)
40% to 55% of
base salary
Relative TSR over a 3-year period
measured against a custom peer
group consisting of 24 companies
50% to 100% of
base salary
N/A
N/A
Remuneration mixes
The relative proportion of target FY18 total remuneration packages split between fixed and variable
remuneration is shown below:
100%
80%
60%
40%
20%
0%
37%
21%
42%
31%
23%
46%
31%
23%
46%
25%
20%
55%
Mr D Lougher
Mr D Southam
Mr J Belladonna
Mr W Jones
Fixed Remuneration
Target STI
Target LTI
WESTERN AREAS ANNUAL REPORT 2018
43
in March 2016.
The report is comprised of the following key sections:
Section A: Who this report covers
Section B: Use of remuneration consultants
Section C:
Section D:
Section E:
Remuneration governance and philosophy
Executive remuneration framework
Link between performance and remuneration outcomes
Section F: Non-executive director remuneration
Section G: Service contracts
Section H: Details of remuneration
SECTION A: WHO THIS REPORT COVERS
Mr I Macliver
Mr D Lougher
Mr D Southam
Mr R Yeates
Mr C Readhead
Mr T Netscher
Mrs N Streltsova
Independent Non-Executive Chairman
Managing Director
Executive Director
Independent Non-Executive Director
Independent Non-Executive Director
Independent Non-Executive Director
Independent Non-Executive Director
Other KMP’s of the Company during the financial year were:
Mr J Belladonna
Mr W Jones
Chief Financial Officer & Company Secretary
General Manager Operations
SECTION B: USE OF REMUNERATION CONSULTANTS
Western Areas engaged PwC as Remuneration Consultants during FY18 to provide assistance with
documentation management and ongoing market trend monitoring and development in relation to the Long
Term Incentive (‘LTI’) plans. No ‘remuneration recommendations’ as defined in the Corporations Act 2001 were
made or supplied by PwC.
DIRECTORS’ REPORT
DIRECTORS’ REPORT
DIRECTORS’ REPORT
REMUNERATION REPORT (AUDITED) (cont’d)
SECTION D: EXECUTIVE REMUNERATION FRAMEWORK (cont’d)
Remuneration mixes (cont’d)
The target remuneration mix of higher level KMP has been designed with emphasis on LTI exposure. This
budget.
exceed Board set business plans.
further aligns Executives with shareholders and a focus on long term value generation.
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.
It is noted that senior Executives have a balanced blend of physical, financial, mineral resource and exploration
targets included in their key performance indicators, which limits the potential reward payable based on
achieving financial targets alone to trigger STI payments.
Fixed remuneration
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.
Following a near two year 10% reduction in KMP base salaries, the discount was reversed in a staged manner
during the financial year. The discount was first implemented in March 2016. In assessing the removal of the
discount, the Remuneration Committee considered the overall Company performance, earnings and cashflow
outcomes, reinstatement of a final dividend, the increasingly competitive employee market and the positive
commodity price outlook.
Short term incentive (‘STI’)
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. It is noted that all STI
targets for FY18 were based off the 5% reduced base salary level.
The full list of KPIs set for Executives in FY18 is below. For each Executive, KPIs relevant to their area of
influence are selected from the list below and assigned each year.
Operations
The quantum of LTI grants made during FY18 was as follows:
Overview KPI
Why KPI was set
respective year.
Forrestania safety
performance
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 reported environmental
incidents by quarter.
Motivate and reward the continued focus on
best practice environmental management.
Forrestania unit cash cost 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.
Motivate and reward the stringent
management of production costs outcomes
that exceed the Board set business plan.
Forrestania nickel in ore
production
Must exceed the budgeted nickel metal in ore
production target from FF and SQ mines.
Motivate and reward nickel production
outcomes that exceed Board set business
plans.
Forrestania mill recoveries Achieve a set threshold recovery above budget
levels for the combined ore feed from FF and SQ
mines.
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.
44
WESTERN AREAS ANNUAL REPORT 2018
Overview KPI
Why KPI was set
Corporate
Earnings
Achieve EBIT target above budget.
Motivate and reward financial outcomes that
exceed Board set business plans.
Cashflow
Achieve pre-funding cashflow target above
Motivate and reward financial outcomes that
Construction of the Mill
Achieving on time and on budget construction of
Motivate and reward construction and
Recovery Enhancement
the MREP. Achieving design product
commissioning outcomes related to a new key
Project (‘MREP’)
specification.
asset construction.
Business development
Based on business development activities and
Motivate and reward business development
project pipeline development that provides
initiatives that provide market intelligence,
opportunities to add value or protect value in
preservation of capital and enhance corporate
the Company and for the shareholders.
growth opportunities identification.
Mineral Resources and Exploration
Nickel resource
Establishing replacement nickel reserves or
Motivate and reward mine life extension
mining inventory tonnages.
outcomes at Board set levels.
Project evaluation and
Based on Board set outcomes associated with
Motivate and reward timely delivery of key
developments
the evaluation and development activities for
growth initiatives and activities.
new projects.
New nickel resources
Establishing new published nickel resources
Motivate and reward economic nickel
exceeding targeted nickel tonnage levels.
discovery.
New nickel discovery
Discovery of a new Nickel deposit.
Motivate and reward economic nickel
discovery.
Long Term Incentive (‘LTI’)
Under the shareholder approved LTI plan Executives receive a grant of Performance Rights each year with
each grant measured against a 3-year TSR period. No vesting occurs until the end of the third year to ensure
Executives are focused on the long-term shareholder value generation.
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 at 1 July of each
Name
Exercise date
Expiry date
LTI quantum
Number of
(% of base
salary)(i)
Performance
Rights issued(ii)
Fair Value at
allocation date(ii)
Mr D Lougher
100%
420,280
Mr D Southam
Mr J Belladonna
Mr W Jones
75%
75%
50%
236,480
159,320
114,570
$1.66
$1.66
$1.66
$1.66
Upon receipt of a vesting
notice issued in FY21
As above
As above
As above
30/6/2023
30/6/2023
30/6/2023
30/6/2023
(i) % of base salary was calculated on the base salary applicable 1 July 2017 including the 5% base salary discount.
(ii) $1.66 was the fair value of the performance rights as calculated on 1 July 2017. For accounting purposes, the fair value, as required
under AASB 2, is measured on the date of the Annual General Meeting where the Performance Rights are approved. For FY18 this
was $2.47/right as at 22 November 2017.
REMUNERATION REPORT (AUDITED) (cont’d)
SECTION D: EXECUTIVE REMUNERATION FRAMEWORK (cont’d)
Remuneration mixes (cont’d)
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.
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
It is noted that senior Executives have a balanced blend of physical, financial, mineral resource and exploration
targets included in their key performance indicators, which limits the potential reward payable based on
achieving financial targets alone to trigger STI payments.
Fixed remuneration
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.
Following a near two year 10% reduction in KMP base salaries, the discount was reversed in a staged manner
during the financial year. The discount was first implemented in March 2016. In assessing the removal of the
discount, the Remuneration Committee considered the overall Company performance, earnings and cashflow
outcomes, reinstatement of a final dividend, the increasingly competitive employee market and the positive
commodity price outlook.
Short term incentive (‘STI’)
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. It is noted that all STI
targets for FY18 were based off the 5% reduced base salary level.
The full list of KPIs set for Executives in FY18 is below. For each Executive, KPIs relevant to their area of
influence are selected from the list below and assigned each year.
Forrestania safety
Based on Lost Time Injury performance in each
Motivate and reward the continued focus on
performance
quarter.
safety standards and procedures.
Forrestania environmental
Based on a minimum reported environmental
Motivate and reward the continued focus on
incidents
incidents by quarter.
best practice environmental management.
Forrestania unit cash cost Focused on average unit cash costs for Flying
Motivate and reward the stringent
Fox (‘FF’) and Spotted Quoll (‘SQ’) mines per
management of production costs outcomes
pound of nickel produced. Performance better
that exceed the Board set business plan.
than budget is required.
Forrestania nickel in ore
production
Must exceed the budgeted nickel metal in ore
production target from FF and SQ mines.
Motivate and reward nickel production
outcomes that exceed Board set business
Forrestania mill recoveries Achieve a set threshold recovery above budget
Motivate and reward nickel production
levels for the combined ore feed from FF and SQ
outcomes that exceed Board set business
mines.
Forrestania nickel in
Sale of nickel metal in concentrate to exceed a
Motivate and reward nickel sales outcomes
concentrate sales
set tonnage target.
that exceed Board set business plans.
plans.
plans.
DIRECTORS’ REPORT
DIRECTORS’ REPORT
DIRECTORS’ REPORT
or paid. There is currently no formal claw back of performance based remuneration paid in prior financial years.
Business development
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,
preservation of capital and enhance corporate
growth opportunities identification.
Corporate
Earnings
Cashflow
Overview KPI
Why KPI was set
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.
Construction of the Mill
Recovery Enhancement
Project (‘MREP’)
Achieving on time and on budget construction of
the MREP. Achieving design product
specification.
Motivate and reward construction and
commissioning outcomes related to a new key
asset construction.
Mineral Resources and Exploration
Nickel resource
Establishing replacement nickel reserves or
mining inventory tonnages.
Motivate and reward mine life extension
outcomes at Board set levels.
Project evaluation and
developments
Based on Board set outcomes associated with
the evaluation and development activities for
new projects.
Motivate and reward timely delivery of key
growth initiatives and activities.
New nickel resources
Establishing new published nickel resources
exceeding targeted nickel tonnage levels.
Motivate and reward economic nickel
discovery.
New nickel discovery
Discovery of a new Nickel deposit.
Motivate and reward economic nickel
discovery.
Long Term Incentive (‘LTI’)
Under the shareholder approved LTI plan Executives receive a grant of Performance Rights each year with
each grant measured against a 3-year TSR period. No vesting occurs until the end of the third year to ensure
Executives are focused on the long-term shareholder value generation.
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 at 1 July of each
Operations
The quantum of LTI grants made during FY18 was as follows:
Overview KPI
Why KPI was set
respective year.
Name
LTI quantum
(% of base
salary)(i)
Number of
Performance
Rights issued(ii)
Fair Value at
allocation date(ii)
Exercise date
Expiry date
Mr D Lougher
100%
420,280
Mr D Southam
Mr J Belladonna
Mr W Jones
75%
75%
50%
236,480
159,320
114,570
$1.66
$1.66
$1.66
$1.66
Upon receipt of a vesting
notice issued in FY21
As above
As above
As above
30/6/2023
30/6/2023
30/6/2023
30/6/2023
(i) % of base salary was calculated on the base salary applicable 1 July 2017 including the 5% base salary discount.
(ii) $1.66 was the fair value of the performance rights as calculated on 1 July 2017. For accounting purposes, the fair value, as required
under AASB 2, is measured on the date of the Annual General Meeting where the Performance Rights are approved. For FY18 this
was $2.47/right as at 22 November 2017.
WESTERN AREAS ANNUAL REPORT 2018
45
DIRECTORS’ REPORT
DIRECTORS’ REPORT
DIRECTORS’ REPORT
REMUNERATION REPORT (AUDITED) (cont’d)
The table below shows the KPIs of the Company over the last 5 years.
2018
0.9
20,549
$5.84/lb
$2.03/lb
11,837
4.34
2.0
971M
3.56
57th
2017
1.1
22,639
$4.58/lb
$1.80/lb
19,299
7.09
2.0
575M
2.11
60th
2016
0
24,793
$4.14/lb
$1.64/lb
(29,783)
(12.3)
-
582M
2.15
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
$2.28/lb
25,460
12.2
5.0
1,073M
4.62
93rd
Year Ended 30 June
Lost time injury frequency rate
Nickel tonnes Sold (tns)
Nickel Price – US$
Reported Cash Cost US$/lb (*)
Net Profit/(Loss) after Tax (‘000)
EPS
Dividend Cents/share
Market capitalisation ($)
Closing share price ($)
Short term incentive
target STI award.
payments below.
Name
Executive Directors
Mr D Lougher
Mr D Southam
Executives
Mr J Belladonna
Mr W Jones
TSR – 3-year peer ranking (% percentile)
(*) Cash cost of production before smelting & refining, concentrate haulage and royalties.
Based on the achievements of the Company in FY18, the Remuneration Committee determined that Executives
achieved between 76% and 87% of their target STI opportunity. It is noted that no KMP achieved 100% of their
Performance achieved during the year against the above KPIs has resulted in Executives earning the STI
Target STI quantum
Target FY18 STI
STI quantum
STI quantum not
(% of base salary)
quantum ($)
earned ($)
earned ($)
55%
55%
55%
40%
383,000
288,000
194,000
152,000
290,000
253,000
170,000
118,000
93,000
35,000
24,000
34,000
STI payments have historically fluctuated in line with Company performance. The table below demonstrates the
variability in awards received over time.
Year Ended 30 June
Average KMP STI payout (%)
2018
82%
2017
83%
2016
56%
2015
90%
2014
87%
2013
29%
Long Term Incentive
The performance rights that vested and were converted into shares during FY18 were originally issued in FY15.
The relative TSR performance of the grant was assessed at the completion of the 3-year performance period
ending on 30 June 2018. As a result of the assessment, Western Areas was positioned at the 57th percentile
against the peer group which resulted in 64% vesting of the grant.
SECTION D: EXECUTIVE REMUNERATION FRAMEWORK (cont’d)
Long Term Incentive (‘LTI’) (cont’d)
Performance conditions
Western Areas TSR performance for the FY18 grant will be assessed against a customised peer group
comprising the following 24 companies:
Altona Mining Ltd
Hillgrove Resources Ltd
Northern Star Resources Ltd
Rex Minerals Ltd
Alumina Ltd
Independence Group NL
OM Holdings Ltd
Avanco Resources Ltd
Medusa Mining Ltd
Oz Minerals Ltd
Sandfire Resources Ltd
Syrah Resources Ltd
Beadell Resources Ltd
Metals X Ltd
Poseidon Nickel Ltd
Talisman Resources Ltd
Bouganville Copper Ltd
Mincor Resources NL
Panoramic Resources Ltd
Zimplats Holdings Ltd
Cudeco Ltd
Mt Gibson Iron Ltd
Pilbara Minerals Ltd
Westgold Resources 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
and the participant remains employed with the Company as at 30 June 2020.
The following table sets out the vesting outcome based on the Company’s relative TSR performance:
Relative TSR performance
Performance Vesting Outcomes
Less than 50th percentile
At the 50th percentile
Between 50th and 75th percentile
At or above 75th percentile
Performance period and vesting
0% vesting
50% vesting
Pro-rata/progressive vesting from 50% – 100%
100% vesting
No Performance Rights will vest unless they meet a relative TSR measure for the period 1 July 2017 to 30 June
2020 as measured against the peer group and satisfaction of the service based vesting condition which requires
the participant remains employed as at 30 June 2020. Upon satisfaction of the performance and service
condition, the Performance Rights will vest upon receipt of a vesting notice during the 2021 financial year.
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 received via 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 E: 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
The Company continued a consistent high level to performance during FY18 achieving its production and cost
guidance, as provided and updated for the market during the year. This consistent performance and a
strengthening nickel price enabled free cashflow and net profits to be generated. Capital assets have been
constructed on time and on budget and importantly new and innovative growth projects have been advanced.
These outcomes have occurred while maintaining a class leading performance in safety and environmentally
management.
46
WESTERN AREAS ANNUAL REPORT 2018
DIRECTORS’ REPORT
DIRECTORS’ REPORT
DIRECTORS’ REPORT
REMUNERATION REPORT (AUDITED) (cont’d)
The table below shows the KPIs of the Company over the last 5 years.
SECTION D: EXECUTIVE REMUNERATION FRAMEWORK (cont’d)
Long Term Incentive (‘LTI’) (cont’d)
Performance conditions
comprising the following 24 companies:
Western Areas TSR performance for the FY18 grant will be assessed against a customised peer group
Altona Mining Ltd
Hillgrove Resources Ltd
Northern Star Resources Ltd
Rex Minerals Ltd
Alumina Ltd
Independence Group NL
OM Holdings Ltd
Avanco Resources Ltd
Medusa Mining Ltd
Oz Minerals Ltd
Sandfire Resources Ltd
Syrah Resources Ltd
Beadell Resources Ltd
Metals X Ltd
Poseidon Nickel Ltd
Talisman Resources Ltd
Bouganville Copper Ltd
Mincor Resources NL
Panoramic Resources Ltd
Zimplats Holdings Ltd
Cudeco Ltd
Mt Gibson Iron Ltd
Pilbara Minerals Ltd
Westgold Resources 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
and the participant remains employed with the Company as at 30 June 2020.
The following table sets out the vesting outcome based on the Company’s relative TSR performance:
Relative TSR performance
Performance Vesting Outcomes
Less than 50th percentile
At the 50th percentile
Between 50th and 75th percentile
At or above 75th percentile
Performance period and vesting
0% vesting
50% vesting
100% vesting
Pro-rata/progressive vesting from 50% – 100%
No Performance Rights will vest unless they meet a relative TSR measure for the period 1 July 2017 to 30 June
2020 as measured against the peer group and satisfaction of the service based vesting condition which requires
the participant remains employed as at 30 June 2020. Upon satisfaction of the performance and service
condition, the Performance Rights will vest upon receipt of a vesting notice during the 2021 financial year.
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 received via 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 E: 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
The Company continued a consistent high level to performance during FY18 achieving its production and cost
guidance, as provided and updated for the market during the year. This consistent performance and a
strengthening nickel price enabled free cashflow and net profits to be generated. Capital assets have been
constructed on time and on budget and importantly new and innovative growth projects have been advanced.
These outcomes have occurred while maintaining a class leading performance in safety and environmentally
management.
