Paladin Energy Ltd Energy Paladin
MAINTAINING OUR FOCUS ANNUAL REPORT 2015 A nnual Report nnual Designed by PE_2_16750 by Designed
Follow Paladin at www.paladinenergy.com.au 2015
Paladin Energy Ltd THE YEAR AT A GLANCE
Bicarbonate Deleveraging Recovery Plant balance sheet commissioned
Retained key personnel to develop next World class asset pipeline generation in expanded and enhanced uranium mines
Safety Operations performance further significantly optimised with improved costs reduced
About Paladin...... 01 Financial Report...... 64 Chairman’s Letter...... 04 Contents of the Financial Report...... 64 Consolidated Income Statement...... 65 Insights From The Interim CEO...... 05 Consolidated Statement of Comprehensive Income...... 66 Nuclear Power – Getting Back on Track...... 06 Consolidated Statement of Financial Position...... 67 Management Discussion and Analysis...... 08 Consolidated Statement of Changes in Equity...... 68 Review of Operations...... 09 Consolidated Statement of Cash Flows...... 70 Health and Safety ...... 23 Notes to the Consolidated Financial Statements...... 71 Financial Review ...... 25 Directors’ Declaration...... 116 Sustainable Development ...... 34 Independent Audit Report...... 117 Environment ...... 34 Additional Information...... 119 Corporate Social Responsibility ...... 37 Corporate Directory...... 124 Our People ...... 43 Corporate Governance Statement ...... 45 Directors' Report...... 46 Remuneration Report...... 52
Paladin Energy Ltd ACN 061 681 098 The annual report covers the Group consisting of Paladin Energy Ltd (referred throughout as the Company or Paladin) and its controlled entities. Paladin Energy Ltd is a company limited by shares, incorporated and domiciled in Australia. Its registered office and principal place of business is: Paladin Energy Ltd, Level 4 502 Hay Street Subiaco WA 6008 Through the use of the internet, we have ensured that our corporate reporting is timely, complete, and available globally at minimum cost to the Company. All press releases, financial statements and other information are available on our websitewww.paladinenergy.com.au KEY ANNUAL DATA
UE EN V E R S S E E L L A A S S
5.373 8 198.6 Mlb U O MILLION
PRODUCTIO ICH N NR EI H R E G N A L
5.043 8 Mlb U O
TOTAL PRODUCTION LANGER HEINRICH MINE C1 COST OF PRODUCTION 9,000,000 31.5 8,000,000 31.0 7,000,000 30.5 6,000,000 30.0 5,000,000 lb 29.5
4,000,000 U$$/lb 29.0 3,000,000 28.5
2,000,000 28.0
1,000,000 27.5 F Y2011 FY2012 FY2013 FY2014 FY2015* F Y2011 FY2012 FY2013 FY2014 FY2015*
* Production reduced in FY2015 mainly due to Kayelekera being on care and maintenance since February 2014.
PALADIN ENERGY LTD ANNUAL REPORT 2015 1 OUR ACHIEVEMENTS
WHAT WE SET OUT TO DO IN 2015
Achieved Ongoing ✕ Not achieved
2015 production guidance for Langer Heinrich Improve health and safety performance across in the range of 5.4 to 5.8Mlb the Group. U3O8 Revised guidance 5.0 to 5.2Mlb – U3O8 Increase value through strategic partnerships. Achieved 5.04Mlb. Strengthen balance sheet through continued Continue to reduce unit production costs debt reduction. at Langer Heinrich via: Maintain Kayelekera Mine in operational – Focused cost management ready status. - Optimisation of existing processes - Ongoing development and introduction of process innovation.
Advance approvals process to enable a Field Leach Trial at Manyingee. ABOUT PALADIN ABOUT
WHAT WE PLAN TO DO IN 2016
2016 production guidance for Langer Heinrich in Strengthen balance sheet through debt reduction. the range of 5.0Mlb to 5.4Mlb . U3O8 Continue to increase efficiency and productivity Focussed cost reduction and optimisation efforts at Langer Heinrich through successful process to achieve group-wide sustainability. innovation.
KEY ACHIEVEMENTS FOR THE YEAR
July 2014 March 2015 Settlement of sale of 25% minority interest in Key optimisation success at Langer Heinrich. Langer Heinrich to subsidiary of China National Bicarbonate Recovery Plant (BRP) commissioned Nuclear Corporation for US$190M. Successful and operating above design. refinancing of Langer Heinrich financing facility. April 2015 December 2014 Completion of repurchase of US$300M CBs, due Entitlement offer and institutional placement November 2015. raises A$205M. Cornerstone strategic investor – HOPU Clean Energy (Singapore) Pte. Ltd – on June 2015 register with 15% equity. Strategic acquisition of Carley Bore uranium deposit to consolidate and enhance Manyingee project. February 2015 Issue of US$100M senior unsecured convertible June 2015 bonds (CB) issued to high quality institutional Historic decision by Canadian government to exempt investors. Paladin from the Non-Resident Ownership Policy in relation to the Michelin Project in Newfoundland March 2015 and Labrador. Additional US$50M CBs issued to subsidiary of China Investment Corporation (CIC).
2 PALADIN ENERGY LTD ANNUAL REPORT 2015 PALADIN TODAY
OVERVIEW Paladin’s value is based on five key drivers - production, quality pipeline, proven team, industry positioning and sustainability of operations.
OPERATIONS
Langer Heinrich Mine Kayelekera Mine Focus on process optimisation and cost reduction. Placed on care and maintenance due to low uranium prices and non-profitability. Successful process innovation at Langer Heinrich should provide a pathway to C1 cash costs1 Maintaining plant, infrastructure and substantially lower than recent experience. critical aspects of intellectual property and operational knowhow to allow for a quick restart, when justified.
Care and maintenance to preserve the orebody to recommence production once the uranium price provides sufficient incentive (circa US$75/lb). 1 Refer to ‘Non IFRS Measure’ in Financial Review section. ABOUT PALADIN ABOUT
INNOVATION POSITIONING GOING & PROJECT PIPELINE FORWARD
Proven track record in mining Only non-aligned, independent, pure-play and processing innovation. uranium producer.
Established in-house Long-term business strategy and vision technical strength. is to continue to strengthen through key partnerships. Consolidating a unique, geographically diversified Maintain Paladin as a partner of choice. asset base. Technical innovation, process optimisation and cost reduction an ongoing focus.
Project pipeline able to drive organic growth.
OUR VALUES
Create shareholder wealth by developing the considerable opportunities Paladin has and continues to generate.
Become a major player in the global uranium supply market.
Operate at global best practice with particular emphasis on safety and the environment.
Reward employee performance and provide a fulfilling work environment.
Contribute to the growth and prosperity of the countries in which Paladin operates by conducting operations in an efficient and effective manner and by seeking out opportunities for expansion.
Respond to the attitudes and expectations of the communities in which it operates as part of its commitment to corporate social responsibility.
Act with integrity, honesty and cultural sensitivity in all of its dealings.
PALADIN ENERGY LTD ANNUAL REPORT 2015 3 CHAIRMAN'S
LETTER RICK CRABB CHAIRMAN
Dear Fellow Shareholder The further retreat in the uranium price and overall deterioration in global equity markets during the 2015 financial year presented continued ongoing challenges for your Company. During 2014 the uranium spot price touched a nine-year low, but has since recovered and now shows signs of an ongoing upward trend, notwithstanding some volatility.
