More annual reports from Western Areas Ltd:
2019 ReportPeers and competitors of Western Areas Ltd:
Scandium International Mining Corp.Registered Office
Level 2, 2 Kings Park Road
West Perth WA 6005
PO Box 1891
West Perth WA 6872
Phone: +61 (0) 8 9334 7777
Fax: +61 (0) 8 9486 7866
Email: info@westernareas.com.au
westernareas.com.au
ANNUAL REPORT
2019
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HIGHLIGHTS
21.5kt contained nickel shipped to customers
20% increase in Net Profit after Tax of A$14.3m
Stronger year on year nickel price driving stronger
financial performance
2 cent fully franked dividend declared
A$144m Cash at Bank - Strong debt free Balance Sheet
Odysseus mine DFS completed – Decision to mine
confirmed at the long life, low cost mining project
Odysseus early works programme completed on time
and on budget
High grade premium nickel product being produced
and sold into the EV battery market
Western Areas has Australia’s highest grade nickel mines and is a low unit cash cost producer.
Its main asset, the 100% owned Forrestania Nickel Operation, is located 400km east of Perth
in Western Australia. Western Areas is also Australia’s second largest independent 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.
An active nickel project developer at Cosmos and explorer at Western Gawler in Australia, the
Company also holds exploration interests in Canada through shareholdings in Grid Metals
Corp (TSXV:GRDM). Additionally, the Company has exposure to the emerging lithium market
via an exploration joint venture with Kidman Resources Limited.
The Board remains focused on the core business of low cost, long life nickel production, new
nickel discoveries and generating returns to shareholders. It has put in place the cost structure
and capabilities to prosper throughout the cycle by adopting prudent capital management
strategies and strict cost control.
CONTENTS
CHAIRMAN’S LETTER
MANAGING DIRECTOR’S REPORT
OPERATIONS REVIEW
EXPLORATION
3
4
6
16
ORE RESERVE
/ MINERAL RESOURCE STATEMENT 22
FINANCIAL STATEMENTS
Directors' Report
24
25
Auditor's Independence Declaration
43
Consolidated Statement of Profit or
Loss and Other Comprehensive Income 44
Consolidated Statement
of Financial Position
Consolidated Statement
of Changes In Equity
Consolidated Statement
of Cash Flows
Notes to the Financial Statements
Directors' Declaration
Independent Auditor's Report
Tenement Listing
Shareholder Information
45
46
47
48
86
87
92
95
CORPORATE DIRECTORY
DIRECTORS
Ian Macliver (Chairman)
Daniel Lougher
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 is a Fellow of AUSIMM and Mr Orunesu Preiata is a member 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.
CHAIRMAN’S
LETTER
Ian Macliver Independent Non-Executive Chairman
Dear Fellow Shareholder,
On behalf of your Board of Directors,
I am pleased to present to you the
Annual Report for the financial year
ended 30 June 2019. Western Areas
has had a successful year operationally,
meeting production guidance,
advancing growth projects and
conducting significant exploration
activities across our tenement holdings.
The major highlight of the year was
the decision to mine the Odysseus
mine after results from the Definitive
Feasibility Study (DFS) confirmed a
robust and long life mining operation.
The positive outlook for nickel demand
has supported the Company's
decision to mine, underpinned by the
expectation of increased growth in the
Electric Vehicle (EV) market and
continued strong stainless steel
production rates. Importantly, upside
beyond the DFS case exists at
Odysseus and is currently being
explored which we look forward to
reporting on in the coming year.
Western Areas also remains focused
on controlling costs to further
optimise its business to ensure we are
in the best position to capitalise on
the strengthening nickel market.
Notably, we have maintained
operational performance throughout
the year, and Spotted Quoll and Flying
Fox continue to produce consistent
and reliable results. Western Areas
has now successfully delivered
guidance over many years.
Importantly, an increase in nickel
tonnes sold to offtake customers
combined with a stronger nickel price
resulted in improved year on year
financial outcomes for the group. This
included a 20% increase in net profit
after tax (NPAT), which reported at
A$14.2m, and declaration of a 2 cent
per share dividend for shareholders.
The Group Balance Sheet remains
strong, with A$144.3m cash at bank
and no debt. This combined with the
Company’s ability to generate strong
operating cashflow enabled the
advancement of significant organic
capital growth projects throughout the
year, including investment into the key
growth project at the Cosmos nickel
operation which totalled A$35.2m and
continued exploration activities across
all project areas of A$13.1m.
As stated, the Company has
progressed the Odysseus mine
located at the Cosmos nickel operation
which will become Western Areas’
second production centre. The DFS
results show a larger, longer life project
and first nickel ore is scheduled early
in FY23. Odysseus will be one of the
few nickel sulphide mines coming
on-line just as forecast demand for
class one nickel is expected to
increase in the EV sector substantially.
A strong start to the project has been
made, with the early capital works now
complete. In the year ahead the
Company will focus on fully defining
the upside beyond the DFS case,
principally through the AM5 and AM6
ore bodies, as well as continued
preproduction construction works,
such as the haulage shaft equipment
delivery and installation.
The Mill Recovery Enhancement
Project (MREP) continued in ramp up
mode during FY19. While production
rates have been lower than
anticipated, improvements to the
MREP process has enabled
production and sale of a new premium
high-grade nickel sulphide precipitate
product. A new twelve month offtake
agreement for the MREP product has
recently been completed with
Sumitomo Metals and Mining Co., Ltd,
a party that is associated with the EV
battery supply chain.
The nickel market has remained volatile
throughout the year closing over US$6
per pound. As has been common in the
past, the nickel price movements have
appeared to be driven by geopolitical
factors, such as rhetoric around tariffs
or other politically driven trade
measures, or speculation on policy
changes in the large producing
countries of Indonesia and the
Philippines. However, the emerging EV
battery market continues to gain
momentum, which is set to reshape the
future demand for nickel. Throughout
the year the LME nickel stockpile has
fallen to its lowest level since 2013,
confirming that nickel supply remains in
deficit. The Company is confident that
a strengthening market will support our
operations in FY20.
Looking forward, Western Areas will
focus on further optimisation of our
core business and strive to deliver
consistent operational performance.
The Company remains in a strong,
debt-free, financial position to fund
active exploration and pursue organic
growth opportunities that strengthen
our position in the market. Finally,
Western Areas remains committed 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
WESTERN AREAS ANNUAL REPORT 2019
3
MANAGING
DIRECTOR’S
REPORT
Daniel Lougher
The Company had a strong FY19,
focussed on continuing to deliver
reliable and consistent production
from the Forrestania operations,
whilst also making significant
progress toward bringing the
Odysseus mine into production
after announcing the decision to
mine, after strong results from the
Definitive Feasibility Study (DFS).
Growth and exploration activities
have been supported overall by
a shift in the demand outlook for
nickel as the electric vehicle (EV), and
energy storage sectors continue
to gain momentum. Maintaining
stable and consistent operations
at Forrestania remains a key
performance indicator, which allows
the Company to get the full benefit
of prevailing nickel prices. Western
Areas’ continues to provide a safe
working environment throughout its
operations, while remaining efficient
and productive.
The Forrestania operations delivered
another year of reliable production
in line with guidance, resulting in
an increase in nickel sales of 21,483
nickel tonnes. With a year on year
higher realised nickel price, the
Company produced a solid financial
result with an increase in revenue to
A$268.7m and a stronger profit at
A$14.2m.
The Odysseus mine, located at the
Company’s 100%-owned Cosmos
nickel operation is the key focus of
the Company’s organic growth plans.
Odysseus is an important asset for
Western Areas and will be one of
the few new global nickel sulphide
operations coming online to deliver
into the growing demand profile for
nickel that is occurring globally. The
Odysseus mine is underpinned by a
robust DFS study that demonstrates
long term financial returns and a
mine life beyond ten years, with
additional upside from deposits not
included in the study.
As announced post year end,
Western Areas completed the early
capital works at the Odysseus
mine on time and to budget. To
date, the decline rehabilitation is
complete down to the 10,000m
RL pump station, with the pump
station mechanical and electrical
designs completed. In addition,
the dismantling has begun of the
purchased shaft headgear with
winder delivery to Perth expected
in the third quarter of FY20. With
the early works complete, Western
Areas can now advance to the
next phase of the underground
rehabilitation programme down to
the AM5/6 orebodies, which will allow
new decline development toward the
Odysseus deposit.
The overall nickel market outlook
has shifted positively as the EV and
energy storage sectors continue
to gain momentum. We have seen
a significant increase in inbound
off-take enquiries, and our partner,
China’s largest stainless-steel
producer, Tsingshan, has strong
growth plans which will require
significant additional nickel units.
This is reinforcing an industry-wide
trend as the demand increases for
stainless steel.
The demand for nickel from the
battery market will reshape the
nickel industry, and as a result,
nickel sulphide supply will need to
increase. Currently, around six per
cent of the global market for nickel
comes from the battery market, and
this is expected to grow to 20% by
2025. With a positive outlook for
nickel in both the short and long
term, Western Areas is confident
that we will be able to capitalise on
this demand, particularly with the
Odysseus mine coming online.
The Company has increased
exploration throughout the year and
continued to target new prospects
and existing discoveries.
The Cosmos exploration strategy
has a single focus, which is to add
to the nickel mineral inventory by
assessing and drill-testing high
quality targets both proximal to
existing deposits and within the
surrounding tenement package.
Expanding from a focus on the
Neptune prospect in FY18, the
Company has broadened its
targeting envelope to assess the
mineral potential of the entire
interpreted prospective ultramafic
channel at Cosmos, which extends
from Neptune in the south through
to Ajax on the northern margins,
representing a target corridor of
around 9km.
Western Areas completed several
exploration activities at Western
Gawler including several air-core
drilling programmes which were
designed to follow up conductive
responses from Moving Loop
Electromagnetic (MLEM) regional
targets identified in 2018, along
with prospect-scale drilling at
Thunderdome, Mystic, Citadel and
Crack in the Earth.
Western Areas executed a strategic
agreement with Iluka for five leases
covering an additional 5,070km² of
prospective exploration tenure. This
strategic agreement is a two-stage
Farm-in earning up to 75% base and
precious metals rights and effectively
representing close to 100% of the
highly prospective Fowler domain.
During the year, Western Areas has
established a series of exploration
programs across this Farm-In and
Joint Venture ground.
4
WESTERN AREAS ANNUAL REPORT 2019
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In addition, the Company continues
to support the various primary
schools, sporting clubs and
community groups that surround the
Forrestania operations.
The Company continued to work
closely with the Tjiwarl Aboriginal
Corporation, the traditional owners
of the Cosmos project area. The
Tjiwarl people were involved in
aboriginal heritage surveys, heritage
monitoring and contract earthworks
on the Cosmos nickel operation.
The company also engaged with the
Ballardong people, the traditional
owners in the Forrestania area
and the Far West Coast Aboriginal
Corporation (FWCAC) and the
Aboriginal Lands Trust (ALT) in the
Western Gawler area.
Looking ahead, the Company will
continue to focus on providing a
safe workplace and minimise our
environmental impact throughout
our operations. Western Areas’
Forrestania operations continue
to produce reliable and consistent
results, and the Company is well
placed heading into FY20.
In conclusion, the Company remains
in a strong, debt-free, financial
position to continue to fund its active
growth projects, such as Odysseus
mine, and exploration in the near
term. Extensive exploration activities
throughout the year, coupled with
significant achievements from our
early works program at Odysseus,
demonstrate that Western Areas is
continually striving to innovate and
grow to remain competitive in the
market. We will continue to run our
Forrestania operations efficiently
to ensure the Company is in a
good position to capitalise on the
strengthening nickel market.
Finally, I would like to take this
opportunity to thank our Board, all
our staff, contractors and suppliers
for their support throughout the year.
Daniel Lougher
Managing Director
and Chief Executive Officer
The Company owns 17.4m shares
in Kidman Resources, as a result
of transactions in recent years that
were structured with the aim of
generating value for the non-core
lithium potential at Forrestania.
Prior to the end of the financial year,
the Company agreed to support a
bid by Wesfarmers for Kidman at
A$1.90 per Kidman share with the
bid also receiving the endorsement
of the Kidman Board. Assuming
Kidman shareholder approval of
the Scheme, Western Areas will
receive proceeds of approximately
A$33.1 million from the bid. Overall,
the Kidman transactions have
generated significant value from
the lithium potential at Forrestania
that was otherwise not highly
valued by the market.
At Western Areas, safety is
fundamental to our long-term
success, and we believe that
safe operations result in efficient
operations. The Lost Time Injury
Frequency rate for the year was 2.8.
Key safety management initiatives
throughout the year included
a comprehensive Health and
Hygiene Risk Based Management
Assessment. A site-wide Noise
Audit was also conducted to
assist in noise management
plans. The Department of Mines,
Industry Regulation and Safety
(DMIRS) conducted an Emergency
Preparedness Audit on Operations
during the year with no significant
defects recorded.
Practical training was also enforced
throughout the year and Emergency
Response Team (ERT) training
focused on wildfire, rope rescue
and rescue skills assessments, with
several evacuation drills and mock
emergency drills conducted.
A high standard of environmental
management has been
maintained across the Company
during the financial year with no
major reportable environmental
incidents. The early works program
commenced at Cosmos with
dewatering of the existing workings
continued and all water monitoring
and compliance reporting obligations
completed. A Mining Proposal was
submitted to the Department of
Mines, Industry Regulation and
Safety (DMIRS) for approval of the
Cosmos nickel operation including
the Odysseus underground mine,
new waste rock dump, shaft and
associated infrastructure.
At Forrestania, baseline
environmental studies for the New
Morning Daybreak project were
completed, including pump testing of
a hydrological production bore-hole.
Also, the Teddy Bear Mine Closure
Plan was accepted by DMIRS, and
several DMIRS program-of-work
applications (PoW) were approved
to allow exploration at Mt Hope and
other areas.
Western Areas continued its
commitment to its Corporate Social
Responsibility (CSR) programme
during the year, with a range of
initiatives supported within the
local communities. The Company
extended sponsorship of the Perth
Zoo Western Quoll enclosure plus
the Western Shield wildlife recovery
program by Parks and Wildlife WA.
Company personnel joined Parks
and Wildlife WA on a monitoring
trip of the Dryandra Woodland
conservation area where Woylie
(extremely rare small kangaroo
marsupials) populations were
growing due to more intensive fox
and feral cat management initiated
by the program.
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)
FY19
2.8
FY18
0.9
556,002
607,120
4.2%
4.0%
23,208
24,442
610,487
616,598
4.0%
88%
4.0%
87%
21,675
21,060
21,483
20,459
Average Nickel Price Received (US$/tn)
12,322
12,875
Cash Costs before smelting/refining (A$/tn)
Average Exchange Rate USD/AUD
2.98
0.72
2.63
0.77
WESTERN AREAS ANNUAL REPORT 2019
5
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 Operation
(“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 Mill
Recovery Enhancement Project
(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.
FORRESTANIA
NICKEL
OPERATIONS
(100%)
COSMOS
NICKEL
OPERATION (100%)
Odysseus Mine
Flying Fox
Spotted Quoll
FORRESTANIA
(100%)
Lounge Lizard - Ni
Diggers South - Ni
New Morning - Ni
Cosmic Boy - Ni
WESTERN
AREAS
LTD
AUSTRALIAN
EXPLORATION
ASSETS
Mt Alexandria JV - Ni
Western Gawler
(including Strandline JV)
- Ni, Cu, Au
GRID METALS
CORP CANADA
Makwa - Ni, PGM
Mayville (M2) - Cu, PGM
BIOHEAP (100%)
Bacterial Heap Leach
Worldwide Patents
Full Laboratory
Western Areas’ primary growth
asset is the Odysseus mine located
at the Cosmos nickel operation.
The decision to mine the Odysseus
deposit was announced following
completion of the definitive mining
feasibility study, early works have
been completed allowing the long
life, low cost mine to develop.
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 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.
6
WESTERN AREAS ANNUAL REPORT 2019
WESTERN AREAS
SAFETY
There were three Lost Time Injuries
(LTI) recorded during the year.
Consequently, the LTI Frequency
Rate increased from 0.9 to 2.2. The
Total Recordable Injury Frequency
Rate (TRIFR) increased from 8.6 to
10.5 at year end. TRIFR includes
recordable injuries which require
medical treatment, restricted duties
or result in lost time across all
operations.
Key safety management initiatives
included updating the Health and
Hygiene Management Plan, the
Emergency Management Plan and
the on-site Medical Providers (poison
permit holder), plus completing a
risk assessment into organisational
factors affecting Mental Health and
associated on-site newsletter articles.
The Department of Mines,
Industry Regulation and Safety
(DMIRS) conducted an Emergency
Preparedness Audit on operations
late in the year with no significant
defects identified.
Emergency Response Team (ERT)
training focused on team skills,
underground search & rescue,
firefighting and breathing apparatus.
The on-site Emergency Response
systems have been further aligned
with the Australasian Inter-Service
Incident Management System
with site management undergoing
associated training.
A summary detailing the LTI free
days by operating department
at year end is shown in the
table below.
Department
LTI free
Spotted Quoll UG mine
Cosmic Boy Village
Surface Haulage
Cosmos
Cosmic Boy Concentrator
Surface Exploration
Flying Fox UG mine
days
3,001
2,708
1,916
1,368
296
282
100
ERT FIRE-FIGHTING TRAINING EXERCISE
7
WESTERN AREAS ANNUAL REPORT 2019OPERATIONS REVIEW ENVIRONMENTAL
ACTIVITIES
Forrestania
Community
One minor environmental incident
occurred during the year where
a containment cap failure of a
legacy buried pipeline resulted in a
decant pH neutral water discharge
(approximately one hectare) north
of the Cosmic Boy Tailings Storage
Facility. No surface drainage lines
or wetlands were impacted by the
spill and a vegetation monitoring
program was implemented in line
with best practice.
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 program
commenced in June with the
reshaping of the Spotted Quoll
waste rock dump and drainage
repairs to the Lounge Lizard
waste rock dump. The programme
includes topsoil spreading and
deep ripping of the batters of the
Spotted Quoll waste rock dump.
Following the remedial earthworks,
24,000 seedlings will be planted
by a specialist contractor over
approximately 2.5ha in July which
should benefit from winter rains.
The Company extended
sponsorship of the Perth Zoo
Western Quoll enclosure plus the
Western Shield wildlife recovery
program by Parks and Wildlife WA.
Company personnel joined Parks
and Wildlife WA on a monitoring
trip of the Dryandra Woodland
conservation area where Woylie
(extremely rare small kangaroo
marsupials) populations were
growing due to more intensive fox
and feral cat management initiated
by the program.
The Company continues to support
the various primary schools,
sporting clubs and community
groups that surround the
Forrestania operations.
Cosmos
Environmental compliance was
maintained at a high standard
throughout the year.
One environmental incident was
reported in January where an
open-pit dewatering transfer
station overflowed due to the
failure of an outlet pump. Western
Areas self-reported the incident
to the Department of Water and
Environmental Regulation (DWER).
This was an isolated incident, and
Western Areas immediately began
an investigation to determine the
cause and any subsequent impacts
on the environment. Since the
incident, pit dewatering at Cosmos
has finished. Western Areas has
an excellent track record with
environmental management and
safety, with no significant incidents
recorded in the last 10 years.
The water management pond (WMP)
network was expanded during
the year with the construction of
two WMP’s 8 and 9. An extensive
network of seepage recovery bores
was installed around the WMP’s
to improve the seepage recovery
network in the area.
Key environmental approvals were
obtained from the state regulators
during the year, i.e. DMIRS Mining
Proposal for the Cosmos nickel
operation, including the Odysseus
underground mine, new waste
rock dump, shaft and associated
infrastructure; plus Department
of Water and Environmental
Regulation (DWER) for water
management infrastructure.
The Company maintained its
excellent relationship with the
Tjiwarl Aboriginal Corporation with
a number of aboriginal heritage
surveys of exploration and key
infrastructure areas completed,
plus the Tjiwarl people were
involved in heritage monitoring
and the rehabilitation of completed
exploration drill site.
THE COMPANY MAINTAINED ITS
EXCELLENT RELATIONSHIP WITH THE
TJIWARL ABORIGINAL CORPORATION
8
WESTERN AREAS ANNUAL REPORT 2019 FLYING FOX MINE
There was 2,139m of total jumbo
lateral development for the year.
Nearly half (1,044m) was capital
development, predominately access
development (900m) to the four
‘old Flying Fox’ ore drives (between
the 1220 and 1185 levels), which is a
down-dip orebody extension below
the legacy Outokumpu workings
with the remainder (144m) was in the
lower areas of T5.
Operating waste development
(590m) was split between 258m of
waste (predominately low grade or
waste sections in ore drives) and
332 of paste-fill development to
facilitate slot drilling.
Production for the year was
sourced from the T5 orebody (460
to 215 levels) and predominately
from long-hole stoping (86%) with
the remainder from a combination
of ore development and flatback
stoping (460 level) over existing
lateral development to rehabilitate
areas in preparation for stoping.
FLYING FOX MINE
INFRASTRUCTURE
SPOTTED QUOLL
INFRASTRUCTURE
There was a 13m vertical extension
to the T5 escape-way ladder-way
between the 200 and 180 levels.
There was also 13m of capital vertical
development at the 1170 level to
establish primary flow-through
ventilation and an escape-way
ladder-way for the old Flying Fox
stoping area.
SPOTTED QUOLL MINE
The advance of the Hanna Decline
to a depth of 931m below the
surface facilitated four ‘Stage Two’
ore drive accesses (600, 570, 540
and 510), which resulted in the
establishment of eight ore drives
(610, 595, 580, 565, 550, 535, 520
and 505) and commencement of the
480 access. The ‘Stage Two’ area
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, i.e. twin boom jumbo area
(TBA, Stage One and Two) and (SBA),
with TBA production starting in the
675, 660, 627 and 595 levels and
completed 1215, 944 and 932 levels.
Production from the SBA (920 to
710m RL) using specialist contractors
completed the 871, 862, 837,
833 and 832 levels with ongoing
production from the 920, 825, 819,
818, 804 and 795 levels. Smaller ore
drive development (nominal 3.5m x
3.5m ‘shanty’ profile) was completed
from the 767 to 747 levels with the
757 to 747 level development below
SBA ore reserve boundary.
The primary surface fan electrical
and underground commissioning
was completed early in the year
with decommissioning of the four
90kW in-pit fans, increasing the
total primary return airflows from
180m3/s to 200-250m3/s. The
primary underground 756 magazine
was commissioned and the 1280
primary underground magazine
decommissioned prior to the primary
ventilation system upgrade.
The underground primary ventilation
RAW network was extended to the
510 level with the excavation of five
vertical Return Air-ways (RAW) long-
hole rises. The escape-way network
necessary to continue ‘Stage 2’
stoping was extended, with escape
ladder-ways installed in dedicated
1.0m raise-bore shafts from the 640
to 510 levels.
Other underground infrastructure
established during the year is
summarised below:
• The 722 Level underground
sat-stat refuelling station was
installed which reduced the
return tramming distance of
underground mobile equipment
to refuel by 12km;
• The 750 underground air
compressor and air receiver;
• The 600 level high voltage 11kV/1kV
substation;
• The 745 remote stench gas
activation unit; and
• The 645 and 545 sixteen person
refuge chambers were added for
the lower sections of the mine.
MINE AND MILL PRODUCTION AND CASH COSTS
TONNES MINED
Flying Fox
Ore Mined
Grade
Flying Fox Nickel Mined
Spotted Quoll
Ore Mined
Grade
Spotted Quoll Nickel Mined
Sep Qtr
Dec Qtr
Mar Qtr
Jun Qtr
FY19
Tonnes
Ni%
Tonnes
Tonnes
Ni%
Tonnes
58,699
4.0%
2,330
82,868
4.3%
3,538
59,309
4.3%
2,574
80,219
4.1%
3,277
56,386
4.5%
2,550
85,209
4.1%
3,516
57,213
4.2%
2,381
76,099
4.0%
3,042
YTD Total
231,607
4.2%
9,835
324,395
4.1%
13,373
Total Ore Mined
Grade
Total Nickel Mined
Tonnes
141,567
139,528
141,595
133,312
556,002
Ni%
Tonnes
4.1%
5,868
4.2%
5,851
4.3%
6,066
4.1%
5,423
4.2%
23,208
9
WESTERN AREAS ANNUAL REPORT 2019OPERATIONS REVIEW FLYING FOX
PRODUCTION
Flying Fox mined a total of 231,606
ore tonnes at an average grade
of 4.2% nickel for 9,834 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 127,615 ore tonnes at a
grade of 4.2% nickel for 5,329 nickel
tonnes.
SPOTTED QUOLL
PRODUCTION
Spotted Quoll mined a total of
324,395 ore tonnes at an average
grade of 4.1% nickel for 13,373
contained nickel tonnes which
surpassed last year as the highest
annual production of both ore and
nickel tonnes to date.
COSMIC BOY NICKEL
CONCENTRATOR
The Cosmic Boy Concentrator (CBC)
processed 610,487 tonnes of ore
at an average grade of 4.0% nickel,
despite its nameplate capacity of
550kt. A total of 146,549 tonnes of
concentrate grading 14.8% nickel
was produced containing 21,675
nickel tonnes with an average
recovery of 89%.
NICKEL SALES
The delivery of concentrates
has been maintained into the
two existing offtake agreements
along with spot sales of the nickel
sulphide precipitate product
being produced from the Mill
Recovery Enhancement Project
(MREP). A total of 147,325 tonnes
of concentrate was delivered
containing 21,483 tonnes of nickel.
The ability to process above
nameplate is largely due to the well
planned and executed preventative
maintenance programme with
98.2% plant availability achieved for
the year.
Other concentrate sales and
marketing costs for FY19 included
royalties at A$0.24/lb and
concentrate transport of A$0.40/lb
of nickel in concentrate delivered
to customers.
On the 8th February 2019, the
CBC had its ten year anniversary
and by year end had processed
more than 5.6 million tonnes of ore
and produced more than 230,000
tonnes of nickel in concentrate.
COSMIC BOY NICKEL CONCENTRATOR
Sep Qtr
Dec Qtr
Mar Qtr
Jun Qtr
FY19
YTD Total
tonnes
156,706
154,517
146,935
152,329
610,487
%
%
tonnes
tonnes
3.9%
89%
5,379
5,018
4.0%
88%
5,415
5,386
4.2%
88%
5,448
5,189
4.0%
88%
5,433
5,890
4.0%
88%
21,675
21,483
TONNES MILLED AND SOLD
Grade
Ave. Recovery
Nickel in Concentrate Produced (i)
Nickel in Concentrate Sold
(i) Includes MREP Nickel tonnes produced.
10
WESTERN AREAS ANNUAL REPORT 2019 COST OF PRODUCTION
The year to date cost of production stands at A$2.98/lb, around the mid-point of the
full year guidance range.