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 ($)
TSR – 3-year peer ranking (% percentile)
2018
0.9
20,549
$5.84/lb
$2.03/lb
11,837
4.34
2.0
971M
3.56
57th
2017
1.1
22,639
$4.58/lb
$1.80/lb
19,299
7.09
2.0
575M
2.11
60th
2016
0
24,793
$4.14/lb
$1.64/lb
(29,783)
(12.3)
-
582M
2.15
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
$2.28/lb
25,460
12.2
5.0
1,073M
4.62
93rd
(*) Cash cost of production before smelting & refining, concentrate haulage and royalties.
Short term incentive
Based on the achievements of the Company in FY18, the Remuneration Committee determined that Executives
achieved between 76% and 87% of their target STI opportunity. It is noted that no KMP achieved 100% of their
target STI award.
Performance achieved during the year against the above KPIs has resulted in Executives earning the STI
payments below.
Name
Executive Directors
Mr D Lougher
Mr D Southam
Executives
Mr J Belladonna
Mr W Jones
Target STI quantum
(% of base salary)
Target FY18 STI
quantum ($)
STI quantum
earned ($)
STI quantum not
earned ($)
55%
55%
55%
40%
383,000
288,000
194,000
152,000
290,000
253,000
170,000
118,000
93,000
35,000
24,000
34,000
STI payments have historically fluctuated in line with Company performance. The table below demonstrates the
variability in awards received over time.
Year Ended 30 June
Average KMP STI payout (%)
2018
82%
2017
83%
2016
56%
2015
90%
2014
87%
2013
29%
Long Term Incentive
The performance rights that vested and were converted into shares during FY18 were originally issued in FY15.
The relative TSR performance of the grant was assessed at the completion of the 3-year performance period
ending on 30 June 2018. As a result of the assessment, Western Areas was positioned at the 57th percentile
against the peer group which resulted in 64% vesting of the grant.
WESTERN AREAS ANNUAL REPORT 2018
47
DIRECTORS’ REPORT
DIRECTORS’ REPORT
DIRECTORS’ REPORT
REMUNERATION REPORT (AUDITED) (cont’d)
SECTION F: NON-EXECUTIVE DIRECTOR REMUNERATION
Non-Executive Director (NED) fees limits
NED fees are determined within an aggregated fee limit of $1,000,000, which was approved by shareholders at
the 2012 AGM. This aggregated fee limit is reviewed from time to time and the apportionment amongst Directors
is reviewed annually. The following fees (including statutory superannuation) were applicable for the year:
Fees
Actual
Financial Year
Board Chair
Board Member
2018
$178,391
$154,606
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.
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.
SECTION G: SERVICE CONTRACTS
Executives
A summary of the key contractual provisions for each of the current executives as at 30 June 2018 is set out below:
SECTION H: DETAILS OF REMUNERATION
Short Term Employee Benefits
Post
Employment
Long Term Employee
Benefits
(accounting valuation)
TOTAL
Base
Salary
STI
Payments/
Bonuses(i)
Allowances
Non-
Super-
& Other
Monetary
annuation
Long
Share Based
Service
Payments
Leave
LTI
Non-executive
Directors
I Macliver
FY2017
C Readhead
FY2017
T Netscher
FY2017
R Yeates
FY2017
160,713
156,369
139,284
135,520
154,606
150,427
139,284
135,520
N Streltsova
139,284
FY2017
67,760
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
17,678
17,201
15,322
14,907
-
-
15,322
14,907
15,322
7,454
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
178,391
173,570
154,606
150,427
154,606
150,427
154,606
150,427
154,606
75,214
Total Non-Executive Remuneration FY2018
796,815
Total Non-Executive Remuneration FY2017
700,065
Short Term Employee Benefits
Post
Employment
Base
Salary
STI
Payments/
Bonuses(i)
Allowances
Non-
Super-
& Other(ii)
Monetary
annuation
Long Term Employee
Benefits
(accounting valuation)
Long
Share Based
Service
Payments
Leave
LTI(ii)
TOTAL
D Lougher
716,040
290,000
57,764
48,748
18,346
890,042
2,045,940
FY2017
660,961
275,700
50,681
49,488
D Southam
537,142
253,000
38,086
50,663
FY2017
495,823
229,500
31,040
55,178
16,512
13,763
12,386
864,519
1,949,944
500,750
1,418,404
486,388
1,340,315
J Belladonna
361,920
170,000
334,081
157,500
41,624
45,334
41,624
45,334
9,271
8,346
337,400
964,022
327,725
913,735
390,390
118,000
37,091
37,091
10,002
225,669
825,995
360,361
125,500
36,300
36,300
9,002
235,668
808,370
Total Executive Remuneration FY2018 5,254,361
Total Executive Remuneration FY2017 5,012,364
(iii) LTI refers to the value of Performance Rights that were expensed during FY18. No Options were granted or remain outstanding at the
(i)
Includes all paid and/or accrued bonuses for the applicable year.
(ii) Includes over-cap super.
end of the financial year.
Related Party Transactions
There were no related party transactions with KMP during FY18.
Executive
Directors
Executive
Officers
FY2017
W Jones
FY2017
25,000
32,083
25,000
30,000
25,000
27,500
25,000
32,083
Financial Officer/
$371,200
11%
No fixed term
3 months
Company Secretary*
W Jones, General
Manager Operations
$400,400
11%
No fixed term
1 month
12 months termination payment
and accrued leave entitlements
12 months termination payment
and accrued leave entitlements
6 months termination payment
and accrued leave entitlements
6 months termination payment
and accrued leave entitlements
Name & job title
D Lougher,
Managing Director*
D Southam,
Executive Director*
J Belladonna, Chief
Base
salary
$734,400
$550,914
11%
11%
No fixed term
3 months
No fixed term
3 months
Superannuation
Contract
duration
Notice
period
Termination provision
*
In the event that there is a takeover of, or merger with, the Company, the Company must pay the Executive a change of control
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 7 years.)
All other senior management contracts are as per the Company’s standards terms and conditions and there
are no contractual 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.
48
WESTERN AREAS ANNUAL REPORT 2018
REMUNERATION REPORT (AUDITED) (cont’d)
SECTION F: NON-EXECUTIVE DIRECTOR REMUNERATION
Non-Executive Director (NED) fees limits
NED fees are determined within an aggregated fee limit of $1,000,000, which was approved by shareholders at
the 2012 AGM. This aggregated fee limit is reviewed from time to time and the apportionment amongst Directors
is reviewed annually. The following fees (including statutory superannuation) were applicable for the year:
Fees
Actual
Financial Year
Board Chair
Board Member
2018
$178,391
$154,606
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.
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.
SECTION G: SERVICE CONTRACTS
Executives
A summary of the key contractual provisions for each of the current executives as at 30 June 2018 is set out below:
Name & job title
Superannuation
Termination provision
Base
salary
Contract
duration
Notice
period
$734,400
No fixed term
3 months
$550,914
No fixed term
3 months
11%
11%
Financial Officer/
$371,200
11%
No fixed term
3 months
D Lougher,
Managing Director*
D Southam,
Executive Director*
J Belladonna, Chief
Company Secretary*
W Jones, General
Manager Operations
12 months termination payment
and accrued leave entitlements
12 months termination payment
and accrued leave entitlements
6 months termination payment
and accrued leave entitlements
6 months termination payment
and accrued leave entitlements
$400,400
11%
No fixed term
1 month
*
In the event that there is a takeover of, or merger with, the Company, the Company must pay the Executive a change of control
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 7 years.)
All other senior management contracts are as per the Company’s standards terms and conditions and there
are no contractual 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.
DIRECTORS’ REPORT
DIRECTORS’ REPORT
DIRECTORS’ REPORT
SECTION H: DETAILS OF REMUNERATION
Short Term Employee Benefits
Post
Employment
Long Term Employee
Benefits
(accounting valuation)
Base
Salary
STI
Payments/
Bonuses
Allowances
& Other
Non-
Monetary
Super-
annuation
Long
Service
Leave
Share Based
Payments
LTI
Non-executive
Directors
I Macliver
FY2017
C Readhead
FY2017
T Netscher
FY2017
R Yeates
FY2017
160,713
156,369
139,284
135,520
154,606
150,427
139,284
135,520
N Streltsova
139,284
FY2017
67,760
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
17,678
17,201
15,322
14,907
-
-
15,322
14,907
15,322
7,454
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
TOTAL
178,391
173,570
154,606
150,427
154,606
150,427
154,606
150,427
154,606
75,214
Total Non-Executive Remuneration FY2018
796,815
Total Non-Executive Remuneration FY2017
700,065
Short Term Employee Benefits
Post
Employment
Long Term Employee
Benefits
(accounting valuation)
Base
Salary
STI
Payments/
Bonuses(i)
Allowances
& Other(ii)
Non-
Monetary
Super-
annuation
Long
Service
Leave
Share Based
Payments
LTI(ii)
TOTAL
Executive
Directors
D Lougher
716,040
290,000
57,764
48,748
FY2017
660,961
275,700
50,681
49,488
D Southam
537,142
253,000
38,086
50,663
FY2017
495,823
229,500
31,040
55,178
Executive
Officers
J Belladonna
361,920
170,000
334,081
157,500
41,624
45,334
41,624
45,334
390,390
118,000
37,091
37,091
360,361
125,500
36,300
36,300
FY2017
W Jones
FY2017
25,000
32,083
25,000
30,000
25,000
27,500
25,000
32,083
18,346
890,042
2,045,940
16,512
13,763
12,386
864,519
1,949,944
500,750
1,418,404
486,388
1,340,315
9,271
8,346
337,400
964,022
327,725
913,735
10,002
225,669
825,995
9,002
235,668
808,370
Total Executive Remuneration FY2018 5,254,361
Total Executive Remuneration FY2017 5,012,364
(i)
Includes all paid and/or accrued bonuses for the applicable year.
(ii) Includes over-cap super.
(iii) LTI refers to the value of Performance Rights that were expensed during FY18. No Options were granted or remain outstanding at the
end of the financial year.
Related Party Transactions
There were no related party transactions with KMP during FY18.
WESTERN AREAS ANNUAL REPORT 2018
49
DIRECTORS’ REPORT
DIRECTORS’ REPORT
DIRECTORS’ REPORT
REMUNERATION REPORT (AUDITED) (cont’d)
ENVIRONMENTAL REGULATION AND PERFORMANCE
SECTION H: DETAILS OF REMUNERATION
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 2017
Granted as
Remuneration
On Vesting of
Performance Rights
Other Changes
During the Year
Balance at
30 June 2018
continual improvement.
I Macliver
D Lougher
D Southam
R Yeates
T Netscher
C Readhead
J Belladonna
W Jones
TOTAL
36,448
462,430
131,932
10,000
12,000
20,000
242,630
170,950
1,086,390
-
-
-
-
-
-
-
-
-
-
143,598
80,791
-
-
-
54,736
39,145
317,970
-
(193,598)
(147,800)
-
-
-
(127,066)
(40,890)
36,448
412,430
64,923
10,000
12,000
20,000
170,000
169,205
(509,354)
895,006
Options held by Key Management Personnel
There were no options held by key management at any time during FY18.
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 2018
are outlined below:
Balance at
1 July 2017
Number
granted as
Remuneration
Number
vested
Number
expired/
lapsed
Balance at
30 June
2018
Portion
vested (%)
Portion
unvested
(%)
ROUNDING OF AMOUNTS
D Lougher
880,430
420,280
(143,598)
(61,542)
1,095,570
D Southam
495,335
236,460
(80,791)
(34,624)
616,380
J Belladonna
333,755
159,320
(54,436)
(23,329)
415,310
W Jones
TOTAL
240,002
114,570
(39,145)
(16,777)
298,650
1,949,522
930,630
(317,970)
(136,272)
2,425,910
0%
0%
0%
0%
0%
100%
100%
100%
100%
100%
All Performance Rights issued during FY18 were allotted in accordance with the shareholder approved Western
Areas LTI plan. The rights were granted on 30 November 2017 and have a zero exercise price.
END OF AUDITED REMUNERATION REPORT.
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
No significant changes in the consolidated group’s state of affairs occurred during the financial year.
D Lougher
Managing Director
Perth, 22 August 2018
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.
50
WESTERN AREAS ANNUAL REPORT 2018
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
AUDITOR’S INDEPENDENCE DECLARATION
The Auditor’s Independence Declaration to the Directors of Western Areas Ltd on page 52 forms part of the
Directors’ Report for the year ended 30 June 2018.
NON-AUDIT SERVICES
The entity’s auditor, Crowe Horwath, provided non-audit services, related to renewable energy lodgements,
amounting to $4,500 during FY18 (FY17: $4,500). 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.
The Company is a company of the kind referred to in Corporations Instrument 2016/191, issued by the Australian
Securities and Investments Commission, relating to ‘rounding-off’. Amounts in this report have been rounded
off in accordance with the Corporations Instrument to the nearest thousand dollars, or in certain cases, the
nearest dollar.
Signed in accordance with a resolution of the Board of Directors.
DIRECTORS’ REPORT
DIRECTORS’ REPORT
DIRECTORS’ REPORT
REMUNERATION REPORT (AUDITED) (cont’d)
ENVIRONMENTAL REGULATION AND PERFORMANCE
SECTION H: DETAILS OF REMUNERATION
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 2017
Granted as
On Vesting of
Other Changes
Balance at
Remuneration
Performance Rights
During the Year
30 June 2018
I Macliver
D Lougher
D Southam
R Yeates
T Netscher
C Readhead
J Belladonna
W Jones
TOTAL
36,448
462,430
131,932
10,000
12,000
20,000
242,630
170,950
1,086,390
-
-
-
-
-
-
-
-
-
143,598
80,791
(193,598)
(147,800)
-
-
-
-
54,736
39,145
317,970
-
-
-
-
(127,066)
(40,890)
36,448
412,430
64,923
10,000
12,000
20,000
170,000
169,205
(509,354)
895,006
Options held by Key Management Personnel
There were no options held by key management at any time during FY18.
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 2018
are outlined below:
D Lougher
880,430
420,280
(143,598)
(61,542)
1,095,570
D Southam
495,335
236,460
(80,791)
(34,624)
616,380
J Belladonna
333,755
159,320
(54,436)
(23,329)
415,310
W Jones
TOTAL
240,002
114,570
(39,145)
(16,777)
298,650
1,949,522
930,630
(317,970)
(136,272)
2,425,910
0%
0%
0%
0%
0%
(%)
100%
100%
100%
100%
100%
All Performance Rights issued during FY18 were allotted in accordance with the shareholder approved Western
Areas LTI plan. The rights were granted on 30 November 2017 and have a zero exercise price.
END OF AUDITED REMUNERATION REPORT.
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 52 forms part of the
Directors’ Report for the year ended 30 June 2018.
NON-AUDIT SERVICES
The entity’s auditor, Crowe Horwath, provided non-audit services, related to renewable energy lodgements,
amounting to $4,500 during FY18 (FY17: $4,500). 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.
Balance at
1 July 2017
Number
granted as
Remuneration
Number
vested
Number
Balance at
expired/
lapsed
30 June
2018
Portion
vested (%)
Portion
unvested
ROUNDING OF AMOUNTS
The Company is a company of the kind referred to in Corporations Instrument 2016/191, issued by the Australian
Securities and Investments Commission, relating to ‘rounding-off’. Amounts in this report have been rounded
off in accordance with the Corporations Instrument to the nearest thousand dollars, or in certain cases, the
nearest dollar.
Signed in accordance with a resolution of the Board of Directors.
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
No significant changes in the consolidated group’s state of affairs occurred during the financial year.
D Lougher
Managing Director
Perth, 22 August 2018
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.
WESTERN AREAS ANNUAL REPORT 2018
51
AUDITOR’S INDEPENDENCE DECLARTION
AUDITOR’S INDEPENDENCE DECLARATION
In 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 2018, 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
Profit on Sale of tenements & investments
(b)
no contraventions of any applicable code of professional conduct in relation to the audit.
CROWE HORWATH PERTH
CYRUS PATELL
Partner
Signed at Perth, 22 August 2018
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
AND OTHER COMPREHENSIVE INCOME
YEAR ENDED 30 JUNE 2018
Depreciation and Amortisation
Sales
Operating Costs
Other income
Finance costs
Employee benefit expense
Foreign exchange gain/(loss)
Write-off of non-current assets
Share based payments
Administration expenses
Care and maintenance expense
Realised derivative (loss)/gain
Profit before income tax
Income tax (expense)/benefit
Profit for the year
Share of loss of associates accounted for using the equity method
Consolidated Entity
2018
$’000
2017
$’000
Notes
248,268
213,920
(146,408)
(146,493)
(64,872)
(65,717)
3,494
4,486
-
33,063
(1,934)
(11,342)
1,143
-
(3,598)
(4,286)
(1,750)
-
(1,552)
17,163
(5,326)
11,837
(1,854)
(9,185)
(436)
(48)
(3,060)
(6,254)
(1,310)
(694)
932
17,350
1,949
19,299
4
2
2
4
29
7
Other comprehensive income, net of tax
Items that may be reclassified to profit or loss
Changes in fair value of hedging instruments
(2,012)
249
Changes in financial assets at fair value through other
comprehensive income
9
21,911
2,646
Total comprehensive income for the year
31,736
22,194
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
18
18
4.34
4.27
7.09
7.01
The accompanying notes form part of these financial statements.
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. Liability limited other than for the acts or omissions of
financial services licensees.