During this challenging period, the Paladin Board and Mr Alexander Molyneux is currently serving as Interim management nevertheless completed a number of CEO and with the support of the Board continues to focus important steps to progress recapitalisation of the on the goals the Company has set for FY2016. Company, as outlined in this Annual Report. I am pleased that the Company has continued to maintain Although production at the Langer Heinrich Mine was high standards in health and safety and environmental down 13% during the year, the temporary technical issue management. I encourage shareholders to study the which resulted in the reduction was rectified and a solid sustainable development reports in this Annual Report production outlook is expected. and on the Company’s website. In addition to cost reduction initiatives during FY2015, I wish to thank all employees for their hard work and in July and August this year the Company announced a dedication during what has been, yet again, a challenging number of further measures aimed at making Paladin cash- period for the Company. I remain confident that the
CHAIRMANS' LETTER CHAIRMANS' flow positive in the current uranium price environment. conclusion of FY2016 will see an improved outlook for Further work remains to be done in FY2016 particularly to Paladin, to the benefit of all stakeholders. strengthen the balance sheet and to improve production at Langer Heinrich whilst reducing costs. Yours faithfully On 10 August 2015, the Company announced that Paladin Energy Ltd Mr John Borshoff stepped down as Managing Director and CEO. It was John’s vision, tenacity and spirit that created Paladin, which remains uniquely placed to benefit from an improved uranium market. On behalf of shareholders I sincerely thank John for his efforts and sacrifice over some 21 years and wish him all the best for the future. Recently two other long serving officers of the Company, non-executive director Sean Llewelyn and Company Secretary/EGM Corporate Services Gillian Swaby, stepped down. Their respecting significant RICK CRABB contributions are very much appreciated. Chairman
4 PALADIN ENERGY LTD ANNUAL REPORT 2015 INSIGHTS FROM
THE INTERIM CEO ALEXANDER MOLYNEUX Interim CEO
Dear Shareholder 2015 was a year which saw uranium prices touch nine-year and post-Fukushima incident lows. Despite the challenges presented by the market, we can commend the Paladin team for safely achieving a number of positive outcomes in the areas of operating improvements, strategic initiatives and capital management. Importantly, the company finished the year with cash on hand of US$183.7M, an increase of US$94.9M. The world class nature of our assets and team led to the strategic investment and availability of funding to be able to strengthen our balance sheet during a ‘dire’ period for uranium producers globally.
It seems apparent to me that the uranium market could • Demand is rapidly accelerating in new markets – be in the early stages of a recovery from the earthquake All of the ‘BRICS’ countries (i.e., Brazil, Russia, and tsunami in Japan in March 2011 and its damaging India, China and South Africa) are rapidly growing effect on Japan’s nuclear power industry. Prior to March their nuclear power capacity and increasing their 2011, Japan was the world’s second largest consumer reliance on nuclear power as a proportion of of uranium and since that time Japan has been almost overall power generation. absent from the market. Certain other major nuclear power producing nations, such as Germany, have • Current prices will constrain supply – According to implemented plans to reduce or eliminate nuclear power. supply cost curves published by industry analysts, approximately one third of current mine supply is
The TradeTech U 3O8 Spot Price at the end of June 2015 uneconomic at the current spot price. Low prices was US$36.25/lb, approximately 29% higher than at the are forcing producers to curtail mining, development end of June 2014. and exploration. According to industry analysts, in the 2014 calendar year, at least 12 million pounds INSIGHTSFROM THE INTERIM CEO Paladin’s belief that a meaningful turnaround for uranium of annual U O supply has been eliminated. is underway is predicated on a number of key elements: 3 8 Despite the Company’s belief that a uranium • Many countries that eliminated or reduced their industry turnaround is tentatively underway, its current nuclear reliance are now encountering significant strategies are focused on optimising actions to maximise INSIGHTS FROM THE MANAGING DIRECTOR/CEO consequences and switching back to nuclear – cash flow whilst also prudently enacting capital Japan, in particular, is a key uranium customer now management actions. switching back to nuclear. In August 2015, Kyushu Electric Power’s Sendai 1 nuclear reactor became the first in Japan to restart operation. Yours faithfully
ALEXANDER MOLYNEUX Interim CEO
PALADIN ENERGY LTD ANNUAL REPORT 2015 5 NUCLEAR POWER – GETTING BACK ON TRACK
The March 2011 Great East Japan earthquake and resultant tsunami severely damaged the Fukushima-Diiachi reactor complex and set in motion market forces which continue to negatively impact the global uranium market. While conditions in Japan are showing noticeable improvement as discussed below, the FY2015 market suffered from the Fukushima after-effects.
While growth in global commercial nuclear power now stands at 66 units (compared to 62) and the number remains strong and increasing, the clearly identified shift of planned reactors is currently 10 reactors higher than in from the traditional nuclear power regions/countries March 2011. of North America (predominantly the United States), Western Europe and Japan continues unabated. During China Driving Global Commercial Nuclear Power FY2015, installed nuclear capacity rose in China, South
Korea, Russia and Argentina while Japan lost units to Reactors classified as “under construction” declined decommissioning as did the United States. during FY2015 as a number of Chinese reactors entered commercial operations but were yet to be followed The natural uranium production sector which had by further new build authorisations, a condition which experienced uninterrupted growth since 2006 reported changed in March 2015 when the China State Council a decline in output of 9Mlb (6%) as a host of production approved the construction of two additional units at problems began to be revealed, supplemented by
NUCLEAR POWER the Hongyanhe NPP with further such authorisations existing production centres being placed on care and anticipated. maintenance or output curtailed in response to persistent depressed uranium prices. The Chinese government continues to aggressively
GETTING BACK ON TRACK ON BACK GETTING pursue the development of a significant commercial nuclear programme in support of increasing electricity Spot Uranium Price Volatility Prevailed needs and implementation of climate change goals. During FY2015, the spot uranium price demonstrated Installed nuclear capacity of 58 Gwe remains the 2020 substantial volatility beginning the year at around objective with China planning to eclipse the United States US$28.00/lb before rising to US$44.00/lb in mid- nuclear programme as the largest in the world by 2025, November, an increase of 56% in less than six months. having operational reactors totalling 100 Gwe or more. The near-term price then plunged to US$35.50/lb by the end of the calendar year, a decline of 20% in less than two Japanese Nuclear Power Poised to Restart months. Entering CY2015, the spot price rose, once again, to US$39.50/lb (late March) a gain of over 11% before Post-Fukushima, the commercial nuclear power dropping to US$35.00/lb by the end of May. Overall, programme in Japan has been under heightened scrutiny the uranium spot price ended the year at US$36.75/lb, as the government created the independent Nuclear showing an increase of 30% for the 12 month period. Regulatory Authority (NRA) which then developed and promulgated far-ranging safety guidelines for nuclear The long-term uranium price which tends to reflect market power plants. Japanese utilities have submitted safety conditions several years in the future, showed much less evaluation requests for a total of 24 reactors located volatility, starting the year at US$44.00/lb then rising at 13 sites, representing almost 60% of the currently to US$50.00/lb by late November before declining to operational Japanese reactors. US$46.00/lb at the end of May. Sendai 1 & 2, (Kyushu Electric Power Company) are now likely to restart in the September quarter 2015 while NRA Operational Reactors Increased preliminary approvals have been given to Takahama 3 & FY2015 saw the number of operational nuclear reactors 4 (Hokuriku Electric Power) and Ikata 3 (Shikoku Electric increase by a total of three units as China (+6), South Power), with the Takahama units under a temporary court Korea (+1), Russia (+1), and Argentina (+1) placed new injunction against their operations. units in commercial operation while a single reactor was decommissioned in the United States and Japanese In mid-April, the Japanese Cabinet approved the utilities made the decision to permanently close five older, “Strategic Energy Plan” calling for nuclear power to smaller reactors in the face of economically unjustified represent 20-22% of total installed generating capacity safety upgrades under the Nuclear Regulatory Authority by 2030. That target would require not only operating post-Fukushima guidelines. life extension for a number of units but also new reactor construction to proceed. Compared to the global situation immediately preceding Fukushima, the total number of operational reactors is India’s Nuclear Programme Moving Forward down slightly to six reactors in total), a reflection of the decommissioning initiatives in Japan, Germany and, After a period of relative stagnation, the newly-elected to a lesser degree, the United States but, much more Prime Minister, Narendra Modi, has reinvigorated the importantly, the number of reactors under construction Indian commercial nuclear power programme supporting