FINANCIAL STATISTICS
Group Production Cost/lb
Mining Cost (*)
Haulage
Milling
Admin
By Product Credits
A$/lb
A$/lb
A$/lb
A$/lb
A$/lb
Cash Cost Ni in Con (***)
A$/lb
Cash Cost Ni in Con (***)
US$/lb(**)
Exchange Rate US$ / A$
FY19
Sep Qtr Dec Qtr Mar Qtr Jun Qtr
2.24
0.07
0.49
0.22
(0.03)
2.99
2.19
0.73
2.38
0.07
0.51
0.22
(0.03)
3.15
2.26
0.72
2.11
0.06
0.48
0.20
(0.03)
2.82
2.01
0.71
2.24
0.07
0.46
0.22
(0.03)
2.96
2.07
0.70
YTD
2.24
0.07
0.48
0.22
(0.03)
2.98
2.13
0.72
(*) Mining Costs are net of deferred waste costs and inventory stockpile movements.
(**) US$ FX for Relevant Quarter is RBA average daily rate.
(***) Payable terms are not disclosed due to confidentiality conditions of the offtake agreements.
Cash costs exclude royalties and concentrate logistics costs.
Note: Grade and recovery estimates are subject to change until the final assay data are received.
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: 1.69 million
tonnes of ore at a grade of 4.7%
nickel for 79,332 tonnes of nickel;
and
• Ore Reserve: 0.60 million tonnes
of ore at a grade of 3.5% nickel for
21,100 tonnes of nickel
The longitudinal section shows
the Flying Fox mine with mineral
resources and ore reserves
depleted for mining production
during the year.
11
WESTERN AREAS ANNUAL REPORT 2019OPERATIONS REVIEW SPOTTED QUOLL
MINERAL RESOURCES
AND ORE RESERVES
The Spotted Quoll Mineral Resource
and Ore Reserve Estimates
(depleted for mining) at the end of
the financial year are as follows:
• Mineral Resource: 1.49 million
tonnes of ore at a grade of 5.3%
nickel for 78,894 tonnes of nickel:
and
• Ore Reserve: 1.59 million tonnes
of ore at a grade of 4.0% nickel for
64,200 tonnes of nickel
A surface diamond drilling resource
extension program to investigate
Stage 3 (below the T3 fault)
mineralisation was completed during
the year.
All of the drill-holes that reached
target elevation intersected
mineralisation resulting in the
following change to the Inferred
Resource.
Old Stage 3
Resource Estimate
Updated Stage 3
Resource Estimate
RESCAT
Ore Tonnes
(t)
Grade
(Ni %)
Ni Tonnes
(t)
Ore Tonnes
(t)
Grade
(Ni %)
Ni Tonnes
(t)
Inferred
116,367
2.6
3,060
118,464
4.9
5,745
Although the increase in grade
from 2.6% to 4.9% is encouraging,
the overall average thickness of
the mineralised intersections was
approximately 0.74m as a result of
a hangingwall and footwall felsic
intrusion that reduced the ore
thickness. Further surface drilling
is currently being planned to test a
thicker north-east trending plunge
that appears to extend beyond the
current resource limits.
The longitudinal section shows
the Spotted Quoll mine with
mineral resources and ore reserves
depleted for mining production
during the year.
A SURFACE DIAMOND DRILLING RESOURCE
EXTENSION PROGRAM TO INVESTIGATE STAGE 3
MINERALISATION WAS COMPLETED DURING THE YEAR
12
WESTERN AREAS ANNUAL REPORT 2019 NEW MORNING /
DAYBREAK RESOURCE
COSMOS NICKEL
OPERATION (“COSMOS”)
There was no change to the New
should be Morning / Daybreak
(NMDB) and Odysseus Mineral
Resource during the year.
The early works program has been
completed in-line with budget and
cost targets (ASX release 5 July 2019)
with several key milestones achieved:
• Decline rehabilitation completed
down to the 10,000m RL pump
station (500m below surface), with
pump station mechanical and
electrical designs complete;
• Dismantling of purchased shaft
headgear and winder commenced
and expedited in South Africa.
Delivery to Perth expected in
third quarter of FY20, to support
hoisting shaft operations;
• All required tenders and contracts
for ongoing works awarded or
substantially complete; and
• Successful recruitment of
experienced Project Manager
and Construction Manager with
extensive shaft construction
experience.
New Morning / Daybreak Open-Pit
Feasibility Study
The New Morning / Daybreak
Feasibility Study started in July with
a summary below:
• The field component of the
Flora and Fauna spring surveys
(including stygofauna), waste rock
characterisation and groundwater
sampling were completed in
September;
• The haul road bypass conceptual
design was completed in August;
• Drilling of 14 geotechnical drill-holes
to underpin the open-pit design
were completed in December;
• Completion of the preliminary
hydrological drilling program which
included a single production bore-
hole and one monitoring bore-
hole in November;
• Twenty-four oxide bottle-roll leach
tests were conducted to test the
oxide ore leaching kinetics. Further
work will investigate alternative
methods to improve nickel
recovery from the oxide zones.
• Metallurgical testing on the
transition and primary zones is
planned to commence in the next
year.
Near-term Work Plan and
Underground Infrastructure
Underground life of mine
infrastructure works will continue in
parallel with decline rehabilitation
down to the AM5/6 orebodies and
to the new take-off position for the
Odysseus decline. Specific activities
include:
• Construction and commissioning
of the underground pump station
(10,000m RL) and associated
infrastructure early in the second
quarter of FY20;
• Rehabilitation of the Alec Mairs
twin declines down to the new
Odysseus decline take-off,
(adjacent to the AM5/6 orebodies)
in the third quarter FY20;
• Delivery of the shaft headgear
and winder from South Africa in
the third quarter FY20;
• Completion of the mining design
for the AM5/6 deposits in the
second quarter of FY20; and
• A further 106 camp rooms to be
upgraded (266 in total) during
the first half of FY20, to cater for
increased construction activity.
13
WESTERN AREAS ANNUAL REPORT 2019OPERATIONS REVIEW Shaft Project Engineering
and Site Construction
The project progressed well with key
activities outlined below:
• Geotechnical logging of selected
AM5/6 drill-cores was completed
in July;
• The winder mechanical and
electrical packages were awarded
during the quarter, as well as a
letter of intent (LOI) issued for the
headframe structural package.
Mobilisation of personnel to
the South African mine-site has
commenced;
• The shaft geotechnical drill-hole
was successfully completed
(depth 1.2km), with deviation
along the shaft axis within a 1.0m
tolerance;
• Following a successful heritage
survey, the nearby Yakabindie
sand deposit was drilled to test
the resource extent and quality
for use in paste fill; and
• A detailed engineering design
(DED) of the shaft and materials
handling systems.
MILL RECOVERY
ENHANCEMENT
PROJECT (MREP)
The MREP continued to ramp up
operations during the year. The plant
is producing the high-grade nickel
sulphide product which has been
sold successfully on a regular spot
basis to companies producing nickel
sulphate destined for the electric
vehicle (EV) market.
Following year end a 12 month offtake
agreement was completed with
Sumitomo Metals and Mining., Ltd.
THE PLANT IS PRODUCING THE HIGH-GRADE
NICKEL SULPHIDE PRODUCT WHICH HAS BEEN
SOLD SUCCESSFULLY ON A REGULAR SPOT BASIS
14
WESTERN AREAS ANNUAL REPORT 2019 BIOHEAP LIMITED
The BioHeap management team
has continued the 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. BioHeap
conducted testwork during the
year for external companies who
are interested in pursuing the
technology for sulphide projects.
Laboratory
For the past 7 years, the BioHeap
laboratory testing facilities have
been located as part of CSIRO in
Waterford, Perth. The lease for
this laboratory was terminated in
September 2018 and BioHeap has
relocated to a new laboratory facility
in the Technology/Industrial area of
Canning Vale, Perth.
BioHeap has received several
samples for testing using the
BioHeap™ process as a result of
discussions with potential parties
interested in battery materials.
BioHeap has also conducted support
testwork for MREP and continues to
test samples from Western Areas
Forrestania operations.
New Morning / Day Break
Leaching Testwork Programme
Additional test work is being
undertaken looking at processes
to recover nickel from the oxide
zones. The BioHeap™ process
will be tested as part of the next
stage of evaluation on the deeper
transition and primary ores from the
New Morning / Daybreak deposits.
This work will be undertaken during
FY20, as part of the New Morning
feasibility study.
Cosmic Boy Scats Leaching
Testwork Programme
BioHeap has looked at a method
to treat a waste stream from the
Cosmic Boy Concentrator (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
BioHeap™ 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, BioHeap performed a column
leach test programme. This test
simulates the possible performance
from a BioHeap™ leach.
The preliminary results indicate the
material is a low acid consumer and
initial leaching data has indicated
that 70% of the total available nickel
is expected to be extracted from the
scats product.
Further columns commenced during
FY19 to confirm operating conditions
for the potential heap leach. Capital
and operating cost estimates were
commenced late in the year to
establish a demonstration heap
leach for the scats. This is expected
to be approximately 20,000 t of
scats and to commence build
during FY20. The nickel rich solution
obtained from the heap leach will
add additional nickel into the metal
recovery circuit of the MREP.
15
WESTERN AREAS ANNUAL REPORT 2019OPERATIONS REVIEW EXPLORATION
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 third 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 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 maintains strong,
practical relationships with project
stakeholders, and particularly
values its ongoing relationships
with the Far West Coast Aboriginal
Corporation (FWCAC) and the
Aboriginal Lands Trust (ALT).
The nickel endowment of the
Forrestania Nickel Belt has provided
a solid foundation for the Company
and the exploration strategy into
FY19 reflects this, with a renewed
focus on assessing near-mine
opportunities for discovery and
growth. The Western Ultramafic Belt,
incorporating the producing centres
of Spotted Quoll and Flying Fox,
along with the resource inventory
of New Morning, represents a
significant exploration opportunity
for the discovery of additional
nickel sulphide mineralisation.
The Company has maintained an
elevated focus in assessing target
opportunities across this belt in FY19,
embracing innovative technologies
to unlock new targeting horizons.
MT ALEXANDER
JOINT VENTURE
(WSA 25% NON-CONTRIBUTING
INTEREST)
With regard to E29/63 at Mt
Alexander, 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.
Western Areas continues to embrace
a balanced exploration programme
across its diverse portfolio of
tenements. The Company has
escalated its exploration activities in
FY19, with an expansion of its regional
exploration program through a
strategic partnership in the Western
Gawler region of South Australia.
Complementing this regional work,
with a strong portfolio of near-mine
targets adjacent to existing and
emerging nickel producing centres
at both Forrestania and Cosmos,
Exploration remains committed to
assessing, testing and discovering
new concentrations of nickel sulphide
to support current and future mine
operations.
The Cosmos exploration strategy has
a single focus, which is to add to the
nickel mineral inventory by assessing
and drill-testing high quality targets
both proximal to existing deposits
and within the surrounding tenement
package. Expanding from a focus on
the Neptune prospect in FY18, the
Company has broadened its targeting
envelope to assess the mineral
potential of the entire interpreted
prospective ultramafic channel at
Cosmos, which extends from Neptune
in the south through to Ajax on the
northern margins, representing a
target corridor of around 9km.
Regional exploration saw a significant
boost in both target inventory
and exploration activity with the
execution of a strategic agreement
with Iluka Resource Limited covering
a 5,070 km² of ground in the Western
Gawler region of South Australia.
Coupled with the existing tenure
on the project, this agreement
more than doubles the Company’s
interests in the project to 9,520 km²
of contiguous ground covering the
prospective Fowler Domain.
16
WESTERN AREAS ANNUAL REPORT 2019 COSMOS NICKEL OPERATION
Encouraged by the thick nickel
sulphides intersections at Neptune,
the Company expanded its
exploration focus throughout the year,
assessing targeting opportunities
across the entire length of the
interpreted channel position. From
this work, the Company has identified
the 2.5km corridor extending between
Prospero – Tapinos and Alec Mairs
as being of notable exploration and
strategic significance. Of additional
interest is the northern interpreted
channel position at Ajax (1km north
of the Odysseus resource), which is
considered to be significantly under-
explored.
A hiatus in drilling activities across
the December quarter enabled
detailed planning and targeting to
advance across the entire length
of the prospective interpreted
channel, extending over a strike
length of 9km. Numerous drill sites
were proposed, primarily centred on
Penelope, with additional locations
identified at Ajax and Neptune.
Subsequently, planning for a
heritage survey covering all these
proposed sites also commenced
during the December quarter.
The Company values the strong
collaborative relationship that it
has fostered with the Tjiwarl Group
native title holders and traditional
owners at Cosmos. This bilateral
cooperative approach culminated
with the completion, in March, of
a regionally extensive heritage
survey incorporating sites for future
exploration targeting covering
prospects at Penelope (south of
Alec Mairs), Neptune and Ajax
(north of Odysseus). The Company
understands the importance of
maintaining regular dialogue and
communication with the traditional
owners, with representatives of
the Tjiwarl Group involved in the
monitoring of all aspects of site
preparation and exploration drilling,
along with drill site and track
rehabilitation activities.
PLAN SHOWING COSMOS TENEMENTS, KEY PROSPECTS AND GEOLOGY
(100% WSA)
Since the acquisition of Cosmos from
Xstrata Nickel Australasia Operations
(XNAO) in October 2015, the Company
has identified numerous near-mine
targets considered highly prospective
for their potential to host significant
accumulations of nickel sulphides.
Throughout FY18, the initial focus of
these efforts was on a 1.5km corridor
centred over the Neptune prospect
located approximately 2km south
of the previously mined Prospero-
Tapinos deposit. Drill targeting
continued at Neptune in FY19, along
with a broadening of the focus
area to incorporate an additional
2.5km corridor extending north from
Prospero-Tapinos towards Alec Mairs.
The Neptune prospect is interpreted
to contain the highest volume of
cumulate ultramafic bodies within the
Cosmos nickel operation. Continuing
into early FY19, Phase 2 of drilling
on the Neptune prospect was
completed, with this component
of the program designed to target
the down-plunge extents of
mineralisation previously intersected
throughout FY18, while further testing
the prospectivity of the host cumulate
sequence along its northern flanks.
Phase 2 works markedly advanced
the geological understanding of this
prospective ultramafic package, with
significant findings throughout the
period including;
• Further delineation of the
prospective host sequence,
identified to extend >1200m in
strike length (north – south),
• Confirmation of additional
thick sequences of high-tenor,
disseminated nickel sulphide
mineralisation (along with localised
stringers-sulphide zones) with
some notable results of 52.5m @
0.70% Ni including 2.64m @ 1.56%
Ni returned from WCD017 and
25m @ 0.79% Ni returned from
WCD018, with the later numbers
representing the northernmost
intersections received to date at
Neptune,
• Results of Down Hole
Electromagnetic (DHEM) surveying
completed in the December quarter,
with two off-hole conductors
identified, potentially representing
semi-massive sulphides. These
targets are planned for future drill
testing in FY20.
17
WESTERN AREAS ANNUAL REPORT 2019EXPLORATION Western Gawler Nickel-Copper
Joint Venture (WSA 100% and
earning up to 90% interest)
In October 2014, the Company
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.
A staged series of exploration
programmes continued within EL
5880 across FY19. In the June
quarter, the company achieved
a 90% interest after meeting
Stage 2 earn-in and expenditure
requirements.
Early exploration in the September
and December quarters centred
on the Thunderdome prospect,
with elevated copper anomalism
identified in association with several
discrete pyroxene-hornblende rich
mafic intrusive units.
Anomalism was returned from
several drill-holes, with notable
values of 3m @ 0.46% Cu (from 27m)
including 1m @ 0.81% Cu (from 28m)
returned from 18WGRC377. Results
to date highlight the potential
for this corridor to host additional
zones of copper mineralisation.
The Mystic prospect represents an
emerging Western Gawler target,
and was another key focus during
FY19. Initial interest stemmed from
anomalous nickel in oxide values
returned from drilling programs
in early FY18, with notable values
including 2m @ 1.44% Ni from
18WGAC353.
Follow up drilling was undertaken
over the December and March
quarters with several thick elevated
nickel oxide intervals returned,
hosted within weathered, iron-
chromite enriched clay horizons,
with a broad zone of 18m @ 2.06%
Ni including 5m @ 4.29% Ni from
19WGAC444. The Company is
extremely encouraged by the
results returned from Mystic,
representing the highest-grade
nickel mineralisation identified to
date within the Fowler Domain of
the Western Gawler project.
FY19 DRILLING COMPLETED AT WESTERN GAWLER
WESTERN GAWLER
NICKEL-COPPER
PROJECT
The Western Gawler Project lies
within the Fowler Domain of western
South Australia. The Fowler Domain
is an orogenic belt of Proterozoic age,
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.
The Company has a consolidated
land holding with 100% interest
covering five tenements across
the Western Gawler Project with
an additional 90% interest in a
sixth tenement held by Strandline
Resources. Further to these
interests, the Company announced
in the September quarter an
expansion of the Western Gawler
regional exploration strategy via the
execution of a Farm-in and Joint
Venture Agreement with Iluka (Eucla
Basin) Pty Limited, a 100% owned
subsidiary of Iluka Resources Limited.
The Company has evolved its
exploration strategy across
Western Gawler, commencing in
FY18 with a migration from a broader
regional approach and moving to
a more focused, prospect-scale
style of targeting. Building on an
advancement and maturing of
geological understanding across the
project, the Company has shifted
its focus over the FY19 period from
the western corridor (centred around
Thunderdome), to a greater focus on
its eastern prospects, centred on the
Mystic-Woodford-Meredith Corridor.
18
WESTERN AREAS ANNUAL REPORT 2019 The Company continues to embrace
new and innovative methods to
assist exploration targeting. During
the September quarter a regional-
scale heli-borne Electromagnetic
(EM) Survey was completed over
three 100% WSA held tenements
along with Strandline tenement EL
5880. The survey was completed
using the SkyTEM312 HP system,
which is optimised to provide
exceptional depth of investigation
due to the high current and low
base frequency of 12.5 Hz. The
survey, which was executed over
1,584 km² and represented 1,844
line-kilometres was designed to
define EM conductors with potential
to represent semi-massive to
massive sulphide bodies associated
with Ni-Cu-Co-PGE mineralisation.
Numerous targets were identified
from this work and followed up
throughout FY19.
Western Gawler - Iluka Joint
Venture (WSA earning up to
75% interest)
The execution of a Farm-in and
Joint Venture agreement with Iluka
Resources across five tenements
during the first quarter of FY19
has consolidated the Company’s
tenure holding within the Western
Gawler Project. The tenements,
covering an additional 5,070 km²,
are contiguous with Western Areas’
substantial existing tenure within
the Western Gawler region of
South Australia, the combination of
which effectively represents 100%
of the highly prospective Fowler
Domain. The Company believes that
combining the Iluka Joint Venture
ground with its existing tenement
holdings maximises the potential for
a significant discovery.
EXPLORATION DRILLING (WESTERN GAWLER)
Underpinning the exploration efforts
across the Iluka JV tenements
in FY19 was the completion of
a regionally extensive airborne
electromagnetic (EM) survey
covering 657 km². Numerous low to
moderate-response targets were
identified from this work, with many
of these responses interpreted to
be coincident with mafic intrusive
bodies. Drill testing of these targets
commenced from late March and
extended into the June quarter,
supplemented by guidance from
subsequent follow-up, targeted
ground EM surveys. Drill testing was
completed over several prospects,
commencing initially at Woodford
and extending to Roskilde,
Coachella, Splendour and Meredith.
19
WESTERN AREAS ANNUAL REPORT 2019EXPLORATION Although exploration on the Iluka
JV ground is within its first year,
the Company is encouraged by
early results that were returned
from the maiden drilling program
at Woodford, with elevated copper
and nickel values identified within
partially weathered pyroxenite.
Drill-hole 19WGAC510 returned 1m
@ 549ppm Cu, 0.29% Ni with drill-
hole 19WGAC493 returning 1m @
996ppm Cu, 685ppb Pt+Pd (PGE).
Drilling activity significantly ramped
up towards the end of FY19, with
several large drill campaigns
commencing covering the Meredith
and Splendour prospects. This
momentum is anticipated to
continue into early FY20, with the
Company maintaining a focus on
the eastern corridor extending from
Woodford to Meredith.
FORRESTANIA
NICKEL OPERATION
(100% WSA)
The Company has a strong record
of exploration and production
across the Forrestania Nickel
Belt, reflecting its robust nickel
endowment. The Company realises
the high potential for this belt to
host additional nickel resources into
the future and has maintained a
balanced approach to exploration
in FY19, primarily advancing several
opportunities proximal to existing
resource envelopes, along with
exploration across numerous
promising regional targets.
The Parker Dome Project, located
20km north of the historic 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. The region is relatively
under-explored, and is considered
prospective for both komatiite-
hosted nickel sulphides and gold.
Leveraging off the extensive
regional airborne electromagnetic
survey completed in late FY18,
exploration work at Parker Dome in
FY19 has centred around processing
and compilation of numerous late-
time responses identified from the
June 2018 survey. Planning has
progressed over the remainder of
the reporting year, with a series of
drill programs designed to test both
nickel and gold targets. Pending
final environmental and heritage
approvals, drilling is anticipated to
commence in FY20.
The Company acknowledges the
strategic importance of ensuring
that all near-mine exploration
targeting opportunities are
continually reviewed for their
potential to add to the nickel
sulphide inventory at Forrestania.
Early targeting in the period centred
on testing for the extension of the
mineral system beneath the existing
Flying Fox resource, with two holes
completed and subsequent down-
hole EM survey work. No significant
concentration of nickel sulphides
was identified from this work.
20
WESTERN AREAS ANNUAL REPORT 2019 A second near-mine target was tested
at Cosmic Boy. Located to the west of
the Cosmic Boy Mill and concentrator,
the Cosmic Boy Deposit (last mined
in 1999, producing a total of 3.77Mt
@ 1.46% Ni for 55,081t of contained
nickel) is characterised by ultramafic-
hosted, predominantly high-tenor,
disseminated nickel sulphides, lying
proximal to a basal contact with a
banded iron formation sequence. A
review of the controls on mineralisation
at Cosmic Boy was completed in the
September quarter. A total of four
holes were drilled, testing the potential
for the mineralised ultramafic channel
to reform at depth. Early drilling
completed in the December quarter
successfully intersected disseminated
style mineralisation approaching the
basal contact target horizon, with drill-
hole CBD211W1 returning a particularly
encouraging interval of 2m @1.85% Ni
within a broader zone of 7m @ 1.16%
Ni (from 1,059m). Follow up drilling was
completed in the March quarter, with
CBD212W1W1W1 testing the down-plunge
extension from CBD211W1, returning 2m
@ 1.20% Ni. Despite these encouraging
results, owing to the depth of these
intersections, success and follow-up
drilling would require the mineral system
to increase substantially in both grade
and width. Immediate follow-up drilling is
not planned at this stage.
The Company understands the
importance of embracing innovative
methods of exploration to realise
the full potential across its tenure.
Commencing in March and extending
through the June quarter, the Company
commenced a strategic exploration
review of the Western Ultramafic
Corridor, assessing the potential for
this zone to host additional, likely-
blind mineral systems at depth. The
25km long Western Ultramafic Corridor,
hosting the producing high-tenor nickel
mines of Spotted Quoll and Flying Fox,
together with the the New Morning
resource, continues to represent a
significant exploration opportunity
for the discovery of additional nickel
sulphide mineralisation. Starting in
May, the Company, in collaboration with
HiSeis Pty Ltd, commenced a two-
pronged study designed to identify
the applicability of modern seismic to
aid future exploration efforts across
the Western Ultramafic Belt, with the
geological environment incorporating
the Spotted Quoll mineral resource
identified as the most suitable
environment for this work. Work involved
capturing detailed physical property
data (density and full waveform sonic)
from representative drill core samples
and down-hole probes.
21
WESTERN AREAS ANNUAL REPORT 2019EXPLORATION ORE RESERVE / MINERAL
RESOURCE STATEMENT
ORE SUMMARY RESERVES AT 30 JUNE 2019
Ore Reserves
Ore Reserves
1. Flying Fox Area
2. Spotted Quoll Area
3. Diggers Area
Digger South
Digger Rocks
TOTAL FORRESTANIA ORE RESERVE
4. Cosmos area
Odysseus South
Odysseus North
TOTAL COSMOS ORE RESERVE
TOTAL WESTERN AREAS ORE RESERVE
Ore summary reserves at 30 June 2018
Deposit
Flying Fox Area
Spotted Quoll Area
Digger South
Digger Rocks
Tonnes
Grade
Ni%
Ni Tonnes Classification
601,100
1,598,000
2,016,000
93,000
4,308,100
4,483,700
3,651,900
8,135,600
12,443,700
Tonnes
749,600
89,600
1,708,500
2,016,000
93,000
3.5
4.0
1.4
2.0
2.7
1.9
2.2
2.0
2.3
21,100 Probable Ore Reserve
64,200 Probable Ore Reserve
28,950 Probable Ore Reserve
1,850 Probable Ore Reserve
116,100
85,620 Probable Ore Reserve
78,900 Probable Ore Reserve
164,520
280,620
Grade
Ni%
Ni Tonnes 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
JORC
Code
2012
2012
2004
2004
2012
2012
JORC
Code
2012
2012
2012
2004
2004
TOTAL FORRESTANIA ORE RESERVES
4,656,700
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.