52
WESTERN AREAS ANNUAL REPORT 2018
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
AND OTHER COMPREHENSIVE INCOME
AND OTHER COMPREHENSIVE INCOME
YEAR ENDED 30 JUNE 2018
YEAR ENDED 30 JUNE 2018
Sales
Operating Costs
Depreciation and Amortisation
Other income
Profit on Sale of tenements & investments
Finance costs
Employee benefit expense
Foreign exchange gain/(loss)
Write-off of non-current assets
Share based payments
Administration expenses
Care and maintenance expense
Share of loss of associates accounted for using the equity method
Realised derivative (loss)/gain
Profit before income tax
Income tax (expense)/benefit
Profit for the year
Other comprehensive income, net of tax
Items that may be reclassified to profit or loss
Consolidated Entity
2018
$’000
2017
$’000
Notes
248,268
213,920
(146,408)
(146,493)
(64,872)
(65,717)
3,494
4,486
-
33,063
(1,934)
(11,342)
1,143
-
(3,598)
(4,286)
(1,750)
-
(1,552)
17,163
(5,326)
11,837
(1,854)
(9,185)
(436)
(48)
(3,060)
(6,254)
(1,310)
(694)
932
17,350
1,949
19,299
4
2
2
4
29
7
Changes in fair value of hedging instruments
(2,012)
249
Changes in financial assets at fair value through other
comprehensive income
9
21,911
2,646
Total comprehensive income for the year
31,736
22,194
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
18
18
4.34
4.27
7.09
7.01
The accompanying notes form part of these financial statements.
WESTERN AREAS ANNUAL REPORT 2018
53
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2018
AS AT 30 JUNE 2018
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
YEAR ENDED 30 JUNE 2018
Capital
Share
Based
Issued
Raising
Payment
Hedge
Investment
Retained
Capital
Costs
Reserve
Reserve
Reserve
Earnings
Total
Equity
$’000
$’000
$’000
$’000
$’000
$’000
$’000
Total equity at 1 July 2016
459,184
(16,221)
24,528
171
(9,296)
(24,365)
434,001
Comprehensive income
Profit for the year
Other comprehensive loss for the year
Total comprehensive profit for the year
Transactions with owners in their capacity
as owner, and other transfers
Share based payments expense
Deferred tax asset on performance rights
Comprehensive income
Profit for the year
Total comprehensive (loss)/profit for the
year
as owner, and other transfers
Share based payments expense
Deferred tax liability on performance rights
Dividends paid
Total equity at 30 June 2017
459,184
(16,221)
27,677
420
(6,650)
(5,066)
459,344
Other comprehensive profit for the year
(2,012)
21,911
19,899
(2,012)
21,911
11,837
31,736
(19,299)
(19,299)
249
249
2,646
(2,895)
2,646
(19,299)
(22,194)
3,060
89
3,598
(411)
3,060
89
11,837
11,837
3,598
(411)
(5,455)
(5,455)
Total equity at 30 June 2018
459,184
(16,221)
30,864
(1,592)
15,261
1,316
488,812
The accompanying notes form part of these financial statements.
Consolidated Entity
2018
$’000
151,643
22,209
34,805
-
2017
$’000
140,294
19,182
21,280
420
208,657
181,176
89,003
82,884
506
97,784
142,673
33,307
506
87,157
155,813
11,396
363,273
337,756
571,930
518,932
41,396
26,345
Transactions with owners in their capacity
267
4,514
1,592
170
3,323
-
47,769
29,838
445
24,408
10,496
35,349
304
23,544
5,902
29,750
83,118
59,588
488,812
459,344
442,963
442,963
44,533
1,316
21,447
(5,066)
488,812
459,344
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
Total Non-Current Assets
Total Assets
Current Liabilities
Trade and other payables
Borrowings
Provisions
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
Total Equity
Notes
19(b)
5
6
16
8
10
11
9
13
14
15
16
14
15
12
17
30
The accompanying notes form part of these financial statements.
54
WESTERN AREAS ANNUAL REPORT 2018
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2018
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
YEAR ENDED 30 JUNE 2018
YEAR ENDED 30 JUNE 2018
Consolidated Entity
Notes
19(b)
Issued
Capital
Capital
Raising
Costs
Share
Based
Payment
Reserve
Hedge
Reserve
Investment
Reserve
Retained
Earnings
Total
Equity
$’000
$’000
$’000
$’000
$’000
$’000
$’000
Total equity at 1 July 2016
459,184
(16,221)
24,528
171
(9,296)
(24,365)
434,001
Comprehensive income
Profit for the year
Other comprehensive loss for the year
Total comprehensive profit for the year
Transactions with owners in their capacity
as owner, and other transfers
Share based payments expense
Deferred tax asset on performance rights
(19,299)
(19,299)
249
249
2,646
(2,895)
2,646
(19,299)
(22,194)
3,060
89
3,060
89
Total equity at 30 June 2017
459,184
(16,221)
27,677
420
(6,650)
(5,066)
459,344
Comprehensive income
Profit for the year
11,837
11,837
Other comprehensive profit for the year
(2,012)
21,911
19,899
Total comprehensive (loss)/profit for the
year
(2,012)
21,911
11,837
31,736
41,396
26,345
Transactions with owners in their capacity
as owner, and other transfers
Share based payments expense
Deferred tax liability on performance rights
Dividends paid
3,598
(411)
3,598
(411)
(5,455)
(5,455)
47,769
29,838
Total equity at 30 June 2018
459,184
(16,221)
30,864
(1,592)
15,261
1,316
488,812
The accompanying notes form part of these financial statements.
Financial assets at fair value through other comprehensive income
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
Total Non-Current Assets
Total Assets
Current Liabilities
Trade and other payables
Borrowings
Provisions
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
Total Equity
The accompanying notes form part of these financial statements.
208,657
181,176
89,003
82,884
363,273
337,756
571,930
518,932
2018
$’000
151,643
22,209
34,805
-
506
97,784
142,673
33,307
267
4,514
1,592
445
24,408
10,496
35,349
2017
$’000
140,294
19,182
21,280
420
506
87,157
155,813
11,396
170
3,323
-
304
23,544
5,902
29,750
83,118
59,588
488,812
459,344
442,963
442,963
44,533
1,316
21,447
(5,066)
488,812
459,344
5
6
16
8
10
11
9
13
14
15
16
14
15
12
17
30
WESTERN AREAS ANNUAL REPORT 2018
55
CONSOLIDATED STATEMENT OF CASH FLOWS
CONSOLIDATED STATEMENT OF CASH FLOWS
YEAR ENDED 30 JUNE 2018
YEAR ENDED 30 JUNE 2018
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
Cash flows from operating activities
Receipts from customers
Payments to suppliers & employees
Interest received
Royalties paid
Other receipts
Interest paid
Realisation on settlement of derivatives
Income tax refund
Consolidated Entity
2018
$’000
2017
$’000
Notes
237,242
226,844
(154,007)
(157,743)
2,480
(9,194)
880
(25)
(410)
-
1,702
(9,818)
593
(14)
496
4,130
Net cash inflow from operating activities
19(a)
76,966
66,190
Australian Accounting Standards set out accounting policies that the AASB has concluded would result in a
Cash flows from investing activities
Payments for property, plant & equipment
Proceeds from sale of property, plant & equipment
Proceeds from sale of investments
Mine development expenditure
Exploration & evaluation expenditure
Net cash outflow from investing activities
Cash flows from financing activities
Finance lease payments
Borrowing costs
Dividends paid to company’s shareholders
Net cash outflow from financing activities
(22,544)
(6,280)
4
-
-
32,583
(26,268)
(15,703)
(10,972)
(11,983)
(59,780)
(1,383)
(282)
(100)
(5,455)
(5,837)
(219)
-
-
(219)
Net increase in cash and cash equivalents held
11,349
64,588
The Group financial statements consolidate those of Western Areas Ltd (‘company’ or ‘parent’) and all of
Cash and cash equivalents as at the beginning of the financial year
140,294
75,706
Cash and cash equivalents at end of financial year
19(b)
151,643
140,294
The accompanying notes form part of these financial statements.
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 Corporations 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 22 August 2018.
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.
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
its subsidiaries as of 30 June 2018. The parent controls a subsidiary if it is exposed, or has rights, to
variable returns from its involvement with the subsidiary and has the ability to affect those returns
through its power over the subsidiary. All subsidiaries have a reporting date of 30 June.
All transactions and balances between Group companies are eliminated on consolidation, including
unrealised gains and losses on transactions between Group companies. Where unrealised losses on intra-
group asset sales are reversed on consolidation, the underlying asset is also tested for impairment from a
group perspective. Amounts reported in the financial statements of subsidiaries have been adjusted
where necessary to ensure consistency with the accounting policies adopted by the Group.
Profit or loss and other comprehensive income of subsidiaries acquired or disposed of during the year are
recognised from the effective date of acquisition, or up to the effective date of disposal, as applicable.
Non-controlling interests, presented as part of equity, represent the portion of a subsidiary’s profit or loss
and net assets that is not held by the Group. The Group attributes total comprehensive income or loss of
subsidiaries between the owners of the parent and the non-controlling interests based on their respective
ownership interests.
56
WESTERN AREAS ANNUAL REPORT 2018
Cash flows from operating activities
Receipts from customers
Payments to suppliers & employees
Interest received
Royalties paid
Other receipts
Interest paid
Realisation on settlement of derivatives
Income tax refund
Cash flows from investing activities
Payments for property, plant & equipment
Proceeds from sale of property, plant & equipment
Proceeds from sale of investments
Mine development expenditure
Exploration & evaluation expenditure
Net cash outflow from investing activities
Cash flows from financing activities
Finance lease payments
Borrowing costs
Dividends paid to company’s shareholders
Net cash outflow from financing activities
Consolidated Entity
2018
$’000
2017
$’000
Notes
237,242
226,844
(154,007)
(157,743)
2,480
(9,194)
880
(25)
(410)
-
1,702
(9,818)
593
(14)
496
4,130
(22,544)
(6,280)
4
-
-
32,583
(26,268)
(15,703)
(10,972)
(11,983)
(59,780)
(1,383)
(282)
(100)
(5,455)
(5,837)
(219)
-
-
(219)
Cash and cash equivalents as at the beginning of the financial year
140,294
75,706
Cash and cash equivalents at end of financial year
19(b)
151,643
140,294
The accompanying notes form part of these financial statements.
CONSOLIDATED STATEMENT OF CASH FLOWS
YEAR ENDED 30 JUNE 2018
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
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 Corporations 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 22 August 2018.
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.
Net cash inflow from operating activities
19(a)
76,966
66,190
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
Net increase in cash and cash equivalents held
11,349
64,588
The Group financial statements consolidate those of Western Areas Ltd (‘company’ or ‘parent’) and all of
its subsidiaries as of 30 June 2018. The parent controls a subsidiary if it is exposed, or has rights, to
variable returns from its involvement with the subsidiary and has the ability to affect those returns
through its power over the subsidiary. All subsidiaries have a reporting date of 30 June.
All transactions and balances between Group companies are eliminated on consolidation, including
unrealised gains and losses on transactions between Group companies. Where unrealised losses on intra-
group asset sales are reversed on consolidation, the underlying asset is also tested for impairment from a
group perspective. Amounts reported in the financial statements of subsidiaries have been adjusted
where necessary to ensure consistency with the accounting policies adopted by the Group.
Profit or loss and other comprehensive income of subsidiaries acquired or disposed of during the year are
recognised from the effective date of acquisition, or up to the effective date of disposal, as applicable.
Non-controlling interests, presented as part of equity, represent the portion of a subsidiary’s profit or loss
and net assets that is not held by the Group. The Group attributes total comprehensive income or loss of
subsidiaries between the owners of the parent and the non-controlling interests based on their respective
ownership interests.
WESTERN AREAS ANNUAL REPORT 2018
57
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
Sale of Goods
b)
Investments in Associates and Joint Arrangements
Associates are those entities over which the Group is able to exert significant influence but which are not
subsidiaries.
A joint venture is an arrangement that the Group controls jointly with one or more other investors, and
over which the Group has rights to a share of the arrangement’s net assets rather than direct rights to
underlying assets and obligations for underlying liabilities. A joint arrangement in which the Group has
direct rights to underlying assets and obligations for underlying liabilities is classified as a joint operation.
Investments in associates and joint ventures are accounted for using the equity method. Interests in joint
operations are accounted for by recognising the Group’s assets (including its share of any assets held
jointly), its liabilities (including its share of any liabilities incurred jointly), its revenue from the sale of its
share of the output arising from the joint operation, its share of the revenue from the sale of the output by
the joint operation and its expenses (including its share of any expenses incurred jointly).
Any goodwill or fair value adjustment attributable to the Group’s share in the associate or joint venture is
not recognised separately and is included in the amount recognised as the investment.
The carrying amount of the investment in associates and joint ventures is increased or decreased to
recognise the Group’s share of the profit or loss and other comprehensive income of the associate and
joint venture, adjusted where necessary to ensure consistency with the accounting policies of the Group.
Unrealised gains and losses on transactions between the Group and its associates and joint ventures are
eliminated to the extent of the Group’s interest in those entities. Where unrealised losses are eliminated,
the underlying asset is also tested for impairment.
c) 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.
fixed overhead costs relating to mining activities.
d) Foreign Currency Transactions and Balances
The cost of consumables and spare parts includes cost of materials and transportation costs.
The financial statements are presented in Australian dollars, which is Western Areas Ltd’s functional and
h) Property, Plant and Equipment
presentation currency.
Foreign currency transactions
Foreign currency transactions are translated into Australian dollars using the exchange rates prevailing at
the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such
transactions and from the translation at 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 equity reserve.
The foreign currency reserve is recognised in profit or loss when the foreign operation or net investment is
disposed of.
e) 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. All revenue is stated net of the amount of goods and services tax (‘GST’).
58
WESTERN AREAS ANNUAL REPORT 2018
Revenue from the sale of nickel is recognised when the performance obligation of delivering the products
to the buyer has been satisfied, 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, payability, the metal price and exchange rate. Revenue is
provisionally priced at the date revenue is recognised. 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 revenue is recognised on a proportional basis taking into account the interest rates applicable to
Other revenue is recognised when it is received or when the right to receive payment is established.
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.
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
Interest
the financial assets.
Other revenue
f) Finance Costs
g)
Inventories
Each class of property, plant and equipment is carried at cost less, where applicable, any accumulated
depreciation and impairment losses.
Property
Plant and Equipment
Land and buildings are carried at cost, less accumulated depreciation for buildings.
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(p) for details of impairment).
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
Sale of Goods
b)
Investments in Associates and Joint Arrangements
Associates are those entities over which the Group is able to exert significant influence but which are not
subsidiaries.
A joint venture is an arrangement that the Group controls jointly with one or more other investors, and
over which the Group has rights to a share of the arrangement’s net assets rather than direct rights to
underlying assets and obligations for underlying liabilities. A joint arrangement in which the Group has
direct rights to underlying assets and obligations for underlying liabilities is classified as a joint operation.
Investments in associates and joint ventures are accounted for using the equity method. Interests in joint
operations are accounted for by recognising the Group’s assets (including its share of any assets held
jointly), its liabilities (including its share of any liabilities incurred jointly), its revenue from the sale of its
share of the output arising from the joint operation, its share of the revenue from the sale of the output by
the joint operation and its expenses (including its share of any expenses incurred jointly).
Revenue from the sale of nickel is recognised when the performance obligation of delivering the products
to the buyer has been satisfied, 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, payability, the metal price and exchange rate. Revenue is
provisionally priced at the date revenue is recognised. 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.
Other revenue
Other revenue is recognised when it is received or when the right to receive payment is established.
Any goodwill or fair value adjustment attributable to the Group’s share in the associate or joint venture is
not recognised separately and is included in the amount recognised as the investment.
f) Finance Costs
The carrying amount of the investment in associates and joint ventures is increased or decreased to
recognise the Group’s share of the profit or loss and other comprehensive income of the associate and
joint venture, adjusted where necessary to ensure consistency with the accounting policies of the Group.
Unrealised gains and losses on transactions between the Group and its associates and joint ventures are
eliminated to the extent of the Group’s interest in those entities. Where unrealised losses are eliminated,
the underlying asset is also tested for impairment.
c) 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
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.
g)
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
and assessing performance of the operating segments, has been identified as the board of directors.
fixed overhead costs relating to mining activities.
d) Foreign Currency Transactions and Balances
The cost of consumables and spare parts includes cost of materials and transportation costs.
The financial statements are presented in Australian dollars, which is Western Areas Ltd’s functional and
h) Property, Plant and Equipment
presentation currency.
Foreign currency transactions
Foreign currency transactions are translated into Australian dollars using the exchange rates prevailing at
the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such
transactions and from the translation at 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 equity reserve.
The foreign currency reserve is recognised in profit or loss when the foreign operation or net investment is
disposed of.
e) 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. All revenue is stated net of the amount of goods and services tax (‘GST’).
Each class of property, plant and equipment is carried at cost 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(p) for details of impairment).
WESTERN AREAS ANNUAL REPORT 2018
59
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
j) Mine Properties
h) Property, Plant and Equipment (cont’d)
Plant and Equipment (cont’d)
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.
depletion of proved and probable reserves.
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
Depreciation of an asset (including amounts classified as Works in Progress) begins when it is available for
use, that is, when it is in the location and condition necessary for it to be capable of operating in the manner
intended by Management. The depreciable amount of all property, plant and equipment is depreciated on a
straight line basis over their useful lives or the estimated life of mine, whichever is shorter. Land is not
depreciated. The depreciation rates used for each major type of depreciable assets are:
Class of Fixed Asset
Depreciation Rate
Property
2% - 20%
Plant and equipment
2% - 33% or units of production over life of mine
Motor vehicles
20%
Furniture and fittings
6% - 27%
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.
i) 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 of interest
The carrying amount of recognised and unrecognised deferred tax assets are reviewed each reporting
or where activities in the area have not yet reached a stage that permits reasonable assessment of the
date. Deferred tax assets recognised are reduced to the extent that it is no longer probable that future
existence of economically recoverable reserves and active and significant operation in relation to the area
taxable profits will be available for the carrying amount to be recovered. Previously unrecognised deferred
of interest are continuing.
tax assets are recognised to the extent that it is probable that there are future taxable profits available to
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 transferred to
mine properties and are amortised at 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. In accordance with AASB 6, where circumstances
suggest that the carrying amount of an asset exceed its recoverable amount, an impairment loss will be
recognised.