6 PALADIN ENERGY LTD ANNUAL REPORT 2015 term contracts with Kazakhstan, Uzbekistan and Canada During the first half of CY2015, several nuclear utilities, (Cameco). Additional multi-year purchase commitments located in the United States, Western Europe and Asia/ are expected as the country’s meagre nuclear generation Pacific (non-China) have either entered the term market (supplied 3.5% of total electricity in 2014) grows from or have indicated plans to pursue additional longer the current 21 operating reactors (5.3 Gwe) reaching term uranium coverage with deliveries beginning 2017- 14.6 Gwe by 2020 with the 2050 target being nuclear- 2018 and extending well into the next decade. These generated electricity providing 25% of the nation’s needs. procurement programmes will truly test the availability of uranium later in this decade and past 2020. In order to support its expanding nuclear programme, India announced in mid-July 2015 that the country will Nowhere is the need for future uranium coverage most pursue the creation of a strategic uranium reserve totalling evident than in the United States. The United States 13Mlb which will increase to 39Mlb as the installed nuclear government agency, the U.S. Energy Information capacity rises into the future. Administration, provides comprehensive data regarding United States nuclear utility nuclear fuel procurement and forward forecasts. According to its “2014 Uranium Global Uranium Production Struggling Marketing Annual Report”, the United States nuclear Global uranium output stumbled during CY2014 declining utilities need to secure deliveries totalling 283Mlb over the from the CY2013 level of 154Mlb down to 145Mlb. A period 2015-2024, representing almost 60% of their ten- myriad of factors were in play as operational problems year forward total uranium requirements. Interestingly, resulted in significant reductions at both Ranger (Australia) United States utility contractual coverage for a ten year and Rössing (Namibia) while Areva’s Somaïr operation forward period has declined consistently over the past (Niger) produced at a reduced rate. Even Canada’s prolific seven years. Athabaska Basin operations reported a 3% decline in annual uranium production. Uranium Supply Deficits Looming
In addition to Paladin’s Kayelekera Mine (Malawi), Paladin continues to revise/update its internal annual UraniumOne’s ISR production facility at Honeymoon uranium demand, supply and price assessment and (South Australia) was placed on care and maintenance forecasts. That comprehensive analysis of the global while some United States-based ISR mines held uranium market underscores the absolute imperative for production at contracted levels. the development of additional uranium production in the immediate near future. That conclusion is increasingly
Looking forward, FY2016 will see increased output from NUCLEAR POWER the Cigar Lake Mine (Canada) and the possible initiating being reached by industry analysts as well as financial of mining at the Husab Project (CGNPC) in Namibia. analysts focused on the uranium sector. At this point However, aggregate global uranium production might in time, the principal question remains the timing of the not exceed 150-152Mlbs as producers struggle with market reaction to the fully recognised fundamentals of TRACK ON BACK GETTING unsustainably depressed uranium prices. uranium demand and supply.
Term Uranium Contracting on the Rise The vast majority of natural uranium concentrates are delivered to utility end-users under term (multi-year) purchase agreements. Since 1995, the two largest uranium consuming regions, the United States and the European Union, reported total purchases aggregating
1.9Blb U3O8 with 87% of that total being delivered under term uranium agreements. During CY2013, global term contracting volume totalled about 20Mlb for future delivery, a far cry from the annual average of 155Mlb or more. That term contracting activity increased in CY2014 to around 80Mlb, a decided improvement but still far short of the normal term contracting activity by the world’s nuclear utilities.
PALADIN ENERGY LTD ANNUAL REPORT 2015 7 MANAGEMENT DISCUSSION AND ANALYSIS
The following Management Discussion and Analysis (“MD&A”) for Paladin Energy Ltd (“Company”) and its controlled entities (“Group”) should be read in conjunction with the Consolidated Financial Statements for the year ended 30 June 2015. The effective date of this report is 27 August 2015.
The financial information presented in this MD&A has consider it important in making an investment decision; been extracted from the attached financial statements. or (iii) it would significantly alter the total mix of information For the purpose of preparing our MD&A, we consider available to investors. We evaluate materiality with the materiality of information. Information is considered reference to all relevant circumstances, including potential material if: (i) such information results in, or would market sensitivity. reasonably be expected to result in, a significant change in market price or value of our shares; or (ii) there is a Additional information relating to the Company, substantial likelihood that a reasonable investor would including public announcements, is available at www.paladinenergy.com.au.
FORWARD LOOKING STATEMENTS Some of the statements contained in this MD&A, including those relating to strategies and other statements, are predictive in nature, and depend upon or refer to future events or conditions, or include words such as “expects”, “intends”, “plans”, “anticipates”, “believes”, “estimates”, “with an expectation of”, “is expected”, “are expected”, or similar expressions that are forward looking statements. Forward looking statements include, without limitation, the information concerning possible or assumed further results of operations as set forth herein. These statements are not historical facts but instead represent only expectations, estimates and projections regarding future events and are qualified in their entirety by the inherent risks and uncertainties surrounding future expectations generally. The forward looking statements contained in this MD&A are not guarantees of future performance and involve MANAGEMENT DISCUSSION AND ANALYSIS AND MANAGEMENTDISCUSSION certain risks and uncertainties that are difficult to predict. The future results of the Group may differ materially from those expressed in the forward looking statements contained in this MD&A due to, among other factors, the risks and uncertainties inherent in the business of the Group. The Company does not undertake any obligation to update or release any revisions to these forward looking statements to reflect events or circumstances after the date of this MD&A or to reflect the occurrence of anticipated events.
8 PALADIN ENERGY LTD ANNUAL REPORT 2015 REVIEW OF OPERATIONS
PROJECT LOCATIONS AND RESOURCE OVERVIEW
AUSTRALIA Bigrlyi Advanced Exploration
Darwin Oobagooma Mount Isa Projects Michelin Exploration Pre Development Advanced Exploration
Manyingee Postville NT Angela / Pamela Resource Definition Advanced Exploration
Alice Springs Happy Valley - Goose Bay
QLD WA Quebec NEWFOUNDLAND AND LABRADOR SA Brisbane
0 300 St. John’s Perth NSW
Kilometres Adelaide Sydney
0 1000 VIC Melbourne Kilometres CANADA AUSTRALIA
Paladin 100% REVIEW OF OPERATIONS OF REVIEW Paladin 75%
Paladin 41.71%
Mount Isa Projects Resources and Reserves shown above represent 100% of the resource or reserve - not the participant’s share, and are depleted
for mining where appropriate ANALYSIS AND DISCUSSION MANAGEMENT N
NIGER NAMIBIA MALAWI
Kayelekera Angola Zambia Tanzania Mine on Care Libya and Maintenance Algeria Langer Heinrich Operating Mine plus Expansion Karonga
Zambia Mzuzu
Takardeit Lake Malawi Swakopmund Windhoek Botswana Arlit Exploration Walvis Bay Mali Mozambique Lilongwe Agadez NAMIBIA NIGER MALAWI Chad Niamey Blantyre South Africa Burkina Atlantic 0 300 0 300 0 300 Faso Nigeria Ocean Zimbabwe Benin Kilometres Kilometres Kilometres
In addition to the resources illustrated above, the Company has a 16.70% interest in Deep Yellow Ltd (ASX: “DYL”) which has projects located near Langer Heinrich in Namibia and Mount Isa in Australia.