22
WESTERN AREAS ANNUAL REPORT 2019
WESTERN AREAS MINERAL RESOURCE STATEMENT
- EFFECTIVE DATE 30 JUNE 2019
Tonnes
Grade
Ni%
Ni Tonnes Classification
JORC
Code
Ore Reserves
Mineral Resources
1. Flying Fox Area
T1 South
T1 North
OTZ Sth Massive Zone
T4 Massive Zone
T5 Massive Zone
T6 Massive Zone
T7 Massive Zone
Total High Grade
T5 Flying Fox Disseminated Zone
T5 Lounge Lizard Disseminated Zone
144,125
45,041
54,217
177,614
212,835
722,890
86,044
248,720
1,691,486
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 - Core
Digger Rocks - Core
Digger Rocks - Core
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
6,674,486
340,126
78,067
3,318,468
2,496,658
6,233,319
1,341,966
146,678
1,488,644
480,000
14,876,449
180,900
195,000
375,900
2,704,500
362,700
282,940
50,600
560,000
3,960,740
19,213,089
479,914
26,922
1,704,548
329,443
4,016,949
219,641
3,128,943
225,248
70,106
124,900
10,326,614
13,563,000
27,363,000
12,009,000
52,935,000
63,261,614
82,474,703
4.6
2.3
5.1
5.9
5.8
5.3
5.6
1.3
4.7
0.8
1.0
0.8
0.8
1.8
3.3
3.9
1.2
1.3
1.4
5.3
5.0
5.3
1.4
2.0
2.8
2.0
2.4
1.4
1.2
1.7
1.3
0.9
1.3
1.9
2.6
1.9
2.7
2.5
2.1
2.0
2.6
2.7
12.6
11.2
2.6
0.8
0.6
0.5
0.6
0.9
1.1
6,625
Indicated Mineral Resource
1,036
Inferred Mineral Resource
2,736
Indicated Mineral Resource
10,550
Indicated Mineral Resource
12,364
Indicated Mineral Resource
37,955
Indicated Mineral Resource
4,833
Indicated Mineral Resource
3,233
Inferred Mineral Resource
79,332
1,590
Indicated Mineral Resource
3,460
Inferred Mineral Resource
36,000
Indicated Mineral Resource
41,050
120,382
11,224
Indicated Mineral Resource
3,025
Inferred Mineral Resource
41,181
Indicated Mineral Resource
32,498
Inferred Mineral Resource
87,928
71,666
Indicated Mineral Resource
7,228
Inferred Mineral Resource
78,894
2012
2012
2012
2012
2012
2012
2012
2012
2004
2004
2004
2012
2012
2012
2012
2012
2012
6,720
Indicated Mineral Resource
2004
293,924
5,050
Indicated Mineral Resource
3,900
Indicated Mineral Resource
8,950
37,570
Indicated Mineral Resource
4,530
Inferred Mineral Resource
4,790
Indicated Mineral Resource
670
Inferred Mineral Resource
5,040
Indicated Mineral Resource
52,600
355,474
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
8,814
Indicated Mineral Resource
14,002
Inferred Mineral Resource
265,465
105,791 Measured Mineral Resource
158,705
Indicated Mineral Resource
62,447
Inferred Mineral Resource
326,943
592,408
947,882
2004
2004
2004
2004
2004
2004
2004
2012
2012
2012
2012
2012
2012
2012
2012
2012
2012
2012
2012
2012
WESTERN AREAS ANNUAL REPORT 2019
23
FINANCIAL STATEMENTS
24
WESTERN AREAS ANNUAL REPORT 2019
DIRECTORS’ REPORT
The Directors of Western Areas Ltd present the financial report of the Company for the financial year ended
30 June 2019. 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
other corporate development initiatives. Mr Macliver is Executive Chairman of Grange Consulting
Group Pty Ltd which provides specialist corporate advisory services to both listed and unlisted
Non-Executive
Independent
Chairman
companies.
Committee responsibilities:
Member of the Audit & Risk, Remuneration and Nomination Committee
Director appointed
October 2011
Other current listed company directorships:
Sheffield Resources Ltd (since August 2019)
Otto Energy Ltd (since January 2004)
- Chair of the Audit & Risk Committee
- Member of the Remuneration & Nomination Committee
Former listed company directorships in last three years:
Nil
Other relevant experience:
Fellow of Chartered Accountants Australia and New Zealand
Fellow of the Australian Institute of Company Directors
Senior Fellow of the Financial Services Institute of Australasia
Daniel Lougher
Mr Lougher is a qualified Mining Geologist and Mining Engineer with over 38 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:
Director appointed
May 2008
Perseus Mining Ltd (since May 2019)
- Chairman of the Technical Committee
Former listed company directorships in last three years:
Nil
Other relevant experience:
Extensive training in Mine, Planning and Geotechnical Engineering (Chamber of Mines, South
Africa)
WA Mines Manager Certificate
25
WESTERN AREAS ANNUAL REPORT 2019
DIRECTORS’ REPORT
DIRECTORS’ REPORT
INFORMATION ABOUT THE DIRECTORS (cont’d)
Richard Yeates
Mr Yeates is an experienced international mining executive with 36 years industry experience in
BSc (Geology),
MAusIMM, GAICD
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 Global and Coffey
Non-Executive
Independent
Director
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 Tetra Tech) in
2006. Mr Yeates’ experience covers a wide range of commodities (including nickel, copper, lead,
zinc, tin, tungsten, gold, coal and mineral sands), in 39 countries on five continents.
Committee responsibilities:
Director appointed
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 the Remuneration Committee
- Member of the Nomination Committee
Former listed company directorships in last three years:
Nil
Other relevant experience:
Director, Austmine (ceased October 2009)
Director, Australia-Africa Mining Industry Group (AAMIG, now AAMEG) (ceased November 2016)
Formerly a member of Swick Mining Services Ltd R&D Advisory Board
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
specialising in mining and corporate law.
Committee responsibilities:
Chairman of the Audit & Risk Committee
Other current listed company directorships:
Director appointed
Nil
June 2014
Former listed company directorships in last three years:
Beadell Resources Ltd (ceased April 2019)
- Member of the Remuneration, Nomination & Diversity and Audit & Risk Committee
- Formerly Chairman of the Board (ceased July 2018)
Eastern Goldfields Ltd (ceased February 2019)
Redbank Copper Ltd (ceased January 2019)
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
26
Tim Netscher
Mr Netscher is an experienced international mining executive with extensive operational, project
BSc (Eng)
(Chemical), BCom,
MBA, FIChE, CEng,
MAICD
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, platinum group metals and gold in Africa,
Non-Executive
Independent
Director
Asia, North America and Australia.
Committee responsibilities:
Chairman of the Remuneration Committee
Member of the Audit & Risk Committee
Director appointed
August 2014
Other current listed company directorships:
Gold Road Resources Ltd (since September 2014)
- Chairman
- Member of the Audit & Risk Committee
- Member of the Remuneration & Nomination Committee
St Barbara Ltd (since February 2014)
- Chairman
- Member 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 the 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
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)
Director appointed
- Chairman of the Risk Committee
January 2017
- Member of the Audit, Nominations and Remuneration Committees
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
Director, CopperMoly Ltd (ceased 2014)
David Southam
Mr Southam resigned as a Director of Western Areas as at 26 November 2018.
BCom, CPA, MAICD
Committee responsibilities:
Nil
WESTERN AREAS ANNUAL REPORT 2019
DIRECTORS’ REPORT
DIRECTORS’ REPORT
INFORMATION ABOUT THE DIRECTORS (cont’d)
Richard Yeates
Mr Yeates is an experienced international mining executive with 36 years industry experience in
BSc (Geology),
MAusIMM, GAICD
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 Global and Coffey
Non-Executive
Independent
Director
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 Tetra Tech) in
2006. Mr Yeates’ experience covers a wide range of commodities (including nickel, copper, lead,
zinc, tin, tungsten, gold, coal and mineral sands), in 39 countries on five continents.
Committee responsibilities:
Director appointed
Chairman of the Nomination Committee
October 2009
Member of the Remuneration Committee
Other current listed company directorships:
Middle Island Resources Ltd (since March 2010)
- Managing Director and CEO
- Member of the Remuneration Committee
- Member of the Nomination Committee
Former listed company directorships in last three years:
Nil
Other relevant experience:
Director, Austmine (ceased October 2009)
Director, Australia-Africa Mining Industry Group (AAMIG, now AAMEG) (ceased November 2016)
Formerly a member of Swick Mining Services Ltd R&D Advisory Board
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
specialising in mining and corporate law.
Committee responsibilities:
Chairman of the Audit & Risk Committee
Other current listed company directorships:
Director appointed
Nil
June 2014
Former listed company directorships in last three years:
Beadell Resources Ltd (ceased April 2019)
- Member of the Remuneration, Nomination & Diversity and Audit & Risk Committee
- Formerly Chairman of the Board (ceased July 2018)
Eastern Goldfields Ltd (ceased February 2019)
Redbank Copper Ltd (ceased January 2019)
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, project
BSc (Eng)
(Chemical), BCom,
MBA, FIChE, CEng,
MAICD
Non-Executive
Independent
Director
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, platinum group metals and gold in Africa,
Asia, North America and Australia.
Committee responsibilities:
Chairman of the Remuneration Committee
Member of the Audit & Risk Committee
Director appointed
August 2014
Other current listed company directorships:
Gold Road Resources Ltd (since September 2014)
- Chairman
- Member of the Audit & Risk Committee
- Member of the Remuneration & Nomination Committee
St Barbara Ltd (since February 2014)
- Chairman
- Member 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 the 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
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)
Director appointed
January 2017
- Chairman of the Risk Committee
- Member of the Audit, Nominations and Remuneration Committees
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
Director, CopperMoly Ltd (ceased 2014)
David Southam
Mr Southam resigned as a Director of Western Areas as at 26 November 2018.
BCom, CPA, MAICD
Committee responsibilities:
Nil
27
WESTERN AREAS ANNUAL REPORT 2019
DIRECTORS’ REPORT
DIRECTORS’ REPORT
COMPANY SECRETARY
DIRECTORS’ BENEFITS
Mr Belladonna is a Certified Practicing Accountant and has been employed at Western Areas Ltd since 2005,
No Directors of the Consolidated Entity have, since the end of the previous financial year, received or become
originally as Financial Controller and then as the Company Secretary and Chief Financial Officer. During his time at
entitled to receive a benefit (other than a benefit included in the total amount of emoluments received or due
the Company, he has been intimately involved in the accounting, debt financing, corporate governance, risk
and receivable by Directors shown on page 40 of the Directors’ Report) by reason of a contract made by the
management, capital raising and financial initiatives at the Company. Mr Belladonna has over 18 years’ experience
parent entity or a related body corporate with the director or with any entity in which the director has a
in the resources industry including listed gold and base metal companies in a range of management positions.
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.
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 on page 34.
PERFORMANCE RIGHTS GRANTED TO KEY MANAGEMENT
PERSONNEL
Performance Rights granted to directors and senior management during the financial year ended 30 June 2019
is set out in the Remuneration Report of this Directors’ Report on page 34.
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.
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.
PRINCIPAL ACTIVITIES
The principal activities of the Consolidated Entity during the year consisted of mining, processing and sale of
nickel sulphide concentrate, the continued assessment of development feasibility of the high grade nickel
mines and the exploration for nickel sulphides and other base metals.
DIVIDENDS PAID OR RECOMMENDED
In respect of the financial year ended 30 June 2019, the Board of Directors declared a final fully franked
dividend of 2 cents to the holders of fully paid ordinary shares on 20 August 2019.
In relation to the 30 June 2018 financial year the Board declared a final 2 cent fully franked dividend on
22 August 2018 and paid to shareholders on 6 October 2018.
28
DIRECTORS’ MEETINGS
The following table sets out the number of meetings of the parent entity’s Directors and meetings of the
sub-committees of the Board held during the year ended 30 June 2019 and the number of meetings attended
by each Director.
Meetings held:
Meetings attended:
I Macliver
D Lougher
R Yeates
C Readhead
T Netscher
N Streltsova
D Southam (*)
Directors
Meetings
Audit & Risk
Management
Remuneration
Nomination
Meetings of Committees
11
11
11
10
10
11
11
5
3
3
-
-
3
3
-
-
3
3
-
3
-
3
-
-
1
1
1
1
-
-
1
-
(*) Mr Southam attended all meetings prior to his resignation as a director.
SUBSEQUENT EVENTS
fully paid ordinary shares.
The Board of Directors, on 20 August 2019, declared a final fully franked dividend of 2 cents to the holders of
Other than matters detailed above, there have been no subsequent events after 30 June 2019 which have a
material effect on the financial statements for the year ended 30 June 2019.
REVIEW OF OPERATIONS
OPERATIONAL METRICS
The Company continues to strongly operate in line with plan and achieved its published guidance metrics which
were updated during the year. Detailed quarterly operating reports are provided throughout the year outlining
quarterly and year to date production, cost, sales and operating metrics, some of which are shown below.
Financial Year – Physical Summary
Tonnes Mined
Nickel Grade (average)
Tonnes Milled
Milled Grade (average)
Recovery
Nickel in Concentrate
Nickel Sales in Concentrate
Tns
%
Tns
%
%
Tns
Tns
FY19
556,002
4.2%
610,487
4.0%
88%
21,675
21,483
FY18
607,120
4.0%
615,598
4.0%
87%
21,060
20,549
WESTERN AREAS ANNUAL REPORT 2019
DIRECTORS’ REPORT
DIRECTORS’ REPORT
COMPANY SECRETARY
DIRECTORS’ BENEFITS
Mr Belladonna is a Certified Practicing Accountant and has been employed at Western Areas Ltd since 2005,
No Directors of the Consolidated Entity have, since the end of the previous financial year, received or become
originally as Financial Controller and then as the Company Secretary and Chief Financial Officer. During his time at
entitled to receive a benefit (other than a benefit included in the total amount of emoluments received or due
the Company, he has been intimately involved in the accounting, debt financing, corporate governance, risk
and receivable by Directors shown on page 40 of the Directors’ Report) by reason of a contract made by the
management, capital raising and financial initiatives at the Company. Mr Belladonna has over 18 years’ experience
parent entity or a related body corporate with the director or with any entity in which the director has a
in the resources industry including listed gold and base metal companies in a range of management positions.
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.
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 on page 34.
PERFORMANCE RIGHTS GRANTED TO KEY MANAGEMENT
PERSONNEL
Performance Rights granted to directors and senior management during the financial year ended 30 June 2019
is set out in the Remuneration Report of this Directors’ Report on page 34.
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.
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.
PRINCIPAL ACTIVITIES
The principal activities of the Consolidated Entity during the year consisted of mining, processing and sale of
nickel sulphide concentrate, the continued assessment of development feasibility of the high grade nickel
mines and the exploration for nickel sulphides and other base metals.
DIVIDENDS PAID OR RECOMMENDED
In respect of the financial year ended 30 June 2019, the Board of Directors declared a final fully franked
dividend of 2 cents to the holders of fully paid ordinary shares on 20 August 2019.
In relation to the 30 June 2018 financial year the Board declared a final 2 cent fully franked dividend on
22 August 2018 and paid to shareholders on 6 October 2018.
DIRECTORS’ MEETINGS
The following table sets out the number of meetings of the parent entity’s Directors and meetings of the
sub-committees of the Board held during the year ended 30 June 2019 and the number of meetings attended
by each Director.
Meetings held:
Meetings attended:
I Macliver
D Lougher
R Yeates
C Readhead
T Netscher
N Streltsova
D Southam (*)
Directors
Meetings
Audit & Risk
Management
Remuneration
Nomination
Meetings of Committees
11
11
11
10
10
11
11
5
3
3
-
-
3
3
-
-
3
3
-
3
-
3
-
-
1
1
1
1
-
-
1
-
(*) Mr Southam attended all meetings prior to his resignation as a director.
SUBSEQUENT EVENTS
The Board of Directors, on 20 August 2019, declared a final fully franked dividend of 2 cents to the holders of
fully paid ordinary shares.
Other than matters detailed above, there have been no subsequent events after 30 June 2019 which have a
material effect on the financial statements for the year ended 30 June 2019.
REVIEW OF OPERATIONS
OPERATIONAL METRICS
The Company continues to strongly operate in line with plan and achieved its published guidance metrics which
were updated during the year. Detailed quarterly operating reports are provided throughout the year outlining
quarterly and year to date production, cost, sales and operating metrics, some of which are shown below.
Financial Year – Physical Summary
Tonnes Mined
Nickel Grade (average)
Tonnes Milled
Milled Grade (average)
Recovery
Nickel in Concentrate
Nickel Sales in Concentrate
Tns
%
Tns
%
%
Tns
Tns
FY19
556,002
4.2%
610,487
4.0%
88%
21,675
21,483
FY18
607,120
4.0%
615,598
4.0%
87%
21,060
20,549
29
WESTERN AREAS ANNUAL REPORT 2019
DIRECTORS’ REPORT
DIRECTORS’ REPORT
REVIEW OF OPERATIONS (cont’d)
OPERATIONAL METRICS (cont’d)
As planned, total ore mined was lower compared to the prior year but at an increased head grade. The Spotted
Quoll mine produced 324,395 tonnes of ore at a grade of 4.1% nickel, with Flying Fox producing 231,607 ore
tonnes at an average grade 4.2%.
The nickel concentrator treated a total of 610,487 tonnes of ore during FY19, continuing to operate well above
its 550,000 tonne per annum name plate capacity. Milled grade was in line with the prior year while recovery
was higher at 88%. The concentrator celebrated its ten-year anniversary in FY19 processing in excess of
5.6 million tonnes of ore and producing more than 230,000 tonnes of nickel.
The Mill Recovery Enhancement Project (‘MREP’) continued in ramp-up mode during FY19. While leach
production rates have been lower than anticipated, the addition of the MREP filtering and bagging unit has
enabled the production and sale of a new, premium, high-grade, nickel sulphide precipitate product. The recent
installation of a de-slime unit to recover coarse un-leached nickel sulphides from the MREP will increase overall
nickel recovery from the MREP plant that will report to concentrate.
FINANCIAL METRICS
Income Statement
Full Financial Year – Earnings Results Summary
Revenue
EBITDA1
EBIT
Profit Before Tax
Net Profit After Tax
FY19
$m
268.7
80.8
20.6
19.0
14.2
FY18
$m
248.3
84.0
18.5
17.2
11.8
Change
$m
20.4
(3.2)
2.1
1.8
2.4
1 EBITDA is not defined by International Financial Reporting Standards. As such, it is a Non-IFRS performance measure.
The A$20.4m increase in Revenue was due to the higher average nickel price for the year at A$7.84/lb
(FY18: A$7.53/lb) and increase in sales volumes.
Earnings Before Interest, Tax, Depreciation and Amortisation (‘EBITDA’) and Profit Before Tax were materially
consistent with the prior year. The increased sales revenue was partially offset by higher operational costs
predominantly relating to increased production tonnages and the prior year comparative period including
treatment of free carry, lower grade, ore sorter material.
Net Profit After Tax was 20% higher than the prior year due to the higher nickel price and increased earnings
from ordinary mining activities.
Statement of Cash Flows
Full Financial Year – Cashflow Summary
FY19
$m
271.4
(169.6)
(3.5)
98.3
(0.5)
(99.3)
(99.8)
(5.8)
(7.4)
FY18
$m
237.2
(154.0)
(6.2)
77.0
0.0
(59.8)
(59.8)
(5.8)
11.3
144.3
151.6
Change
$m
34.2
(15.6)
2.7
21.3
(0.5)
(39.5)
(40.0)
-
(18.7)
(7.3)
Revenue
Payments to suppliers
Other
Net Operating Cashflow
Sale of investments
Capital purchases
Net Investing Cashflow
Net Financing Cashflow
Net Cashflow
Cash at Bank
30
Net operating cashflow increased by A$21.3m primarily due to the higher average nickel price and the release
of working capital related to nickel sales receivables. This was partly offset by increased payments to suppliers.
The significant year-on-year change in Investing Cashflow, primarily relates to investments in growth assets at
the Company’s 100% owned Cosmos nickel operation. Completion of the Definitive Feasibility Study (‘DFS’) early in
the first half culminated in the announcement of a decision to mine the long life, low all-in sustaining cost project.
The final DFS included installation of shaft haulage infrastructure for haulage of ore to surface. The Company has
acquired a fit for purpose second-hand winder & headgear, located in South Africa, that is in the process of being
refurbished for delivery and installation at Odysseus. The early works infrastructure programme has been
completed on time and on budget. The decline rehabilitation is completed to 500 metres below surface.
Net cash outflow of A$7.3m resulted in A$144.3m cash at bank at year end. The free cash outflow result was
due to the significant year-on-year increase in expenditure invested into the Company’s key organic growth
project, the Odysseus mine, located at the Cosmos nickel operation.
Statement of Financial Position
Full Financial Year – Balance Sheet Summary
Current Assets
Total Assets
Current Liabilities
Total Liabilities
Net Equity
FY19
$m
189.7
596.5
53.4
95.0
FY18
$m
208.7
571.9
47.8
83.1
501.5
488.8
Change
$m
(19.0)
24.6
5.6
11.9
12.7
Current assets decreased primarily due to the cash at bank decreasing by A$7.3m and the ore stockpile
inventory value decreasing by A$12.3m. The decrease in inventory value related to consumption of ore
stockpiles enabling maintenance of consistent concentrator throughput.
The increase in non-current assets predominantly relates to the Odysseus early works program at Cosmos.
Amortisation charges against mine properties of A$44.7m was partly offset by new development expenditure
of A$32.8m. Exploration and evaluation expenditure of A$12.7m 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$596.5m, representing an increase of A$24.6m as compared to the prior year.
Total liabilities of A$95.0m represented an increase of A$11.9m 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$12.7m to A$501.5m, mainly due to an increase in
retained earnings A$8.7m and reserves of A$4.0m.
MATERIAL BUSINESS RISKS
Understanding and managing risk is essential to achievement of Western Areas short and long term objectives.
Western Areas has a well-established integrated risk management framework that ensures risks are effectively
managed. The senior management team regularly report to the Board on material risks and related controls to
ensure risk remains within the Board’s agreed risk appetite.
CORPORATE RISKS
People
Attraction and retention of skilled motivated people remains a challenge in an environment of increased natural
resources projects, an aging population and emigration from Western Australia. The Company recognises and
rewards the performance of individuals, and maintain positive, supportive and open communication to foster a
culture of learning and development.
WESTERN AREAS ANNUAL REPORT 2019
DIRECTORS’ REPORT
DIRECTORS’ REPORT
REVIEW OF OPERATIONS (cont’d)
OPERATIONAL METRICS (cont’d)
As planned, total ore mined was lower compared to the prior year but at an increased head grade. The Spotted
Quoll mine produced 324,395 tonnes of ore at a grade of 4.1% nickel, with Flying Fox producing 231,607 ore
tonnes at an average grade 4.2%.
The nickel concentrator treated a total of 610,487 tonnes of ore during FY19, continuing to operate well above
its 550,000 tonne per annum name plate capacity. Milled grade was in line with the prior year while recovery
was higher at 88%. The concentrator celebrated its ten-year anniversary in FY19 processing in excess of
5.6 million tonnes of ore and producing more than 230,000 tonnes of nickel.
The Mill Recovery Enhancement Project (‘MREP’) continued in ramp-up mode during FY19. While leach
production rates have been lower than anticipated, the addition of the MREP filtering and bagging unit has
enabled the production and sale of a new, premium, high-grade, nickel sulphide precipitate product. The recent
installation of a de-slime unit to recover coarse un-leached nickel sulphides from the MREP will increase overall
nickel recovery from the MREP plant that will report to concentrate.
FINANCIAL METRICS
Income Statement
Full Financial Year – Earnings Results Summary
Revenue
EBITDA1
EBIT
Profit Before Tax
Net Profit After Tax
FY19
$m
268.7
80.8
20.6
19.0
14.2
FY18
$m
248.3
84.0
18.5
17.2
11.8
Change
$m
20.4
(3.2)
2.1
1.8
2.4
1 EBITDA is not defined by International Financial Reporting Standards. As such, it is a Non-IFRS performance measure.
The A$20.4m increase in Revenue was due to the higher average nickel price for the year at A$7.84/lb
(FY18: A$7.53/lb) and increase in sales volumes.
Earnings Before Interest, Tax, Depreciation and Amortisation (‘EBITDA’) and Profit Before Tax were materially
consistent with the prior year. The increased sales revenue was partially offset by higher operational costs
predominantly relating to increased production tonnages and the prior year comparative period including
treatment of free carry, lower grade, ore sorter material.
Net Profit After Tax was 20% higher than the prior year due to the higher nickel price and increased earnings
from ordinary mining activities.
Statement of Cash Flows
Full Financial Year – Cashflow Summary
Payments to suppliers
Revenue
Other
Net Operating Cashflow
Sale of investments
Capital purchases
Net Investing Cashflow
Net Financing Cashflow
Net Cashflow
Cash at Bank
FY19
$m
271.4
(169.6)
(3.5)
98.3
(0.5)
(99.3)
(99.8)
(5.8)
(7.4)
FY18
$m
237.2
(154.0)
(6.2)
77.0
0.0
(59.8)
(59.8)
(5.8)
11.3
144.3
151.6
Change
$m
34.2
(15.6)
2.7
21.3
(0.5)
(39.5)
(40.0)
-
(18.7)
(7.3)
Net operating cashflow increased by A$21.3m primarily due to the higher average nickel price and the release
of working capital related to nickel sales receivables. This was partly offset by increased payments to suppliers.
The significant year-on-year change in Investing Cashflow, primarily relates to investments in growth assets at
the Company’s 100% owned Cosmos nickel operation. Completion of the Definitive Feasibility Study (‘DFS’) early in
the first half culminated in the announcement of a decision to mine the long life, low all-in sustaining cost project.
The final DFS included installation of shaft haulage infrastructure for haulage of ore to surface. The Company has
acquired a fit for purpose second-hand winder & headgear, located in South Africa, that is in the process of being
refurbished for delivery and installation at Odysseus. The early works infrastructure programme has been
completed on time and on budget. The decline rehabilitation is completed to 500 metres below surface.
Net cash outflow of A$7.3m resulted in A$144.3m cash at bank at year end. The free cash outflow result was
due to the significant year-on-year increase in expenditure invested into the Company’s key organic growth
project, the Odysseus mine, located at the Cosmos nickel operation.
Statement of Financial Position
Full Financial Year – Balance Sheet Summary
Current Assets
Total Assets
Current Liabilities
Total Liabilities
Net Equity
FY19
$m
189.7
596.5
53.4
95.0
FY18
$m
208.7
571.9
47.8
83.1
501.5
488.8
Change
$m
(19.0)
24.6
5.6
11.9
12.7
Current assets decreased primarily due to the cash at bank decreasing by A$7.3m and the ore stockpile
inventory value decreasing by A$12.3m. The decrease in inventory value related to consumption of ore
stockpiles enabling maintenance of consistent concentrator throughput.
The increase in non-current assets predominantly relates to the Odysseus early works program at Cosmos.
Amortisation charges against mine properties of A$44.7m was partly offset by new development expenditure
of A$32.8m. Exploration and evaluation expenditure of A$12.7m 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$596.5m, representing an increase of A$24.6m as compared to the prior year.
Total liabilities of A$95.0m represented an increase of A$11.9m 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$12.7m to A$501.5m, mainly due to an increase in
retained earnings A$8.7m and reserves of A$4.0m.
MATERIAL BUSINESS RISKS
Understanding and managing risk is essential to achievement of Western Areas short and long term objectives.
Western Areas has a well-established integrated risk management framework that ensures risks are effectively
managed. The senior management team regularly report to the Board on material risks and related controls to
ensure risk remains within the Board’s agreed risk appetite.
CORPORATE RISKS
People
Attraction and retention of skilled motivated people remains a challenge in an environment of increased natural
resources projects, an aging population and emigration from Western Australia. The Company recognises and
rewards the performance of individuals, and maintain positive, supportive and open communication to foster a
culture of learning and development.
31
WESTERN AREAS ANNUAL REPORT 2019
DIRECTORS’ REPORT
DIRECTORS’ REPORT
REVIEW OF OPERATIONS (cont’d)
CORPORATE RISKS (cont’d)
People (cont’d)
The development of the long life Odysseus mine has commenced, which will present an attractive employment
proposition for existing and prospective professionals with the project offering an attractive opportunity for
development of new skills and experience. Value is placed on the contribution of Western Areas people and the
required systems and support are in place to motivate, empower, and reward our people.
Safety & Health
Innovation will assist to ensure exploitation of the ore body is maximised and highly experienced and
credentialled project delivery resources have been engaged to complete the necessary studies and manage
site works. The schedule and costs are closely monitored against the forecast to ensure the project is delivered
in accordance with market disclosures.