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 Ltd (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.
60
WESTERN AREAS ANNUAL REPORT 2018
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 an amortisation charge proportional to the
Mine properties are tested for impairment in accordance with the policy in Note 1(p).
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, 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.
k)
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.
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
j) Mine Properties
expected net cash flows have been discounted to their present values in determining recoverable amounts.
depletion of proved and probable reserves.
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 an amortisation charge proportional to the
Mine properties are tested for impairment in accordance with the policy in Note 1(p).
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, 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.
k)
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.
extent that they are expected to be recovered through the successful development of the area of interest
The carrying amount of recognised and unrecognised deferred tax assets are reviewed each reporting
or where activities in the area have not yet reached a stage that permits reasonable assessment of the
date. Deferred tax assets recognised are reduced to the extent that it is no longer probable that future
existence of economically recoverable reserves and active and significant operation in relation to the area
taxable profits will be available for the carrying amount to be recovered. Previously unrecognised deferred
of interest are continuing.
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 Ltd (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.
WESTERN AREAS ANNUAL REPORT 2018
61
h) Property, Plant and Equipment (cont’d)
Plant and Equipment (cont’d)
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
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
Depreciation of an asset (including amounts classified as Works in Progress) begins when it is available for
use, that is, when it is in the location and condition necessary for it to be capable of operating in the manner
intended by Management. The depreciable amount of all property, plant and equipment is depreciated on a
straight line basis over their useful lives or the estimated life of mine, whichever is shorter. Land is not
depreciated. The depreciation rates used for each major type of depreciable assets are:
Class of Fixed Asset
Depreciation Rate
Property
2% - 20%
Plant and equipment
2% - 33% or units of production over life of mine
Motor vehicles
20%
Furniture and fittings
6% - 27%
reporting period.
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each
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.
i) 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
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 transferred to
mine properties and are amortised at 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. In accordance with AASB 6, where circumstances
suggest that the carrying amount of an asset exceed its recoverable amount, an impairment loss will be
recognised.
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
k)
Income Tax (cont’d)
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 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.
l) 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
that all other conditions are satisfied.
investing and financing activities, which are disclosed as operating cash flows.
m) 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
as described in the preceding paragraph.
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
interest on the remaining balance of the liability.
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
a straight-line basis over the term of the lease.
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).
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WESTERN AREAS ANNUAL REPORT 2018
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 29.
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
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,
n) 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
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.
Operating lease payments, net of any incentives received from the lessor, are charged to profit or loss on
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
k)
Income Tax (cont’d)
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 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.
l) 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.
investing and financing activities, which are disclosed as operating cash flows.
m) 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
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
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
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 29.
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
Cash flows are presented in the cash flow statement on a gross basis, except for the GST component of
that all other conditions are satisfied.
The liabilities for long service leave and annual leave that are not expected to be settled wholly within
as described in the preceding paragraph.
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,
n) 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
Contributions to defined contribution superannuation plans are expensed in the period in which they are
interest on the remaining balance of the liability.
shares. The Remuneration Committee approved the grant of performance rights as incentives to attract
a straight-line basis over the term of the lease.
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.
Operating lease payments, net of any incentives received from the lessor, are charged to profit or loss on
WESTERN AREAS ANNUAL REPORT 2018
63
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
Financial assets at fair value through profit and loss (cont’d)
o) 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 or amortised cost using the
effective interest rate method. 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.
A financial asset is subsequently measured at amortised cost, using effective interest method and net of
any impairment loss, if:
The asset is held within the business model whose objective is to hold assets in order to collect
contractual cash flows; and
The contractual terms of the financial asset give rise, on specified dates, to cash flows that are solely
payments of principal and interest.
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, or
those to be measured at amortised cost.
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.
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.
64
WESTERN AREAS ANNUAL REPORT 2018
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
made an irrevocable election 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.
Non-derivative financial liabilities (excluding financial guarantees) are subsequently measured at amortised
Financial liabilities
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
prices and foreign currency exchange rates.
Derivative financial instruments are used by the consolidated entity to hedge exposures to commodity
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.
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
Fair Value Hedges
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.
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
Financial assets at fair value through profit and loss (cont’d)
o) 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 or amortised cost using the
effective interest rate method. 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.
A financial asset is subsequently measured at amortised cost, using effective interest method and net of
The asset is held within the business model whose objective is to hold assets in order to collect
The contractual terms of the financial asset give rise, on specified dates, to cash flows that are solely
any impairment loss, if:
contractual cash flows; and
payments of principal and interest.
Amortised cost is calculated as:
b) less principal repayments;
d) less any reduction for impairment.
a) the amount at which the financial asset or financial liability is measured at initial recognition;
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
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.
As from 1 July 2013 the group classifies its financial assets in the following measurement categories:
those to be measured subsequently at fair value, or
those to be measured at amortised cost.
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.
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
made an irrevocable election 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.
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.
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.
Financial assets at fair value through profit and loss
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.
WESTERN AREAS ANNUAL REPORT 2018
65
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
t)
Intangibles
o) Financial Instruments (cont’d)
Derivative financial instruments (cont’d)
Cash Flow Hedge (cont’d)
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.
p)
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.
q) Rounding Amounts
The company is of a kind referred to in Corporations Instrument 2016/191, issued by the Australian
Securities and Investments Commission, relating to ‘rounding-off’. Amounts in this report have been
rounded off in accordance with that Corporations Instrument to the nearest thousand dollars, or in certain
cases, the nearest dollar.
r) 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.
s) 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.
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WESTERN AREAS ANNUAL REPORT 2018
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.
u) 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.
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 Monti Carlo 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.
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 of 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
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or
access at the measurement date;
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.
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
t)
Intangibles
o) Financial Instruments (cont’d)
Derivative financial instruments (cont’d)
Cash Flow Hedge (cont’d)
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.
Changes in the fair value of derivatives that do not qualify for hedge accounting are recognised in the
All Other Derivatives
Income Statement.
p)
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.
q) Rounding Amounts
cases, the nearest dollar.
r) Cash and Cash Equivalents
The company is of a kind referred to in Corporations Instrument 2016/191, issued by the Australian
Securities and Investments Commission, relating to ‘rounding-off’. Amounts in this report have been
rounded off in accordance with that Corporations Instrument to the nearest thousand dollars, or in certain
Cash and cash equivalents comprise cash-on-hand, cash in banks and investments in money market
instruments, net of outstanding bank overdrafts.
s) Provisions
be reliably measured.
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
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.
u) 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.
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 Monti Carlo 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.
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 of 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.
WESTERN AREAS ANNUAL REPORT 2018
67
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
v) Contributed equity
u) Critical Accounting Estimates and Balances (cont’d)
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.
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.
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 2018, there were
no impairment charge 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 15. 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
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.
Where necessary, comparative figures have been restated to conform with changes in presentation for
w) Comparative figures
the current year.
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) 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 Group applies the simplified approach to providing for expected credit losses as prescribed by
AASB 9.
z) 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 18).
Diluted earnings per share
into account:
ordinary shares, and
Diluted earnings per share adjust the figures used in the determination of basic earnings per share to take
The after income tax effect of interest and other financing costs associated with dilutive potential
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
The weighted average number of additional ordinary shares that would have been outstanding
assuming the conversion of all dilutive potential ordinary shares.
and losses.
Employee benefits provision
As discussed in Note (m), 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.
68
WESTERN AREAS ANNUAL REPORT 2018
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
v) Contributed equity
u) Critical Accounting Estimates and Balances (cont’d)
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.
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.
Impairment of non-financial assets other than goodwill and other indefinite life
w) Comparative figures
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.
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 2018, there were
no impairment charge to Exploration, Evaluation and Development.
Income tax
uncertain.
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
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 15. 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
and losses.
Employee benefits provision
As discussed in Note (m), 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.
Where necessary, comparative figures have been restated to conform with changes in presentation for
the current year.
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) 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 Group applies the simplified approach to providing for expected credit losses as prescribed by
AASB 9.
z) 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 18).
Diluted earnings per share
Diluted earnings per share adjust 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
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
The weighted average number of additional ordinary shares that would have been outstanding
assuming the conversion of all dilutive potential ordinary shares.
WESTERN AREAS ANNUAL REPORT 2018
69
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
AASB 16 Leases
aa) 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 2018. 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 judgements 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 Group has reviewed all its sales contracts to identify potential changes in: timing of revenue
recognition, measurement of the amount of revenue and note disclosure between the current standard,
AASB 118 Revenue, and AASB 15.
Currently revenue for domestic sales is recognised when the concentrates are delivered to the customers’
Total other income
3,494
4,486
premises, which is the point when the customer takes over the risk and rewards of ownership transfer. The
Consolidated Entity’s assessment indicates that under AASB 15, revenue will continue to be recognised on
the same basis when the customer obtains control of the concentrates as this is when the consolidated
entity has satisfied its performance obligations under the contract. Revenue for export sales is currently
recognised when shipments of concentrates are loaded on to the vessel as the risk and reward of
ownership is transferred to the customer at that point.
The Consolidated Entity’s assessment under AASB 15 indicates that the export contracts are made up of
two performance obligations. The first obligation to deliver the concentrates to the port of shipment and
the second obligation is to organise shipping of the concentrate, which will be satisfied when
concentrates are delivered to the destination port. Under AASB 118, the Group recognises such shipping
and other freight revenue and accrues the associated costs in full on loading whereas under AASB 15,
freight and, where applicable, insurance, are required to be accounted for as separate performance
obligations with revenue recognised over time as the service is rendered. The Group has determined that
AASB 15 will have no material impact on the way the Group accounts for its revenue.
70
WESTERN AREAS ANNUAL REPORT 2018
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). The Group has yet to commence an assessment of the impact of
AASB 16. Management intend to commence the development of an implementation plan prior to 30 June
2019. It is expected that the plan is likely to involve the establishment of an implementation team whose
responsibility will be to firstly gain a clear understanding of the requirements of the new Standards, and
thereafter assess the potential impact on the Group (in the form of accounting and disclosure, taxation,
systems and processes and internal controls) of this new Standard. This assessment will then establish
the areas that require change for the purposes of full implementation. As part of finalising the plan,
Management will determine the appropriate adoption date and transition method, as well as ensuring
appropriate communication with relevant stakeholders.
NOTE 2: OTHER INCOME & PROFIT ON SALE OF TENEMENTS &
INVESTMENTS
Consolidated Entity
Interest income
Other income
Profit on sale of PP&E
Partial Exemption Certificate credits
Profit on sale of Bluejay Plc shares
Profit on discontinuance of equity accounting
Profit on sale of tenements to Kidman Resources Ltd
Total profit on sale of tenements & investments
NOTE 3: DIVIDENDS
Dividends proposed
A fully franked final dividend of 2 cents per share is proposed for
the year ended 30 June 2018 (2017: 2 cents per ordinary share)
Dividends paid
A final dividend of 2 cents per share was paid for
the year ended 30 June 2017 (2016: Nil)
No interim dividend for 2018 (2017: Nil)
2018
$’000
2,611
879
4
-
-
-
-
-
5,470
5,470
5,445
-
5,445
2017
$’000
1,872
829
-
1,785
12,417
13,178
7,468
33,063
5,446
-
-
-
-
Consolidated Entity
2018
$’000
2017
$’000
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
AASB 16 Leases
aa) 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 2018. 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 judgements 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 Group has reviewed all its sales contracts to identify potential changes in: timing of revenue
recognition, measurement of the amount of revenue and note disclosure between the current standard,
AASB 118 Revenue, and AASB 15.
premises, which is the point when the customer takes over the risk and rewards of ownership transfer. The
Consolidated Entity’s assessment indicates that under AASB 15, revenue will continue to be recognised on
the same basis when the customer obtains control of the concentrates as this is when the consolidated
entity has satisfied its performance obligations under the contract. Revenue for export sales is currently
recognised when shipments of concentrates are loaded on to the vessel as the risk and reward of
ownership is transferred to the customer at that point.
The Consolidated Entity’s assessment under AASB 15 indicates that the export contracts are made up of
two performance obligations. The first obligation to deliver the concentrates to the port of shipment and
the second obligation is to organise shipping of the concentrate, which will be satisfied when
concentrates are delivered to the destination port. Under AASB 118, the Group recognises such shipping
and other freight revenue and accrues the associated costs in full on loading whereas under AASB 15,
freight and, where applicable, insurance, are required to be accounted for as separate performance
obligations with revenue recognised over time as the service is rendered. The Group has determined that
AASB 15 will have no material impact on the way the Group accounts for its revenue.
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). The Group has yet to commence an assessment of the impact of
AASB 16. Management intend to commence the development of an implementation plan prior to 30 June
2019. It is expected that the plan is likely to involve the establishment of an implementation team whose
responsibility will be to firstly gain a clear understanding of the requirements of the new Standards, and
thereafter assess the potential impact on the Group (in the form of accounting and disclosure, taxation,
systems and processes and internal controls) of this new Standard. This assessment will then establish
the areas that require change for the purposes of full implementation. As part of finalising the plan,
Management will determine the appropriate adoption date and transition method, as well as ensuring
appropriate communication with relevant stakeholders.
NOTE 2: OTHER INCOME & PROFIT ON SALE OF TENEMENTS &
INVESTMENTS
Currently revenue for domestic sales is recognised when the concentrates are delivered to the customers’
Total other income
Interest income
Other income
Profit on sale of PP&E
Partial Exemption Certificate credits
Profit on sale of Bluejay Plc shares
Profit on discontinuance of equity accounting
Profit on sale of tenements to Kidman Resources Ltd
Total profit on sale of tenements & investments
NOTE 3: DIVIDENDS
Dividends proposed
A fully franked final dividend of 2 cents per share is proposed for
the year ended 30 June 2018 (2017: 2 cents per ordinary share)
Dividends paid
A final dividend of 2 cents per share was paid for
the year ended 30 June 2017 (2016: Nil)
No interim dividend for 2018 (2017: Nil)
Consolidated Entity
2018
$’000
2,611
879
4
-
2017
$’000
1,872
829
-
1,785
3,494
4,486
-
-
-
-
12,417
13,178
7,468
33,063
Consolidated Entity
2018
$’000
2017
$’000
5,470
5,470
5,445
-
5,445
5,446
-
-
-
-
WESTERN AREAS ANNUAL REPORT 2018
71
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
NOTE 4: PROFIT BEFORE INCOME TAX
NOTE 7: INCOME TAX
Profit before income tax includes the following specific expenses:
- Depreciation of property, plant and equipment
- Amortisation of mine development asset
- Rental expenditure relating to operating leases
- Employee benefits expense
Consolidated Entity
2018
$’000
17,764
47,108
1,019
2017
$’000
17,711
48,006
1,186
The components of the tax expense comprise:
- Current tax
- Deferred tax
- R&D Tax offset
- Adjustment of current tax for prior periods
Income tax expense/(benefit)
Defined contribution superannuation expense
2,117
2,107
- Finance costs:
Provisions: unwinding of discount
Interest expense – finance leases
Borrowing costs amortised
Total borrowing costs
NOTE 5: TRADE AND OTHER RECEIVABLES
Trade debtors
Other receivables
GST refund due
Prepayments
1,297
24
613
1,934
1,227
14
613
1,854
Consolidated Entity
2018
$’000
19,855
929
1,128
297
22,209
2017
$’000
8,851
2,088
1,050
7,193
19,182
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:
Consolidated Entity
There are no balances within trade and other receivables that contain amounts that are past due but not
impaired. It is expected the balances will be received when due as there is no recent history of default or
NOTE 8: PROPERTY, PLANT AND EQUIPMENT
Consolidated Entity
expectation that they will default.
NOTE 6: INVENTORIES
Ore stockpiles
Nickel concentrate stockpiles
Consumables and spare parts
Consolidated Entity
2018
$’000
26,765
3,634
4,406
34,805
2017
$’000
16,177
1,281
3,822
21,280
Prima facie tax on profit/(loss) before income tax at 30% (2017: 30%)
Adjusted for the tax effect of:
- Exploration write-off
- Share based payment expense
- Sale of foreign investment
- Foreign branch losses (Bluejay Mining Plc)
- Other temporary differences
- Income tax benefit on share based payments
Tax Expense/(Benefit)
Property – at cost
Accumulated depreciation
Plant & equipment – at cost
Work in Progress – at cost
Accumulated depreciation
Plant & equipment under lease
Accumulated depreciation
Total property, plant & equipment – at cost
Accumulated Depreciation
Total
ASSETS PLEDGED AS SECURITY
Consolidated Entity
2018
$’000
-
4,594
(246)
978
5,326
2018
$’000
5,149
1,079
-
-
-
821
(1,723)
5,326
2018
$’000
48,049
(33,294)
14,755
145,693
31,520
(103,933)
73,280
2,428
(1,460)
968
227,690
(138,687)
89,003
2017
$’000
-
(211)
(510)
(1,228)
1,949
2017
$’000
5,205
14
918
(7,679)
208
(333)
(282)
(1,949)
2017
$’000
48,049
(28,638)
19,411
144,245
9,571
(91,052)
62,764
1,942
(1,233)
709
203,807
(120,923)
82,884
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 (Note 14(b)).
72
WESTERN AREAS ANNUAL REPORT 2018
- Depreciation of property, plant and equipment
- Amortisation of mine development asset
- Rental expenditure relating to operating leases
- Employee benefits expense
- Finance costs:
Provisions: unwinding of discount
Interest expense – finance leases
Borrowing costs amortised
Total borrowing costs
Trade debtors
Other receivables
GST refund due
Prepayments
expectation that they will default.