Unless specifically noted, Mineral Resources were prepared and first disclosed under the JORC Code 2004. These estimates have not been updated since to comply with JORC Code 2012 on the basis that the information that the estimates are derived from has not materially changed since it was last reported.
Paladin’s attributable Mineral Resource inventory, with effect from 30 June 2015, includes 153,234t U3O8 (337.8Mlb) at 0.07% U3O8 in the
Indicated and Measured categories (including ROM stockpiles) and 70,606t of U3O8 (155.7Mlb) at 0.06% U3O8 in the Inferred Resource category. A summary of the status of each of the advanced projects is detailed in the following table. This table does not include additional JORC(2004) and NI 43-101 compliant Mineral Resources from Bikini, Andersons, Mirrioola, Watta or Warwai deriving from Paladin’s 82.08% ownership of Summit Resources Ltd, nor from the Duke Batman or Honey Pot deposits.
PALADIN ENERGY LTD ANNUAL REPORT 2015 9 URANIUM PRODUCTION
Mining Method/ Project Overview Deposit Type Outlook Mineral Resources *Langer Heinrich Mine The Company’s cornerstone Conventional Project life of M&I (inc 114.6Mt @ 0.051%
- 75% asset commenced open pit; 20 years stockpiles): (127.5Mlb U 3O8) production in 2007. calcrete (Namibia, Southern 17.0Mt @ 0.058% The Stage 3 expansion is Inferred: Africa) (21.7Mlb U O ) complete with production 3 8 at 5.2Mlb per annum (pa). Studies are underway for a further expansion.
*Kayelekera Mine – Paladin’s second uranium Conventional Currently M&I (inc 15.0Mt @ 0.072%
85% mine, capable of operating open pit; on care and stockpiles): (23.9Mlb U3O8) at nameplate of 3.3Mlb pa. sandstone maintenance (Malawi, Southern Inferred: 5.4Mt @ 0.06% due to low Africa) (7.4Mlb U O ) uranium prices 3 8
URANIUM DEVELOPMENT
Mining
Method/ Project Overview Deposit Type Outlook Resources *Aurora Project – Paladin’s first entry into Open pit - Resource M&I: 47.6Mt @ 0.10% Canada. Resource definition underground; definition and 100% (100.8Mlb U3O8 and additional exploration metasomatic extension drilling (Labrador, Canada) Inferred: has been planned for. is ongoing 21.9Mt @ 0.08%
(39.8Mlb U3O8)
**Manyingee Project Resource update has been In-situ leach; 3 year staged M&I: 8.4Mt @ 0.09% completed and planning for a sandstone feasibility study (15.7Mlb U O ) – 100% 3 8 field leach trial is underway. required REVIEW OF OPERATIONS OF REVIEW (Western Pilbara, Inferred: 5.4Mt @ 0.09%
Western Australia) (10.2Mlb U3O8)
Oobagooma Project A key pipeline asset for In-situ leach; 3 year reserve/ Exploration 8.0Mt @ 0.12%-
– 100% Paladin. sandstone resource drilling target: 0.14% (U 3O8) required (West Kimberley, Western Australia) MANAGEMENT DISCUSSION AND ANALYSIS AND MANAGEMENTDISCUSSION *Valhalla, Skal & Odin One of Paladin’s significant Open pit Development M&I: 57.2Mt @ 0.07% Australian assets. -underground; dependent (93.7Mlb U O ) Deposits – 91.04% 3 8 Metallurgical studies are metasomatic on market (Queensland, Australia) Inferred: 16.3Mt @ 0.06% progressing towards conditions (22.0Mlb U O ) developing a comprehensive 3 8 processing flowsheet.
*Bigrlyi Deposit – Limited work within the JV Open pit - Future direction M&I: 4.7Mt @ 0.14% tenements. Co-operative underground; of project will (14.1Mlb U O ) 41.71% 3 8 arrangement to assess sandstone be determined (Northern Territory, Inferred: 2.8Mt @ 0.11% nearby regional targets. by market Australia) (7.1Mlb U O ) conditions 3 8
*Angela Deposit – Planning has been completed Open pit - Future direction Inferred: 10.7Mt @ 0.13%
100% for resource extension and underground; of project will (30.8Mlb U3O8) development drilling. sandstone be determined (Northern Territory, by market Australia) conditions
Mineral Resources are quoted inclusive of any Ore Reserves that may be applicable. Mineral Resources detailed above in all cases represent 100% of the resource – not the participant’s share. * Conforms to JORC(2004) guidelines & is NI 43-101 Compliant, in addition the Mineral Resource for the Michelin deposit conforms to the JORC(2012) guidelines. ** Conforms to JORC(2012) guidelines. (a) For Kayelekera, the Government of Malawi holds a 15% equity interest in the subsidiary, Paladin (Africa) Limited, the holder of the Kayelekera Mining Licence. (b) For Valhalla, Skal & Odin, Paladin’s interest is based on 50% deriving from the Isa Uranium Joint Venture and 41.04% via Paladin’s 82.08% ownership of Summit Resources Ltd. Langer Heinrich and Kayelekera Mineral Resources have been depleted for mining to the end of June 2015 and June 2014 respectively. M&I = Measured and Indicated.
10 PALADIN ENERGY LTD ANNUAL REPORT 2015 NAMIBIA
LANGER HEINRICH MINE (LHM)
Paladin through its Namibian subsidiary, Langer Heinrich Uranium (Pty) Ltd 75% and CNNC Overseas Uranium Holding Limited 25%
Following the sale of a 25% equity stake to CNNC followed by construction and commissioning of the Stage Overseas Uranium Holding Limited (CNNC), a wholly- 3 expansion, completed in FY2012 resulting in production owned subsidiary of China National Nuclear Corporation, over 5Mlb. Paladin owns 75% of LHM in Namibia through its Namibian subsidiary, Langer Heinrich Uranium (Pty) Langer Heinrich is a surficial, calcrete type uranium Ltd (LHUPL). Paladin purchased the Langer Heinrich deposit containing a Mineral Resource of 57,831t U O at a grade of 0.050% U O in the Measured and project in August 2002 and, following development and 3 8 3 8 construction, production commenced from the open Indicated categories (including ROM stockpiles) in seven pit mine and conventional alkaline leach plant in early mineralised zones designated Detail 1 to 7 (see figure below), along the length of the Langer Heinrich valley 2007, with annual production of 2.7Mlb of U3O8 achieved in FY2009. Soon afterwards, a Stage 2 expansion was within the 15km length of a contiguous paleodrainage undertaken to increase production to 3.7Mlb pa U O , system. The deposit is located in the Namib Desert, 80km 3 8 from the major seaport of Walvis Bay.
24000E 28000E 32000E 36000E 40000E
D7 D2 D1 D5 D3 D6 D4
-88000N -88000N REVIEW OF OPERATIONS OF REVIEW
To Gawib Flats & Swakopmund
PLANT
ML 172 ML 140 ANALYSIS AND MANAGEMENTDISCUSSION
-92000N N -92000N Legend To Tikos Flats & Main Road Mineral Resources >250ppm U3O8 Delineation Drilling 0 1 2km D7 Detail Grid Area
24000E 28000E 32000E 36000E 40000E
OPERATIONS
Langer Heinrich produced 5.037Mlb (2,284t) U3O8 in the coming year the Company expects to approximately FY2015, down 13% from the previous year’s total of double the beneficial impact of this technology at LHM.