Investment opportunities
The Company strategy includes investment in business development activities (joint ventures, mergers,
acquisitions and innovation) to enhance the project portfolio. The strong debt free position and continued
generation of positive cash flow from operations places Western Areas in a competitive position. The Company
is able to pursue business development opportunities that can clearly demonstrate the best possible value for
shareholders, rather than take unnecessary risks.
There are a number of inherent hazards associated with exploration, mining and mineral processing that
Established networks, technical capability and commercial experience enables the company to identify and
require ongoing management and assurance to ensure safety performance is in line with the high standards
analyse potential base metal prospects.
we expect.
The health and wellbeing of personnel undertaking activities on behalf of Western Areas is paramount. A risk
based approach to managing health and safety risks is applied to ensure the appropriate control of hazards.
We continue to demonstrate excellence in safety performance, by working collaboratively with suppliers and
contractors.
OPERATIONAL RISKS
Business interruption
Forrestania Nickel Operations (‘FNO’) is the Company’s sole production hub. A significant interruption at FNO
confirm the existence of economic resources.
would impact the ability to supply nickel concentrate to customers and therefore curtail revenue.
FNO is located in a well-supported mining district with low risk exposure to natural catastrophes and the
management team and operations personnel are highly experienced professionals with a long track record in
consistently delivering production targets. FNO has limited single point failure exposures and nickel ore is
sourced from two separate mining operations. However, where exposures do exist, business continuity and
emergency response plans are in place.
Infrastructure, equipment and logistics routes are the focus of mature preventative maintenance practices and
a comprehensive insurance program is in place.
Third parties
Western Areas relies on a number of third party entities to support exploration, mining, logistics, design and
project execution activities. A high level of due diligence is exercised prior to awarding contracts, and supply
chains partners are actively managed.
A dedicated commercial team is in place to ensure appropriate commercial measures are applied to protect our
position and encourage positive outcomes for both parties. Additionally, contracting strategies provide
certainty on delivering the defined outcomes, while limiting exposure to non-performance.
Long term partnerships are valued with supply chain partners that have a record of delivering value to the
company.
EXPLORATION AND GROWTH RISKS
Project delays
Delays to the delivery of the Odysseus mine at the Cosmos nickel operation would defer the realisation of
future revenue and increase project costs.
Once in production, the Cosmos nickel operation will become a significant nickel concentrate contributor. A
series of technical studies and financial analysis has been undertaken to develop a robust project plan and
development schedule. The Company have successfully demonstrated the value of the Odysseus mine under
a number of different scenarios, which has led to a positive final investment decision for the project.
32
Exploration success
Exploration is inherently risky and there is no guarantee that expenditure in exploration will deliver the targeted
results. Organic growth is a key strategic pillar, and therefore there is acceptance of the inherent risks
associated with mineral exploration.
The exploration program is focussed on highly prospective tenements within the regions of Forrestania, the
Cosmos nickel operation and West Gawler. It is believed that these regions will provide the best opportunity to
grow near mine resources and establish new mining areas for the Company. Our exploration team apply
advanced exploration techniques and geological knowledge to provide the best and most cost-effective way to
NICKEL MARKETS
Product substitution
Over recent years the nickel market has been subject to volatility driven by weak GDP growth, product
substitution and foreign Government policy measures.
We have been working with offtake partners to establish their appetite for offtake of a high grade concentrate
product that can be utilised within the growing EV battery market which is seeing growing interest.
At times, we do hedge a portion of expected nickel sales and foreign exchange exposures in line with the board
approved treasury management policy.
We remain one of the lowest cost nickel producers and are debt free, which provides a buffer against the
adverse effects of a deterioration in nickel market fundamentals.
WESTERN AREAS ANNUAL REPORT 2019 DIRECTORS’ REPORT
DIRECTORS’ REPORT
REVIEW OF OPERATIONS (cont’d)
CORPORATE RISKS (cont’d)
People (cont’d)
The development of the long life Odysseus mine has commenced, which will present an attractive employment
proposition for existing and prospective professionals with the project offering an attractive opportunity for
development of new skills and experience. Value is placed on the contribution of Western Areas people and the
required systems and support are in place to motivate, empower, and reward our people.
Innovation will assist to ensure exploitation of the ore body is maximised and highly experienced and
credentialled project delivery resources have been engaged to complete the necessary studies and manage
site works. The schedule and costs are closely monitored against the forecast to ensure the project is delivered
in accordance with market disclosures.
Investment opportunities
The Company strategy includes investment in business development activities (joint ventures, mergers,
acquisitions and innovation) to enhance the project portfolio. The strong debt free position and continued
generation of positive cash flow from operations places Western Areas in a competitive position. The Company
is able to pursue business development opportunities that can clearly demonstrate the best possible value for
shareholders, rather than take unnecessary risks.
There are a number of inherent hazards associated with exploration, mining and mineral processing that
Established networks, technical capability and commercial experience enables the company to identify and
require ongoing management and assurance to ensure safety performance is in line with the high standards
analyse potential base metal prospects.
Forrestania Nickel Operations (‘FNO’) is the Company’s sole production hub. A significant interruption at FNO
confirm the existence of economic resources.
Exploration success
Exploration is inherently risky and there is no guarantee that expenditure in exploration will deliver the targeted
results. Organic growth is a key strategic pillar, and therefore there is acceptance of the inherent risks
associated with mineral exploration.
The exploration program is focussed on highly prospective tenements within the regions of Forrestania, the
Cosmos nickel operation and West Gawler. It is believed that these regions will provide the best opportunity to
grow near mine resources and establish new mining areas for the Company. Our exploration team apply
advanced exploration techniques and geological knowledge to provide the best and most cost-effective way to
NICKEL MARKETS
Product substitution
Over recent years the nickel market has been subject to volatility driven by weak GDP growth, product
substitution and foreign Government policy measures.
We have been working with offtake partners to establish their appetite for offtake of a high grade concentrate
product that can be utilised within the growing EV battery market which is seeing growing interest.
At times, we do hedge a portion of expected nickel sales and foreign exchange exposures in line with the board
approved treasury management policy.
We remain one of the lowest cost nickel producers and are debt free, which provides a buffer against the
adverse effects of a deterioration in nickel market fundamentals.
Safety & Health
we expect.
contractors.
OPERATIONAL RISKS
Business interruption
The health and wellbeing of personnel undertaking activities on behalf of Western Areas is paramount. A risk
based approach to managing health and safety risks is applied to ensure the appropriate control of hazards.
We continue to demonstrate excellence in safety performance, by working collaboratively with suppliers and
would impact the ability to supply nickel concentrate to customers and therefore curtail revenue.
FNO is located in a well-supported mining district with low risk exposure to natural catastrophes and the
management team and operations personnel are highly experienced professionals with a long track record in
consistently delivering production targets. FNO has limited single point failure exposures and nickel ore is
sourced from two separate mining operations. However, where exposures do exist, business continuity and
emergency response plans are in place.
Infrastructure, equipment and logistics routes are the focus of mature preventative maintenance practices and
a comprehensive insurance program is in place.
Third parties
Western Areas relies on a number of third party entities to support exploration, mining, logistics, design and
project execution activities. A high level of due diligence is exercised prior to awarding contracts, and supply
chains partners are actively managed.
A dedicated commercial team is in place to ensure appropriate commercial measures are applied to protect our
position and encourage positive outcomes for both parties. Additionally, contracting strategies provide
certainty on delivering the defined outcomes, while limiting exposure to non-performance.
Long term partnerships are valued with supply chain partners that have a record of delivering value to the
company.
Project delays
EXPLORATION AND GROWTH RISKS
Delays to the delivery of the Odysseus mine at the Cosmos nickel operation would defer the realisation of
future revenue and increase project costs.
Once in production, the Cosmos nickel operation will become a significant nickel concentrate contributor. A
series of technical studies and financial analysis has been undertaken to develop a robust project plan and
development schedule. The Company have successfully demonstrated the value of the Odysseus mine under
a number of different scenarios, which has led to a positive final investment decision for the project.
33
WESTERN AREAS ANNUAL REPORT 2019 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
the Company.
Links executive remuneration to the creation of shareholder value; and
Remuneration arrangements are equitable, fair and facilitate the deployment of senior management across
Western Areas have been extremely well supported by its shareholders based on the Annual General Meeting
Remuneration levels and other terms of employment are reviewed at least annually by the Remuneration
(‘AGM’) voting results. Given the level of support and acceptance of the remuneration structures and outcomes,
Committee, having regard to performance against goals set each year, qualifications and experience, relevant
there has been no material changes in remuneration practices or incentive programmes during the 2019
market conditions and independent remuneration benchmarking reports.
financial year (‘FY19’).
Key points/changes for FY19:
The Remuneration Report resolution continued to be well supported at the 2018 AGM with 99% of votes cast
in favour of the resolution.
Non-executive Directors’ remuneration remained reduced by 5% for the entirety of FY19. Reduced
Non-executive Directors’ salaries were first implemented in March 2016.
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.
The tranche of Performance Rights, originally issued in FY17, finalised its testing period as at 30 June 2019.
Due to the relative total shareholder return performance hurdle not being met, no performance rights
vested. It is believed this shows the direct link to shareholder outcomes and executive remuneration.
The report is comprised of the following key sections:
Remuneration governance and philosophy
Section A: Who this report covers
Section B:
Section C: Use of remuneration consultants
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 R Yeates
Mr C Readhead
Mr T Netscher
Dr N Streltsova
Mr D Southam
Independent Non-Executive Chairman
Managing Director
Independent Non-Executive Director
Independent Non-Executive Director
Independent Non-Executive Director
Independent Non-Executive Director
Executive Director – resigned 26 November 2018
Other KMP of the Company during the financial year were:
Mr J Belladonna
Mr W Jones
Chief Financial Officer & Company Secretary
General Manager Operations
SECTION B: 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 statutory
disclosures generally to ensure that the Company’s remuneration policy:
Reflects the competitive global market in which we operate;
Retains staff throughout commodity price cycles, which is crucial to ensure achievement of corporate goals
and objectives;
Mr D Louger
Mr J Belladonna
Mr W Jones
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
or paid. There is currently no formal claw back of performance based remuneration paid in prior financial years.
Rewards individuals based on sustainable performance across a range of disciplines that apply to delivering
It is noted that senior Executives have a balanced blend of physical, financial, mineral resource and exploration
results and executing strategies for the Company;
targets included in their KPIs, which limits the potential reward payable based on achieving financial targets
alone to trigger STI payments.
34
SECTION C: USE OF REMUNERATION CONSULTANTS
Western Areas engaged PwC as Remuneration Consultants during FY19 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.
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
Fixed
remuneration
Description
Performance metrics
Inclusive of base pay,
superannuation, allowances and
Nil
median against
with market
salary-sacrifice component
market
positioning
Potential
Changes for
opportunity
FY19
Position at
Reviewed, in line
Cash bonus on achievement of
STI
individual and Company key
performance indicators (KPIs)
KPIs used span across key focus
areas of the business (operations,
40% to 55% of
corporate, resource replenishment
base salary
and exploration)
Relative TSR over a 3-year period
group consisting of 24 companies
50% to 100% of
base salary
N/A
N/A
LTI
Performance Rights
measured against a custom peer
The relative proportion of target FY19 total remuneration packages split between fixed and variable
24%
33%
43%
21%
26%
53%
STI
LTI
Fixed
Remuneration mixes
remuneration is shown below:
100%
75%
50%
25%
0%
22%
39%
39%
WESTERN AREAS ANNUAL REPORT 2019
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
Links executive remuneration to the creation of shareholder value; and
Remuneration arrangements are equitable, fair and facilitate the deployment of senior management across
the Company.
Western Areas have been extremely well supported by its shareholders based on the Annual General Meeting
Remuneration levels and other terms of employment are reviewed at least annually by the Remuneration
(‘AGM’) voting results. Given the level of support and acceptance of the remuneration structures and outcomes,
Committee, having regard to performance against goals set each year, qualifications and experience, relevant
there has been no material changes in remuneration practices or incentive programmes during the 2019
market conditions and independent remuneration benchmarking reports.
financial year (‘FY19’).
Key points/changes for FY19:
in favour of the resolution.
The Remuneration Report resolution continued to be well supported at the 2018 AGM with 99% of votes cast
Non-executive Directors’ remuneration remained reduced by 5% for the entirety of FY19. Reduced
Non-executive Directors’ salaries were first implemented in March 2016.
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.
The tranche of Performance Rights, originally issued in FY17, finalised its testing period as at 30 June 2019.
Due to the relative total shareholder return performance hurdle not being met, no performance rights
vested. It is believed this shows the direct link to shareholder outcomes and executive remuneration.
The report is comprised of the following key sections:
Section A: Who this report covers
Section B:
Remuneration governance and philosophy
Section C: Use of remuneration consultants
Section D:
Section E:
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
The following people acted as directors of the Company during the financial year:
Mr I Macliver
Mr D Lougher
Mr R Yeates
Mr C Readhead
Mr T Netscher
Dr N Streltsova
Mr D Southam
Independent Non-Executive Chairman
Managing Director
Independent Non-Executive Director
Independent Non-Executive Director
Independent Non-Executive Director
Independent Non-Executive Director
Executive Director – resigned 26 November 2018
Other KMP of the Company during the financial year were:
Mr J Belladonna
Mr W Jones
Chief Financial Officer & Company Secretary
General Manager Operations
SECTION B: 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 statutory
disclosures generally to ensure that the Company’s remuneration policy:
Reflects the competitive global market in which we operate;
Retains staff throughout commodity price cycles, which is crucial to ensure achievement of corporate goals
and objectives;
SECTION C: USE OF REMUNERATION CONSULTANTS
Western Areas engaged PwC as Remuneration Consultants during FY19 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.
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
Fixed
remuneration
Description
Performance metrics
Inclusive of base pay,
superannuation, allowances and
salary-sacrifice component
Nil
Potential
opportunity
Changes for
FY19
Position at
median against
market
Reviewed, in line
with market
positioning
STI
Cash bonus on achievement of
individual and Company key
performance indicators (KPIs)
LTI
Performance Rights
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 FY19 total remuneration packages split between fixed and variable
remuneration is shown below:
100%
75%
50%
25%
0%
22%
39%
39%
24%
33%
43%
21%
26%
53%
STI
LTI
Fixed
Mr D Louger
Mr J Belladonna
Mr W Jones
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
or paid. There is currently no formal claw back of performance based remuneration paid in prior financial years.
Rewards individuals based on sustainable performance across a range of disciplines that apply to delivering
It is noted that senior Executives have a balanced blend of physical, financial, mineral resource and exploration
results and executing strategies for the Company;
targets included in their KPIs, which limits the potential reward payable based on achieving financial targets
alone to trigger STI payments.
35
WESTERN AREAS ANNUAL REPORT 2019
DIRECTORS’ REPORT
DIRECTORS’ REPORT
REMUNERATION REPORT (AUDITED) (cont’d)
Long term incentive (‘LTI’)
SECTION D: EXECUTIVE REMUNERATION FRAMEWORK (cont’d)
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.
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.
The full list of KPIs set for Executives in FY19 is below. For each Executive, KPIs relevant to their area of
influence are selected from the list below and assigned each year. The KPIs set for the Managing Director &
CEO are assigned across all areas, to ensure performance and attainment of all Board set goals and objects is
not overly focussed in one area at the detriment of others.
Operations
Overview KPI
Why KPI was set
Group safety performance Based on Lost Time Injury performance in each
quarter.
Motivate and reward the continued focus on
safety standards and procedures.
Group environmental
incidents
Based on a minimum reported environmental
incidences 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 Board
set business plan.
Forrestania nickel in ore
production
Must achieve Board set nickel metal in ore
production target.
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.
Corporate
Earnings
Cashflow
Construction of the Mill
Recovery Enhancement
Project (‘MREP’)
Business development
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.
Achieving on time commissioning and ramp up
of the MREP.
Motivate and reward commissioning Board set
outcomes related to the asset.
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.
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.
36
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 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
respective year.
The quantum of LTI grants made during FY19 was as follows:
Name
Exercise date
Expiry date
LTI quantum
Number of
(% of base
salary)
Performance
Rights issued
Fair Value at
allocation date(i)
Mr D Lougher
Mr J Belladonna
Mr W Jones
100%
75%
50%
277,080
106,050
75,530
$2.73
$2.73
$2.73
Upon receipt of a vesting
notice issued in FY21
As above
As above
30/6/2024
30/6/2024
30/6/2024
(i) $2.73 was the fair value of the performance rights as calculated on 1 July 2018. 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 FY19, this
was $1.29/right as at 20 November 2018.
Performance conditions
comprising the following 24 companies:
Western Areas TSR performance for the FY19 grant will be assessed against a representative peer group
Alumina Ltd
Independence Group NL
Northern Star Resources Ltd
Rex Minerals Ltd
Aurelia Metals Ltd
Medusa Mining Ltd
Beadell Resources Ltd
Metals X Ltd
OM Holdings Ltd
Oz Minerals Ltd
Sandfire Resources Ltd
Syrah Resources Ltd
Bouganville Copper Ltd
Mincor Resources NL
Panoramic Resources Ltd
Talisman Resources Ltd
Cudeco Ltd
Mt Gibson Iron Ltd
Pilbara Minerals Ltd
Westgold Resources Ltd
Hillgrove Resources Ltd
New Century Resources Ltd
Poseidon Nickel Ltd
Zimplats Holdings Ltd
No Performance Rights will vest unless the percentile ranking of the Company’s TSR for the relevant
performance year, as compared to the TSR’s for the peer group companies, is at or above the 50th percentile
and the participant remains employed with the Company as at 30 June 2021.
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% to 100%
No Performance Rights will vest unless they meet a relative TSR measure for the period 1 July 2018 to 30 June
2021 as measured against the peer group and satisfaction of the service based vesting condition which
requires the participant remains employed as at 30 June 2021. Upon satisfaction of the performance and
service condition, the Performance Rights will vest upon receipt of a vesting notice during the 2022 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.
WESTERN AREAS ANNUAL REPORT 2019
DIRECTORS’ REPORT
DIRECTORS’ REPORT
REMUNERATION REPORT (AUDITED) (cont’d)
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 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
respective year.
The quantum of LTI grants made during FY19 was as follows:
Name
LTI quantum
(% of base
salary)
Number of
Performance
Rights issued
Fair Value at
allocation date(i)
Exercise date
Expiry date
Mr D Lougher
Mr J Belladonna
Mr W Jones
100%
75%
50%
277,080
106,050
75,530
$2.73
$2.73
$2.73
Upon receipt of a vesting
notice issued in FY21
As above
As above
30/6/2024
30/6/2024
30/6/2024
(i) $2.73 was the fair value of the performance rights as calculated on 1 July 2018. 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 FY19, this
was $1.29/right as at 20 November 2018.
Performance conditions
Western Areas TSR performance for the FY19 grant will be assessed against a representative peer group
comprising the following 24 companies:
Alumina Ltd
Independence Group NL
Northern Star Resources Ltd
Rex Minerals Ltd
Aurelia Metals Ltd
Medusa Mining Ltd
Beadell Resources Ltd
Metals X Ltd
OM Holdings Ltd
Oz Minerals Ltd
Sandfire Resources Ltd
Syrah Resources Ltd
Bouganville Copper Ltd
Mincor Resources NL
Panoramic Resources Ltd
Talisman Resources Ltd
Cudeco Ltd
Mt Gibson Iron Ltd
Pilbara Minerals Ltd
Westgold Resources Ltd
Forrestania mill recoveries Achieve a set threshold recovery above
Motivate and reward nickel production outcomes
Hillgrove Resources Ltd
New Century Resources Ltd
Poseidon Nickel Ltd
Zimplats Holdings Ltd
No Performance Rights will vest unless the percentile ranking of the Company’s TSR for the relevant
performance year, as compared to the TSR’s for the peer group companies, is at or above the 50th percentile
and the participant remains employed with the Company as at 30 June 2021.
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% to 100%
100% vesting
No Performance Rights will vest unless they meet a relative TSR measure for the period 1 July 2018 to 30 June
2021 as measured against the peer group and satisfaction of the service based vesting condition which
requires the participant remains employed as at 30 June 2021. Upon satisfaction of the performance and
service condition, the Performance Rights will vest upon receipt of a vesting notice during the 2022 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.
37
SECTION D: EXECUTIVE REMUNERATION FRAMEWORK (cont’d)
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.
Fixed remuneration
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.
The full list of KPIs set for Executives in FY19 is below. For each Executive, KPIs relevant to their area of
influence are selected from the list below and assigned each year. The KPIs set for the Managing Director &
CEO are assigned across all areas, to ensure performance and attainment of all Board set goals and objects is
not overly focussed in one area at the detriment of others.
Operations
Overview KPI
Why KPI was set
Group safety performance Based on Lost Time Injury performance in each
Motivate and reward the continued focus on
quarter.
safety standards and procedures.
Group environmental
Based on a minimum reported environmental
Motivate and reward the continued focus on
incidents
incidences by quarter.
best practice environmental management.
Forrestania unit cash cost Focused on average unit cash costs for Flying
Motivate and reward the stringent management
Fox (‘FF’) and Spotted Quoll (‘SQ’) mines per
of production costs outcomes that exceed Board
pound of nickel produced. Performance better
set business plan.
than budget is required.
Forrestania nickel in ore
Must achieve Board set nickel metal in ore
Motivate and reward nickel production outcomes
production
production target.
that exceed Board set business plans.
budget levels for the combined ore feed from
that exceed Board set business plans.
FF and SQ mines.
Forrestania nickel in
Sale of nickel metal in concentrate to exceed a
Motivate and reward nickel sales outcomes that
concentrate sales
set tonnage target.
exceed Board set business plans.
Corporate
Earnings
Project (‘MREP’)
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
budget.
exceed Board set business plans.
Construction of the Mill
Achieving on time commissioning and ramp up
Motivate and reward commissioning Board set
Recovery Enhancement
of the MREP.
outcomes related to the asset.
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 discovery.
exceeding targeted nickel tonnage levels.
New nickel discovery
Discovery of a new nickel deposit.
Motivate and reward economic nickel discovery.
WESTERN AREAS ANNUAL REPORT 2019
DIRECTORS’ REPORT
DIRECTORS’ REPORT
REMUNERATION REPORT (AUDITED) (cont’d)
Long term incentive
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 maintained a class leading performance in safety and environmental management throughout
the year. A consistent high level of operational performance was again achieved during FY19 with all production
and cost guidance attained, as provided and updated for the market during the year. The consistent
operational performance and an improved year-on-year nickel price generated increased after tax net profits
and earnings per share, with an improved operating cashflow produced. The Company commenced
construction of a significant new capital asset, the Odysseus mine at Cosmos, delivering the first phase of the
project on time and on budget. The Odysseus mine is a long life nickel sulphide project that will underpin the
long term profitable nickel production future of Western Areas.
The table below shows the KPIs of the Company over the last 5 years.
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)
2019
2.8
21,483
5.59/lb
$2.13/lb
14,194
5.19
2.0
538M
$1.96
42nd
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
$1.94/lb
35,013
15.1
7.0
753M
3.23
84th
(*) Cash cost of production before smelting and refining, concentrate haulage and royalties.
Short term incentive
Based on the achievements of the Company in FY19, the Remuneration Committee determined that Executives
achieved between 79% and 88% of their target STI opportunity. It is noted that no KMP achieved 100% of their
target STI award.
Performance achieved during the year against the above KPIs has resulted in Executives earning the STI
payments below.
Name
Executive Directors
Mr D Lougher
Executives
Mr J Belladonna
Mr W Jones
Target STI quantum
(% of base salary)
Target FY19 STI
quantum ($)
STI quantum
earned ($)
STI quantum not
earned ($)
$412,412
11%
No fixed term
1 month
55%
55%
40%
416,000
329,250
86,750
212,500
165,000
187,500
133,000
25,000
32,000
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
2019
2018
Average KMP STI payout (%)
82%
82%
2017
83%
2016
56%
2015
90%
2014
87%
2013
29%
38
The performance rights that vested and were converted into shares during FY19 were originally issued in FY16.
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 performance rights granted at that time.
No performance rights are currently expected to vest during FY20. The tranche of Performance Rights,
originally issued in FY17, finalised its testing period as at 30 June 2019. Due to the relative total shareholder
return performance hurdle not being met, no performance rights vested. It is believed this shows the direct link
to shareholder outcomes and executive remuneration.
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 FY19.
Fees
Actual
Financial Year
Board Chair
Board Member
2019
$183,212
$158,784
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 2019 is set out below:
Name & job title
Superannuation
Termination provision
Base
salary
Contract
duration
Notice
period
$756,432
11%
No fixed term
3 months
Financial Officer/
$425,000
11%
No fixed term
3 months
12 months termination payment
and accrued leave entitlements
6 months termination payment
and accrued leave entitlements
6 months termination payment
and accrued leave entitlements
D Lougher,
Managing Director*
J Belladonna, Chief
Company Secretary*
W Jones, General
Manager Operations
*
In the event that there is a takeover of, or merger with, the Company, the Company must pay the Executive a 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.)
All other senior management contracts are as per the Company’s standard 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.
WESTERN AREAS ANNUAL REPORT 2019
DIRECTORS’ REPORT
DIRECTORS’ REPORT
REMUNERATION REPORT (AUDITED) (cont’d)
Long term incentive
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 maintained a class leading performance in safety and environmental management throughout
the year. A consistent high level of operational performance was again achieved during FY19 with all production
and cost guidance attained, as provided and updated for the market during the year. The consistent
operational performance and an improved year-on-year nickel price generated increased after tax net profits
and earnings per share, with an improved operating cashflow produced. The Company commenced
construction of a significant new capital asset, the Odysseus mine at Cosmos, delivering the first phase of the
project on time and on budget. The Odysseus mine is a long life nickel sulphide project that will underpin the
long term profitable nickel production future of Western Areas.
The table below shows the KPIs of the Company over the last 5 years.
2019
2.8
21,483
5.59/lb
$2.13/lb
14,194
5.19
2.0
538M
$1.96
42nd
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
$1.94/lb
35,013
15.1
7.0
753M
3.23
84th
Year Ended 30 June
Lost time injury frequency rate
Nickel tonnes Sold (tns)
Nickel Price – US$
Reported Cash Cost US$/lb (*)
Net Profit/(Loss) after Tax (‘000)
EPS
Dividend Cents/share
Market capitalisation ($)
Closing share price ($)
Short term incentive
target STI award.
payments below.
Name
Executive Directors
Mr D Lougher
Executives
Mr J Belladonna
Mr W Jones
TSR – 3-year peer ranking (% percentile)
(*) Cash cost of production before smelting and refining, concentrate haulage and royalties.
Based on the achievements of the Company in FY19, the Remuneration Committee determined that Executives
achieved between 79% and 88% of their target STI opportunity. It is noted that no KMP achieved 100% of their
Performance achieved during the year against the above KPIs has resulted in Executives earning the STI
Target STI quantum
Target FY19 STI
STI quantum
STI quantum not
(% of base salary)
quantum ($)
earned ($)
earned ($)
55%
55%
40%
416,000
329,250
86,750
212,500
165,000
187,500
133,000
25,000
32,000
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
2019
2018
Average KMP STI payout (%)
82%
82%
2017
83%
2016
56%
2015
90%
2014
87%
2013
29%
The performance rights that vested and were converted into shares during FY19 were originally issued in FY16.