NOTE 6: INVENTORIES
Ore stockpiles
Nickel concentrate stockpiles
Consumables and spare parts
NOTE 5: TRADE AND OTHER RECEIVABLES
Consolidated Entity
There are no balances within trade and other receivables that contain amounts that are past due but not
impaired. It is expected the balances will be received when due as there is no recent history of default or
2018
$’000
17,764
47,108
1,019
1,297
24
613
1,934
2018
$’000
19,855
929
1,128
297
22,209
2018
$’000
26,765
3,634
4,406
34,805
2017
$’000
17,711
48,006
1,186
1,227
14
613
1,854
2017
$’000
8,851
2,088
1,050
7,193
19,182
2017
$’000
16,177
1,281
3,822
21,280
Consolidated Entity
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
NOTE 4: PROFIT BEFORE INCOME TAX
NOTE 7: INCOME TAX
Consolidated Entity
Consolidated Entity
Profit before income tax includes the following specific expenses:
The components of the tax expense comprise:
- Current tax
- Deferred tax
- R&D Tax offset
- Adjustment of current tax for prior periods
Income tax expense/(benefit)
2018
$’000
-
4,594
(246)
978
5,326
2017
$’000
-
(211)
(510)
(1,228)
1,949
Defined contribution superannuation expense
2,117
2,107
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 profit/(loss) before income tax at 30% (2017: 30%)
Adjusted for the tax effect of:
- Exploration write-off
- Share based payment expense
- Sale of foreign investment
- Foreign branch losses (Bluejay Mining Plc)
- Other temporary differences
- Income tax benefit on share based payments
Tax Expense/(Benefit)
Consolidated Entity
2018
$’000
5,149
-
1,079
-
-
821
(1,723)
5,326
2017
$’000
5,205
14
918
(7,679)
208
(333)
(282)
(1,949)
NOTE 8: PROPERTY, PLANT AND EQUIPMENT
Consolidated Entity
Property – at cost
Accumulated depreciation
Plant & equipment – at cost
Work in Progress – at cost
Accumulated depreciation
Plant & equipment under lease
Accumulated depreciation
Total property, plant & equipment – at cost
Accumulated Depreciation
Total
ASSETS PLEDGED AS SECURITY
2018
$’000
48,049
(33,294)
14,755
145,693
31,520
(103,933)
73,280
2,428
(1,460)
968
227,690
(138,687)
89,003
2017
$’000
48,049
(28,638)
19,411
144,245
9,571
(91,052)
62,764
1,942
(1,233)
709
203,807
(120,923)
82,884
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 (Note 14(b)).
WESTERN AREAS ANNUAL REPORT 2018
73
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
NOTE 8: PROPERTY, PLANT AND EQUIPMENT (cont’d)
NOTE 10: EXPLORATION & EVALUATION EXPENDITURE
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
- Depreciation expense
Written down value at the end of the year
Plant & Equipment
Written down value at the beginning of the year
- Additions
- 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
NOTE 9: FINANCIAL ASSETS
Opening Balance
- Disposal of investment in associate
- Fair value of consideration received for Tenement sale
- Proceeds on farm in joint venture at initial fair value
- Changes in fair value through other comprehensive income
2018
$’000
19,411
-
(4,656)
14,755
62,764
23,397
(12,881)
73,280
709
486
(227)
968
2017
$’000
23,135
872
(4,596)
19,411
72,683
3,010
(12,929)
62,764
547
348
(186)
709
Consolidated Entity
2018
$’000
11,396
-
-
-
21,911
33,307
2017
$’000
1,281
(280)
5,222
2,527
2,646
11,396
In accordance with the terms of AASB 9, the Company made an irrevocable election to recognise movements in
the fair value of its shares in Kidman Resources Ltd and Grid Metals Inc at each reporting period through Other
Comprehensive Income. As at 30 June 2018, the investment in Kidman was fair valued at $32.42m
(2017: 10.63m).
74
WESTERN AREAS ANNUAL REPORT 2018
Exploration & Evaluation Expenditure consists of:
- At cost
- Cosmos Nickel Complex
Total Exploration and Evaluation Expenditure
MOVEMENT IN CARRYING AMOUNT
Movement in the carrying amounts for exploration and evaluation expenditure between the beginning and the
end of the current period:
Consolidated Entity
Written down value at the beginning of the year
- Expenditure incurred during the year
- Tenements sold at written down value
- Write-off
Written down value at the end of the year
97,784
87,157
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.
NOTE 11: 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
MOVEMENT IN CARRYING AMOUNT
Development Expenditure
Written down value at the beginning of the year
- Additions
- Amortisation charge for the year
Written down value at the end of the year
Movement in the carrying amounts for mine development expenditure between the beginning and the end of
the current period:
Consolidated Entity
2018
$’000
70,679
27,105
97,784
2018
$’000
87,157
10,627
-
-
2017
$’000
60,052
27,105
87,157
2017
$’000
80,360
7,126
(281)
(48)
Consolidated Entity
2018
$’000
166,796
59,796
76,000
371,825
11,645
11,175
2017
$’000
154,872
59,796
76,000
349,781
11,645
11,175
(554,564)
(507,456)
142,673
155,813
Consolidated Entity
2018
$’000
155,813
33,968
(47,108)
142,673
2017
$’000
183,579
20,240
(48,006)
155,813
Property
- Additions
- Depreciation expense
Plant & Equipment
- Additions
- Depreciation expense
Written down value at the end of the year
Written down value at the beginning of the year
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
NOTE 9: FINANCIAL ASSETS
Opening Balance
- Disposal of investment in associate
- Fair value of consideration received for Tenement sale
- Proceeds on farm in joint venture at initial fair value
- Changes in fair value through other comprehensive income
2018
$’000
19,411
-
(4,656)
14,755
62,764
23,397
(12,881)
73,280
709
486
(227)
968
2018
$’000
11,396
-
-
-
21,911
33,307
2017
$’000
23,135
872
(4,596)
19,411
72,683
3,010
(12,929)
62,764
547
348
(186)
709
2017
$’000
1,281
(280)
5,222
2,527
2,646
11,396
In accordance with the terms of AASB 9, the Company made an irrevocable election to recognise movements in
the fair value of its shares in Kidman Resources Ltd and Grid Metals Inc at each reporting period through Other
Comprehensive Income. As at 30 June 2018, the investment in Kidman was fair valued at $32.42m
(2017: 10.63m).
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
NOTE 8: PROPERTY, PLANT AND EQUIPMENT (cont’d)
NOTE 10: EXPLORATION & EVALUATION EXPENDITURE
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
Exploration & Evaluation Expenditure consists of:
- At cost
- Cosmos Nickel Complex
Total Exploration and Evaluation Expenditure
Consolidated Entity
2018
$’000
70,679
27,105
97,784
2017
$’000
60,052
27,105
87,157
Written down value at the beginning of the year
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
- Tenements sold at written down value
- Write-off
Consolidated Entity
2018
$’000
87,157
10,627
-
-
2017
$’000
80,360
7,126
(281)
(48)
Written down value at the end of the year
97,784
87,157
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.
Consolidated Entity
NOTE 11: 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
MOVEMENT IN CARRYING AMOUNT
Consolidated Entity
2018
$’000
166,796
59,796
76,000
371,825
11,645
11,175
2017
$’000
154,872
59,796
76,000
349,781
11,645
11,175
(554,564)
(507,456)
142,673
155,813
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
- Amortisation charge for the year
Written down value at the end of the year
Consolidated Entity
2018
$’000
155,813
33,968
(47,108)
142,673
2017
$’000
183,579
20,240
(48,006)
155,813
WESTERN AREAS ANNUAL REPORT 2018
75
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
NOTE 12: DEFERRED TAX LIABILITIES
The balance comprises temporary differences attributable to:
a) Liabilities
- Exploration & evaluation expenditure
- Mine development
- Other
b) Assets
- Property, plant and equipment
- Provisions
- Tax losses
- Employee share trust
- Other
Net deferred tax liabilities
c) Reconciliation
i) Gross movement
Consolidated Entity
2018
$’000
2017
$’000
(21,151)
(6,780)
(213)
(17,707)
(9,997)
(274)
c) Reconciliation (cont’d)
iii) Deferred tax assets
The movement in the deferred tax assets for each temporary difference
(28,144)
(27,978)
(Debit)/Credit to income statement
5,061
5,006
3,879
1,178
2,524
17,648
(10,496)
5,002
5,838
9,752
192
1,292
22,076
(5,902)
The overall movement in the deferred tax account is as follows:
Credit/(Debit) to income statement
Opening balance
(Credit)/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)/Credit to income statement
Closing balance
Mine development:
Opening balance
Credit/(Debit) to income statement
Closing balance
Other:
Opening balance
Credit to income statement
Closing balance
(5,902)
(4,594)
(10,496)
(6,113)
211
(5,902)
(17,707)
(3,444)
(21,151)
(9,997)
3,217
(6,780)
(274)
61
(213)
(50,782)
33,075
(17,707)
27,673
(37,670)
(9,997)
(286)
12
(274)
76
WESTERN AREAS ANNUAL REPORT 2018
during the year is as follows:
Provisions:
Opening balance
Closing balance
Property, plant and equipment:
Opening balance
Credit to income statement
Debit to income statement
Closing balance
Tax losses:
Opening balance
Closing balance
Employee share trust:
Opening balance
Closing balance
Other:
Opening balance
Credit/(Debit) to income statement
Closing balance
NOTE 13: TRADE & OTHER PAYABLES
Trade payables
Accrued expenses
Consolidated Entity
2018
$’000
2017
$’000
5,838
(832)
5,006
5,002
59
5,061
9,752
(5,873)
3,879
192
986
1,178
1,292
1,232
2,524
5,583
255
5,838
(1,938)
6,940
5,002
11,378
(1,626)
9,752
965
(773)
192
1,294
(2)
1,292
Consolidated Entity
2018
$’000
17,792
23,604
41,396
2017
$’000
8,255
18,090
26,345
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
NOTE 12: DEFERRED TAX LIABILITIES
The balance comprises temporary differences attributable to:
Consolidated Entity
2018
$’000
2017
$’000
c) Reconciliation (cont’d)
iii) Deferred tax assets
The movement in the deferred tax assets for each temporary difference
during the year is as follows:
Provisions:
Opening balance
(28,144)
(27,978)
(Debit)/Credit to income statement
Closing balance
Property, plant and equipment:
Opening balance
Credit to income statement
Closing balance
Tax losses:
Opening balance
Debit to income statement
Closing balance
Employee share trust:
Opening balance
Credit/(Debit) to income statement
Closing balance
Other:
Opening balance
Credit/(Debit) to income statement
Closing balance
NOTE 13: TRADE & OTHER PAYABLES
Trade payables
Accrued expenses
a) Liabilities
- Exploration & evaluation expenditure
- Mine development
- Other
b) Assets
- Property, plant and equipment
- Provisions
- Tax losses
- Employee share trust
- Other
Net deferred tax liabilities
c) Reconciliation
i) Gross movement
Opening balance
(Credit)/Debit to income statement
Closing balance
ii) Deferred tax liability
during the year is as follows:
Exploration & development expenditure:
Opening balance
(Debit)/Credit to income statement
Closing balance
Mine development:
Opening balance
Closing balance
Other:
Credit/(Debit) to income statement
Opening balance
Credit to income statement
Closing balance
(21,151)
(6,780)
(213)
5,061
5,006
3,879
1,178
2,524
17,648
(10,496)
(17,707)
(3,444)
(21,151)
(9,997)
3,217
(6,780)
(274)
61
(213)
(17,707)
(9,997)
(274)
5,002
5,838
9,752
192
1,292
22,076
(5,902)
(50,782)
33,075
(17,707)
27,673
(37,670)
(9,997)
(286)
12
(274)
The overall movement in the deferred tax account is as follows:
(5,902)
(4,594)
(10,496)
(6,113)
211
(5,902)
The movement in the deferred tax liabilities for each temporary difference
Consolidated Entity
2018
$’000
2017
$’000
5,838
(832)
5,006
5,002
59
5,061
9,752
(5,873)
3,879
192
986
1,178
1,292
1,232
2,524
5,583
255
5,838
(1,938)
6,940
5,002
11,378
(1,626)
9,752
965
(773)
192
1,294
(2)
1,292
Consolidated Entity
2018
$’000
17,792
23,604
41,396
2017
$’000
8,255
18,090
26,345
WESTERN AREAS ANNUAL REPORT 2018
77
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
NOTE 14: BORROWINGS
NOTE 16: DERIVATIVE FINANCIAL INSTRUMENTS
Current
Lease liabilities
Non-Current
Lease liabilities
Consolidated Entity
2018
$’000
2017
$’000
267
267
445
445
170
170
304
304
Current Assets
Foreign exchange/nickel options – current assets
Foreign exchange/nickel options – current liabilities
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
a) CORPORATE LOAN FACILITY
included in the income statement.
The Corporate Loan facility can be made available for broad company purposes as agreed between the
Australia and New Zealand Banking Group Ltd (‘ANZ’) and Western Areas Ltd. In December 2017 the ANZ
corporate loan facility (‘facility’) was renegotiated by the Company. The new facility is a secured, two year,
A$25m revolving cash facility. Initial term of the facility is 12 months, which is extendable for a further
12 months (24 months in total).
The carrying value of assets secured under the corporate loan facility is as follows:
272,792,647 fully paid ordinary shares (2017: 272,276,625)
442,963
442,963
Mine properties
Property, plant & equipment
b) LEASE LIABILITIES
Consolidated Entity
2018
$’000
142,673
88,035
2017
$’000
155,813
82,175
Note
11
8
230,708
237,988
- Performance rights vested issued as shares
2018
Balance at beginning of the financial year
272,276,625
442,963
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 5.05%. Refer to Note 8 for the carrying value of the
2017
assets under lease.
NOTE 15: PROVISIONS
Current
Employee entitlements
Non-Current
Rehabilitation and restoration cost
Opening balance
Unwinding of discount
Rehabilitation expenditure incurred during the period
Closing balance
Employee entitlements
Consolidated Entity
2018
$’000
2017
$’000
4,514
3,323
22,917
1,297
(123)
24,091
317
22,649
1,227
(959)
22,917
627
24,408
23,544
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 and Cosmos Nickel Project. Based on the current known mine
life, restoration activities are not expected to commence within the next 8 years, following full exhaustion of
mine life rehabilitation activities will be undertaken.
78
WESTERN AREAS ANNUAL REPORT 2018
Consolidated Entity
2018
$’000
-
1,592
2017
$’000
420
-
Consolidated Entity
2018
$’000
2017
$’000
Number of
Shares
$’000
272,792,647
442,963
270,924,958
442,963
482,422
33,600
1,307,740
43,927
-
-
-
-
272,276,625
442,963
NOTE 17: ISSUED CAPITAL
MOVEMENTS IN ISSUED CAPITAL
- Tax exempt share plan shares
Balance at end of the financial year
Balance at beginning of the financial year
- Performance rights vested issued as shares
- Tax exempt share plan shares
Balance at end of the financial year
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 and lapsed during the year and the performance
rights outstanding at the end of the year are detailed in Note 29 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.
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
NOTE 14: BORROWINGS
NOTE 16: DERIVATIVE FINANCIAL INSTRUMENTS
Current
Lease liabilities
Non-Current
Lease liabilities
Consolidated Entity
2018
$’000
2017
$’000
267
267
445
445
170
170
304
304
Current Assets
Foreign exchange/nickel options – current assets
Foreign exchange/nickel options – current liabilities
Consolidated Entity
2018
$’000
-
1,592
2017
$’000
420
-
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
a) CORPORATE LOAN FACILITY
included in the income statement.
The Corporate Loan facility can be made available for broad company purposes as agreed between the
Australia and New Zealand Banking Group Ltd (‘ANZ’) and Western Areas Ltd. In December 2017 the ANZ
corporate loan facility (‘facility’) was renegotiated by the Company. The new facility is a secured, two year,
A$25m revolving cash facility. Initial term of the facility is 12 months, which is extendable for a further
12 months (24 months in total).
NOTE 17: ISSUED CAPITAL
Consolidated Entity
2018
$’000
2017
$’000
The carrying value of assets secured under the corporate loan facility is as follows:
272,792,647 fully paid ordinary shares (2017: 272,276,625)
442,963
442,963
Consolidated Entity
2018
$’000
142,673
88,035
2017
$’000
155,813
82,175
Note
11
8
MOVEMENTS IN ISSUED CAPITAL
2018
Balance at beginning of the financial year
272,276,625
442,963
Number of
Shares
$’000
The lease liabilities are secured over the assets under the lease. The finance leases have an average term
230,708
237,988
- Performance rights vested issued as shares
- Tax exempt share plan shares
Balance at end of the financial year
of 3 years and an average implicit discount rate of 5.05%. Refer to Note 8 for the carrying value of the
2017
Balance at beginning of the financial year
- Performance rights vested issued as shares
- Tax exempt share plan shares
Balance at end of the financial year
CAPITAL MANAGEMENT
482,422
33,600
-
-
272,792,647
442,963
270,924,958
442,963
1,307,740
43,927
-
-
272,276,625
442,963
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 and lapsed during the year and the performance
rights outstanding at the end of the year are detailed in Note 29 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.
WESTERN AREAS ANNUAL REPORT 2018
79
Mine properties
Property, plant & equipment
b) LEASE LIABILITIES
assets under lease.