5.822Mlb (2,641t) U3O8. Recoveries through the plant Already, a significant reduction in operating cost has been decreased by 3% from the previous year to 87.6% with experienced as a consequence of the project which has a decrease in feed grade of 2% to 768ppm. The major demonstrated a capital pay-back period of less than 6 contributor to the lower production was a decrease in plant months. The BRP involves leading edge technology for throughput of 8.8% from the record of FY2014, due largely which Paladin has developed and owns the intellectual to a major scaling incident that occurred early in the year property. Suitable patent protection has been applied for and is now resolved. The mine has recently recruited an to protect this very valuable intellectual property asset experienced production manager and already a positive that is expected to have broad application throughout the impact on the plant can be seen. With the Husab mine uranium processing sector. and the aggressive recruitment by surrounding mines in the Erongo region, staff retention has been a challenge. Future production and possible expansion options to Consequently, the mine has embarked on a number of allow the treating of much lower feed grade are still being initiatives to ensure stability returns to staff turnover rates. considered and advanced. Various evaluations have been completed or planned on piloting and testing programmes With the declining uranium price, initiatives to reduce the to test the most promising options and enhancements. operating and unit costs at LHM continued to be front The goal of this work is to increase production at lower and centre, with a number of improvements identified unit costs and at lower grades. The focus is also on and implemented. In this regard, the most notable improved process efficiencies and operability and the is the Bicarbonate Recovery Plant (BRP) which was BRP is a good example of the outcomes being sought. commissioned in the June quarter. The BRP has surpassed all design expectations and at the time of writing was A focus on cost reduction and efficiency remains at operating at approximately 148% of design capacity. In the forefront going into FY2016 with an expectation of significant benefits going forward.
PALADIN ENERGY LTD ANNUAL REPORT 2015 11 MINERAL RESOURCES AND ORE RESERVES The Ore Reserve was estimated from the original un- ESTIMATION depleted Measured and Indicated Mineral Resource
of 139.3Mt at a grade of 0.055% U3O8. The Mineral Mineral Resources and Ore Reserves conforming to both Resource estimate was completed using Multi-Indicator the JORC(2004) code and NI 43-101 are detailed below. . Kriging and incorporates a specific adjustment based on expected mining parameters. As a result, additional MINERAL RESOURCE ESTIMATE (250PPM U O CUT-OFF)) 3 8 dilution and mining recovery are not included in the Ore Reserve estimation. Grade These reserves form the basis of the continuing life of % Mlb Mt U O t U O U O mine plan for the Project. The revised mine plan allows 3 8 3 8 3 8 a project life of 20 years, based on current processing Measured 19.6 0.056 10,912 24.1 feed rates. Indicated 62.9 0.054 34,051 75.1
Measured + EXPLORATION (EPL3500) Indicated 82.5 0.055 44,964 99.1 EPL3500 previously covered the western extension of the mineralised Langer Heinrich paleochannel. An application Stockpiles 32.1 0.040 12,867 28.4 to convert the EPL to a mining lease has progressed through the regulatory process and the site has received Inferred 17.0 0.06 9,842 21.7 notice of the intent to grant the licence application.
(Figures may not add due to rounding and are quoted inclusive of any Ore Reserves, and have been depleted for mining to the end of June 2015).
ORE RESERVES Economic analysis on this resource has indicated a break-even cut-off grade of 250ppm.
ORE RESERVE ESTIMATE 250PPM U3O8 CUT-OFF
Grade Mlb REVIEW OF OPERATIONS OF REVIEW Mt % U3O8 t U3O8 U3O8 Proved 15.8 0.057 8,955 19.7 Probable 52.8 0.055 29,273 64.5 Stockpiles 32.1 0.040 12,867 28.4
MANAGEMENT DISCUSSION AND ANALYSIS AND MANAGEMENTDISCUSSION Total 100.7 0.051 51,095 112.6
Ore Reserve has been depleted for mining to the end of June 2015.
12 PALADIN ENERGY LTD ANNUAL REPORT 2015 MALAWI
KAYELEKERA MINE (KM) C&M OPERATIONS KM completed a full year on C&M, with no production Kayelekera Mine (KM), which is currently on care and maintenance (C&M), is located in northern Malawi, 600km since May 2014 and no sales revenue since December north of the country’s capital city, Lilongwe, and 52km 2014. The key focus at KM has been ensuring the safety west of the regional administrative and commercial centre of C&M personnel and the security of the project assets; of Karonga. maintaining idled plant and equipment in a fit state of readiness to facilitate a rapid restart of operations Kayelekera is a sandstone-hosted uranium deposit, when a decision is made to do so; maintaining legal associated with the Permian Karoo sediments and and social obligations encompassing community hosted by the Kayelekera member of the North relations, environmental and radiological monitoring and Rukuru sedimentary outcrop of the Karoo System. The treating and discharging surplus water stocks at KM to mineralisation is associated with seven variably oxidised, reduce KM’s water balance prior to the onset of the next coarse grained arkoses, separated by shales and rainfall season. mudstones. Uranium mineralisation occurs as lenses, primarily within the arkose layers and, to a lesser extent, During production, rainfall run-off water captured in the in the mudstone. The lowest level of known mineralisation operational area was stored on site and was recycled for is at a depth of approximately 160m below surface. use in processing of uranium ore. Since the operation went
on C&M, this has no longer been occurring, necessitating Kayelekera is owned 100% by Paladin (Africa) Limited the controlled release of treated water in order to reduce (PAL), an 85% subsidiary of Paladin. In July 2009, Paladin KM’s water balance prior to the onset of the next rainfall issued 15% of the equity in PAL to the Government of season. PAL modified a section of the KM processing Malawi (GoM) under the terms of the Development plant to treat water to remove contaminants prior to Agreement signed between PAL and the Government release to meet internationally recognised standards. in February 2007, which established the fiscal regime and development framework for KM. PAL operates PAL was licensed by the GoM in October 2014 to treat KM under the provisions of Environmental Certificate and release water, with the government setting strict 27.3.1, granted in March 2007, following approval of the conditions regulating critical water quality parameters, Kayelekera Project Environmental Impact Assessment including the World Health Organization (WHO) drinking OPERATIONS OF REVIEW (EIA) and Mining Licence ML152, granted in April 2007. water guideline for uranium content. Controlled treated ML152 covers an area of some 55km² surrounding water release commenced in April 2015 and continued the Kayelekera deposit and was granted for a period without incident. In late June, discharge was suspended of 15 years, renewable for further 10-year periods. due to the very low receiving water level in the local river The EIA contained a Social Impact Assessment and system. Comprehensive monitoring of samples has MANAGEMENT DISCUSSION AND ANALYSIS AND MANAGEMENTDISCUSSION Management Plan, which was implemented during the been undertaken at the end of the discharge outlet and construction and operational phases of KM, with certain upstream and downstream from KM. components continuing during C&M. Under the terms PAL has maintained a strong focus on cost control during of the Development Agreement, PAL has undertaken C&M with year-on-year cash costs reducing by 33.3%. various corporate social responsibility (CSR) obligations in A feasibility study for recommencement of production relation to operation of a Social Responsibility Plan, Local at KM is underway, preliminary results show that KM Business Development and Community Consultation. remains a valuable strategic asset that can be quickly Construction took place in 2007-9 and KM operated for returned to production when justified by a higher uranium five years from 2009-2014, producing a total of 10.7Mlb price environment.