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 performance rights granted at that time.
No performance rights are currently expected to vest during FY20. The tranche of Performance Rights,
originally issued in FY17, finalised its testing period as at 30 June 2019. Due to the relative total shareholder
return performance hurdle not being met, no performance rights vested. It is believed this shows the direct link
to shareholder outcomes and executive remuneration.
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 FY19.
Fees
Actual
Financial Year
Board Chair
Board Member
2019
$183,212
$158,784
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 2019 is set out below:
Name & job title
D Lougher,
Managing Director*
J Belladonna, Chief
Financial Officer/
Company Secretary*
W Jones, General
Manager Operations
Base
salary
Superannuation
Contract
duration
Notice
period
Termination provision
$756,432
11%
No fixed term
3 months
$425,000
11%
No fixed term
3 months
$412,412
11%
No fixed term
1 month
12 months termination payment
and accrued leave entitlements
6 months termination payment
and accrued leave entitlements
6 months termination payment
and accrued leave entitlements
*
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.)
All other senior management contracts are as per the Company’s standard 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.
39
WESTERN AREAS ANNUAL REPORT 2019
DIRECTORS’ REPORT
DIRECTORS’ REPORT
Related Party Transactions
During the year the Company engaged Vintage94 Pty Ltd to provide specialist metallurgical consulting services
to the value of A$16,000. Vintage94 Pty Ltd is a related party of Dr Natalia Streltsova. There were other related
party transactions with KMP during FY19.
Shareholding by Key Management Personnel
The number of shares held by KMP (and their related parties) in the Group during the FY19 is as follows:
Balance at
1 July 2018
Granted as
On Vesting of
Other Changes
Balance at
Remuneration
Performance Rights
During the Year
30 June 2019
I Macliver
D Lougher
R Yeates
T Netscher
C Readhead
N Streltsova
J Belladonna
W Jones
D Southam (*)
36,448
412,430
10,000
12,000
20,000
-
170,000
169,205
64,923
TOTAL
895,006
-
-
-
-
-
-
-
-
-
-
191,840
(171,840)
-
-
-
-
-
72,723
52,294
107,930
424,787
-
-
-
-
-
3,600
6,620
(100,000)
(261,620)
36,448
432,430
10,000
15,600
20,000
6,620
242,723
221,499
72,853
1,058,173
(*) Mr Southam resigned as a Director on 26 November 2018. The shareholding represents Mr Southam’s holding at that date.
Options held by Key Management Personnel
There were no options held by key management at any time during FY19.
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 2019
are outlined below:
Balance at
1 July 2018
Number
granted as
Remuneration
Number
vested
Number
expired/
lapsed
Balance at
30 June 2019
Portion
vested
Portion
unvested
D Lougher
1,095,570
277,080
(191,840)
(107,910)
1,072,900
J Belladonna
415,310
106,050
(72,723)
(40,907)
407,730
W Jones
298,650
75,530
(52,294)
(29,416)
292,470
TOTAL
1,809,530
458,660
(316,857)
(178,233)
1,773,100
(%)
0%
0%
0%
0%
(%)
100%
100%
100%
100%
Areas LTI plan. The rights were granted on 30 November 2018 and have a zero exercise price.
END OF AUDITED REMUNERATION REPORT.
REMUNERATION REPORT (AUDITED) (cont’d)
SECTION H: DETAILS OF REMUNERATION
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 (iii)
Non-executive Directors
I Macliver
FY2018
165,056
160,713
C Readhead
143,049
FY2018
T Netscher
FY2018
R Yeates
FY2018
139,284
158,784
154,606
143,049
139,284
N Streltsova
143,049
FY2018
139,284
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
18,156
17,678
15,735
15,322
-
-
15,735
15,322
15,735
15,322
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
TOTAL
183,212
178,391
158,784
154,606
158,784
154,606
158,784
154,606
158,784
154,606
Total Non-Executive Remuneration FY2019
818,348
Total Non-Executive Remuneration FY2018
796,815
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
756,432
329,250
132,248
49,913
25,000
18,897
749,226
2,060,966
FY2018
716,040
290,000
57,764
48,748
25,000
18,346
890,042
2,045,940
D Southam (iv)
331,007
-
196,047
38,787
FY2018
537,142
253,000
38,086
50,663
14,583
25,000
-
-
580,424
13,763
500,750
1,418,404
Executive Officers
J Belladonna
399,032
187,500
22,967
47,167
25,000
10,617
284,313
976,596
FY2018
W Jones
FY2018
361,920
170,000
18,807
41,624
25,000
9,271
337,400
964,022
All Performance Rights issued during FY19 were allotted in accordance with the shareholder approved Western
412,412
133,000
22,300
37,336
25,000
10,303
204,239
844,590
390,390
118,000
19,843
37,091
25,000
10,002
225,669
825,995
Total Executive Remuneration FY2019 4,462,576
Total Executive Remuneration FY2018 5,254,361
(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 FY19. No Options were granted or remain outstanding at the
end of the financial year.
(iv) Mr Southam resigned as a Director on 26 November 2018 and ceased working with the Company on 31 January 2019.
40
WESTERN AREAS ANNUAL REPORT 2019
DIRECTORS’ REPORT
DIRECTORS’ REPORT
REMUNERATION REPORT (AUDITED) (cont’d)
SECTION H: DETAILS OF REMUNERATION
Short Term Employee Benefits
Post
Employment
Long Term Employee
Benefits
(accounting valuation)
Base
Salary
STI
Payments/
Bonuses (i)
Allowances
Non-
Super-
& Other (ii)
Monetary
annuation
Long
Share Based
Service
Payments
Leave
LTI (iii)
Non-executive Directors
C Readhead
143,049
I Macliver
FY2018
FY2018
T Netscher
FY2018
R Yeates
FY2018
165,056
160,713
139,284
158,784
154,606
143,049
139,284
N Streltsova
143,049
FY2018
139,284
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
18,156
17,678
15,735
15,322
-
-
15,735
15,322
15,735
15,322
-
-
-
-
-
-
-
-
-
-
TOTAL
183,212
178,391
158,784
154,606
158,784
154,606
158,784
154,606
158,784
154,606
-
-
-
-
-
-
-
-
-
-
Total Non-Executive Remuneration FY2019
818,348
Total Non-Executive Remuneration FY2018
796,815
Post
Employment
Long Term Employee
Benefits
(accounting valuation)
TOTAL
Short Term Employee Benefits
Base
Salary
STI
Payments/
Bonuses (i)
Allowances
Non-
Super-
& Other (ii)
Monetary
annuation
Long
Share Based
Service
Payments
Leave
LTI (ii)
Executive Directors
Executive Officers
FY2018
W Jones
FY2018
D Lougher
756,432
329,250
132,248
49,913
25,000
18,897
749,226
2,060,966
FY2018
716,040
290,000
57,764
48,748
25,000
18,346
890,042
2,045,940
D Southam (iv)
331,007
-
196,047
38,787
-
-
580,424
FY2018
537,142
253,000
38,086
50,663
13,763
500,750
1,418,404
14,583
25,000
J Belladonna
399,032
187,500
22,967
47,167
25,000
10,617
284,313
976,596
412,412
133,000
22,300
37,336
25,000
10,303
204,239
844,590
390,390
118,000
19,843
37,091
25,000
10,002
225,669
825,995
Total Executive Remuneration FY2019 4,462,576
Total Executive Remuneration FY2018 5,254,361
(i)
Includes all paid and/or accrued bonuses for the applicable year.
(ii) Includes over-cap super.
end of the financial year.
(iii) LTI refers to the value of Performance Rights that were expensed during FY19. No Options were granted or remain outstanding at the
(iv) Mr Southam resigned as a Director on 26 November 2018 and ceased working with the Company on 31 January 2019.
Related Party Transactions
During the year the Company engaged Vintage94 Pty Ltd to provide specialist metallurgical consulting services
to the value of A$16,000. Vintage94 Pty Ltd is a related party of Dr Natalia Streltsova. There were other related
party transactions with KMP during FY19.
Shareholding by Key Management Personnel
The number of shares held by KMP (and their related parties) in the Group during the FY19 is as follows:
Balance at
1 July 2018
Granted as
Remuneration
On Vesting of
Performance Rights
Other Changes
During the Year
Balance at
30 June 2019
I Macliver
D Lougher
R Yeates
T Netscher
C Readhead
N Streltsova
J Belladonna
W Jones
D Southam (*)
36,448
412,430
10,000
12,000
20,000
-
170,000
169,205
64,923
TOTAL
895,006
-
-
-
-
-
-
-
-
-
-
-
191,840
-
-
-
-
72,723
52,294
107,930
424,787
-
(171,840)
-
3,600
-
6,620
-
-
(100,000)
(261,620)
36,448
432,430
10,000
15,600
20,000
6,620
242,723
221,499
72,853
1,058,173
(*) Mr Southam resigned as a Director on 26 November 2018. The shareholding represents Mr Southam’s holding at that date.
Options held by Key Management Personnel
There were no options held by key management at any time during FY19.
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 2019
are outlined below:
Balance at
1 July 2018
Number
granted as
Remuneration
Number
vested
Number
expired/
lapsed
Balance at
30 June 2019
Portion
vested
(%)
Portion
unvested
(%)
D Lougher
1,095,570
277,080
(191,840)
(107,910)
1,072,900
J Belladonna
415,310
106,050
(72,723)
(40,907)
407,730
W Jones
298,650
75,530
(52,294)
(29,416)
292,470
TOTAL
1,809,530
458,660
(316,857)
(178,233)
1,773,100
0%
0%
0%
0%
100%
100%
100%
100%
361,920
170,000
18,807
41,624
25,000
9,271
337,400
964,022
All Performance Rights issued during FY19 were allotted in accordance with the shareholder approved Western
Areas LTI plan. The rights were granted on 30 November 2018 and have a zero exercise price.
END OF AUDITED REMUNERATION REPORT.
41
WESTERN AREAS ANNUAL REPORT 2019
DIRECTORS’ REPORT
AUDITOR’S INDEPENDENCE DECLARATION
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
No significant changes in the consolidated group’s state of affairs occurred during the financial year.
FUTURE DEVELOPMENTS
Disclosure of information regarding likely developments in the operations of the consolidated entity in future
financial years and the expected results of those operations is likely to result in unreasonable prejudice to the
consolidated entity. Accordingly, this information has not been disclosed in this report.
ENVIRONMENTAL REGULATION AND PERFORMANCE
The Consolidated Entity has conducted exploration and development activities on mineral tenements. The
right to conduct these activities is granted subject to State and Federal environmental legislation and
regulations, tenement conditions and Mining Proposal commitments. The Consolidated Entity aims to ensure
that a high standard of environmental management is achieved and, as a minimum, to comply with all relevant
legislation and regulations, tenement conditions and Mining Proposal commitments. The Company has
achieved a high level of compliance with all environmental conditions set for its projects and actively strives for
continual improvement.
AUDITOR’S INDEPENDENCE DECLARATION
The Auditor’s Independence Declaration to the Directors of Western Areas Ltd on page 43 forms part of the
Directors’ Report for the year ended 30 June 2019.
NON-AUDIT SERVICES
The entity’s auditor, Crowe Horwath, provided non-audit services, related to renewable energy lodgements,
amounting to $4,750 during FY19 (FY18: $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.
ROUNDING OF 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.
Signed in accordance with a resolution of the Board of Directors.
D Lougher
Managing Director & Chief Executive Officer
Perth, 20 August 2019
42
WESTERN AREAS ANNUAL REPORT 2019
DIRECTORS’ REPORT
AUDITOR’S INDEPENDENCE DECLARATION
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
No significant changes in the consolidated group’s state of affairs occurred during the financial year.
FUTURE DEVELOPMENTS
Disclosure of information regarding likely developments in the operations of the consolidated entity in future
financial years and the expected results of those operations is likely to result in unreasonable prejudice to the
consolidated entity. Accordingly, this information has not been disclosed in this report.
Crowe Perth
ABN 96 844 819 235
Level 5 45 St Georges Terrace
Perth WA 6000
PO Box P1213
Perth WA 6844
Australia
Main +61 (8) 9481 1448
Fax +61 (8) 9481 0152
www.crowe.com.au
ENVIRONMENTAL REGULATION AND PERFORMANCE
AUDITOR’S INDEPENDENCE DECLARATION
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.
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 2019, I declare that, to the best of my
knowledge and belief, there have been:
(a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
(b) no contraventions of any applicable code of professional conduct in relation to the audit.
AUDITOR’S INDEPENDENCE DECLARATION
The Auditor’s Independence Declaration to the Directors of Western Areas Ltd on page 43 forms part of the
Directors’ Report for the year ended 30 June 2019.
Crowe Perth
NON-AUDIT SERVICES
The entity’s auditor, Crowe Horwath, provided non-audit services, related to renewable energy lodgements,
amounting to $4,750 during FY19 (FY18: $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.
ROUNDING OF 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.
Signed in accordance with a resolution of the Board of Directors.
D Lougher
Managing Director & Chief Executive Officer
Perth, 20 August 2019
Sean McGurk
Partner
Signed at Perth, 20 August 2019
The title ‘Partner’ conveys that the person is a senior member within their respective division, and is among the group of persons who hold an
equity interest (shareholder) in its parent entity, Findex Group Limited. The only professional service offering which is conducted by a partnership
is the Crowe Australasia external audit division. All other professional services offered by Findex Group Limited are conducted by a privately
owned organisation and/or its subsidiaries.
Findex (Aust) Pty Ltd, trading as Crowe Australasia is a member of Crowe Global, a Swiss verein. Each member firm of Crowe Global is a
separate and independent legal entity. Findex (Aust) Pty Ltd and its affiliates are not responsible or liable for any acts or omissions of Crowe
Global or any other member of Crowe Global. Crowe Global does not render any professional services and does not have an ownership or
partnership interest in Findex (Aust) Pty Ltd. Services are provided by Crowe Perth, an affiliate of Findex (Aust) Pty Ltd. Liability limited by a
scheme approved under Professional Standards Legislation. Liability limited other than for acts or omissions of financial services licensees.
© 2019 Findex (Aust) Pty Ltd
43
WESTERN AREAS ANNUAL REPORT 2019
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AND OTHER COMPREHENSIVE INCOME
YEAR ENDED 30 JUNE 2019
Sales
Operating Costs
Depreciation and Amortisation
Other income
Finance costs
Employee benefit expense
Foreign exchange gain
Share based payments
Administration expenses
Care and maintenance expense
Realised derivative gain/(loss)
Profit before income tax
Income tax expense
Profit for the year
Consolidated Entity
2019
$’000
2018
$’000
Notes
268,716
248,268
(178,755)
(146,408)
(60,172)
(64,872)
5,148
(1,562)
(10,272)
382
(2,286)
(4,599)
(1,257)
3,674
19,017
(4,823)
14,194
3,494
(1,934)
(11,342)
1,143
(3,598)
(4,286)
(1,750)
(1,552)
17,163
(5,326)
11,837
4
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, net of tax
1,616
(2,012)
Changes in financial assets at fair value through other
comprehensive income, net of tax
Total comprehensive income for the year
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
The accompanying notes form part of these financial statements.
9
18
18
(118)
21,911
15,692
31,736
5.19
5.12
4.34
4.27
44
Financial assets at fair value through other comprehensive income
33,725
33,307
AS AT 30 JUNE 2019
Consolidated Entity
2019
$’000
144,261
22,888
22,483
39
2018
$’000
151,643
22,209
34,805
-
189,671
208,657
131,394
89,003
506
506
110,444
97,784
130,790
142,673
406,859
363,273
596,530
571,930
48,974
41,396
53,449
47,769
399
4,061
15
495
25,947
15,062
41,504
94,953
267
4,514
1,592
445
24,408
10,496
35,349
83,118
501,577
488,812
442,963
442,963
48,574
10,040
44,533
1,316
501,577
488,812
Notes
19(b)
5
6
16
8
10
11
9
13
14
15
16
14
15
12
17
30
Derivative financial instruments through other comprehensive income
Current Assets
Cash and cash equivalents
Trade and other receivables
Inventories
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
Total Current Liabilities
Non-Current Liabilities
Borrowings
Provisions
Deferred tax
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.
Derivative financial instruments through other comprehensive income
WESTERN AREAS ANNUAL REPORT 2019
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
AND OTHER COMPREHENSIVE INCOME
YEAR ENDED 30 JUNE 2019
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2019
Depreciation and Amortisation
Sales
Operating Costs
Other income
Finance costs
Employee benefit expense
Foreign exchange gain
Share based payments
Administration expenses
Care and maintenance expense
Realised derivative gain/(loss)
Profit before income tax
Income tax expense
Profit for the year
Other comprehensive income, net of tax
Items that may be reclassified to profit or loss
Changes in financial assets at fair value through other
comprehensive income, net of tax
Total comprehensive income for the year
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
The accompanying notes form part of these financial statements.
Consolidated Entity
2019
$’000
2018
$’000
Notes
268,716
248,268
(178,755)
(146,408)
(60,172)
(64,872)
4
2
4
29
7
9
18
18
5,148
(1,562)
(10,272)
382
(2,286)
(4,599)
(1,257)
3,674
19,017
(4,823)
14,194
3,494
(1,934)
(11,342)
1,143
(3,598)
(4,286)
(1,750)
(1,552)
17,163
(5,326)
11,837
(118)
21,911
15,692
31,736
5.19
5.12
4.34
4.27
Changes in fair value of hedging instruments, net of tax
1,616
(2,012)
Current Assets
Cash and cash equivalents
Trade and other receivables
Inventories
Derivative financial instruments through other comprehensive income
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 through other comprehensive income
Total Current Liabilities
Non-Current Liabilities
Borrowings
Provisions
Deferred tax
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.
Notes
19(b)
5
6
16
8
10
11
9
13
14
15
16
14
15
12
17
30
Consolidated Entity
2019
$’000
144,261
22,888
22,483
39
2018
$’000
151,643
22,209
34,805
-
189,671
208,657
131,394
89,003
506
506
110,444
97,784
130,790
142,673
33,725
33,307
406,859
363,273
596,530
571,930
48,974
41,396
399
4,061
15
267
4,514
1,592
53,449
47,769
495
25,947
15,062
41,504
94,953
445
24,408
10,496
35,349
83,118
501,577
488,812
442,963
442,963
48,574
10,040
44,533
1,316
501,577
488,812
45
WESTERN AREAS ANNUAL REPORT 2019
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
YEAR ENDED 30 JUNE 2019
CONSOLIDATED STATEMENT OF CASH FLOWS
YEAR ENDED 30 JUNE 2019
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 2017
459,184
(16,221)
27,677
420
(6,650)
(5,066)
459,344
Comprehensive income
Profit for the year
Other comprehensive loss for the year,
net of tax
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
Dividends paid
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
11,837
11,837
(2,012)
21,911
-
19,899
(2,012)
21,911
11,837
31,736
3,598
(411)
-
-
-
-
-
-
-
-
-
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
Comprehensive income
Profit for the year
Other comprehensive profit for the year,
net of tax
Total comprehensive profit for the year
Transactions with owners in their capacity
as owner, and other transfers
Share based payments expense
Deferred tax liability on performance rights
Dividends paid
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
14,194
14,194
1,616
1,616
(118)
(118)
-
1,498
14,194
15,692
2,286
257
-
-
-
-
-
-
-
-
-
2,286
257
(5,470)
(5,470)
Total equity at 30 June 2019
459,184
(16,221)
33,407
24
15,143
10,040
501,577
The accompanying notes form part of these financial statements.
Net cash inflow from operating activities
19(a)
98,297
76,966
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Interest received
Royalties paid
Other receipts
Interest paid
Income tax paid
Realisation on settlement of derivatives
Cash flows from investing activities
Payments for property, plant and equipment
Proceeds from sale of property, plant and equipment
Investments in listed companies
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
2019
$’000
2018
$’000
Notes
271,381
237,242
(169,566)
(154,007)
2,921
(11,416)
1,021
(42)
4,055
(57)
2,480
(9,194)
880
(25)
(410)
-
(49,951)
(22,544)
-
(536)
4
-
(32,470)
(26,268)
(16,881)
(10,972)
(99,838)
(59,780)
(321)
(50)
(282)
(100)
(5,470)
(5,455)
(5,841)
(5,837)
(7,382)
11,349
Net (decrease)/increase in cash and cash equivalents held
Cash and cash equivalents as at the beginning of the financial year
151,643
140,294
Cash and cash equivalents at end of financial year
19(b)
144,261
151,643
The accompanying notes form part of these financial statements.
46
WESTERN AREAS ANNUAL REPORT 2019
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
YEAR ENDED 30 JUNE 2019
CONSOLIDATED STATEMENT OF CASH FLOWS
YEAR ENDED 30 JUNE 2019
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 2017
459,184
(16,221)
27,677
420
(6,650)
(5,066)
459,344
Total comprehensive profit for the year
(2,012)
21,911
11,837
31,736
Total equity at 30 June 2018
459,184
(16,221)
30,864
(1,592)
15,261
1,316
488,812
Comprehensive income
Profit for the year
Other comprehensive loss for the year,
net of tax
Transactions with owners in their capacity
as owner, and other transfers
Share based payments expense
Deferred tax asset on performance rights
Dividends paid
Comprehensive income
Profit for the year
Other comprehensive profit for the year,
net of tax
Total comprehensive profit for the year
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)
-
2,286
257
-
-
-
11,837
11,837
(2,012)
21,911
-
19,899
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3,598
(411)
(5,455)
(5,455)
-
-
2,286
257
(5,470)
(5,470)
-
14,194
14,194
1,616
1,616
(118)
(118)
-
1,498
14,194
15,692
Total equity at 30 June 2019
459,184
(16,221)
33,407
24
15,143
10,040
501,577
The accompanying notes form part of these financial statements.
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Interest received
Royalties paid
Other receipts
Interest paid
Realisation on settlement of derivatives
Income tax paid
Consolidated Entity
2019
$’000
2018
$’000
Notes
271,381
237,242
(169,566)
(154,007)
2,921
(11,416)
1,021
(42)
4,055
(57)
2,480
(9,194)
880
(25)
(410)
-
Net cash inflow from operating activities
19(a)
98,297
76,966
Cash flows from investing activities
Payments for property, plant and equipment
Proceeds from sale of property, plant and equipment
Investments in listed companies
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
Net (decrease)/increase in cash and cash equivalents held
(49,951)
(22,544)
-
(536)
4
-
(32,470)
(26,268)
(16,881)
(10,972)
(99,838)
(59,780)
(321)
(50)
(282)
(100)
(5,470)
(5,455)
(5,841)
(5,837)
(7,382)
11,349
Cash and cash equivalents as at the beginning of the financial year
151,643
140,294
Cash and cash equivalents at end of financial year
19(b)
144,261
151,643
The accompanying notes form part of these financial statements.
47
WESTERN AREAS ANNUAL REPORT 2019
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
NOTES TO THE FINANCIAL STATEMENTS
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
Export Sales
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 20 August 2019.
BASIS OF PREPARATION
These general purpose financial statements have been prepared in accordance with Australian Accounting
Standards, Australian Accounting Interpretations, other authoritative pronouncements of the Australian
Accounting Standards Board (‘AASB’) and the Corporations Act 2001.
Australian Accounting Standards set out accounting policies that the AASB has concluded would result in a
financial report containing relevant and reliable information about transactions, events and conditions.
Compliance with Australian Accounting Standards ensures that the financial statements and notes also comply
with International Financial Reporting Standards. Material accounting policies adopted in the preparation of this
financial report are presented below and have been consistently applied unless stated otherwise.
Except for cash flow information, the financial statements have been prepared on an accruals basis and are
based on historical costs, modified, where applicable, by the measurement at fair value of selected non-current
assets, financial assets and financial liabilities.
ADOPTION OF NEW AND REVISED ACCOUNTING STANDARDS
AASB 15 Revenue from Contracts with Customers
The Group has adopted AASB 15 from 1 July 2018. The standard provides a single standard for revenue
ownership interests.
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.
Domestic sales
Revenue is recognised when the customer obtains control of the concentrates as this is when the consolidated
entity has satisfied its performance obligations under the contract.
48
Revenue for export sales is 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. 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. 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 has had no material impact on the way the Group accounts for its
revenue.
a) PRINCIPLES OF CONSOLIDATION
The Group financial statements consolidate those of the Western Areas Limited (‘company’ or ‘parent’) and
all of its subsidiaries as of 30 June 2019. 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
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.
WESTERN AREAS ANNUAL REPORT 2019 NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
NOTES TO THE FINANCIAL STATEMENTS
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
Export Sales
Revenue for export sales is 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. 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. 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 has had no material impact on the way the Group accounts for its
revenue.
a) PRINCIPLES OF CONSOLIDATION
The Group financial statements consolidate those of the Western Areas Limited (‘company’ or ‘parent’) and
all of its subsidiaries as of 30 June 2019. 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
The Group has adopted AASB 15 from 1 July 2018. The standard provides a single standard for revenue
ownership interests.
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.
49
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 20 August 2019.
BASIS OF PREPARATION
These general purpose financial statements have been prepared in accordance with Australian Accounting
Standards, Australian Accounting Interpretations, other authoritative pronouncements of the Australian
Accounting Standards Board (‘AASB’) and the Corporations Act 2001.
Australian Accounting Standards set out accounting policies that the AASB has concluded would result in a
financial report containing relevant and reliable information about transactions, events and conditions.
Compliance with Australian Accounting Standards ensures that the financial statements and notes also comply
with International Financial Reporting Standards. Material accounting policies adopted in the preparation of this
financial report are presented below and have been consistently applied unless stated otherwise.
Except for cash flow information, the financial statements have been prepared on an accruals basis and are
based on historical costs, modified, where applicable, by the measurement at fair value of selected non-current
assets, financial assets and financial liabilities.
ADOPTION OF NEW AND REVISED ACCOUNTING STANDARDS
AASB 15 Revenue from Contracts with Customers
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.
Domestic sales
Revenue is recognised when the customer obtains control of the concentrates as this is when the consolidated
entity has satisfied its performance obligations under the contract.
WESTERN AREAS ANNUAL REPORT 2019 NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
f) FINANCE COSTS
c) SEGMENT REPORTING
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.
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.
g)
INVENTORIES
d) FOREIGN CURRENCY TRANSACTIONS AND BALANCES
The financial statements are presented in Australian dollars, which is Western Areas Ltd’s functional and
presentation currency.
Foreign currency transactions
Foreign currency transactions are translated into Australian dollars using the exchange rates prevailing at
the dates of the 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.
The foreign currency reserve is recognised in profit or loss when the foreign operation or net investment is
disposed of.
e) REVENUE RECOGNITION
The consolidated entity recognises revenue as follows:
Revenue from contracts with customers
Revenue is recognised at an amount that reflects the consideration to which the consolidated entity is
expected to be entitled in exchange for transferring goods or services to a customer. For each contract
with a customer, the consolidated entity: identifies the contract with a customer; identifies the
performance obligations in the contract; determines the transaction price which takes into account
estimates of variable consideration and the time value of money; allocates the transaction price to the
separate performance obligations on the basis of the relative stand-alone selling price of each distinct
good or service to be delivered; and recognises revenue when or as each performance obligation is
satisfied in a manner that depicts the transfer to the customer of the goods or services promised.