NOTE 15: PROVISIONS
Current
Employee entitlements
Non-Current
Rehabilitation and restoration cost
Opening balance
Unwinding of discount
Rehabilitation expenditure incurred during the period
Closing balance
Employee entitlements
Consolidated Entity
2018
$’000
2017
$’000
4,514
3,323
22,917
1,297
(123)
24,091
317
22,649
1,227
(959)
22,917
627
24,408
23,544
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 and Cosmos Nickel Project. Based on the current known mine
life, restoration activities are not expected to commence within the next 8 years, following full exhaustion of
mine life rehabilitation activities will be undertaken.
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
NOTE 17: ISSUED CAPITAL (cont’d)
TAX EXEMPT SHARE PLAN
During February 2018, the Company issued $1,000 worth of shares to eligible employees under the newly
introduced Western Areas Ltd Tax Exempt Share Plan, eligible employees were those that satisfied the
minimum service condition and were not included in the existing performance rights plan.
NOTE 18: EARNINGS PER SHARE
Earnings used to calculate basic/diluted earnings per share
Consolidated Entity
2018
$’000
11,837
2018
Number
2017
$’000
19,299
2017
Number
Weighted average number of ordinary shares outstanding during the year
used in calculating earnings per share
272,746,202
272,081,823
Weighted average number of ordinary shares outstanding during the year
used in calculating dilutive earnings per share
277,113,672
275,329,044
NOTE 19: CASH FLOW INFORMATION
a) RECONCILIATION OF THE NET PROFIT AFTER TAX
TO NET CASH PROVIDED BY OPERATING ACTIVITIES
Consolidated Entity
value of $486k (2017: $348k).
Profit after income tax
Depreciation expense
Amortisation expense
Impairment/write-off expenses
Profit on discontinue of equity accounting and sale of Bluejay shares
Profit on sale of tenements
Other
Share based payment expense
Rehabilitation provision interest unwound
Rehabilitation expense
Provision for employee entitlements
Change in Assets and Liabilities
Increase in trade and other payables
Increase in inventories
(Increase)/Decrease/ in trade and other receivables
Decrease in interest payable
Increase/(Decrease) in tax liabilities
2018
$’000
11,837
17,764
47,721
-
-
-
1,533
3,598
1,297
(123)
881
10,003
(13,524)
(9,216)
(131)
5,326
2017
$’000
19,299
17,711
48,619
48
(25,595)
(7,468)
(1,125)
3,060
1,227
(959)
586
2,262
(6,520)
17,164
(170)
(1,949)
Net cash provided by operating activities
76,966
66,190
80
WESTERN AREAS ANNUAL REPORT 2018
b) RECONCILIATION OF CASH AND CASH EQUIVALENTS
Consolidated Entity
2018
$’000
2017
$’000
151,643
140,294
Cash and cash equivalents comprises:
Cash on hand and at bank
c) FINANCING FACILITIES AVAILABLE
As at the reporting date the Consolidated Entity had the following financing facilities in place:
Total Facility
Utilised at Balance Date
Available Facilities (*)
$’000
$’000
$’000
Banking Facilities:
ANZ Banking Group
- Cash advance facility*
- Asset Finance
Performance Guarantees:
ANZ Banking Group
- Security bond facility
25,000
1,000
1,000
27,000
-
679
472
1,151
25,000
321
528
25,849
* The Corporate Loan facility can be made available for broad company purposes as agreed between the Australia and New
Zealand Banking Group Ltd (‘ANZ’) and Western Areas Ltd (refer Note 14a).
d) NON-CASH FINANCING ACTIVITIES
During the year, the consolidated entity acquired plant & equipment by means of a finance lease to the
The Directors are not aware of any commitments as at the date of these financial statements other than those
NOTE 20: COMMITMENTS
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
2018
$’000
2017
$’000
645
1,436
2,081
680
2,081
2,761
The operating leases are for miscellaneous office equipment and office premises in West Perth. The West
Perth office lease expires August 2021.
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
NOTE 17: ISSUED CAPITAL (cont’d)
TAX EXEMPT SHARE PLAN
During February 2018, the Company issued $1,000 worth of shares to eligible employees under the newly
introduced Western Areas Ltd Tax Exempt Share Plan, eligible employees were those that satisfied the
minimum service condition and were not included in the existing performance rights plan.
NOTE 18: EARNINGS PER SHARE
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
272,746,202
272,081,823
Weighted average number of ordinary shares outstanding during the year
used in calculating dilutive earnings per share
277,113,672
275,329,044
NOTE 19: CASH FLOW INFORMATION
a) RECONCILIATION OF THE NET PROFIT AFTER TAX
TO NET CASH PROVIDED BY OPERATING ACTIVITIES
b) RECONCILIATION OF CASH AND CASH EQUIVALENTS
Cash and cash equivalents comprises:
Cash on hand and at bank
c) FINANCING FACILITIES AVAILABLE
Consolidated Entity
2018
$’000
2017
$’000
151,643
140,294
As at the reporting date the Consolidated Entity had the following financing facilities in place:
Total Facility
Utilised at Balance Date
Available Facilities (*)
$’000
$’000
$’000
Banking Facilities:
ANZ Banking Group
- Cash advance facility*
- Asset Finance
Performance Guarantees:
ANZ Banking Group
- Security bond facility
25,000
1,000
1,000
27,000
-
679
472
1,151
25,000
321
528
25,849
* The Corporate Loan facility can be made available for broad company purposes as agreed between the Australia and New
Zealand Banking Group Ltd (‘ANZ’) and Western Areas Ltd (refer Note 14a).
d) NON-CASH FINANCING ACTIVITIES
During the year, the consolidated entity acquired plant & equipment by means of a finance lease to the
Consolidated Entity
value of $486k (2017: $348k).
NOTE 20: COMMITMENTS
The Directors are not aware of any commitments as at the date of these financial statements other than those
listed below.
Profit on discontinue of equity accounting and sale of Bluejay shares
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
2018
$’000
2017
$’000
645
1,436
2,081
680
2,081
2,761
The operating leases are for miscellaneous office equipment and office premises in West Perth. The West
Perth office lease expires August 2021.
WESTERN AREAS ANNUAL REPORT 2018
81
Consolidated Entity
2018
$’000
11,837
2018
Number
2017
$’000
19,299
2017
Number
2018
$’000
11,837
17,764
47,721
-
-
-
1,533
3,598
1,297
(123)
881
10,003
(13,524)
(9,216)
(131)
5,326
2017
$’000
19,299
17,711
48,619
48
(25,595)
(7,468)
(1,125)
3,060
1,227
(959)
586
2,262
(6,520)
17,164
(170)
(1,949)
Profit after income tax
Depreciation expense
Amortisation expense
Impairment/write-off expenses
Profit on sale of tenements
Other
Share based payment expense
Rehabilitation provision interest unwound
Rehabilitation expense
Provision for employee entitlements
Change in Assets and Liabilities
Increase in trade and other payables
Increase in inventories
(Increase)/Decrease/ in trade and other receivables
Decrease in interest payable
Increase/(Decrease) in tax liabilities
Net cash provided by operating activities
76,966
66,190
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
NOTE 20: COMMITMENTS (cont’d)
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
Consolidated Entity
2018
$’000
2017
$’000
267
445
712
53
765
297
468
765
170
304
474
35
509
197
312
509
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
A 3-year Offtake Contract with Tsingshan Group (‘Tsingshan’), through its associated entity Golden Harbour Pte
the vehicle.
Ltd, effective 1 February 2017 to deliver up 10,000 tonnes of nickel contained in concentrate per annum.
c) CAPITAL EXPENDITURE COMMITMENTS
- No later than 1 year
- Later than 1 year and not later than 5 years
Total minimum commitments
Consolidated Entity
2018
$’000
25,784
-
25,784
2017
$’000
11,963
-
11,963
On 10 April 2018, the Company announced the commencement of an early works programme for the
Odysseus Project at Cosmos. A total of $32m has been approved by the Board and will comprise three
major work groups staged over an eighteen-month period. For full details please refer to the ASX
Announcement dated 10 April 2018.
d) EXPLORATION EXPENDITURE COMMITMENTS
- No later than 1 year
- Later than 1 year and not later than 5 years
Total Minimum Payments
Consolidated Entity
2018
$’000
6,255
25,020
31,275
2017
$’000
5,143
20,572
25,715
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. Some of this cost may be met by joint venture partners.
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
NOTE 21: 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 Programme Assistance Application
Consolidated Entity
2018
$’000
2017
$’000
92
5
97
94
5
99
NOTE 22: MATERIAL CONTRACTS
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 27.
A 3-year Offtake Contract with BHP Nickel West (‘BHPNW’) effective 1 February 2017 to deliver up 10,000 tonnes
of nickel contained in concentrate per annum with a 30,000 tonne aggregate limit.
NOTE 23: CONTINGENT LIABILITIES
The Directors are not aware of any contingent liabilities as at the date of these financial statements.
NOTE 24: SUBSEQUENT EVENTS
On 22 August 2018, the Board of Directors declared a fully franked dividend of 2 cents per share to the holders
of fully paid ordinary shares.
Other than the matter detailed above, there have been no subsequent events after 30 June 2018 which had a
material effect on the financial statements for the year ended 30 June 2018.
NOTE 25: 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
BASIS OF ACCOUNTING FOR PURPOSES OF REPORTING BY OPERATING SEGMENTS
resources.
the Group.
82
WESTERN AREAS ANNUAL REPORT 2018
NOTE 20: COMMITMENTS (cont’d)
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
c) CAPITAL EXPENDITURE COMMITMENTS
- No later than 1 year
- Later than 1 year and not later than 5 years
Total minimum commitments
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
On 10 April 2018, the Company announced the commencement of an early works programme for the
Odysseus Project at Cosmos. A total of $32m has been approved by the Board and will comprise three
major work groups staged over an eighteen-month period. For full details please refer to the ASX
Announcement dated 10 April 2018.
d) EXPLORATION EXPENDITURE COMMITMENTS
- No later than 1 year
- Later than 1 year and not later than 5 years
Total Minimum Payments
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. Some of this cost may be met by joint venture partners.
Consolidated Entity
2018
$’000
2017
$’000
267
445
712
53
765
297
468
765
170
304
474
35
509
197
312
509
Consolidated Entity
2018
$’000
25,784
-
25,784
2017
$’000
11,963
-
11,963
Consolidated Entity
2018
$’000
6,255
25,020
31,275
2017
$’000
5,143
20,572
25,715
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
NOTE 21: 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 Programme Assistance Application
Consolidated Entity
2018
$’000
2017
$’000
92
5
97
94
5
99
NOTE 22: MATERIAL CONTRACTS
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 27.
A 3-year Offtake Contract with BHP Nickel West (‘BHPNW’) effective 1 February 2017 to deliver up 10,000 tonnes
of nickel contained in concentrate per annum with a 30,000 tonne aggregate limit.
are generally required at the expiry of the finance lease, at which point the Company takes ownership of
A 3-year Offtake Contract with Tsingshan Group (‘Tsingshan’), through its associated entity Golden Harbour Pte
the vehicle.
Ltd, effective 1 February 2017 to deliver up 10,000 tonnes of nickel contained in concentrate per annum.
NOTE 23: CONTINGENT LIABILITIES
The Directors are not aware of any contingent liabilities as at the date of these financial statements.
NOTE 24: SUBSEQUENT EVENTS
On 22 August 2018, the Board of Directors declared a fully franked dividend of 2 cents per share to the holders
of fully paid ordinary shares.
Other than the matter detailed above, there have been no subsequent events after 30 June 2018 which had a
material effect on the financial statements for the year ended 30 June 2018.
NOTE 25: 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.
WESTERN AREAS ANNUAL REPORT 2018
83
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
NOTE 26: 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
Chairman (Non-Executive)
Director (Non-Executive)
C Readhead
Director (Non-Executive)
T Netscher
Director (Non-Executive)
N Streltsova
Director (Non-Executive)
D Lougher
Managing Director
D Southam
Executive Director
J Belladonna
Chief Financial Officer/Company Secretary
W Jones
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 2018.
of Esperance.
The total of remuneration paid to key management personnel of the Consolidated Entity during the year is
Financial assets at fair value through other comprehensive income
detailed below:
Short term employee benefits
Share based payments
Post-employment benefits
Consolidated Entity
2018
$’000
3,882
1,954
215
6,051
2017
$’000
3,576
1,914
222
5,712
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:
activities
preparing forward looking cash flow analysis in relation to its operational, investing and financing
NOTE 27: FINANCIAL RISK MANAGEMENT
FINANCIAL RISK MANAGEMENT POLICIES
The Treasury Committee consisting of senior management 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.
The carrying amount of financial assets exposed to credit risk is detailed below:
84
WESTERN AREAS ANNUAL REPORT 2018
Consolidated Entity
2018
$’000
151,643
22,209
33,307
-
2017
$’000
140,294
19,182
11,396
420
Cash and cash equivalents
Trade and other receivables
Financial assets at fair value through other comprehensive income
Derivative financial instruments
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 prior to product being loaded at the port
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.
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
Cash and cash equivalents
Trade and other receivables
Financial assets at fair value through other comprehensive income
Derivative financial instruments
Consolidated Entity
2018
$’000
151,643
22,209
33,307
-
2017
$’000
140,294
19,182
11,396
420
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 prior to product being loaded at the port
payable to each member of the group’s key management personnel for the year ended 30 June 2018.
of Esperance.
The total of remuneration paid to key management personnel of the Consolidated Entity during the year is
Financial assets at fair value through other comprehensive income
Consolidated Entity
2018
$’000
3,882
1,954
215
6,051
2017
$’000
3,576
1,914
222
5,712
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.
WESTERN AREAS ANNUAL REPORT 2018
85
NOTE 26: 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
Chairman (Non-Executive)
Director (Non-Executive)
C Readhead
Director (Non-Executive)
T Netscher
Director (Non-Executive)
N Streltsova
Director (Non-Executive)
D Lougher
Managing Director
D Southam
Executive Director
J Belladonna
Chief Financial Officer/Company Secretary
W Jones
General Manager Operations
detailed below:
Short term employee benefits
Share based payments
Post-employment benefits
Refer to the remuneration report contained in the Directors’ Report for details of the remuneration paid or
NOTE 27: FINANCIAL RISK MANAGEMENT
FINANCIAL RISK MANAGEMENT POLICIES
The Treasury Committee consisting of senior management 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.
The carrying amount of financial assets exposed to credit risk is detailed below:
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
NOTE 27: FINANCIAL RISK MANAGEMENT (cont’d)
SPECIFIC FINANCIAL RISK EXPOSURES AND MANAGEMENT (cont’d)
b) Liquidity Risk (cont’d)
Financial liability and financial asset maturity analysis
The Consolidated Entity’s contractual maturity analysis of financial assets and financial liabilities is shown
below:
2018 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
Lease Liabilities
Financial Liabilities – Derivative
Derivative Collar Options (net settled)
1 year or
less
$’000
Over
1 to 5
years
$’000
More
than
5 years
$’000
Total
contractual
cash flows
$’000
151,643
22,209
-
173,852
41,396
267
1,592
43,255
-
-
-
-
-
445
-
445
-
-
151,643
22,209
33,307
33,307
33,307
207,159
-
-
-
-
41,396
712
1,592
43,700
Net Financial Assets/(Liabilities)
130,597
(445)
33,307
163,459
140,294
2017 Consolidated Entity
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
140,294
19,182
-
420
159,896
26,345
170
26,515
-
-
-
-
-
-
304
304
-
-
140,294
19,182
11,396
11,396
-
420
11,396
171,292
-
-
-
26,345
474
26,819
Net Financial Assets/(Liabilities)
133,381
(304)
11,396
144,473
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.
86
WESTERN AREAS ANNUAL REPORT 2018
At the reporting date, the interest rate risk profile of the consolidated entity’s interest bearing financial
instruments was as follows:
Floating
Fixed interest maturing in:
Non-
interest
1 year or
Over 1 to
More than
interest
rate
less
5 years
5 years
bearing
$’000
$’000
$’000
$’000
$’000
Weighted
average
interest
rate
Total
$’000
Cash and Cash Equivalents
151,643
-
151,643
2.62%
22,209
22,209
151,643
33,307
33,307
55,516
207,159
267
267
445
445
41,396
41,396
-
712
5.05%
41,396
42,108
Net Financial Assets/(Liabilities)
151,643
(267)
(445)
14,120
165,051
Cash and Cash Equivalents
140,294
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
140,294
2.48%
19,182
19,182
11,396
11,396
30,578
170,872
26,345
26,345
-
474
4.88%
26,345
26,819
4,233
144,053
Net Financial Assets/ (Liabilities)
140,294
(170)
(304)
170
170
304
304
Interest 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.
2018 Consolidated Entity
Financial Assets
Trade and Other Receivables
Financial assets at fair value
through other comprehensive
income
Financial Liabilities
Trade and Other Payables
Lease liability
2017 Consolidated Entity
Financial Assets
Trade and Other Receivables
Financial assets at fair value
through other comprehensive
income
Financial Liabilities
Trade and Other Payables
Lease liability
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.
on the ASX or the TSXV.
A majority of the consolidated entity’s equity investments are publicly traded and are quoted either
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% (2017 – increased by 10% / decreased by
10%) and foreign exchange rate increased by 5% / decrease by 5% (2017 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.