U3O8 in that period. As a consequence of sustained losses due to low prevailing uranium prices in the wake of the 2011 Fukushima incident, production at KM was suspended in May 2014. The operation was placed on C&M until such time as economic conditions improve sufficiently to enable KM to resume production with sustained profitability. More than 50% of the project’s total reserves and resources remain for future development. This is sufficient to provide for 2.5Mlb pa of production, with the potential to produce strong cash flows for at least another six years. Additional regional exploration has the potential to extend that further.
PALADIN ENERGY LTD ANNUAL REPORT 2015 13 MINERAL RESOURCES AND ORE RESERVES ORE RESERVES ESTIMATION Economic analysis on this Mineral Resource has indicated
Mineral Resources and Ore Reserves are unchanged from a break-even cut-off grade of 400ppm U3O8. those reported in 2014. As part of the Kayelekera re-start study it is expected that an updated Mineral Resource will be completed which will incorporate previous drilling ORE RESERVE AT 400PPM U3O8 CUT-OFF undertaken to the west of the current pit. This extensional drilling only intersected mineralisation at depth and, given Grade the current and projected uranium prices, this is not ppm Mlb
expected to contribute to additional Ore Reserves. Mt U3O8 t U3O8 U3O8 Mineral Resources and Ore Reserves conforming to both Proved 0.4 1,168 457 1.0 the JORC(2004) code and NI 43-101 are detailed below. Probable 5.3 882 4,709 10.4 Stockpiles 1.6 756 1,199 2.6 MINERAL RESOURCE AT 300PPM U3O8 CUT-OFF Total Ore Reserve 7.3 870 6,365 14.0 Grade (Figures may not add due to rounding and are depleted for mining to end ppm Mlb of June 2014).
Mt U3O8 t U3O8 U3O8 The underlying Ore Reserve is unchanged from that Measured 0.7 1,011 753 1.7 announced in 2008 and has only been depleted for Indicated 12.7 700 8,901 19.6 mining until 30 June 2014 (when mining ceased). Total Measured & Indicated 13.4 717 9,654 21.3 EXPLORATION The exploration group worked in areas close to the mine Stockpiles 1.6 756 1,199 2.6 in order to identify any additional targets within easy Inferred 5.4 623 3,334 7.4 access of the processing plant. Whilst mineralised areas have been identified these are not currently considered (Figures may not add due to rounding and are quoted inclusive of any Ore attractive enough to warrant drilling. This activity is Reserves and are depleted for mining to end of June 2014 when mining ceased). expected to continue until all the Karoo sandstone outcrop areas within the vicinity have been covered. The Mineral Resource estimate is based on Multi Indicator
REVIEW OF OPERATIONS OF REVIEW Kriging techniques with a specific adjustment based on The Malawian Government is currently implementing a parameters derived from the mining process. new Cadastral system and is in the process of introducing a new mining act. While this is progressing a moratorium for accepting and granting Exploration Licences has been implemented. The process is expected to be completed by the end of CY2015 and Paladin is preparing
MANAGEMENT DISCUSSION AND ANALYSIS AND MANAGEMENTDISCUSSION new Exploration Licence Applications for submission early CY2016.
14 PALADIN ENERGY LTD ANNUAL REPORT 2015 CANADA
MICHELIN PROJECT
Paladin Energy Ltd, through its wholly-owned subsidiary U3O8 of previously Inferred category material into the Aurora Energy Ltd (Aurora), holds rights to 91,500 Measured and Indicated categories, as well as adding hectares within the Central Mineral Belt of Labrador an additional 3.8Mlb U3O8 for a Measured and Indicated
(CMB), Canada, approximately 140km north of Happy Mineral Resource total of 84.1Mlb U3O8. Additional Mineral Valley-Goose Bay and 40km southwest of the community Resources remaining in the Inferred category now stand of Postville. at 22.9Mlb U3O8. Following pit optimisation studies using previous costs and a variety of uranium prices, the Open Paladin completed the acquisition of Aurora in February Pit (OP) and Underground (UG) split is determined now 2011 and, in March 2012, the Nunatsiavut Government, to be approximately 230m below surface (or 100m RL). a regional, aboriginal government formed in 2005, lifted the three year moratorium on the mining, development Over the last financial year Aurora carried out geological, and production of uranium on Labrador Inuit Land. Five of geophysical and geochemical surveys which have Paladin’s six deposits in this project area fall within these outlined an area 5km east, west and south of the Michelin lands. Paladin started exploration in the summer of 2012. deposit named the Michelin Rainbow Trend (MRT) as being prospective for additional uranium resources. Aurora claims cover a significant area of prospective Detailed geochemical surveys are planned for the ground over the CMB. The CMB contains publically northern summer season commencing July 2015 to reported 83.9Mlb U O Measured and Indicated Mineral 3 8 identify drill targets in this zone. Resources as well as an additional 86.6Mlb U3O8 Inferred Mineral Resource in 12 deposits, half of which are covered by the Aurora tenements. The largest of these deposits is ADDITIONAL POTENTIAL Michelin, the flagship of Aurora’s CMB project and one of The Michelin Deposit is still open along strike and at the world’s top five albitite-hosted resources. depth. Drilling programmes have already been designed On 26 June 2014, Paladin announced a revised Mineral to both infill and extend the existing Mineral Resource. Resource estimate for the Michelin Deposit, conforming In addition, there are also a number of promising targets to both the JORC(2012) Code and Canadian National within the MRT, which are currently being explored and OPERATIONS OF REVIEW Instrument 43-101. are expected to contribute to the economic viability of the project. Mineral Resources for deposits within the The 2014 Mineral Resources estimate for the Michelin Michelin project are detailed below. Deposit was successful in converting some 13.2Mlb MANAGEMENT DISCUSSION AND ANALYSIS AND MANAGEMENTDISCUSSION
Deposit Measured Mineral Resources Indicated Mineral Resources Inferred Mineral Resources
Cut-off 0.05%
& 0.02% U3O8 Mt Grade % t U3O8 Mt Grade % t U3O8 Mt Grade % t U3O8 Michelin 15.6 0.10 15,458 21.9 0.10 22,702 8.8 0.12 10,378 Jacques Lake 0.9 0.09 747 6.0 0.07 4,327 8.1 0.05 4,103 Rainbow 0.2 0.09 193 0.8 0.09 655 0.9 0.08 739 Inda 1.2 0.07 826 3.3 0.07 2,171 Nash 0.7 0.08 564 0.5 0.07 367 Gear 0.4 0.08 270 0.3 0.09 279
16,398 29,343 18,037 Total 16.6 0.10 (36.2Mlb) 31.0 0.09 (64.7Mlb) 21.9 0.08 (39.8Mlb)
The Mineral Resources for the deposits are reported at cut-off grades that contemplated underground (0.05% Alaska
U3O8 cut-off) and open pit (0.02% U3O8 cut-off) mining, based on preliminary economic assumptions carried out Gear CANADA by Aurora. Kaipokok Bay Inda Nash The updated 2014 Mineral Resource Estimate for the Postville United States of America Michelin Deposit has provided added confidence in the character of the mineralisation with the significant increase in Measured and Indicated category material. Importantly, in addition, the near surface open pittable Jacques Lake portion of the deposit now contains a substantial increase Aurora in both uranium grade and contained metal. Future drilling Tenements will concentrate on expanding the Mineral Resources at Michelin Rainbow N both the Michelin Deposit and the deposits and prospects Km0 10 occurring in the immediate surrounds. Scale: 1:200,000
PALADIN ENERGY LTD ANNUAL REPORT 2015 15 EXEMPTION FROM NON-RESIDENT OWNERSHIP RESTRICTION On 22 June 2015 Paladin received notification from Paladin to introduce a suitable minority joint venture the Canadian Government that its submission to be partner at the appropriate time should this be desired. the majority owner of a uranium mine at the Michelin Project has been approved. Under the current Non- Paladin underwent an extensive and rigorous appraisal Resident Ownership Policy (NROP), non-resident mining process by the relevant authorities in Canada conducted companies can own 100% of an exploration project but, over a 5 month period. The decision required the support by the stage of first production, there must be a minimum of the Minister of Natural Resources, the Hon. Greg Rickford level of Canadian resident ownership in individual uranium and ultimately the Prime Minister, Mr Harper. During mining projects of 51%. the familiarisation and due diligence process that was conducted to assess the submission for an exemption This posed an obvious limitation to the Michelin Project. from NROP, Paladin was questioned on its achievements, Given the Company’s global mining experience and technical abilities, environmental performance, commodity reputation, it has always considered itself as an owner/ knowledge and social responsibility particularly its operator of its uranium projects. The granting of an relation to the local communities and its standing with the exemption from NROP allowing Paladin to proceed Nunatsiavut government which is tasked to manage the eventually to production at the Michelin Project will permit Labrador Inuit Lands.