Variable consideration within the transaction price, if any, reflects concessions provided to the customer
such as discounts, rebates and refunds, any potential bonuses receivable from the customer and any
other contingent events. Such estimates are determined using either the ‘expected value’ or ‘most likely
amount’ method. The measurement of variable consideration is subject to a constraining principle
whereby revenue will only be recognised to the extent that it is highly probable that a significant reversal
in the amount of cumulative revenue recognised will not occur. The measurement constraint continues
until the uncertainty associated with the variable consideration is subsequently resolved. Amounts
received that are subject to the constraining principle are recognised as a refund liability.
Sale of nickel and other metals
Sale of nickel and other metals is recognised when the customer obtains control of the concentrates as
this is when the consolidated entity has satisfied its performance obligations under a valid sales contract.
Amounts disclosed as revenue are net of sales returns and trade discounts.
Interest
Interest revenue is recognised on a proportional basis taking into account the interest rates applicable to
Class of Fixed Asset
Depreciation Rate
the financial assets.
Other revenue
Other revenue is recognised when it is received or when the right to receive payment is established.
Property
2% to 20%
Plant and equipment
2% to 33% or units of production over life of mine
Motor vehicles
20%
Furniture and fittings
6% to 27%
50
Inventories are measured at the lower of cost and net realisable value. Costs, including an appropriate
portion of fixed and variable overhead expenses, are assigned to inventories on hand by the method most
appropriate to each class of inventory with the majority being valued on an average cost basis. Net
realisable value represents the estimated selling price less all estimated costs of completion and costs to
be incurred in marketing, selling and distribution.
The cost of mining stocks includes direct materials, direct labour, transportation costs and variable and
fixed overhead costs relating to mining activities.
The cost of consumables and spare parts includes cost of materials and transportation costs.
h) PROPERTY, PLANT AND EQUIPMENT
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).
The carrying amount of plant and equipment is reviewed annually by directors to ensure it is not in excess of
the recoverable amount from these assets. The recoverable amount is assessed on the basis of the
expected net cash flows that will be received from the asset’s employment and subsequent disposal. The
expected net cash flows have been discounted to their present values in determining recoverable amounts.
The cost of fixed assets constructed within the consolidated group includes the cost of materials, direct
labour, borrowing costs and an appropriate proportion of fixed and variable overheads. Subsequent costs
are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when
it is probable that future economic benefits associated with the item will flow to the Group and the cost of
the item can be measured reliably. All other repairs and maintenance are recognised as expenses in profit
or loss during the financial period in which they are incurred.
Depreciation
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:
WESTERN AREAS ANNUAL REPORT 2019
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
f) FINANCE COSTS
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.
d) FOREIGN CURRENCY TRANSACTIONS AND BALANCES
The financial statements are presented in Australian dollars, which is Western Areas Ltd’s functional and
presentation currency.
Foreign currency transactions
Foreign currency transactions are translated into Australian dollars using the exchange rates prevailing at
the dates of the 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.
The foreign currency reserve is recognised in profit or loss when the foreign operation or net investment is
disposed of.
e) REVENUE RECOGNITION
The consolidated entity recognises revenue as follows:
Revenue from contracts with customers
Revenue is recognised at an amount that reflects the consideration to which the consolidated entity is
expected to be entitled in exchange for transferring goods or services to a customer. For each contract
with a customer, the consolidated entity: identifies the contract with a customer; identifies the
performance obligations in the contract; determines the transaction price which takes into account
estimates of variable consideration and the time value of money; allocates the transaction price to the
separate performance obligations on the basis of the relative stand-alone selling price of each distinct
good or service to be delivered; and recognises revenue when or as each performance obligation is
satisfied in a manner that depicts the transfer to the customer of the goods or services promised.
Variable consideration within the transaction price, if any, reflects concessions provided to the customer
such as discounts, rebates and refunds, any potential bonuses receivable from the customer and any
other contingent events. Such estimates are determined using either the ‘expected value’ or ‘most likely
amount’ method. The measurement of variable consideration is subject to a constraining principle
whereby revenue will only be recognised to the extent that it is highly probable that a significant reversal
in the amount of cumulative revenue recognised will not occur. The measurement constraint continues
until the uncertainty associated with the variable consideration is subsequently resolved. Amounts
received that are subject to the constraining principle are recognised as a refund liability.
Sale of nickel and other metals
Sale of nickel and other metals is recognised when the customer obtains control of the concentrates as
this is when the consolidated entity has satisfied its performance obligations under a valid sales contract.
Amounts disclosed as revenue are net of sales returns and trade discounts.
Interest
the financial assets.
Other revenue
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.
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
fixed overhead costs relating to mining activities.
The cost of consumables and spare parts includes cost of materials and transportation costs.
h) PROPERTY, PLANT AND EQUIPMENT
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).
The carrying amount of plant and equipment is reviewed annually by directors to ensure it is not in excess of
the recoverable amount from these assets. The recoverable amount is assessed on the basis of the
expected net cash flows that will be received from the asset’s employment and subsequent disposal. The
expected net cash flows have been discounted to their present values in determining recoverable amounts.
The cost of fixed assets constructed within the consolidated group includes the cost of materials, direct
labour, borrowing costs and an appropriate proportion of fixed and variable overheads. Subsequent costs
are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when
it is probable that future economic benefits associated with the item will flow to the Group and the cost of
the item can be measured reliably. All other repairs and maintenance are recognised as expenses in profit
or loss during the financial period in which they are incurred.
Depreciation
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:
Interest revenue is recognised on a proportional basis taking into account the interest rates applicable to
Class of Fixed Asset
Depreciation Rate
Property
2% to 20%
Plant and equipment
2% to 33% or units of production over life of mine
Motor vehicles
20%
Furniture and fittings
6% to 27%
51
WESTERN AREAS ANNUAL REPORT 2019
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
k)
INCOME TAX
h) PROPERTY, PLANT AND EQUIPMENT (cont’d)
Depreciation (cont’d)
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
substantively enacted, except for:
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
or where activities in the area have not yet reached a stage that permits reasonable assessment of the
existence of economically recoverable reserves and active and significant operation in relation to the area
of interest are continuing.
Accumulated costs in relation to an abandoned area are written off in full against profit or loss in the year
in which the decision to abandon the area is made.
When production commences, the accumulated costs for the relevant area of interest are 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.
j) MINE PROPERTIES
Development expenditure incurred by or on behalf of the consolidated entity is accumulated separately
for each area of interest in which economically recoverable resources have been identified. Such
expenditure comprises costs directly attributable to the construction of a mine, the related infrastructure
and expenditure transferred from the capitalised exploration and evaluation expenditure phase.
Amortisation is charged using the units-of production method, with separate calculations being made for
each area of interest. The units-of-production basis results in an amortisation charge proportional to the
depletion of proved and probable nickel reserves.
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.
52
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
When the deferred income tax asset or liability arises from the initial recognition of goodwill or an asset
or liability in a transaction that is not a business combination and that, at the time of the transaction,
affects neither the accounting nor taxable profits; or
When the taxable temporary difference is associated with interests in subsidiaries, associates or joint
ventures, and the timing of the reversal can be controlled and it is probable that the temporary
difference will not reverse in the foreseeable future.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is
probable that future taxable amounts will be available to utilise those temporary differences and losses.
The carrying amount of recognised and unrecognised deferred tax assets are reviewed each reporting
date. Deferred tax assets recognised are reduced to the extent that it is no longer probable that future
taxable profits will be available for the carrying amount to be recovered. Previously unrecognised deferred
tax assets are recognised to the extent that it is probable that there are future taxable profits available to
recover the asset.
Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset current
tax assets against current tax liabilities and deferred tax assets against deferred tax liabilities; and they
relate to the same taxable authority on either the same taxable entity or different taxable entity's which
intend to settle simultaneously.
Western Areas 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.
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
investing and financing activities, which are disclosed as operating cash flows.
WESTERN AREAS ANNUAL REPORT 2019 h) PROPERTY, PLANT AND EQUIPMENT (cont’d)
Depreciation (cont’d)
reporting period.
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each
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
or where activities in the area have not yet reached a stage that permits reasonable assessment of the
existence of economically recoverable reserves and active and significant operation in relation to the area
of interest are continuing.
Accumulated costs in relation to an abandoned area are written off in full against profit or loss in the year
in which the decision to abandon the area is made.
When production commences, the accumulated costs for the relevant area of interest are 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.
j) MINE PROPERTIES
Development expenditure incurred by or on behalf of the consolidated entity is accumulated separately
for each area of interest in which economically recoverable resources have been identified. Such
expenditure comprises costs directly attributable to the construction of a mine, the related infrastructure
and expenditure transferred from the capitalised exploration and evaluation expenditure phase.
Amortisation is charged using the units-of production method, with separate calculations being made for
each area of interest. The units-of-production basis results in an amortisation charge proportional to the
depletion of proved and probable nickel reserves.
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.
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
k)
INCOME TAX
An asset’s carrying amount is written down immediately to its recoverable amount if the carrying amount
substantively enacted, except for:
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
When the deferred income tax asset or liability arises from the initial recognition of goodwill or an asset
or liability in a transaction that is not a business combination and that, at the time of the transaction,
affects neither the accounting nor taxable profits; or
When the taxable temporary difference is associated with interests in subsidiaries, associates or joint
ventures, and the timing of the reversal can be controlled and it is probable that the temporary
difference will not reverse in the foreseeable future.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is
probable that future taxable amounts will be available to utilise those temporary differences and losses.
The carrying amount of recognised and unrecognised deferred tax assets are reviewed each reporting
date. Deferred tax assets recognised are reduced to the extent that it is no longer probable that future
taxable profits will be available for the carrying amount to be recovered. Previously unrecognised deferred
tax assets are recognised to the extent that it is probable that there are future taxable profits available to
recover the asset.
Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset current
tax assets against current tax liabilities and deferred tax assets against deferred tax liabilities; and they
relate to the same taxable authority on either the same taxable entity or different taxable entity's which
intend to settle simultaneously.
Western Areas 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.
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
investing and financing activities, which are disclosed as operating cash flows.
53
WESTERN AREAS ANNUAL REPORT 2019 NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
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
as described in the preceding paragraph.
The liabilities for long service leave and annual leave that are not expected to be settled wholly within
12 months after the end of the period in which the employees render the related service are recognised as
non-current liabilities and are therefore measured at the present value of expected future payments to be
made in respect of services provided by employees up to the end of the reporting period. Consideration is
given to expected future wage and salary levels, experience of employee departures and periods of
service. Expected future payments are discounted using market yields at the end of the reporting period
of government bonds with terms and currencies that match, as closely as possible, the estimated future
cash outflows.
The obligations are presented as current liabilities in the balance sheet if the entity does not have an
unconditional right to defer settlement for at least twelve months after the reporting period, regardless of
when the actual settlement is expected to occur.
Defined contribution superannuation expense
Contributions to defined contribution superannuation plans are expensed in the period in which they are
incurred.
Share-based payments
The consolidated entity has provided benefits to its Key Management Personnel in the form of share-
based payments, whereby services were rendered partly or wholly in exchange for shares or rights over
shares. The Remuneration Committee approved the grant of performance rights as incentives to attract
Executives and to maintain their long term commitment to the Company. These benefits are awarded at
the discretion of the Board, or following approval by shareholders (equity-settled transactions).
The costs of these equity-settled transactions are measured by reference to the fair value of the equity
instruments at the date on which they are granted. The fair value of performance rights granted is
determined using the Black Scholes Option Pricing Model (“BSM”) that includes a Monte Carlo Simulation
Model to value the Rights, further details of which are disclosed in Note 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
that all other conditions are satisfied.
54
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
interest on the remaining balance of the liability.
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
a straight-line basis over the term of the lease.
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:
contractual cash flows; and
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
payments of principal and interest.
WESTERN AREAS ANNUAL REPORT 2019
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
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.
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,
Other long-term employee benefits obligations
as described in the preceding paragraph.
The liabilities for long service leave and annual leave that are not expected to be settled wholly within
12 months after the end of the period in which the employees render the related service are recognised as
non-current liabilities and are therefore measured at the present value of expected future payments to be
made in respect of services provided by employees up to the end of the reporting period. Consideration is
given to expected future wage and salary levels, experience of employee departures and periods of
service. Expected future payments are discounted using market yields at the end of the reporting period
of government bonds with terms and currencies that match, as closely as possible, the estimated future
cash outflows.
The obligations are presented as current liabilities in the balance sheet if the entity does not have an
unconditional right to defer settlement for at least twelve months after the reporting period, regardless of
when the actual settlement is expected to occur.
Defined contribution superannuation expense
Contributions to defined contribution superannuation plans are expensed in the period in which they are
incurred.
Share-based payments
The consolidated entity has provided benefits to its Key Management Personnel in the form of share-
based payments, whereby services were rendered partly or wholly in exchange for shares or rights over
shares. The Remuneration Committee approved the grant of performance rights as incentives to attract
Executives and to maintain their long term commitment to the Company. These benefits are awarded at
the discretion of the Board, or following approval by shareholders (equity-settled transactions).
The costs of these equity-settled transactions are measured by reference to the fair value of the equity
instruments at the date on which they are granted. The fair value of performance rights granted is
determined using the Black Scholes Option Pricing Model (“BSM”) that includes a Monte Carlo Simulation
Model to value the Rights, further details of which are disclosed in Note 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
that all other conditions are satisfied.
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
interest on the remaining balance of the liability.
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
a straight-line basis over the term of the lease.
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.
55
WESTERN AREAS ANNUAL REPORT 2019
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
Derivative financial instruments
o) FINANCIAL INSTRUMENTS (cont’d)
Classification and subsequent measurement (cont’d)
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
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
If the hedging instrument is sold, terminated, expires, exercised without replacement or rollover, or if the
hedging relationship is recognised in profit or loss and presented net in the income statement within other
hedge becomes ineffective and is no longer a designated hedge, amounts previously recognised in equity
income or other expenses in the period in which it arises. A gain or loss on a debt investment that is
remain in equity until the forecast transaction occurs.
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
Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates
the risks and benefits associated with the asset. Financial liabilities are de-recognised where the related
the recoverable amount of the cash-generating unit to which the asset belongs.
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.
56
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.
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
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
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
Fair value hedges
to the hedged risk.
Cash flow hedge
transaction occurs.
or loss.
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.
WESTERN AREAS ANNUAL REPORT 2019
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
Derivative financial instruments
o) FINANCIAL INSTRUMENTS (cont’d)
Classification and subsequent measurement (cont’d)
Amortised cost is calculated as:
b) less principal repayments;
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
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
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.
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
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 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.
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.
A gain or loss on a debt investment that is subsequently measured at fair value and is not part of a
If the hedging instrument is sold, terminated, expires, exercised without replacement or rollover, or if the
hedging relationship is recognised in profit or loss and presented net in the income statement within other
hedge becomes ineffective and is no longer a designated hedge, amounts previously recognised in equity
income or other expenses in the period in which it arises. A gain or loss on a debt investment that is
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.
is transferred to another party whereby the entity no longer has any significant continuing involvement in
Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates
the risks and benefits associated with the asset. Financial liabilities are de-recognised where the related
the recoverable amount of the cash-generating unit to which the asset belongs.
57
WESTERN AREAS ANNUAL REPORT 2019
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
Provision for impairment of inventories
p)
IMPAIRMENT OF ASSETS (cont’d)
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.
t)
INTANGIBLES
Expenditure during the research phase of a project is recognised as an expense when incurred. Patents
and trademarks are capitalised only when technical feasibility studies identify that the project will deliver
future economic benefits and these benefits can be measured reliably.
Patents and trademarks have a finite life and are amortised on a systematic basis matched to the future
economic benefits over the useful life of the project.
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.
58
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.
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.
intangible assets
Impairment of non-financial assets other than goodwill and other indefinite life
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 2019, there were
no impairment charge to Exploration, Evaluation and Development.
WESTERN AREAS ANNUAL REPORT 2019 NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
Provision for impairment of inventories
p)
IMPAIRMENT OF ASSETS (cont’d)
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.
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
s) PROVISIONS
be reliably measured.
t)
INTANGIBLES
Expenditure during the research phase of a project is recognised as an expense when incurred. Patents
and trademarks are capitalised only when technical feasibility studies identify that the project will deliver
future economic benefits and these benefits can be measured reliably.
Patents and trademarks have a finite life and are amortised on a systematic basis matched to the future
economic benefits over the useful life of the project.
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.
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.
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 2019, there were
no impairment charge to Exploration, Evaluation and Development.
59
WESTERN AREAS ANNUAL REPORT 2019 NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
y) TRADE AND OTHER RECEIVABLES
u) CRITICAL ACCOUNTING ESTIMATES AND BALANCES (cont’d)
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
Deferred tax assets are recognised for deductible temporary differences only if the consolidated entity
considers it is probable that future taxable amounts will be available to utilise those temporary differences
and losses.
Employee benefits provision
As discussed in Note (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.
v) CONTRIBUTED EQUITY
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares
or options are shown in equity as a deduction, net of tax, from the proceeds. Incremental costs directly
attributable to the issue of new shares or options for the acquisition of a business are not included in the
cost of the acquisition as part of the purchase consideration.
If the entity reacquires its own equity instruments, for example as the result of a share buy-back, those
instruments are deducted from equity and the associated shares are cancelled. No gain or loss is
recognised in the profit and loss and the consideration paid including any directly attributable incremental
costs (net of income taxes) is recognised directly in equity.
w) COMPARATIVE FIGURES
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.
60
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
The weighted average number of additional ordinary shares that would have been outstanding
assuming the conversion of all dilutive potential ordinary shares.
aa) NEW ACCOUNTING STANDARDS AND INTERPRETATIONS NOT YET
MANDATORY OR EARLY ADOPTED
Australian Accounting Standards and Interpretations that have recently been issued or amended but are
not yet mandatory, have not been early adopted by the Group for the annual reporting period ended
30 June 2019. The Group’s assessment of the impact of these new or amended Accounting Standards
and Interpretations, most relevant to the Group, are set out below.
AASB 16 Leases
AASB 16 was issued in January 2016 and it replaces AASB 117 Leases, Interpretation 4 Determining
whether an Arrangement contains a Lease,
Interpretation 115 Operating Leases-Incentives and
Interpretation 127 Evaluating the Substance of Transactions Involving the Legal Form of a Lease. AASB 16
sets out the principles for the recognition, measurement, presentation and disclosure of leases and
requires lessees to account for all leases under a single on-balance sheet model similar to the accounting
for finance leases under AASB 117. The standard includes two recognition exemptions for lessees: leases
of ’low-value’ assets and short-term leases (i.e. leases with a lease term of 12 months or less). At the
commencement date of a lease, a lessee will recognise a liability to make lease payments (i.e. the lease
liability) and an asset representing the right to use the underlying asset during the lease term (i.e. the
right-of-use asset). Lessees will be required to separately recognise the interest expense on the lease
liability and the depreciation expense on the right-of-use asset.
Lessees will be also required to remeasure the lease liability upon the occurrence of certain events (e.g. a
change in the lease term, a change in future lease payments resulting from a change in an index or rate
used to determine those payments). The
lessee will generally recognise the amount of the
remeasurement of the lease liability as an adjustment to the right-of-use asset.
Lessor accounting under AASB 16 is substantially unchanged from today’s accounting under AASB 117.
Lessors will continue to classify all leases using the same classification principle as in AASB 117 and
distinguish between two types of leases: operating and finance leases.
AASB 16 also requires lessees and lessors to make more extensive disclosures than under AASB 117.
WESTERN AREAS ANNUAL REPORT 2019 NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
y) TRADE AND OTHER RECEIVABLES
u) CRITICAL ACCOUNTING ESTIMATES AND BALANCES (cont’d)
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
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
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.
v) CONTRIBUTED EQUITY
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares
or options are shown in equity as a deduction, net of tax, from the proceeds. Incremental costs directly
attributable to the issue of new shares or options for the acquisition of a business are not included in the
cost of the acquisition as part of the purchase consideration.
If the entity reacquires its own equity instruments, for example as the result of a share buy-back, those
instruments are deducted from equity and the associated shares are cancelled. No gain or loss is
recognised in the profit and loss and the consideration paid including any directly attributable incremental
costs (net of income taxes) is recognised directly in equity.
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.
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
The weighted average number of additional ordinary shares that would have been outstanding
assuming the conversion of all dilutive potential ordinary shares.
aa) NEW ACCOUNTING STANDARDS AND INTERPRETATIONS NOT YET
MANDATORY OR EARLY ADOPTED
Australian Accounting Standards and Interpretations that have recently been issued or amended but are
not yet mandatory, have not been early adopted by the Group for the annual reporting period ended
30 June 2019. The Group’s assessment of the impact of these new or amended Accounting Standards
and Interpretations, most relevant to the Group, are set out below.
AASB 16 Leases
AASB 16 was issued in January 2016 and it replaces AASB 117 Leases, Interpretation 4 Determining
whether an Arrangement contains a Lease,
Interpretation 115 Operating Leases-Incentives and
Interpretation 127 Evaluating the Substance of Transactions Involving the Legal Form of a Lease. AASB 16
sets out the principles for the recognition, measurement, presentation and disclosure of leases and
requires lessees to account for all leases under a single on-balance sheet model similar to the accounting
for finance leases under AASB 117. The standard includes two recognition exemptions for lessees: leases
of ’low-value’ assets and short-term leases (i.e. leases with a lease term of 12 months or less). At the
commencement date of a lease, a lessee will recognise a liability to make lease payments (i.e. the lease
liability) and an asset representing the right to use the underlying asset during the lease term (i.e. the
right-of-use asset). Lessees will be required to separately recognise the interest expense on the lease
liability and the depreciation expense on the right-of-use asset.
Lessees will be also required to remeasure the lease liability upon the occurrence of certain events (e.g. a
change in the lease term, a change in future lease payments resulting from a change in an index or rate
used to determine those payments). The
lessee will generally recognise the amount of the
remeasurement of the lease liability as an adjustment to the right-of-use asset.
Lessor accounting under AASB 16 is substantially unchanged from today’s accounting under AASB 117.
Lessors will continue to classify all leases using the same classification principle as in AASB 117 and
distinguish between two types of leases: operating and finance leases.
AASB 16 also requires lessees and lessors to make more extensive disclosures than under AASB 117.
61
WESTERN AREAS ANNUAL REPORT 2019 NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
NOTE 3: DIVIDENDS
aa) NEW ACCOUNTING STANDARDS AND INTERPRETATIONS NOT YET
MANDATORY OR EARLY ADOPTED (cont’d)
AASB 16 Leases (cont’d)
Transition to AASB 16
AASB 16 is effective for annual periods beginning on or after 1 January 2019. Early application is permitted,
but not before an entity applies AASB 15. A lessee can choose to apply the standard using either a full
retrospective or a modified retrospective approach. The standard’s transition provisions permit certain
reliefs. The Group plans to adopt AASB 16 using the modified retrospective approach, which means it will
apply the standard from 1 July 2019, the cumulative impact of adoption will be recognised as at 1 July 2019
and comparatives will not be restated. The Group will elect to use the exemptions proposed by the
standard on lease contracts for which the lease terms ends within 12 months as of the date of initial
application, and lease contracts for which the underlying asset is of low value.
During the year, the Group continued to progress its detailed impact assessment and implementation
project of AASB 16, focusing on reviewing contracts, aggregating data to support the evaluation of the
accounting impacts and identifying where key policy decisions were required.
Further work on process
improvements and reaching conclusions on the Group’s accounting
interpretations is continuing. In addition, the Group is aware that implementation activities of other
corporates continue, and practical application of the new standard will continue to develop and emerge.
Given this, the Group will closely monitor these developments and assess whether there is any impact on
the positions taken.
Work completed by the Group to date indicates the new leases standard is not expected to have a
- Employee benefits expense
material effect on the Group’s financial statements.
Defined contribution superannuation expense
2,640
2,117
The Group’s existing operating leases will be the main source of leases under the new standard.
- Finance costs:
Information on the Group’s operating lease commitments under AASB 117 Leases (undiscounted) is
disclosed in Note 20.
NOTE 2: OTHER INCOME
Interest income
Other income
Profit on sale of PP&E
Partial Exemption Certificate credits
Total other income
Consolidated Entity
2019
$’000
2,709
1,238
-
1,201
5,148
2018
$’000
2,611
879
4
-
3,494
NOTE 4: PROFIT BEFORE INCOME TAX
Consolidated Entity
Dividends proposed
A fully franked final dividend of 2 cents per share is proposed for
the year ended 30 June 2019 (2018: 2 cents per ordinary share)
Dividends paid
A final dividend of 2 cents per share was paid for
the year ended 30 June 2018 (2017: 2 cents per ordinary share)
No interim dividend for 2019 (2018: Nil)
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
Provisions: unwinding of discount
Interest expense – finance leases
Borrowing costs amortised
Total borrowing costs
Trade debtors
Other receivables
GST refund due
Prepayments
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
expectation that they will default.
22,888
22,209
Consolidated Entity
2019
$’000
2018
$’000
5,471
5,471
5,470
-
5,470
2019
$’000
15,517
44,655
1,071
1,370
42
150
1,562
2019
$’000
17,454
836
1,271
3,327
5,470
5,470
5,445
-
5,445
2018
$’000
17,764
47,108
1,019
1,297
24
613
1,934
2018
$’000
19,855
929
1,128
297
62
WESTERN AREAS ANNUAL REPORT 2019
aa) NEW ACCOUNTING STANDARDS AND INTERPRETATIONS NOT YET
MANDATORY OR EARLY ADOPTED (cont’d)
AASB 16 Leases (cont’d)
Transition to AASB 16
AASB 16 is effective for annual periods beginning on or after 1 January 2019. Early application is permitted,
but not before an entity applies AASB 15. A lessee can choose to apply the standard using either a full
retrospective or a modified retrospective approach. The standard’s transition provisions permit certain
reliefs. The Group plans to adopt AASB 16 using the modified retrospective approach, which means it will
apply the standard from 1 July 2019, the cumulative impact of adoption will be recognised as at 1 July 2019
and comparatives will not be restated. The Group will elect to use the exemptions proposed by the
standard on lease contracts for which the lease terms ends within 12 months as of the date of initial
application, and lease contracts for which the underlying asset is of low value.
During the year, the Group continued to progress its detailed impact assessment and implementation
project of AASB 16, focusing on reviewing contracts, aggregating data to support the evaluation of the
accounting impacts and identifying where key policy decisions were required.
Further work on process
improvements and reaching conclusions on the Group’s accounting
interpretations is continuing. In addition, the Group is aware that implementation activities of other
corporates continue, and practical application of the new standard will continue to develop and emerge.
Given this, the Group will closely monitor these developments and assess whether there is any impact on
the positions taken.
Information on the Group’s operating lease commitments under AASB 117 Leases (undiscounted) is
disclosed in Note 20.