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
At the reporting date, the interest rate risk profile of the consolidated entity’s interest bearing financial
instruments was as follows:
Floating
Fixed interest maturing in:
Non-
interest
1 year or
Over 1 to
More than
interest
rate
less
5 years
5 years
bearing
$’000
$’000
$’000
$’000
$’000
Weighted
average
interest
rate
Total
$’000
2018 Consolidated Entity
Financial Assets
Cash and Cash Equivalents
151,643
Trade and Other Receivables
Financial assets at fair value
through other comprehensive
income
Financial Liabilities
Trade and Other Payables
Lease liability
-
-
151,643
-
-
-
-
-
-
-
-
-
-
-
-
-
267
267
445
445
Net Financial Assets/(Liabilities)
151,643
(267)
(445)
2017 Consolidated Entity
Financial Assets
Cash and Cash Equivalents
140,294
Trade and Other Receivables
Financial assets at fair value
through other comprehensive
income
Financial Liabilities
Trade and Other Payables
Lease liability
-
-
140,294
-
-
-
-
-
-
-
-
-
-
170
170
304
304
Net Financial Assets/ (Liabilities)
140,294
(170)
(304)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
151,643
2.62%
22,209
22,209
33,307
33,307
55,516
207,159
41,396
41,396
-
712
5.05%
41,396
42,108
14,120
165,051
-
140,294
2.48%
19,182
19,182
11,396
11,396
30,578
170,872
26,345
26,345
-
474
4.88%
26,345
26,819
4,233
144,053
Interest 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.
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 TSXV.
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% (2017 – increased by 10% / decreased by
10%) and foreign exchange rate increased by 5% / decrease by 5% (2017 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.
WESTERN AREAS ANNUAL REPORT 2018
87
NOTE 27: FINANCIAL RISK MANAGEMENT (cont’d)
SPECIFIC FINANCIAL RISK EXPOSURES AND MANAGEMENT (cont’d)
b) Liquidity Risk (cont’d)
Financial liability and financial asset maturity analysis
The Consolidated Entity’s contractual maturity analysis of financial assets and financial liabilities is shown
below:
2018 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
Lease Liabilities
Financial Liabilities – Derivative
Derivative Collar Options (net settled)
2017 Consolidated Entity
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
1 year or
less
$’000
Over
1 to 5
years
$’000
More
than
Total
contractual
5 years
cash flows
$’000
$’000
151,643
22,209
-
173,852
41,396
267
1,592
43,255
140,294
19,182
-
420
159,896
26,345
170
26,515
445
445
-
-
-
-
-
-
-
-
-
-
-
-
304
304
33,307
33,307
33,307
207,159
151,643
22,209
41,396
712
1,592
43,700
140,294
19,182
11,396
11,396
420
11,396
171,292
26,345
474
26,819
-
-
-
-
-
-
-
-
-
-
-
-
Net Financial Assets/(Liabilities)
130,597
(445)
33,307
163,459
Net Financial Assets/(Liabilities)
133,381
(304)
11,396
144,473
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
c) Market Risk
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.
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
NOTE 27: FINANCIAL RISK MANAGEMENT (cont’d)
iii) Currency Risk
SPECIFIC FINANCIAL RISK EXPOSURES AND MANAGEMENT (cont’d)
c) Market Risk (cont’d)
ii) Price Risk (cont’d)
a) Equity Price Risk (cont’d)
Financial assets at fair value through other
comprehensive income Index
ASX
TSX
Consolidated Entity
30 June
2018
$’000
30 June
2017
$’000
3,242
142
532
121
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 US$500/tonne increase and
decrease in the nickel price. US$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 2018
+- $500/tonne nickel
Year Ended 30 June 2017
+- $500/tonne nickel
Nickel Collar Options
Profit
$’000
Equity
$’000
+/-147
+/-147
+/-120
+/-120
The consolidated entity enters into financial transactions in the normal course of business and in
line with Board guidelines for the purpose of hedging and managing its expected exposure to nickel
prices. The hedges are treated as cashflow hedges in accordance with AASB 9 “Financial
Instruments: Recognition and Measurement”.
The following table summarises the nickel collar options open at 30 June 2018.
Nickel Tonnes
US Price ($/tonne) Cap
USD Value ($’000)
US Price ($/tonne) Floor
USD Value ($’000)
Consolidated Group
2018
2017
3,600
15,587
56,113
13,167
47,401
-
-
-
88
WESTERN AREAS ANNUAL REPORT 2018
Currency risk arises when future commercial transactions and recognised financial assets and liabilities
are denominated in a currency that is not the entity’s functional currency. The Consolidated Entity
manages its foreign currency risk exposure through sensitivity analysis, cash flow management,
forecasting and where appropriate, utilises derivative financial instruments. The carrying amount of the
Consolidated Entity’s foreign currency denominated monetary assets and monetary liabilities at the
reporting date is as follows:
30 June 2018
30 June 2017
Financial liabilities
Financial assets
Financial liabilities
Financial assets
US$ ‘000
-
9,655
-
15,494
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 2018
+5% in $A/$US
-5% in $A/$US
+5% in $A/$US
-5% in $A/$US
Year Ended 30 June 2016
Profit
$’000
Equity
$’000
850
(886)
1,061
(960)
850
(886)
1,061
(960)
Foreign exchange collar options
The consolidated entity had open foreign exchange collar options at 30 June 2018 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
Notional Amounts
Exchange Rate
2018
$000
2017
$000
2018
$
2017
$
Put – Call
Put – Call
30,000
15,000
0.737 – 0.788
0.725 – 0.755
-
-
-
-
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
NOTE 27: FINANCIAL RISK MANAGEMENT (cont’d)
iii) Currency Risk
SPECIFIC FINANCIAL RISK EXPOSURES AND MANAGEMENT (cont’d)
c) Market Risk (cont’d)
ii) Price Risk (cont’d)
a) Equity Price Risk (cont’d)
Consolidated Entity
30 June
30 June
2018
$’000
2017
$’000
3,242
142
532
121
Financial assets at fair value through other
comprehensive income Index
ASX
TSX
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 US$500/tonne increase and
decrease in the nickel price. US$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 2018
+- $500/tonne nickel
Year Ended 30 June 2017
+- $500/tonne nickel
Nickel Collar Options
Nickel Tonnes
US Price ($/tonne) Cap
USD Value ($’000)
US Price ($/tonne) Floor
USD Value ($’000)
Profit
$’000
Equity
$’000
+/-147
+/-147
+/-120
+/-120
Consolidated Group
2018
2017
3,600
15,587
56,113
13,167
47,401
-
-
-
The consolidated entity enters into financial transactions in the normal course of business and in
line with Board guidelines for the purpose of hedging and managing its expected exposure to nickel
prices. The hedges are treated as cashflow hedges in accordance with AASB 9 “Financial
Instruments: Recognition and Measurement”.
The following table summarises the nickel collar options open at 30 June 2018.
Currency risk arises when future commercial transactions and recognised financial assets and liabilities
are denominated in a currency that is not the entity’s functional currency. The Consolidated Entity
manages its foreign currency risk exposure through sensitivity analysis, cash flow management,
forecasting and where appropriate, utilises derivative financial instruments. The carrying amount of the
Consolidated Entity’s foreign currency denominated monetary assets and monetary liabilities at the
reporting date is as follows:
30 June 2018
30 June 2017
Financial liabilities
Financial assets
Financial liabilities
Financial assets
US$ ‘000
-
9,655
-
15,494
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 2018
+5% in $A/$US
-5% in $A/$US
Year Ended 30 June 2016
+5% in $A/$US
-5% in $A/$US
Profit
$’000
Equity
$’000
850
(886)
1,061
(960)
850
(886)
1,061
(960)
Foreign exchange collar options
The consolidated entity had open foreign exchange collar options at 30 June 2018 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
Notional Amounts
Exchange Rate
2018
$000
2017
$000
2018
$
2017
$
Put – Call
Put – Call
30,000
15,000
0.737 – 0.788
0.725 – 0.755
-
-
-
-
WESTERN AREAS ANNUAL REPORT 2018
89
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
NOTE 27: FINANCIAL RISK MANAGEMENT (cont’d)
Financial Instruments Measured at Fair Value
SPECIFIC FINANCIAL RISK EXPOSURES AND MANAGEMENT (cont’d)
d) Net fair values
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 closing 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.
2018
2017
Carrying
Amount
$’000
Net Fair
Value
$’000
Carrying
Amount
$’000
Net Fair
Value
$’000
Note
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
Derivative financial liabilities
Other liabilities
i
ii
iii
i
i
iii
i
151,643
151,643
140,294
140,294
NOTE 28: RELATED PARTY TRANSACTIONS
33,307
33,307
-
-
22,209
22,209
11,396
420
19,182
11,396
420
19,182
207,159
207,159
171,292
171,292
41,396
41,396
26,345
26,345
1,592
712
1,592
712
-
474
-
474
43,700
43,700
26,819
26,819
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.
- Year ended 30 June 2018
- Year ended 30 June 2017
- Year ended 30 June 2016
- Year ended 30 June 2015
Equity settled share options and performance rights granted during:
ii) Quoted closing bid prices at reporting date.
Total expense recognised as employee costs
3,598
3,060
iii) Fair valuation calculations are performed by an independent financial risk management consulting firm,
the calculations include valuation techniques incorporating observable market data relevant to the
b) PERFORMANCE RIGHTS
hedged position.
90
WESTERN AREAS ANNUAL REPORT 2018
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)
Financial assets at fair value through other comprehensive income
33,307
-
33,307
(Level 3).
2018
Financial assets:
Financial liabilities:
Derivative financial instruments
2017
Financial assets:
Financial assets at fair value through other comprehensive income
11,396
Derivative financial instruments
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 29: SHARE BASED PAYMENTS
a) EXPENSES ARISING FROM SHARE BASED TRANSACTIONS
Level 1
Level 2
Level 3
$000
$000
$000
Total
$000
33,307
(1,592)
(1,592)
-
-
11,396
-
420
420
-
-
-
-
-
-
(1,592)
31,715
11,396
420
11,816
Consolidated Entity
2018
$’000
2017
$’000
1,121
1,449
1,028
-
-
1,248
974
838
Under the Performance Rights plan, executives and senior management 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 is
measured against a customised peer group of companies.
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.
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
NOTE 27: FINANCIAL RISK MANAGEMENT (cont’d)
Financial Instruments Measured at Fair Value
SPECIFIC FINANCIAL RISK EXPOSURES AND MANAGEMENT (cont’d)
d) Net fair values
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 closing 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.
Financial assets at fair value through other
Financial Assets
comprehensive income
Derivative financial assets
Loans and receivables
Financial Liabilities
Trade and other payables
Derivative financial liabilities
Other liabilities
i
ii
iii
i
i
iii
i
33,307
33,307
-
-
22,209
22,209
11,396
420
19,182
11,396
420
19,182
207,159
207,159
171,292
171,292
41,396
41,396
26,345
26,345
1,592
712
1,592
712
-
474
-
474
43,700
43,700
26,819
26,819
hedged position.
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).
2018
Financial assets:
Level 1
Level 2
Level 3
$000
$000
$000
Total
$000
2018
2017
Carrying
Amount
$’000
Net Fair
Value
$’000
Carrying
Amount
$’000
Net Fair
Value
$’000
Note
Financial assets at fair value through other comprehensive income
11,396
Derivative financial instruments
-
11,396
-
420
420
Cash and cash equivalents
151,643
151,643
140,294
140,294
NOTE 28: RELATED PARTY TRANSACTIONS
Financial assets at fair value through other comprehensive income
33,307
-
Financial liabilities:
Derivative financial instruments
2017
Financial assets:
-
33,307
(1,592)
(1,592)
-
-
-
-
-
-
33,307
(1,592)
31,715
11,396
420
11,816
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 29: SHARE BASED PAYMENTS
a) EXPENSES ARISING FROM SHARE BASED TRANSACTIONS
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.
- Year ended 30 June 2018
- Year ended 30 June 2017
- Year ended 30 June 2016
- Year ended 30 June 2015
Equity settled share options and performance rights granted during:
Consolidated Entity
2018
$’000
2017
$’000
1,121
1,449
1,028
-
-
1,248
974
838
ii) Quoted closing bid prices at reporting date.
Total expense recognised as employee costs
3,598
3,060
iii) Fair valuation calculations are performed by an independent financial risk management consulting firm,
the calculations include valuation techniques incorporating observable market data relevant to the
b) PERFORMANCE RIGHTS
Under the Performance Rights plan, executives and senior management 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 is
measured against a customised peer group of companies.
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.
WESTERN AREAS ANNUAL REPORT 2018
91
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
NOTE 29: SHARE BASED PAYMENTS (cont’d)
NOTE 30: RESERVES
b) PERFORMANCE RIGHTS (cont’d)
i) SHARE BASED PAYMENT RESERVE
For grants made under the LTI plan during FY17, vesting will occur subject to the meeting of a 3-year
The share based payment reserve records the items recognised as expenses on valuation of employee
service condition to 30 June 2019 and the performance condition tested against the relative TSR measure
share options and performance rights.
for the period 1 July 2016 to 30 June 2019.
For grants made under the LTI plan during FY18, vesting will occur subject to the meeting of a 3-year
ii) HEDGE RESERVE
service condition to 30 June 2020 and the performance condition tested against the relative TSR measure
The hedge reserve records revaluations of items designated as hedges.
for the period 1 July 2017 to 30 June 2020.
The following table sets out the vesting outcome based on the Company’s relative TSR performance:
iii)
INVESTMENT REVALUATION RESERVE
The investment revaluation reserve records revaluations of financial assets at fair value through other
comprehensive income.
NOTE 31: 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
Country of Incorporation
Percentage of equity held
Western Platinum NL
Australian Nickel Investments Pty Ltd
Bioheap Ltd
Western Areas Nickel Pty Ltd
Western Areas Employee Share Trust
Australia
Australia
Australia
Australia
Australia
2018
100%
100%
100%
100%
100%
2017
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.
Relative TSR performance
Performance Vesting Outcomes
Less than 50th percentile
At the 50th percentile
Between 50th and 75th percentile
At or above 75th percentile
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:
Underlying share price
Exercise price of rights
Risk free rate
Volatility factor
Dividend yield
Effective life
Entitled number of employees
2018
$3.08
Nil
1.86%
50%
1.18%
2017
$2.98
Nil
1.85%
48.4%
1.65%
3.0 years
3.0 years
23
19
Performance Rights held by Key Management Personnel at 30 June 2018
Balance at
1 July 2017
Granted as
Remuneration
Exercise of
Performance
Rights
Lapsed/
Cancelled/
Other
Balance at
30 June 2018
Performance
Rights Vested
D Lougher
D Southam
J Belladonna
W Jones
TOTAL
880,430
495,335
333,755
240,002
420,280
236,460
159,320
114,570
(143,598)
(80,791)
(54,436)
(39,145)
(61,542)
(34,624)
(23,329)
(16,777)
1,095,570
616,380
415,310
298,650
1,949,522
930,630
(317,970)
(136,272)
2,425,910
-
-
-
-
-
Performance Rights held by Key Management Personnel at 30 June 2017
Balance at
1 July 2016
Granted as
Remuneration
Exercise of
Performance
Rights
Expired/
Lapsed/
Cancelled
Balance at
30 June 2017
Performance
Rights
Vested
D Lougher
D Southam
J Belladonna
W Jones
TOTAL
970,640
546,093
355,779
269,481
375,540
211,280
142,360
102,370
(456,435)
(256,797)
(161,096)
(129,212)
(9,315)
(5,241)
(3,288)
(2,637)
880,430
495,335
333,755
240,002
2,141,993
831,550
(1,003,540)
(20,481)
1,949,522
-
-
-
-
-
c) SHARE OPTION PLANS
There were no options outstanding as at 30 June 2018.
92
WESTERN AREAS ANNUAL REPORT 2018
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
NOTE 29: SHARE BASED PAYMENTS (cont’d)
NOTE 30: RESERVES
b) PERFORMANCE RIGHTS (cont’d)
i) SHARE BASED PAYMENT RESERVE
For grants made under the LTI plan during FY17, vesting will occur subject to the meeting of a 3-year
The share based payment reserve records the items recognised as expenses on valuation of employee
service condition to 30 June 2019 and the performance condition tested against the relative TSR measure
share options and performance rights.
for the period 1 July 2016 to 30 June 2019.
For grants made under the LTI plan during FY18, vesting will occur subject to the meeting of a 3-year
ii) HEDGE RESERVE
service condition to 30 June 2020 and the performance condition tested against the relative TSR measure
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.
No Performance Rights will vest unless the percentile ranking of the Company’s TSR for the relevant
owned subsidiaries in accordance with the accounting policy described in Note 1:
The consolidated financial statements incorporate the assets, liabilities and results of the following wholly-
Pro-rata/progressive vesting from 50% - 100%
NOTE 31: INTERESTS IN SUBSIDIARIES
Name
Country of Incorporation
Western Platinum NL
Australian Nickel Investments Pty Ltd
Bioheap Ltd
Western Areas Nickel Pty Ltd
Western Areas Employee Share Trust
Australia
Australia
Australia
Australia
Australia
Percentage of equity held
2018
100%
100%
100%
100%
100%
2017
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.
for the period 1 July 2017 to 30 June 2020.
The following table sets out the vesting outcome based on the Company’s relative TSR performance:
Relative TSR performance
Performance Vesting Outcomes
Less than 50th percentile
At the 50th percentile
Between 50th and 75th percentile
At or above 75th percentile
0% vesting
50% vesting
100% vesting
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:
Underlying share price
Exercise price of rights
Risk free rate
Volatility factor
Dividend yield
Effective life
Entitled number of employees
2018
$3.08
Nil
1.86%
50%
1.18%
2017
$2.98
Nil
1.85%
48.4%
1.65%
3.0 years
3.0 years
23
19
Performance Rights held by Key Management Personnel at 30 June 2018
Balance at
Granted as
1 July 2017
Remuneration
Exercise of
Lapsed/
Performance
Cancelled/
Rights
Other
Balance at
Performance
30 June 2018
Rights Vested
D Lougher
D Southam
J Belladonna
W Jones
TOTAL
880,430
495,335
333,755
240,002
420,280
236,460
159,320
114,570
(143,598)
(80,791)
(54,436)
(39,145)
(61,542)
(34,624)
(23,329)
(16,777)
1,095,570
616,380
415,310
298,650
1,949,522
930,630
(317,970)
(136,272)
2,425,910
Performance Rights held by Key Management Personnel at 30 June 2017
Balance at
Granted as
1 July 2016
Remuneration
Exercise of
Performance
Expired/
Lapsed/
Rights
Cancelled
Balance at
30 June 2017
Performance
Rights
Vested
D Lougher
D Southam
J Belladonna
W Jones
TOTAL
970,640
546,093
355,779
269,481
375,540
211,280
142,360
102,370
(456,435)
(256,797)
(161,096)
(129,212)
(9,315)
(5,241)
(3,288)
(2,637)
880,430
495,335
333,755
240,002
2,141,993
831,550
(1,003,540)
(20,481)
1,949,522
-
-
-
-
-
-
-
-
-
-
c) SHARE OPTION PLANS
There were no options outstanding as at 30 June 2018.