QUEENSLAND
In early 2015, the Queensland Government reinstated the The three projects include 10 deposits containing
previous ban on uranium mining. This decision has caused 106.2Mlb U3O8 Measured and Indicated Mineral
Paladin to slow the development of its uranium holdings in Resources as well as 42.2Mlb U3O8 Inferred Mineral the Mount Isa region of northwest Queensland. Resources. The bulk of the mineralisation is concentrated
REVIEW OF OPERATIONS OF REVIEW in the Valhalla deposit. Of this, 95.8Mlb U O Measured Paladin has an 82.08% majority shareholding in Summit 3 8 and Indicated Mineral Resources as well as 37.4Mlb U3O8 Resources Limited (Summit) acquired in 2007. Summit’s Inferred Mineral Resources are attributable to Paladin. wholly-owned subsidiary, Summit Resources (Aust) Pty 51.4% of the Mineral Resources are located at Valhalla; the Ltd (SRA), operates the Isa Uranium Joint Venture (IUJV) rest is distributed over the Bikini, Skal, Odin, Andersons, and the Mount Isa North Project (MINP). Mirrioola, Watta, Warwai, Duke Batman and Honeypot
MANAGEMENT DISCUSSION AND ANALYSIS AND MANAGEMENTDISCUSSION deposits. The table below lists JORC(2004) and NI 43- 101 compliant Mineral Resources by deposit, on a 100% project basis.
Measured & Indicated Paladin Deposit Mineral Resources Inferred Mineral Resources Attribution
Cut-off Grade Grade
ppm U3O8 Mt ppm t U3O8 Mt ppm t U3O8 Valhalla* 230 34.7 830 28,778 9.1 643 5,824 91.0%
Skal* 250 14.3 640 9,177 1.4 519 708 91.0%
Odin* 250 8.2 555 4,534 5.8 590 3,430 91.0%
Bikini* 250 5.8 497 2,868 6.7 493 3,324 82.0%
Andersons* 250 1.4 1,449 2,079 0.1 1,639 204 82.0%
Watta 250 5.6 404 2,260 82.0%
Warwai 250 0.4 365 134 82.0%
Mirrioola 250 2.0 555 1,132 82.0%
Duke Batman* 250 0.5 1,370 728 0.3 1,100 325 100%
Honey Pot 250 2.6 700 1,799 100%
Total 64.9 742 48,164 34.0 563 19,140 Total Resource 43,470 16,983 Attributable to Paladin 58.5 743 (95.8Mlb) 29.9 568 (37.4Mlb)
(Figures may not add due to rounding). * Deposits estimated using Multiple Indicator Kriging within a wireframe envelope. All other Mineral Resources are estimated using Ordinary Kriging with an appropriate top cut. Data for all deposits is a combination of geochemical assay and downhole radiometric logging.
16 PALADIN ENERGY LTD ANNUAL REPORT 2015 Metallurgical and mineralogical testwork has resulted Participants in the joint operation are SRA and Mount in a better understanding of the uranium mineralisation. Isa Uranium Pty Ltd (MIU), each holding a 50% interest, The mineralisation was shown to be of a very fine grained with SRA as manager. MIU is a wholly-owned subsidiary and occasionally refractory nature, containing increased of Valhalla Uranium Pty Ltd (VUL), a formerly public carbonate gangue minerals. Alkaline leaching has shown company and now a wholly-owned subsidiary of Paladin. acceptable recoveries of 80 to 90% at high temperature Paladin’s effective participating interest in the IUJV is and pressure, with normal reagent consumption. 91.04% through its ownership of 82.08% of the issued Radiometric sorting of the mineralisation also showed capital of Summit. further encouraging results. Testwork in the coming years 2 will aim at confirming an economic flow-sheet based on Ground subject to the IUJV covers 17.24km at Valhalla 2 alkaline leach and radiometric sorting. and 10km at Skal. These two areas lie within a larger holding of contiguous tenements of 934km2 held 100% The exploration is managed through separate projects, and managed by SRA and Paladin as outlined in the the locations are shown in the following map and details map below. are as follows: The application to cover the Valhalla and Skal uranium deposits with Mineral Development Licences (MDLs) 320000mE 340000mE was granted by the Queensland Government in September 2014. Valhalla is now covered by MDL510
7820000mN and Skal by MDL517 which also includes the Bikini and Gunpowder Mirrioola Deposits. Mount Isa
Honey Pot X QLD X MOUNT ISA NORTH PROJECT (MINP) Sunshine Brisbane EPM12572 The MINP is located 10 to 70km north and east of Mount Isa and contains numerous uranium prospects. The area is 100% held and managed by SRA utilising Paladin staff X Duke Batman and expertise. Exploration continues on MINP where X Joker Summit holds 934km2 of granted tenements that are Carlton Hills prospective for uranium, copper and base metals. In early 2015 the Queensland Government extended the licences 7780000mN Watta Hills for a further three years to 2018. The tenements are X centred on the city of Mount Isa. The project includes the X Warwai Bikini, Mirrioola, Watta, Warwai and Anderson uranium REVIEW OF OPERATIONS OF REVIEW deposits, as well as numerous other uranium prospects. Mineral Resource estimates are shown in the table on the
7760000mN previous page.
X Rich John Summit’s applications to cover the Anderson, Bikini, Mirrioola, Watta and Warwai deposits with MDLs were Odin X Bikini ANALYSIS AND MANAGEMENTDISCUSSION X granted in September 2014. The deposits are now Valhalla X covered by MDLs 509, 511 and 513. X X Skal
7740000mN Mirrioola VALHALLA NORTH PROJECT (VNP) The VNP is located on EPM 12572 totalling 193km2, New May Downs Andersons situated approximately 80km north of the Valhalla deposit. The geological setting is similar to the Summit/ 7720000mN X Paladin projects to the south where albitised basalts N Red Alpha XX with interbedded metasediments are mineralised along Km0 10 east-west and north-south structures in Eastern Creek MOUNT ISA Volcanics. The project includes the Duke Batman and Honey Pot deposits and Mineral Resource estimates for
Project SUMMIT Isa Uranium Joint Venture these deposits are listed in the table on the previous page. FUSION EPM17511 Anderson Mineral development EPM12572 Valhalla North Licences EPM17513 Carlton Paladin’s application for MDLs over the Honey Pot and Uranium Prospect EPM17514 Valhala Duke Batman deposits were granted in September 2014. Mine EPM17519 Skall Station The deposits are now covered by MDLs 507 and 508.