NOTE 2: OTHER INCOME
Interest income
Other income
Profit on sale of PP&E
Partial Exemption Certificate credits
Total other income
Consolidated Entity
2019
$’000
2,709
1,238
-
1,201
5,148
2018
$’000
2,611
879
4
-
3,494
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
NOTE 3: DIVIDENDS
Dividends proposed
A fully franked final dividend of 2 cents per share is proposed for
the year ended 30 June 2019 (2018: 2 cents per ordinary share)
Dividends paid
A final dividend of 2 cents per share was paid for
the year ended 30 June 2018 (2017: 2 cents per ordinary share)
No interim dividend for 2019 (2018: Nil)
NOTE 4: PROFIT BEFORE 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
Consolidated Entity
2019
$’000
2018
$’000
5,471
5,471
5,470
-
5,470
5,470
5,470
5,445
-
5,445
Consolidated Entity
2019
$’000
15,517
44,655
1,071
2018
$’000
17,764
47,108
1,019
Work completed by the Group to date indicates the new leases standard is not expected to have a
- Employee benefits expense
material effect on the Group’s financial statements.
Defined contribution superannuation expense
2,640
2,117
The Group’s existing operating leases will be the main source of leases under the new standard.
- 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
1,370
42
150
1,562
1,297
24
613
1,934
Consolidated Entity
2019
$’000
17,454
836
1,271
3,327
2018
$’000
19,855
929
1,128
297
22,888
22,209
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
expectation that they will default.
63
WESTERN AREAS ANNUAL REPORT 2019
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
NOTE 6: INVENTORIES
ASSETS PLEDGED AS SECURITY
Ore stockpiles
Nickel concentrate stockpiles
Consumables and spare parts
NOTE 7: INCOME TAX
The components of the tax expense comprise:
- Current tax
- Deferred tax
- R&D tax offset
- Adjustment of current tax for prior periods
Income tax expense/(benefit)
Consolidated Entity
2019
$’000
14,440
3,043
5,000
2018
$’000
26,765
3,634
4,406
22,483
34,805
Movement in the carrying amounts for each class of property, plant and equipment between the beginning and
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)).
MOVEMENT IN CARRYING AMOUNTS
the end of the current year:
Consolidated Entity
2019
$’000
-
4,566
-
257
4,823
2018
$’000
-
4,594
(246)
978
5,326
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 before income tax at 30% (2018: 30%)
Adjusted for the tax effect of:
- Exploration write-off
- Share based payment expense
- Other temporary differences
- Income tax benefit on share based payments
Tax expense
NOTE 8: PROPERTY, PLANT AND EQUIPMENT
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
64
Consolidated Entity
2019
$’000
5,704
-
686
(1,567)
-
4,823
2018
$’000
5,149
-
1,079
821
(1,723)
5,326
Consolidated Entity
2019
$’000
48,253
(37,206)
11,047
152,221
82,236
(115,251)
119,206
2,888
(1,747)
1,141
285,598
(154,204)
131,394
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
Written down value at the beginning of the year
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
Consolidated Entity
Opening Balance
- Acquisition of investment in listed entity
- Changes in fair value through other comprehensive income
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, Todd Resources Ltd and Grid Metals Inc. at each reporting
period through Other Comprehensive Income. As at 30 June 2019, the investment in Kidman Resources Ltd was
fair valued at $32.77m (2018: 32.42m).
33,725
33,307
Consolidated Entity
2019
$’000
14,755
204
(3,912)
11,047
73,280
57,244
(11,318)
119,206
968
460
(287)
1,141
2019
$’000
33,307
536
(118)
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
WESTERN AREAS ANNUAL REPORT 2019
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
NOTE 6: INVENTORIES
ASSETS PLEDGED AS SECURITY
Consolidated Entity
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)).
MOVEMENT IN CARRYING AMOUNTS
22,483
34,805
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
- Acquisition of investment in listed entity
- Changes in fair value through other comprehensive income
2019
$’000
14,755
204
(3,912)
11,047
73,280
57,244
(11,318)
119,206
968
460
(287)
1,141
2018
$’000
19,411
-
(4,656)
14,755
62,764
23,397
(12,881)
73,280
709
486
(227)
968
Consolidated Entity
2019
$’000
33,307
536
(118)
2018
$’000
11,396
-
21,911
33,725
33,307
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, Todd Resources Ltd and Grid Metals Inc. at each reporting
period through Other Comprehensive Income. As at 30 June 2019, the investment in Kidman Resources Ltd was
fair valued at $32.77m (2018: 32.42m).
65
Ore stockpiles
Nickel concentrate stockpiles
Consumables and spare parts
NOTE 7: INCOME TAX
The components of the tax expense comprise:
- Current tax
- Deferred tax
- R&D tax offset
- Adjustment of current tax for prior periods
Income tax 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
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
Prima facie tax on profit before income tax at 30% (2018: 30%)
Adjusted for the tax effect of:
- Exploration write-off
- Share based payment expense
- Other temporary differences
- Income tax benefit on share based payments
Tax expense
NOTE 8: PROPERTY, PLANT AND EQUIPMENT
4,823
5,326
Consolidated Entity
Consolidated Entity
2019
$’000
14,440
3,043
5,000
2019
$’000
4,566
-
-
257
4,823
2019
$’000
5,704
686
(1,567)
-
-
2019
$’000
48,253
(37,206)
11,047
152,221
82,236
(115,251)
119,206
2,888
(1,747)
1,141
285,598
(154,204)
131,394
2018
$’000
26,765
3,634
4,406
2018
$’000
-
4,594
(246)
978
5,326
2018
$’000
5,149
-
1,079
821
(1,723)
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
WESTERN AREAS ANNUAL REPORT 2019
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
NOTE 10: EXPLORATION AND EVALUATION EXPENDITURE
NOTE 12: DEFERRED TAX LIABILITIES
Exploration and Evaluation Expenditure consists of:
- At cost
- Cosmos nickel operation
Total Exploration and Evaluation Expenditure
MOVEMENT IN CARRYING AMOUNT
Consolidated Entity
2019
$’000
83,339
27,105
110,444
2018
$’000
70,679
27,105
97,784
Movement in the carrying amounts for exploration and evaluation expenditure between the beginning and the
end of the current period:
Balance at the beginning of the year
- Expenditure incurred during the year
- Tenements sold at written down value
- Write-off
Balance at the end of the year
Consolidated Entity
2019
$’000
97,784
12,660
-
-
2018
$’000
87,157
10,627
-
-
110,444
97,784
CARRY FORWARD EXPLORATION AND EVALUATION EXPENDITURE
The overall movement in the deferred tax account is as follows:
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
The movement in the deferred tax liabilities for each temporary difference
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
2019
$’000
167,845
59,796
76,000
403,548
11,645
11,175
2018
$’000
166,796
59,796
76,000
371,825
11,645
11,175
(599,219)
(554,564)
130,790
142,673
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
66
Consolidated Entity
2019
$’000
142,673
32,772
(44,655)
130,790
2018
$’000
155,813
33,968
(47,108)
142,673
The balance comprises temporary differences attributable to:
a) Liabilities
- Exploration and 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 and 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
Consolidated Entity
2019
$’000
2018
$’000
(33,158)
(28,144)
(10,496)
(4,566)
(15,062)
(5,902)
(4,594)
(10,496)
(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)
(25,536)
(6,713)
(909)
3,356
6,781
7,583
376
-
18,096
(15,062)
(21,151)
(4,385)
(25,536)
(6,780)
67
(6,713)
(213)
(696)
(909)
WESTERN AREAS ANNUAL REPORT 2019
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
NOTE 10: EXPLORATION AND EVALUATION EXPENDITURE
NOTE 12: DEFERRED TAX LIABILITIES
The balance comprises temporary differences attributable to:
a) Liabilities
- Exploration and 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
CARRY FORWARD EXPLORATION AND EVALUATION EXPENDITURE
The overall movement in the deferred tax account is as follows:
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 and 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
Movement in the carrying amounts for exploration and evaluation expenditure between the beginning and the
end of the current period:
Consolidated Entity
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.
Exploration and Evaluation Expenditure consists of:
- At cost
- Cosmos nickel operation
Total Exploration and Evaluation Expenditure
MOVEMENT IN CARRYING AMOUNT
Balance at the beginning of the year
- Expenditure incurred during the year
- Tenements sold at written down value
- Write-off
Balance at the end of the year
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
Consolidated Entity
2019
$’000
83,339
27,105
110,444
2019
$’000
97,784
12,660
-
-
2018
$’000
70,679
27,105
97,784
2018
$’000
87,157
10,627
-
-
110,444
97,784
Consolidated Entity
2019
$’000
167,845
59,796
76,000
403,548
11,645
11,175
2018
$’000
166,796
59,796
76,000
371,825
11,645
11,175
(599,219)
(554,564)
130,790
142,673
Consolidated Entity
2019
$’000
142,673
32,772
(44,655)
130,790
2018
$’000
155,813
33,968
(47,108)
142,673
Movement in the carrying amounts for mine development expenditure between the beginning and the end of
the current period:
Consolidated Entity
2019
$’000
2018
$’000
(25,536)
(6,713)
(909)
(21,151)
(6,780)
(213)
(33,158)
(28,144)
3,356
6,781
7,583
376
-
18,096
(15,062)
5,061
5,006
3,879
1,178
2,524
17,648
(10,496)
(10,496)
(4,566)
(15,062)
(5,902)
(4,594)
(10,496)
(21,151)
(4,385)
(25,536)
(6,780)
67
(6,713)
(213)
(696)
(909)
(17,707)
(3,444)
(21,151)
(9,997)
3,217
(6,780)
(274)
61
(213)
67
WESTERN AREAS ANNUAL REPORT 2019
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
NOTE 12: DEFERRED TAX LIABILITIES (cont’d)
a) CORPORATE LOAN FACILITY
Consolidated Entity
2019
$’000
2018
$’000
5,006
1,775
6,781
5,061
(1,705)
3,356
3,879
3,704
7,583
1,178
(802)
376
2,524
(2,524)
-
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
Consolidated Entity
2019
$’000
29,642
19,332
48,974
2018
$’000
17,792
23,604
41,396
Consolidated Entity
2019
$’000
2018
$’000
399
399
495
495
267
267
445
445
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
(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 AND OTHER PAYABLES
Trade payables
Accrued expenses
NOTE 14: BORROWINGS
Current
Lease liabilities
Non-Current
Lease liabilities
68
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. The initial term of the facility is 12 months, which was extended for a further
12 months (24 months in total).
The carrying value of assets secured under the corporate loan facility is as follows:
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 5.11%. Refer to Note 8 for the carrying value of the
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
2019
$’000
130,790
130,253
2018
$’000
142,673
88,035
261,043
230,708
Consolidated Entity
2019
$’000
2018
$’000
4,061
4,514
24,091
1,370
(49)
25,412
535
22,917
1,297
(123)
24,091
317
25,947
24,408
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 Operations and Cosmos Nickel Operation. Based on the current
known mine life, restoration activities are not expected to commence within the next 7 years, following full
exhaustion of mine life rehabilitation activities will be undertaken.
WESTERN AREAS ANNUAL REPORT 2019
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
NOTE 12: DEFERRED TAX LIABILITIES (cont’d)
a) CORPORATE LOAN FACILITY
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
(Debit)/Credit to income statement
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
Credit/(Debit) to income statement
Closing balance
NOTE 14: BORROWINGS
Trade payables
Accrued expenses
Current
Lease liabilities
Non-Current
Lease liabilities
NOTE 13: TRADE AND OTHER PAYABLES
Consolidated Entity
2019
$’000
2018
$’000
5,006
1,775
6,781
5,061
(1,705)
3,356
3,879
3,704
7,583
1,178
(802)
376
2,524
(2,524)
-
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
Consolidated Entity
2019
$’000
29,642
19,332
48,974
2018
$’000
17,792
23,604
41,396
Consolidated Entity
2019
$’000
2018
$’000
399
399
495
495
267
267
445
445
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. The initial term of the facility is 12 months, which was extended for a further
12 months (24 months in total).
The carrying value of assets secured under the corporate loan facility is as follows:
Mine properties
Property, plant & equipment
b) LEASE LIABILITIES
Consolidated Entity
2019
$’000
130,790
130,253
2018
$’000
142,673
88,035
261,043
230,708
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 5.11%. Refer to Note 8 for the carrying value of the
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
2019
$’000
2018
$’000
4,061
4,514
24,091
1,370
(49)
25,412
535
22,917
1,297
(123)
24,091
317
25,947
24,408
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 Operations and Cosmos Nickel Operation. Based on the current
known mine life, restoration activities are not expected to commence within the next 7 years, following full
exhaustion of mine life rehabilitation activities will be undertaken.
69
WESTERN AREAS ANNUAL REPORT 2019
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
NOTE 16: DERIVATIVE FINANCIAL INSTRUMENTS
Ordinary shares entitle their holder to one vote, either in person or by proxy, at a meeting of the Company.
Current Assets
Foreign exchange/nickel options – current assets
Current Liabilities
Foreign exchange/nickel options – current liabilities
Consolidated Entity
2019
$’000
39
15
2018
$’000
-
1,592
Collar options are used to hedge cash flow risk associated with future transactions. Gains and losses arising
from changes in the fair value of derivatives are initially recognised directly in the statement of comprehensive
income. At the date of settlement, amounts included in the hedge reserve are transferred from equity and
included in the income statement.
NOTE 17: ISSUED CAPITAL
Consolidated Entity
2019
$’000
2018
$’000
273,546,162 fully paid ordinary shares (2018: 272,792,647)
442,963
442,963
MOVEMENTS IN ISSUED CAPITAL
2019
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
2018
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
Number of
Shares
$’000
272,792,647
442,963
693,733
59,782
-
-
273,546,162
442,963
272,276,625
442,963
482,422
33,600
-
-
272,792,647
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.
70
TAX EXEMPT SHARE PLAN
During February 2019, 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 basic earnings per share
273,487,588
272,746,202
Weighted average number of ordinary shares outstanding during the year
used in calculating dilutive earnings per share
277,331,708
277,113,672
NOTE 19: CASH FLOW INFORMATION
a) RECONCILIATION OF THE NET PROFIT AFTER TAX
TO NET CASH PROVIDED BY OPERATING ACTIVITIES
Consolidated Entity
Profit after income tax
Depreciation expense
Amortisation expense
Impairment/write-off expenses
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
Decrease/(Increase) in inventories
(Increase)/Decrease in trade and other receivables
Increase/(Decrease) in interest payable
Increase/(Decrease) in tax liabilities
Cash and cash equivalents comprise:
Cash on hand and at bank
Net cash provided by operating activities
98,297
76,966
b) RECONCILIATION OF CASH AND CASH EQUIVALENTS
Consolidated Entity
2019
$’000
14,194
2018
$’000
11,837
2019
Number
2018
Number
2019
$’000
14,194
15,517
44,805
-
(527)
2,286
1,370
(49)
(235)
1,328
12,322
2,251
212
4,823
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
Consolidated Entity
2019
$’000
2018
$’000
144,261
151,643
WESTERN AREAS ANNUAL REPORT 2019
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
NOTE 16: DERIVATIVE FINANCIAL INSTRUMENTS
Ordinary shares entitle their holder to one vote, either in person or by proxy, at a meeting of the Company.
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
273,546,162 fully paid ordinary shares (2018: 272,792,647)
442,963
442,963
Foreign exchange/nickel options – current assets
Current Assets
Current Liabilities
Foreign exchange/nickel options – current liabilities
included in the income statement.
NOTE 17: ISSUED CAPITAL
MOVEMENTS IN ISSUED CAPITAL
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
2019
2018
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
Consolidated Entity
2019
$’000
39
15
2018
$’000
-
1,592
Consolidated Entity
2019
$’000
2018
$’000
Number of
Shares
$’000
272,792,647
442,963
273,546,162
442,963
272,276,625
442,963
693,733
59,782
482,422
33,600
-
-
-
-
272,792,647
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.
TAX EXEMPT SHARE PLAN
During February 2019, 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
2019
$’000
14,194
2018
$’000
11,837
2019
Number
2018
Number
Weighted average number of ordinary shares outstanding during the year
used in calculating basic earnings per share
273,487,588
272,746,202
Weighted average number of ordinary shares outstanding during the year
used in calculating dilutive earnings per share
277,331,708
277,113,672
NOTE 19: CASH FLOW INFORMATION
a) RECONCILIATION OF THE NET PROFIT AFTER TAX
TO NET CASH PROVIDED BY OPERATING ACTIVITIES
Consolidated Entity
Profit after income tax
Depreciation expense
Amortisation expense
Impairment/write-off expenses
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
Decrease/(Increase) in inventories
(Increase)/Decrease in trade and other receivables
Increase/(Decrease) in interest payable
Increase/(Decrease) in tax liabilities
2019
$’000
14,194
15,517
44,805
-
(527)
2,286
1,370
(49)
(235)
1,328
12,322
2,251
212
4,823
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
Net cash provided by operating activities
98,297
76,966
b) RECONCILIATION OF CASH AND CASH EQUIVALENTS
Cash and cash equivalents comprise:
Cash on hand and at bank
Consolidated Entity
2019
$’000
2018
$’000
144,261
151,643
71
WESTERN AREAS ANNUAL REPORT 2019
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
NOTE 19: CASH FLOW INFORMATION (cont’d)
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
2,000
1,000
28,000
-
1,356
472
1,828
25,000
644
528
26,172
* 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).
surface level at Odysseus.
d) NON-CASH FINANCING ACTIVITIES
During the year, the consolidated entity acquired plant & equipment by means of a finance lease to the
value of $460k (2018: $486k).
NOTE 20: COMMITMENTS
The Directors are not aware of any commitments as at the date of these financial statements other than those
listed below.
a) OPERATING LEASE COMMITMENTS
Non-cancellable operating leases contracted for but not capitalised in the
accounts:
- No later than 1 year
- Later than 1 year and not later than 5 years
Lease expenditure contracted for at year end
Consolidated Entity
2019
$’000
2018
$’000
655
780
1,435
645
1,436
2,081
The operating leases are for miscellaneous office equipment and office premises in West Perth. The West
- Audit of Jobs and Competitiveness Programme Assistance Application
Perth office lease expires August 2021.
b) FINANCE LEASE COMMITMENTS
- No later than 1 year
- Later than 1 year and not later than 5 years
Total Minimum Lease Payments
- Future finance charges
Total Lease Liability
- Current
- Non-current
72
Consolidated Entity
2019
$’000
2018
$’000
399
495
894
59
953
422
531
953
267
445
712
53
765
297
468
765
The finance lease commitments relate primarily to motor vehicles, but also include some office equipment.
Motor vehicles are finance leased under 3-year contracts at normal commercial rates, balloon payments
are generally required at the expiry of the finance lease, at which point the Company takes ownership of
the vehicle.
c) CAPITAL EXPENDITURE COMMITMENTS
- No later than 1 year
- Later than 1 year and not later than 5 years
Total minimum commitments
Following the Board’s decision to mine the Odysseus mine at Cosmos in October 2018, the Group has
committed to the following capital expenditure in the following financial year. Dismantle of the Headgear &
Winder purchased in the current financial year and the installation of pump stations at the 500 below
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
2019
$’000
11,818
-
11,818
2018
$’000
25,784
-
25,784
Consolidated Entity
2019
$’000
6,838
28,336
35,174
2018
$’000
6,255
25,020
31,275
Consolidated Entity
2019
$’000
2018
$’000
96
5
101
92
5
97
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
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.
A 3-year Offtake Contract with Tsingshan Group (‘Tsingshan’), through its associated entity, Golden Harbour
Pte 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.
WESTERN AREAS ANNUAL REPORT 2019 NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
NOTE 19: CASH FLOW INFORMATION (cont’d)
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
2,000
1,000
28,000
-
1,356
472
1,828
25,000
644
528
26,172
The finance lease commitments relate primarily to motor vehicles, but also include some office equipment.
Motor vehicles are finance leased under 3-year contracts at normal commercial rates, balloon payments
are generally required at the expiry of the finance lease, at which point the Company takes ownership of
the vehicle.
c) CAPITAL EXPENDITURE COMMITMENTS
- No later than 1 year
- Later than 1 year and not later than 5 years
Total minimum commitments
Consolidated Entity
2019
$’000
11,818
-
11,818
2018
$’000
25,784
-
25,784
Following the Board’s decision to mine the Odysseus mine at Cosmos in October 2018, the Group has
committed to the following capital expenditure in the following financial year. Dismantle of the Headgear &
Winder purchased in the current financial year and the installation of pump stations at the 500 below
* 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 13a).
surface level at Odysseus.
d) NON-CASH FINANCING ACTIVITIES
During the year, the consolidated entity acquired plant & equipment by means of a finance lease to the
d) EXPLORATION EXPENDITURE COMMITMENTS
The Directors are not aware of any commitments as at the date of these financial statements other than those
- No later than 1 year
- Later than 1 year and not later than 5 years
Total Minimum Payments
Consolidated Entity
2019
$’000
6,838
28,336
35,174
2018
$’000
6,255
25,020
31,275
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.
The operating leases are for miscellaneous office equipment and office premises in West Perth. The West
- Audit of Jobs and Competitiveness Programme Assistance Application
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
Consolidated Entity
2019
$’000
2018
$’000
96
5
101
92
5
97
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.
A 3-year Offtake Contract with Tsingshan Group (‘Tsingshan’), through its associated entity, Golden Harbour
Pte 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.
73
value of $460k (2018: $486k).
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
Perth office lease expires August 2021.
b) FINANCE LEASE COMMITMENTS
- No later than 1 year
- Later than 1 year and not later than 5 years
Total Minimum Lease Payments
- Future finance charges
Total Lease Liability
- Current
- Non-current
Consolidated Entity
2019
$’000
2018
$’000
655
780
1,435
645
1,436
2,081
Consolidated Entity
2019
$’000
2018
$’000
399
495
894
59
953
422
531
953
267
445
712
53
765
297
468
765
WESTERN AREAS ANNUAL REPORT 2019
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
NOTE 24: SUBSEQUENT EVENTS
NOTE 27: FINANCIAL RISK MANAGEMENT
On 20 August 2019, 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 2019 which had a
material effect on the financial statements for the year ended 30 June 2019.
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.
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
J Belladonna
Chief Financial Officer/Company Secretary
W Jones
General Manager Operations
D Southam
Executive Director (resigned 26 November 2018)
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 2019.
The total of remuneration paid to key management personnel of the Consolidated Entity during the year is
detailed below:
Consolidated Entity
2019
$’000
3,848
1,238
195
5,281
2018
$’000
3,882
1,954
215
6,051
Short term employee benefits
Share based payments
Post-employment benefits
74
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:
Consolidated Entity
2019
$’000
144,261
22,888
33,725
39
2018
$’000
151,643
22,209
33,307
-
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
of Esperance.
Financial assets at fair value through other comprehensive income
Credit risk on financial assets at fair value through other comprehensive income is minimised by
undertaking transactions with recognised counterparties on recognised exchanges.
WESTERN AREAS ANNUAL REPORT 2019
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
NOTE 24: SUBSEQUENT EVENTS
NOTE 27: FINANCIAL RISK MANAGEMENT
On 20 August 2019, 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 2019 which had a
material effect on the financial statements for the year ended 30 June 2019.
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.
the Group.
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
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
J Belladonna
Chief Financial Officer/Company Secretary
W Jones
General Manager Operations
D Southam
Executive Director (resigned 26 November 2018)
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 2019.
The total of remuneration paid to key management personnel of the Consolidated Entity during the year is
detailed below:
Short term employee benefits
Share based payments
Post-employment benefits
Consolidated Entity
2019
$’000
3,848
1,238
195
5,281
2018
$’000
3,882
1,954
215
6,051
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:
Cash and cash equivalents
Trade and other receivables
Financial assets at fair value through other comprehensive income
Derivative financial instruments
Consolidated Entity
2019
$’000
144,261
22,888
33,725
39
2018
$’000
151,643
22,209
33,307
-
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
of Esperance.
Financial assets at fair value through other comprehensive income
Credit risk on financial assets at fair value through other comprehensive income is minimised by
undertaking transactions with recognised counterparties on recognised exchanges.
75
WESTERN AREAS ANNUAL REPORT 2019
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
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
Net Financial Assets/(Liabilities)
130,597
(445)
33,307
163,459
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.
Financial liability and financial asset maturity analysis
The Consolidated Entity’s contractual maturity analysis of financial assets and financial liabilities is shown
below:
1 year or
less
$’000
Over
1 to 5
years
$’000
More
than
5 years
$’000
Total
contractual
cash flows
$’000
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
-
-
-
-
-
-
445
445
33,307
33,307
33,307
207,159
-
-
-
-
-
-
151,643
22,209
41,396
712
1,592
43,700
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)
c) Market risk
currency risk.
i) Interest rate 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
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.
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
144,261
2019 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
144,261
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Net Financial Assets/(Liabilities)
144,261
(399)
(495)
7,639
151,006
399
399
495
495
48,974
48,974
-
894
5.11%
48,974
49,868
-
144,261
2.26%
22,888
22,888
33,725
33,725
56,613
200,874
2019 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
Financial Liabilities – Derivative
Derivative collar options (net settled)
144,261
22,888
32,767
39
199,955
48,974
399
15
49,388
-
-
-
-
-
-
495
-
495
-
-
144,261
22,888
958
33,725
-
958
39
200,913
-
-
-
-
48,974
894
15
49,883
151,030
Net Financial Assets/(Liabilities)
150,567
(495)
958
76
WESTERN AREAS ANNUAL REPORT 2019
NOTE 27: FINANCIAL RISK MANAGEMENT (cont’d)
SPECIFIC FINANCIAL RISK EXPOSURES AND MANAGEMENT (cont’d)
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
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
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.
Financial liability and financial asset maturity analysis
The Consolidated Entity’s contractual maturity analysis of financial assets and financial liabilities is shown
below:
2019 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
Financial Liabilities – Derivative
Derivative collar options (net settled)
1 year or
less
$’000
Over
1 to 5
years
$’000
More
than
Total
contractual
5 years
cash flows
$’000
$’000
144,261
22,888
32,767
39
199,955
48,974
399
15
49,388
150,567
-
-
-
-
-
-
-
495
495
(495)
-
-
-
-
-
-
-
144,261
22,888
958
33,725
39
958
200,913
48,974
894
15
49,883
151,030
Net Financial Assets/(Liabilities)
958
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
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
comparing the maturity profile of financial liabilities with the realisation profile of financial assets
Net Financial Assets/(Liabilities)
130,597
(445)
33,307
163,459
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.