WESTERN AREAS ANNUAL REPORT 2018
93
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
DIRECTORS DECLARATION
NOTE 32: PARENT INFORMATION
1)
In the opinion of the Directors of Western Areas Ltd:
The following information has been extracted from the books of the parent and has been prepared in
a)
the Consolidated Entity’s financial statements and notes set out on pages 53 to 94 are in
accordance with the Corporations Act 2001, including:
i)
giving a true and fair view of the Consolidated Entity’s financial position as at 30 June 2018
and of its performance, for the 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 2018.
Signed in accordance with a resolution of the Board of Directors.
D Lougher
Managing Director
Dated – 22 August 2018
accordance with the accounting standards.
STATEMENT OF FINANCIAL POSITION
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 Income
Profit for the year
Total comprehensive income for the year
GUARANTEES
Parent Entity
2018
$’000
206,834
379,589
586,423
41,791
27,920
69,711
2017
$’000
178,618
354,334
532,952
28,415
21,305
49,720
516,712
483,232
442,963
44,533
29,216
516,712
15,847
35,746
442,963
21,445
18,824
483,232
23,009
25,904
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 20, all commitments were entered into by Western Areas Ltd or its fully owned subsidiary
Australian Nickel Investments Pty Ltd.
NOTE 33: 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
94
WESTERN AREAS ANNUAL REPORT 2018
NOTES TO THE FINANCIAL STATEMENTS
DIRECTORS DECLARATION
DIRECTORS DECLARATION
The following information has been extracted from the books of the parent and has been prepared in
a)
the Consolidated Entity’s financial statements and notes set out on pages 53 to 94 are in
1)
In the opinion of the Directors of Western Areas Ltd:
Parent Entity
2018
$’000
206,834
379,589
586,423
41,791
27,920
69,711
442,963
44,533
29,216
516,712
15,847
35,746
2017
$’000
178,618
354,334
532,952
28,415
21,305
49,720
442,963
21,445
18,824
483,232
23,009
25,904
516,712
483,232
accordance with the Corporations Act 2001, including:
i)
giving a true and fair view of the Consolidated Entity’s financial position as at 30 June 2018
and of its performance, for the 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 2018.
Signed in accordance with a resolution of the Board of Directors.
Western Areas Ltd has not entered into any guarantees, in the current or previous financial year, in relation to
The Directors are not aware of any contingent liabilities as at the date of these financial statements.
Refer to Note 20, all commitments were entered into by Western Areas Ltd or its fully owned subsidiary
D Lougher
Managing Director
Dated – 22 August 2018
NOTE 33: ADDITIONAL COMPANY INFORMATION
Western Areas Ltd is a Public Company, incorporated and domiciled in Australia.
Registered office and Principal place of business:
NOTE 32: PARENT INFORMATION
accordance with the accounting standards.
STATEMENT OF FINANCIAL POSITION
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 Income
Profit for the year
Total comprehensive income for the year
GUARANTEES
the debts of its subsidiaries.
CONTINGENT LIABILITIES
CONTRACTUAL COMMITMENTS
Australian Nickel Investments Pty Ltd.
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
WESTERN AREAS ANNUAL REPORT 2018
95
INDEPENDENT AUDITOR’S REPORT
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF WESTERN AREAS LTD
REPORT ON THE AUDIT OF THE FINANCIAL REPORT
Opinion
We have audited the financial report of Western Areas Ltd (the Company) and its subsidiaries (the
Group), which comprises the consolidated statement of financial position as at 30 June 2018, the
consolidated statement of profit or loss and other comprehensive income, the consolidated statement of
changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the
financial statements comprising a summary of significant accounting policies and the Director’s
Declaration.
In our opinion the accompanying financial report of the Group is in accordance with the Corporations
Act 2001, including:
(a) Giving a true and fair view of the Group’s financial position at 30 June 2018 and of its financial
performance for the year then ended; and
(b) Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Report section of this report. We are independent of the Group in accordance with the independence
requirements of the Corporations Act 2001 and the ethical requirements of the Accounting
Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants
(the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our
other ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report of the current period. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide
a separate opinion on these matters.
Key Audit Matter
How we addressed the Key Audit Matter
Amortisation of mine properties (mines in production)
Amortisation of mine properties was material to
our audit and represented an area of significant
estimate and judgement within the financial report.
As outlined in Note 4, the Group recorded
amortisation expenses of $47.1m for the year
ended 30 June 2018.
Our procedures included, but were not limited to:
▪ Ensuring the Group’s amortisation accounting
policy was in accordance with Australian
Accounting Standards and was consistently
applied;
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. Liability limited other than for the acts or
omissions of financial services licensees.
96
WESTERN AREAS ANNUAL REPORT 2018
INDEPENDENT AUDITOR’S REPORT
Key Audit Matter
How we addressed the Key Audit Matter
As outlined in Notes 1(h) and 1(j), the annual
amortization expense was calculated using the
unit of production method that was highly
dependent on management’s estimate of the
remaining ore reserves for each mine and actual
production volumes.
▪ Recalculation of the amortisation rate and
checking the amortisation rate inputs by:
agreeing reserve estimations to published
reserve statements; and
agreeing production volumes to the
Group’s Quarterly Activity Reports.
▪ Assessing the competency and objectivity of
the experts used by management in compiling
the ore reserve estimations and evaluating the
appropriateness and adequacy of the work.
Impairment of mine properties (mines in production) and property, plant and equipment
As outlined in Notes 8 and 11, the carrying value
of the Group’s Mine Properties was $142.7m and
the carrying value of Property, Plant and
Equipment was $89.0m at 30 June 2018. These
represented significant balances recorded in the
Group’s consolidated statement of financial
position.
The process undertaken by management to
assess
whether there were any indicators of impairment
involved significant judgement.
Our procedures included, but were not limited to:
▪ Evaluating management’s documented
assessment of the existence or otherwise of
impairment indicators from both internal and
external sources;
▪ Corroborating representations made by
management with available external data and
evidence obtained by us during the course of
our audit; and
▪ Considering the appropriateness of relevant
disclosures in the notes to the financial
statements.
Provision for rehabilitation
At 30 June 2018, the carrying value of the Group’s
provision for rehabilitation was $24.1m.
The accounting policy adopted by the Group in
relation to its provision for rehabilitation was
disclosed in Notes 1(j, s and u) and further
disclosures were in Note 15.
This area was a key audit matter because the
calculations of the provision were complex and
based on the estimates of future costs of the
required work, including volume and unit rates, the
timing of future cash flows and the discount rate.
Our procedures included, but were not limited to:
▪ Obtaining the closure cost estimates prepared
by management;
▪ Challenging the reasonableness of key
assumptions and conclusions reached by
management, by reference to information
obtained by us during the course of our audit,
as well as publicly available information;
▪ Checking the mathematical accuracy of the
calculations; and
▪ Assessing the competency and objectivity of
the expert used by management and
evaluating the appropriateness and adequacy
of the work.
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. Liability limited other than for the acts or
omissions of financial services licensees.
WESTERN AREAS ANNUAL REPORT 2018
97
INDEPENDENT AUDITOR’S REPORT
Key Audit Matter
How we addressed the Key Audit Matter
Commercial Production for Mill Recovery Enhancement Project (MREP)
At 30 June 2018, the Group had capitalised costs
associated with the MREP of $28.0m. This
amount formed part of the Property, Plant and
Equipment balance of $89.0m at 30 June 2018.
Formal commissioning of the MREP was
completed on 31 March 2018, however
amortisation of capitalised costs will only
commence upon achieving a commercial level of
production, as determined by Management.
Our procedures included, but were not limited to:
▪ Discussion with management on the criteria
used to determine the date of commercial
production;
▪ Evaluation and challenging of management’s
assessment as to whether the predetermined
criteria had been met by reference to
information obtained by us during the course of
our audit, as well as any publicly available
information;
We focused on this area due to the significant
degree of management judgement involved in
determining when commercial levels of production
have been achieved.
▪ Reviewed management’s cost capitalisation
and amortisation methodologies and evaluated
the application of these policies in conjunction
with the conclusions reached in relation to the
achievement (or otherwise) of commercial
production.
▪ Considering the appropriateness of relevant
disclosures in the notes to the financial
statements.
Other Information
The directors are responsible for the other information. The other information comprises the
information included in the Group’s 2018 Annual Report for the year ended 30 June 2018, but does
not include the financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based upon the work we have performed, we conclude that there is material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors’ for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
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. Liability limited other than for the acts or
omissions of financial services licensees.
98
WESTERN AREAS ANNUAL REPORT 2018
INDEPENDENT AUDITOR’S REPORT
In preparing the financial report, the directors are responsible for assessing the Group’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting, unless the Directors either intend to liquidate the Group or to
cease operations, or have no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that
an audit conducted in accordance with Australian Auditing Standards will always detect a material mis-
statement when it exists. Mis-statements can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of the financial report.
As part of an audit in accordance with Australian Auditing Standards, we exercise professional
judgement and maintain professional scepticism throughout the audit. We also:
▪
▪
▪
▪
▪
▪
Identify and assess the risks of material misstatement of the financial report, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud is higher than for one resulting from
error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the
override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting
and based on the audit evidence obtained whether a material uncertainty exists related to
events and conditions that may cast significant doubt on the Group’s ability to continue as a
going concern. If we conclude that a material uncertainty exists, we are required to draw
attention in our auditor’s report to the related disclosures in the financial report or, if such
disclosures are inadequate, to modify our opinion. However, future events or conditions may
cause the Group to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial report, including the
disclosures and whether the financial statements represent the underlying transactions and
events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the group financial report. The
auditor is responsible for the direction, supervision and performance of the group audit. The
auditor remains solely responsible for the audit 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. Liability limited other than for the acts or
omissions of financial services licensees.
WESTERN AREAS ANNUAL REPORT 2018
99
INDEPENDENT AUDITOR’S REPORT
We communicate with the directors regarding, among other matters, the planned scope and timing of
the audit and significant audit findings, including any significant deficiencies in internal control that we
identify during our audit.
We are also provide the directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other
matters that may be reasonably be thought to bear on our independence, and where applicable,
related safeguards.
From the matters communicated to the directors, we determine those matters that were of most
significance in the audit of the financial report of the current period and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter
should be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 42 to 50 of the directors’ report for the
year ended 30 June 2018.
In our opinion, the Remuneration Report of Western Areas Ltd for the year ended 30 June 2018
complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our
responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in
accordance with Australian Auditing Standards.
CROWE HORWATH PERTH
CYRUS PATELL
Partner
Signed at Perth, 22 August 2018
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. Liability limited other than for the acts or
omissions of financial services licensees.
100
WESTERN AREAS ANNUAL REPORT 2018
Name
Forrestania
Lease
E74/0470
E77/1734
E77/1865
E77/2127
E77/2228
E77/2235
E77/2236
E77/2261
E77/2440
E77/2523
E77/2524
E77/2527
G70/0226
G70/0231
L70/0111
L74/0011
L74/0012
L74/0025
L74/0044
L77/0104
L77/0141
L77/0182
L77/0197
L77/0203
L77/0204
M74/0057
M74/0058
M74/0064
M74/0065
M74/0081
M74/0090
M74/0091
M74/0092
M77/0098
M77/0215
M77/0216
M77/0219
M77/0284
M77/0285
M77/0286
M77/0329
M77/0335
M77/0336
M77/0389
M77/0399
M77/0458
M77/0542
M77/0543
M77/0545
M77/0550
M77/0568
M77/0574
M77/0582
M77/0583
M77/0584
M77/0585
M77/0586
M77/0587
M77/0588
M77/0589
M77/0911
M77/0912
Status
Granted
Granted
Granted
Pending
Pending
Pending
Pending
Pending
Pending
Pending
Pending
Pending
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
TENEMENT LISTING
WSA Interest
Applicant/Holder
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%
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
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 ANNUAL REPORT 2018
101
TENEMENT LISTING
Name
Cosmos
Lease
P77/4278
P77/4279
P77/4473
P77/4474
P77/4475
P77/4476
P77/4477
P77/4478
P77/4479
P77/4496
P77/4497
P77/4498
P77/4499
P77/4500
P77/4501
E77/1399
E77/1416
E77/1436
E77/1581
M77/0099
M77/0324
M77/0467
M77/0468
M77/0544
P77/4067
E77/1965
E77/2091
E77/1400
E77/2099
E36/0935
M36/0127
M36/0180
M36/0302
M36/0303
M36/0305
M36/0329
Status
Granted
Granted
Pending
Pending
Pending
Pending
Pending
Pending
Pending
Pending
Pending
Pending
Pending
Pending
Pending
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Pending
Granted
Granted
Granted
Granted
Granted
Granted
WSA Interest
Applicant/Holder
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 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
100% Ni Rights
Black Oak Minerals Limited
100% Ni Rights
Black Oak Minerals Limited
100% Ni Rights
MH Gold Pty Ltd
100% Ni Rights
MH Gold Pty Ltd
100%
100%
100%
100%
80.6%
100%
80.6%
Australian Nickel Investments Pty Ltd
Australian Nickel Investments Pty Ltd
Australian Nickel Investments Pty Ltd
Australian Nickel Investments Pty Ltd
Australian Nickel Investments Pty Ltd (80.6%)
and Alkane Resources Ltd (19.4%)
Australian Nickel Investments Pty Ltd
Australian Nickel Investments Pty Ltd (80.6%)
and Alkane Resources Ltd (19.4%)
Australian Nickel Investments Pty Ltd (80.6%)
and Alkane Resources Ltd (19.4%)
Australian Nickel Investments Pty Ltd
Australian Nickel Investments Pty Ltd
Australian Nickel Investments Pty Ltd
Australian Nickel Investments Pty Ltd
Australian Nickel Investments Pty Ltd
Australian Nickel Investments Pty Ltd
Australian Nickel Investments Pty Ltd
Australian Nickel Investments Pty Ltd
Australian Nickel Investments Pty Ltd
BHP Billiton Yakabindie Nickel Pty Ltd
BHP Billiton Yakabindie Nickel Pty Ltd
BHP Billiton Yakabindie Nickel Pty Ltd
BHP Billiton Yakabindie Nickel Pty Ltd
BHP Billiton Yakabindie Nickel Pty Ltd
BHP Billiton Yakabindie Nickel Pty Ltd
BHP Billiton Yakabindie Nickel Pty Ltd
BHP Billiton Yakabindie Nickel Pty Ltd
BHP Billiton Yakabindie Nickel Pty Ltd
BHP Billiton Yakabindie Nickel Pty Ltd
M36/0330
Granted
80.6%
M36/0332
M36/0349
M36/0371
M36/0377
M36/0467
M36/0632
M36/0633
M36/0659
L36/0042
L36/0067
L36/0068
L36/0069
L36/0070
L36/0071
L36/0072
L36/0073
L36/0074
L36/0075
L36/0076
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
102
WESTERN AREAS ANNUAL REPORT 2018
Name
Lease
L36/0077
L36/0078
L36/0079
L36/0080
L36/0081
L36/0094
L36/0095
L36/0118
L36/0119
L36/0145
L36/0148
L36/0159
L36/0171
L36/0172
L36/0189
L36/0194
L36/0199
L36/0225
Western Gawler (SA)
EL 5199
EL 5200
EL 5688
EL 5880
EL 5939
EL 6087
Mt Alexander JV
E29/0638
Mt Gibb JV
Musgraves
E74/0603
E69/3160
TENEMENT LISTING
WSA Interest
Applicant/Holder
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
75%
100%
100%
25%
90%
100%
BHP Billiton Yakabindie Nickel Pty Ltd
BHP Billiton Yakabindie Nickel Pty Ltd
BHP Billiton Yakabindie Nickel Pty Ltd
BHP Billiton Yakabindie Nickel Pty Ltd
BHP Billiton Yakabindie Nickel Pty Ltd
BHP Billiton Yakabindie Nickel Pty Ltd
BHP Billiton Yakabindie Nickel Pty Ltd
Australian Nickel Investments Pty Ltd
Australian Nickel Investments Pty Ltd
Australian Nickel Investments Pty Ltd
Australian Nickel Investments Pty Ltd
Australian Nickel Investments Pty Ltd
Australian Nickel Investments Pty Ltd
Australian Nickel Investments Pty Ltd
Australian Nickel Investments Pty Ltd
Australian Nickel Investments Pty Ltd
Australian Nickel Investments Pty Ltd
Australian Nickel Investments Pty Ltd
Western Areas Ltd
Western Areas Ltd
Western Areas Ltd
Strandline Resources Limited
Western Areas Ltd
Western Areas Ltd
Blue Thunder Resources Pty Ltd (75%),
Western Areas Ltd (25%)
Western Areas Ltd
Western Areas Ltd
Status
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Pending
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Pending
Pending
WESTERN AREAS ANNUAL REPORT 2018
103
SHAREHOLDER INFORMATION
(AS AT 31 AUGUST 2018)
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
HSBC Custody Nominees
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