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
2019 Consolidated Entity
Financial Assets
Cash and cash equivalents
144,261
Trade and other receivables
Financial assets at fair value
through other comprehensive
income
Financial Liabilities
Trade and other payables
Lease liability
-
-
144,261
-
-
-
-
-
-
-
-
-
-
-
-
-
399
399
495
495
Net Financial Assets/(Liabilities)
144,261
(399)
(495)
-
-
-
-
-
-
-
-
-
144,261
2.26%
22,888
22,888
33,725
33,725
56,613
200,874
48,974
48,974
-
894
5.11%
48,974
49,868
7,639
151,006
77
WESTERN AREAS ANNUAL REPORT 2019
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
NOTE 27: FINANCIAL RISK MANAGEMENT (cont’d)
b) Commodity price risk
SPECIFIC FINANCIAL RISK EXPOSURES AND MANAGEMENT (cont’d)
c) Market risk (cont’d)
i) Interest rate risk (cont’d)
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)
-
-
-
-
-
-
-
-
-
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
Interest rate sensitivities have not been included in the financial report as the changes in profit before
The following table summarises the nickel collar options open at 30 June 2019.
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% (2018: increased by 10% / decreased by 10%)
and foreign exchange rate increased by 5% / decreased by 5% (2018: increased by 5% / decreased
by 5%) with all other variables held constant and all the Consolidated Entity’s equity instruments
moved according to the historical correlation with the index. The percentages are the sensitivity
rates used when reporting equity price risk internally to key management personnel and represents
management’s assessment of the possible change in equity prices.
Financial assets at fair value through other comprehensive income index
ASX
TSX
Consolidated Entity
30 June
2019
$’000
2,922
108
30 June
2018
$’000
3,242
142
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.
78
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
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.
Profit
$’000
Equity
$’000
+/- 153
+/- 153
+/- 147
+/- 147
Consolidated Group
Collar
Options
2019
-
-
-
-
-
Collar
Options
2018
3,600
15,587
56,113
13,167
47,401
constant.
Sensitivity analysis
Year Ended 30 June 2019
+- $500/tonne nickel
Year Ended 30 June 2018
+- $500/tonne nickel
Nickel Collar Options
Nickel Tonnes
US Price ($/tonne) Cap
USD Value ($’000)
US Price ($/tonne) Floor
USD Value ($’000)
iii) Currency risk
Currency risk arises when future commercial transactions and recognised financial assets and liabilities
are denominated in a currency that is not the entity’s functional currency. The Consolidated Entity
manages its foreign currency risk exposure through sensitivity analysis, cash flow management,
forecasting and where appropriate, utilises derivative financial instruments.
The carrying amount of the Consolidated Entity’s foreign currency denominated monetary assets and
monetary liabilities at the reporting date is as follows:
30 June 2019
30 June 2018
Financial liabilities
Financial assets
Financial liabilities
Financial assets
US$‘000
-
13,033
-
9,655
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.
WESTERN AREAS ANNUAL REPORT 2019
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
NOTE 27: FINANCIAL RISK MANAGEMENT (cont’d)
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 2019
+- $500/tonne nickel
Year Ended 30 June 2018
+- $500/tonne nickel
Nickel Collar Options
Profit
$’000
Equity
$’000
+/- 153
+/- 153
+/- 147
+/- 147
The consolidated entity enters into financial transactions in the normal course of business and in
line with Board guidelines for the purpose of hedging and managing its expected exposure to nickel
prices. The hedges are treated as cashflow hedges in accordance with AASB 9 Financial
Instruments: Recognition and Measurement.
Interest rate sensitivities have not been included in the financial report as the changes in profit before
The following table summarises the nickel collar options open at 30 June 2019.
Nickel Tonnes
US Price ($/tonne) Cap
USD Value ($’000)
US Price ($/tonne) Floor
USD Value ($’000)
iii) Currency risk
Consolidated Group
Collar
Options
2019
-
-
-
-
-
Collar
Options
2018
3,600
15,587
56,113
13,167
47,401
Currency risk arises when future commercial transactions and recognised financial assets and liabilities
are denominated in a currency that is not the entity’s functional currency. The Consolidated Entity
manages its foreign currency risk exposure through sensitivity analysis, cash flow management,
forecasting and where appropriate, utilises derivative financial instruments.
The carrying amount of the Consolidated Entity’s foreign currency denominated monetary assets and
monetary liabilities at the reporting date is as follows:
30 June 2019
30 June 2018
Financial liabilities
Financial assets
Financial liabilities
Financial assets
US$‘000
-
13,033
-
9,655
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.
79
SPECIFIC FINANCIAL RISK EXPOSURES AND MANAGEMENT (cont’d)
c) Market risk (cont’d)
i) Interest rate risk (cont’d)
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
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
151,643
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
267
267
445
445
-
-
-
-
-
-
-
-
-
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
Net Financial Assets/ (Liabilities)
151,643
(267)
(445)
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.
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% (2018: increased by 10% / decreased by 10%)
and foreign exchange rate increased by 5% / decreased by 5% (2018: increased by 5% / decreased
by 5%) with all other variables held constant and all the Consolidated Entity’s equity instruments
moved according to the historical correlation with the index. The percentages are the sensitivity
rates used when reporting equity price risk internally to key management personnel and represents
management’s assessment of the possible change in equity prices.
Financial assets at fair value through other comprehensive income index
ASX
TSX
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.
Consolidated Entity
30 June
30 June
2019
$’000
2,922
108
2018
$’000
3,242
142
WESTERN AREAS ANNUAL REPORT 2019
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)
c) Market risk (cont’d)
iii) Currency risk (cont’d)
Sensitivity analysis
Year Ended 30 June 2019
+5% in $A/$US
-5% in $A/$US
Year Ended 30 June 2018
+5% in $A/$US
-5% in $A/$US
Profit
$’000
Equity
$’000
1,135
(1,142)
850
(886)
1,135
(1,142)
850
(886)
Foreign exchange collar options
The consolidated entity had open foreign exchange collar options at 30 June 2019 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 counterparties and are therefore not a measure of the exposure of the
consolidated entity through the use of these contracts.
Consolidated Group
Buy AUD/Sell USD
Settlement:
- Less than 6 months
- 6 months to 1 year
d) Net fair values
Notional Amounts
Exchange Rate
2019
$000
2018
$000
2019
$
2018
$
Put – Call
Put – Call
22,500
30,000
0.677 – 0.723
0.737 – 0.788
-
-
-
-
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.
Financial assets at fair value through other comprehensive income
33,725
Fair values derived may be based on information that is estimated or subject to judgement, where
changes in assumptions may have a material impact on the amounts estimated. Areas of judgement 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.
80
Cash and cash equivalents
144,261
144,261
151,643
151,643
Financial assets at fair value through other
Financial Assets
comprehensive income
Derivative financial assets
Trade receivables
Financial Liabilities
Trade and other payables
Derivative financial liabilities
Other liabilities
2019
2018
Carrying
Amount
$’000
Net Fair
Value
$’000
Carrying
Amount
$’000
Net Fair
Value
$’000
Note
I
ii
iii
i
i
iii
i
33,725
33,725
33,307
33,307
39
39
-
-
22,888
22,888
22,209
22,209
200,913
200,913
207,159
207,159
48,974
48,974
41,396
41,396
15
894
15
894
1,592
712
1,592
712
49,883
49,883
43,700
43,700
The fair values disclosed in the above table have been determined based on the following methodologies:
i) Cash and cash equivalents, trade and other receivables and trade and other liabilities are short-term
instruments in nature whose carrying value is equivalent to fair value. Trade and other payables
exclude amounts provided for annual leave, which is not considered a financial instrument.
ii) Quoted closing bid prices at reporting date.
iii) Fair valuation calculations are performed by an independent financial risk management consulting firm.
The calculations include valuation techniques incorporating observable market data relevant to the
hedged position.
Financial instruments measured at fair value
The financial instruments recognised at fair value in the statement of financial position have been
analysed and classified using a fair value hierarchy reflecting the significance of the inputs used in making
the measurements. The fair value hierarchy consists of the following levels:
quoted prices in active markets for identical assets or liabilities (Level 1);
inputs other than quoted prices included within Level 1 that are observable for the asset or liability,
either directly (as prices) or indirectly (derived from prices) (Level 2); and
inputs for the asset or liability that are not based on observable market data (unobservable inputs)
(Level 3).
2019
Financial assets:
Derivative financial instruments
Financial liabilities:
Derivative financial instruments
2018
Financial assets:
Financial assets at fair value through other comprehensive income
33,307
Derivative financial instruments
Level 1
Level 2
Level 3
$000
$000
$000
Total
$000
-
-
-
33,725
33,307
-
39
(15)
24
-
(1,592)
(1,592)
-
-
-
-
-
-
-
33,725
39
(15)
33,749
33,307
(1,592)
31,715
WESTERN AREAS ANNUAL REPORT 2019
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)
c) Market risk (cont’d)
iii) Currency risk (cont’d)
Sensitivity analysis
Year Ended 30 June 2019
+5% in $A/$US
-5% in $A/$US
+5% in $A/$US
-5% in $A/$US
Year Ended 30 June 2018
Profit
$’000
Equity
$’000
1,135
(1,142)
850
(886)
1,135
(1,142)
850
(886)
Foreign exchange collar options
The consolidated entity had open foreign exchange collar options at 30 June 2019 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 counterparties and are therefore not a measure of the exposure of the
consolidated entity through the use of these contracts.
Consolidated Group
Buy AUD/Sell USD
Settlement:
- Less than 6 months
- 6 months to 1 year
d) Net fair values
Notional Amounts
Exchange Rate
2019
$000
2018
$000
2019
$
2018
$
Put – Call
Put – Call
22,500
30,000
0.677 – 0.723
0.737 – 0.788
-
-
-
-
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
Fair values derived may be based on information that is estimated or subject to judgement, where
changes in assumptions may have a material impact on the amounts estimated. Areas of judgement 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
Cash and cash equivalents
Financial assets at fair value through other
comprehensive income
Derivative financial assets
Trade receivables
Financial Liabilities
Trade and other payables
Derivative financial liabilities
Other liabilities
2019
2018
Carrying
Amount
$’000
Net Fair
Value
$’000
Carrying
Amount
$’000
Net Fair
Value
$’000
Note
I
ii
iii
i
i
iii
i
144,261
144,261
151,643
151,643
33,725
33,725
33,307
33,307
39
39
-
-
22,888
22,888
22,209
22,209
200,913
200,913
207,159
207,159
48,974
48,974
41,396
41,396
15
894
15
894
1,592
712
1,592
712
49,883
49,883
43,700
43,700
The fair values disclosed in the above table have been determined based on the following methodologies:
i) Cash and cash equivalents, trade and other receivables and trade and other liabilities are short-term
instruments in nature whose carrying value is equivalent to fair value. Trade and other payables
exclude amounts provided for annual leave, which is not considered a financial instrument.
ii) Quoted closing bid prices at reporting date.
iii) Fair valuation calculations are performed by an independent financial risk management consulting firm.
The calculations include valuation techniques incorporating observable market data relevant to the
hedged position.
Financial instruments measured at fair value
The financial instruments recognised at fair value in the statement of financial position have been
analysed and classified using a fair value hierarchy reflecting the significance of the inputs used in making
the measurements. The fair value hierarchy consists of the following levels:
quoted prices in active markets for identical assets or liabilities (Level 1);
inputs other than quoted prices included within Level 1 that are observable for the asset or liability,
either directly (as prices) or indirectly (derived from prices) (Level 2); and
inputs for the asset or liability that are not based on observable market data (unobservable inputs)
(Level 3).
2019
Financial assets:
Level 1
Level 2
Level 3
$000
$000
$000
Total
$000
arm’s length transaction.
Financial assets at fair value through other comprehensive income
33,725
Derivative financial instruments
Financial liabilities:
Derivative financial instruments
2018
Financial assets:
-
-
33,725
Financial assets at fair value through other comprehensive income
33,307
Derivative financial instruments
-
33,307
-
39
(15)
24
-
(1,592)
(1,592)
-
-
-
-
-
-
-
33,725
39
(15)
33,749
33,307
(1,592)
31,715
81
WESTERN AREAS ANNUAL REPORT 2019
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
NOTE 28: RELATED PARTY TRANSACTIONS
During the year the Company engaged Vintage94 Pty Ltd to provide specialist metallurgical consulting services
to the value of A$16,000. Vintage94 Pty Ltd is a related party of Dr Natalia Streltsova. There were other related
party transactions with KMP during FY19.
NOTE 29: SHARE BASED PAYMENTS
a) EXPENSES ARISING FROM SHARE BASED TRANSACTIONS
Equity settled share options and performance rights granted during:
- Year ended 30 June 2019
- Year ended 30 June 2018
- Year ended 30 June 2017
- Year ended 30 June 2016
Consolidated Entity
2019
$’000
2018
$’000
443
1,333
510
-
1,121
1,449
1,028
-
Total expense recognised as employee costs
2,286
3,598
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 FY17, vesting will occur subject to the meeting of a 3-year
service condition to 30 June 2019 and the performance condition tested against the relative TSR measure
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
service condition to 30 June 2020 and the performance condition tested against the relative TSR measure
for the period 1 July 2017 to 30 June 2020.
For grants made under the LTI plan during FY19, vesting will occur subject to the meeting of a 3-year
service condition to 30 June 2021 and the performance condition tested against the relative TSR measure
for the period 1 July 2018 to 30 June 2021.
The following table sets out the vesting outcome based on the Company’s relative TSR performance:
Relative TSR performance
Performance Vesting Outcomes
i) SHARE BASED PAYMENT RESERVE
Less than 50th percentile
At the 50th percentile
0% vesting
50% vesting
Between 50th and 75th percentile
Pro-rata/progressive vesting from 50% to 100%
At or above 75th percentile
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.
82
The valuation inputs used in determining the fair value of performance rights issued during the year are
detailed below:
Underlying share price
Exercise price of rights
Risk free rate
Volatility factor
Dividend yield
Effective life
Entitled number of employees
2019
$2.18
Nil
2.03%
49%
1.61%
2018
$3.08
Nil
1.86%
50%
1.18%
3.0 years
3.0 years
24
23
Performance Rights held by Key Management Personnel at 30 June 2019
Balance at
Granted as
1 July 2018
Remuneration
Exercise of
Lapsed/
Performance
Cancelled/
Rights
Other
Balance at
Performance
30 June 2019
Rights Vested
D Lougher
1,095,570
415,310
298,650
277,080
106,050
75,530
(191,840)
(72,723)
(52,294)
(107,910)
(40,907)
(29,416)
1,072,900
407,730
292,470
1,809,530
458,660
(316,857)
(178,233)
1,773,100
J Belladonna
W Jones
TOTAL
Performance Rights held by Key Management Personnel at 30 June 2018
Balance at
Granted as
1 July 2017
Remuneration
Exercise of
Performance
Expired/
Lapsed/
Rights
Cancelled
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
-
-
-
-
-
-
-
-
-
c) SHARE OPTION PLANS
There were no options outstanding as at 30 June 2019.
NOTE 30: RESERVES
The share based payment reserve records the items recognised as expenses on valuation of employee
share options and performance rights.
ii) HEDGE RESERVE
The hedge reserve records revaluations of items designated as hedges.
iii)
INVESTMENT REVALUATION RESERVE
The investment revaluation reserve records revaluations of financial assets at fair value through other
comprehensive income.
WESTERN AREAS ANNUAL REPORT 2019
NOTE 28: RELATED PARTY TRANSACTIONS
During the year the Company engaged Vintage94 Pty Ltd to provide specialist metallurgical consulting services
to the value of A$16,000. Vintage94 Pty Ltd is a related party of Dr Natalia Streltsova. There were other related
party transactions with KMP during FY19.
NOTE 29: SHARE BASED PAYMENTS
a) EXPENSES ARISING FROM SHARE BASED TRANSACTIONS
Equity settled share options and performance rights granted during:
- Year ended 30 June 2019
- Year ended 30 June 2018
- Year ended 30 June 2017
- Year ended 30 June 2016
b) PERFORMANCE RIGHTS
Total expense recognised as employee costs
2,286
3,598
Consolidated Entity
2019
$’000
2018
$’000
443
1,333
510
-
1,121
1,449
1,028
-
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 FY17, vesting will occur subject to the meeting of a 3-year
service condition to 30 June 2019 and the performance condition tested against the relative TSR measure
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
service condition to 30 June 2020 and the performance condition tested against the relative TSR measure
for the period 1 July 2017 to 30 June 2020.
For grants made under the LTI plan during FY19, vesting will occur subject to the meeting of a 3-year
service condition to 30 June 2021 and the performance condition tested against the relative TSR measure
for the period 1 July 2018 to 30 June 2021.
The following table sets out the vesting outcome based on the Company’s relative TSR performance:
Less than 50th percentile
At the 50th percentile
0% vesting
50% vesting
Between 50th and 75th percentile
Pro-rata/progressive vesting from 50% to 100%
At or above 75th percentile
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.
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
The valuation inputs used in determining the fair value of performance rights issued during the year are
detailed below:
Underlying share price
Exercise price of rights
Risk free rate
Volatility factor
Dividend yield
Effective life
Entitled number of employees
2019
$2.18
Nil
2.03%
49%
1.61%
2018
$3.08
Nil
1.86%
50%
1.18%
3.0 years
3.0 years
24
23
Performance Rights held by Key Management Personnel at 30 June 2019
Balance at
1 July 2018
Granted as
Remuneration
Exercise of
Performance
Rights
Lapsed/
Cancelled/
Other
Balance at
30 June 2019
Performance
Rights Vested
D Lougher
1,095,570
415,310
298,650
277,080
106,050
75,530
(191,840)
(72,723)
(52,294)
(107,910)
(40,907)
(29,416)
1,072,900
407,730
292,470
1,809,530
458,660
(316,857)
(178,233)
1,773,100
J Belladonna
W Jones
TOTAL
-
-
-
-
Performance Rights held by Key Management Personnel at 30 June 2018
Balance at
1 July 2017
Granted as
Remuneration
Exercise of
Performance
Rights
Expired/
Lapsed/
Cancelled
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
-
-
-
-
-
c) SHARE OPTION PLANS
There were no options outstanding as at 30 June 2019.
NOTE 30: RESERVES
Relative TSR performance
Performance Vesting Outcomes
i) SHARE BASED PAYMENT RESERVE
The share based payment reserve records the items recognised as expenses on valuation of employee
share options and performance rights.
ii) HEDGE RESERVE
The hedge reserve records revaluations of items designated as hedges.
iii)
INVESTMENT REVALUATION RESERVE
The investment revaluation reserve records revaluations of financial assets at fair value through other
comprehensive income.
83
WESTERN AREAS ANNUAL REPORT 2019
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
NOTE 31: INTERESTS IN SUBSIDIARIES
CONTINGENT LIABILITIES
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
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
2019
100%
100%
100%
100%
100%
2018
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.
NOTE 32: PARENT INFORMATION
The following information has been extracted from the books of the parent and has been prepared in
accordance with the accounting standards.
STATEMENT OF FINANCIAL POSITION
The Directors are not aware of any contingent liabilities as at the date of these financial statements.
CONTRACTUAL COMMITMENTS
Australian Nickel Investments Pty Ltd.
Refer to Note 20, all commitments were entered into by Western Areas Ltd or its fully owned subsidiary,
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
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
2019
$’000
187,785
420,319
608,104
44,508
31,766
76,274
2018
$’000
206,834
379,589
586,423
41,791
27,920
69,711
531,830
516,712
442,963
48,815
40,054
531,832
16,308
18,048
442,963
44,533
29,216
516,712
15,847
35,746
Western Areas Ltd has not entered into any guarantees, in the current or previous financial year, in relation to
the debts of its subsidiaries.
84
WESTERN AREAS ANNUAL REPORT 2019
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
NOTE 31: INTERESTS IN SUBSIDIARIES
CONTINGENT LIABILITIES
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
2019
100%
100%
100%
100%
100%
2018
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.
The following information has been extracted from the books of the parent and has been prepared in
NOTE 32: PARENT INFORMATION
accordance with the accounting standards.
STATEMENT OF FINANCIAL POSITION
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
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.
Parent Entity
2019
$’000
187,785
420,319
608,104
44,508
31,766
76,274
442,963
48,815
40,054
531,832
16,308
18,048
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
531,830
516,712
Western Areas Ltd has not entered into any guarantees, in the current or previous financial year, in relation to
85
WESTERN AREAS ANNUAL REPORT 2019
DIRECTORS DECLARATION
INDEPENDENT AUDITOR’S REPORT
1.
In the opinion of the Directors of Western Areas Ltd:
a)
the Consolidated Entity’s financial statements and notes set out on pages 44 to 85 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 2019
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 Managing Director & Chief Executive Officer and Chief Financial Officer for the financial year
ended 30 June 2019.
Signed in accordance with a resolution of the Board of Directors.
D Lougher
Managing Director & Chief Executive Officer
Dated – 20 August 2019
86
WESTERN AREAS ANNUAL REPORT 2019
DIRECTORS DECLARATION
INDEPENDENT AUDITOR’S REPORT
1.
In the opinion of the Directors of Western Areas Ltd:
a)
the Consolidated Entity’s financial statements and notes set out on pages 44 to 85 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 2019
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 Managing Director & Chief Executive Officer and Chief Financial Officer for the financial year
ended 30 June 2019.
Signed in accordance with a resolution of the Board of Directors.
D Lougher
Managing Director & Chief Executive Officer
Dated – 20 August 2019
Crowe Perth
ABN 96 844 819 235
Level 5 45 St Georges Terrace
Perth WA 6000
PO Box P1213
Perth WA 6844
Australia
Main +61 (8) 9481 1448
Fax +61 (8) 9481 0152
www.crowe.com.au
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 2019, 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 2019 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.
The title ‘Partner’ conveys that the person is a senior member within their respective division, and is among the group of persons who hold an
equity interest (shareholder) in its parent entity, Findex Group Limited. The only professional service offering which is conducted by a partnership
is the Crowe Australasia external audit division. All other professional services offered by Findex Group Limited are conducted by a privately
owned organisation and/or its subsidiaries.
Findex (Aust) Pty Ltd, trading as Crowe Australasia is a member of Crowe Global, a Swiss verein. Each member firm of Crowe Global is a
separate and independent legal entity. Findex (Aust) Pty Ltd and its affiliates are not responsible or liable for any acts or omissions of Crowe
Global or any other member of Crowe Global. Crowe Global does not render any professional services and does not have an ownership or
partnership interest in Findex (Aust) Pty Ltd. Services are provided by Crowe Perth, an affiliate of Findex (Aust) Pty Ltd. Liability limited by a
scheme approved under Professional Standards Legislation. Liability limited other than for acts or omissions of financial services licensees.
© 2019 Findex (Aust) Pty Ltd
87
WESTERN AREAS ANNUAL REPORT 2019
INDEPENDENT AUDITOR’S REPORT
INDEPENDENT AUDITOR’S REPORT
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 $44.7m for the year
ended 30 June 2019.
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;
As outlined in Notes 1(j), the annual amortisation
expense was calculated using the unit of
production method that was highly dependent on
management’s estimate of the remaining nickel
ore reserves for each mine and actual production
volumes.
• Recalculation of the amortisation rate and
checking the amortisation rate inputs by:
o agreeing reserve estimations to published
reserve statements; and
o 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 $130.8m and
the carrying value of Property, Plant and
Equipment was $131.4m at 30 June 2019. These
represented significant balances recorded in the
Group’s consolidated statement of financial
position and encompassed substantial
capitalisation of expenditure.
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 of impairment
indicators from 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 2019, the carrying value of the Group’s
provision for rehabilitation was $25.4m.
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.
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 during the course of our audit.
This area was a key audit matter because the
calculations of the provision were complex and
88
WESTERN AREAS ANNUAL REPORT 2019
INDEPENDENT AUDITOR’S REPORT
INDEPENDENT AUDITOR’S REPORT
Key Audit Matter
How we addressed the Key Audit Matter
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.
• 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.
Other Information
The directors are responsible for the other information. The other information comprises the
information included in the Group’s 2019 Annual Report for the year ended 30 June 2019, 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.
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.
89
WESTERN AREAS ANNUAL REPORT 2019
INDEPENDENT AUDITOR’S REPORT
INDEPENDENT AUDITOR’S 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.
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.
90
WESTERN AREAS ANNUAL REPORT 2019
INDEPENDENT AUDITOR’S REPORT
INDEPENDENT AUDITOR’S REPORT
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 34 to 41 of the directors’ report for the
year ended 30 June 2019.
In our opinion, the Remuneration Report of Western Areas Ltd for the year ended 30 June 2019
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 Perth
Sean McGurk
Partner
Signed at Perth, 20 August 2019
91
WESTERN AREAS ANNUAL REPORT 2019 TENEMENT LISTING
Name
Cosmos (WA)
Lease
Status
WSA Interest Applicant/Holder
E36/0935
M36/0127
M36/0180
M36/0302
M36/0303
Granted
Granted
Granted
Granted
Granted
M36/0305
M36/0329
Granted
Granted
100%
100%
100%
100%
80.6%
100%
80.6%
M36/0330
Granted
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%)
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
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
E74/0470
E77/1734
E77/1865
E77/2127
E77/2228
E77/2235
E77/2236
E77/2261
E77/2440
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
Pending
Granted
Granted
Granted
Pending
Pending
Pending
Pending
Pending
Pending
100%
100%
100%
100%
100%
100%
100%
100%
100%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
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
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
Western Areas Ltd
Western Areas Ltd
Western Areas Ltd
Western Areas Ltd
Western Areas Ltd
Western Areas Ltd
Forrestania (WA)
92
WESTERN AREAS ANNUAL REPORT 2019
Name
Lease
Status
WSA Interest Applicant/Holder
TENEMENT LISTING
Forrestania (WA)
E77/2523
E77/2524
E77/2527
G70/0226
G70/0231
G77/0135
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
M77/1289
P77/4278
P77/4279
Granted
Granted
Pending
Granted
Granted
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
Pending
Granted
Granted
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 ANNUAL REPORT 2019
93
TENEMENT LISTING
Name
Lease
Status
WSA Interest Applicant/Holder
Forrestania (WA)
Mt Alexander JV
(WA)
Mt Gibb JV (WA)
Musgraves (WA)
Western Gawler (SA)
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
E77/1416
E77/1436
E77/1581
M77/0099
M77/0324
M77/0467
M77/0468
M77/0544
P77/4067
E77/1965
E77/2091
E77/1400
E77/2099
E29/0638
E74/0603
E69/3160
EL 5688
EL 5880
EL 5939
EL 6087
EL 6248
EL 6249
Pending
Pending
Pending
Pending
Pending
Pending
Pending
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%
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 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
Granted
100% Ni Rights IMD Gold Mines Ltd
Granted
100% Ni Rights IMD Gold Mines Ltd
Granted
100% Ni Rights MH Gold Pty Ltd
Granted
100% Ni Rights MH Gold Pty Ltd
Granted
25%
Blue Thunder Resources Pty Ltd (75%),
Western Areas Ltd (25%)
Granted
Pending
Granted
Granted
Granted
Granted
Granted
Granted
90%
100%
100%
90%
100%
100%
100%
100%
Western Areas Ltd
Western Areas Ltd
Western Areas Ltd
Strandline Resources Limited
Western Areas Ltd
Western Areas Ltd
Western Areas Ltd
Western Areas Ltd
94
WESTERN AREAS ANNUAL REPORT 2019
SHAREHOLDER INFORMATION
(AS AT 31 AUGUST 2019)
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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