ISA URANIUM JOINT VENTURE (IUJV) QUEENSLAND URANIUM POLITICS The expectation in Queensland is that a conservative SUMMIT RESOURCES (AUST) PTY LTD (SRA) 50% government will strongly support uranium mining while a AND MANAGER Labor government (under current policy) will not permit it. Until the elections in March 2015, the Conservative MOUNT ISA URANIUM PTY LTD (MIU) 50% government under Campbell Newman were active in putting in place the regulatory regime to support the The IUJV covers ground containing the Valhalla, Odin and uranium mining industry. After the Labor government Skal uranium deposits 40km north of Mount Isa. Mineral was elected in March 2015 it indicated that it would Resource estimates are included in the table on the continue to allow exploration for uranium but would not previous page. permit mining.
PALADIN ENERGY LTD ANNUAL REPORT 2015 17 WESTERN AUSTRALIA
MANYINGEE URANIUM PROJECT CARLEY BORE (MANYINGEE) On 1 June 2015 Paladin announced the acquisition of Manyingee is located in the north-west of Western strategically important tenements containing the Carley Australia, 1,100km north of Perth and 85km inland from the Bore deposit from Energia Minerals Limited (EMX) for coastal township of Onslow. The property is comprised consideration of Paladin shares and A$1.6M in cash. of three mining leases covering 1,307 hectares. Paladin On 7 August 2015, Paladin issued to EMX 40 million purchased Manyingee in 1998 from Afmeco Mining and fully paid shares in addition to the cash payment for the Exploration Pty Ltd (AFMEX), a subsidiary of Cogema purchase of EL 08/1645 and EL 08/1646, a 685km2 land from France. package covering a rich sedimentary basin which hosts Between 1973 and 1984, approximately 400 holes were the Carley Bore deposit, in the north west region of drilled by the previous owners to establish the extent and Western Australia. continuity of the sediment-hosted uranium mineralisation A further 5 million Paladin fully paid shares were issued contained in permeable sandstone in paleochannels. for the purchase of the adjacent northern EMX tenement, Field trials by AFMEX demonstrated that the Manyingee EL 08/1644, following EMX’s application for expenditure sandstone-hosted uranium deposit is amenable to being approved. The acquisition also provides Paladin extraction by in-situ recovery (ISR).
with a right of first refusal over the disposal of any interest In 2012, Paladin drilled 96 holes for 9,026m of Rotary in any future tenements granted to EMX that share a Mud and 242m of PQ core. The drilling resulted in boundary with the existing Carley Bore tenements and a new geological model and, on 14 January 2014, certain specific tenements in the vicinity. Paladin announced an updated Mineral Resource for Consisting of three contiguous exploration licences, this the Manyingee Project. The Mineral Resource estimate new project area is located 100km south of Paladin’s conforms to both the JORC(2012) Code and NI 43-101. Manyingee Uranium Project (Manyingee) as shown in the location map. The Carley Bore deposit, as estimated by UPDATED MINERAL RESOURCE ESTIMATE EMX, contains an Indicated Mineral Resource of 5.0Mlb
REVIEW OF OPERATIONS OF REVIEW (250PPM U O AND 0.2M CUT-OFF) 3 8 U3O8 grading 420ppm and an Inferred Mineral Resource
of 10.6Mlb U3O8 grading 280ppm (JORC (2012)) at a cut-
Mineral Grade Metal off grade of 150ppm U3O8. Resource Tonnes ppm Metal Mlb
Classification Mt U3O8 t U3O8 U3O8 Total Indicated 8.4 850 15.71 7,127
MANAGEMENT DISCUSSION AND ANALYSIS AND MANAGEMENTDISCUSSION Manyingee Inferred 5.4 850 10.17 4,613
Figures may not add due to rounding. Manyingee The geology of the deposit is well understood, having been subject to extensive exploration over a number of years with the stratigraphic sequence being defined by Perth the comprehensive dataset of downhole electric logs. A total of 35 water bores in place since 2012, are used for ongoing monitoring of physical and chemical properties of the aquifer containing the uranium mineralisation. Paladin believes that the Mineral Resources on the mining leases can be increased and that commencement of production at the project can be achieved within a 4-5 year time frame. E 08/1644 Current work on the project is concentrated on compiling a Field Leach Trial proposal document expected to be submitted to the WA Department of Mines and Petroleum in the first half of CY2016. Several specialist E 08/1645 studies have been started for this work and these include hydrogeological modelling, metallurgical testing and environmental and radiation approval assistance. N Carley Bore
E 08/1646
0 30 Km
Paladin Tenements
Tenements acquired
North West Coastal Highway
18 PALADIN ENERGY LTD ANNUAL REPORT 2015 This acquisition will increase the Company’s JORC BIGRLYI JOINT VENTURE (BJV) (2012) Indicated Mineral Resources within the area by more than 30% to 20.7Mlb U3O8 at a grade of 680ppm, ENERGY METALS LIMITED 53.29% AND MANAGER and the Inferred Mineral Resources by more than 100% NORTHERN TERRITORY URANIUM PTY LTD 41.71% to 20.9Mlb at a grade of 415ppm. Carley Bore remains open to the north and south and Paladin believes there SOUTHERN CROSS EXPLORATION NL 5% is excellent potential within this land package to increase The BJV covers ten granted Exploration Licences in this resource base by at least a further 15Mlb to 25Mlb. Retention (ELRs), two granted Exploration Licences (ELs), and a number of applications all located in the The large tenement package contains geology similar to Ngalia Basin approximately 320km north-west of that which hosts the Carley Bore and Manyingee deposits Alice Springs in the Northern Territory. Participants in as well as numerous identified regional drill anomalies the Project are Energy Metals Limited (53.29% and which offer additional targets warranting follow-up Manager), Northern Territory Uranium Pty Ltd (a wholly- investigation. The established resource inventory and owned subsidiary of Paladin) (41.71%) and Southern potential upside of the combined tenement portfolio will Cross Exploration NL (5%). ensure that a single ISR facility in the region is able to operate with a long processing life. Energy Metals Limited (EME), as the Manager of the BJV, announced in June 2011 the completion of a Pre- The potential to develop a significant mining operation Feasibility Study (PFS) for the Bigrlyi Project showing that, with a long mine life extending well beyond 20 years within under current market conditions, it is not economically a new uranium district is compelling. In-house studies viable. A substantial increase in the resource base indicate the acquisition of Carley Bore will be value that has been identified to date is required, especially accretive independent of the significant resource upside resources amenable to open pit mining to help the Paladin considers exploration may deliver. economic outcome of this project. EME is exploring the
Exploration drilling is planned to start in September 2015 wider Ngalia Basin for additional resources on its 100% and will focus on resource drilling at Carley Bore as well as owned licences. limited regional exploration to test potential for additional In late June 2011, EME released an updated Mineral uranium deposits. Resource estimate, conforming to both the JORC(2004) guidelines and NI 43-101, based on all drilling to date. OOBAGOOMA URANIUM PROJECT The breakdown of Mineral Resource category is detailed below and is reported at a 500ppm U O cut-off grade. (OOBAGOOMA) 3 8 The Oobagooma Project (held 100%) is located in the West Kimberley region of Western Australia, 1,900km Mineral Grade OPERATIONS OF REVIEW north-north-east of Perth and 75km north-east of the Resource Tonnes ppm Metal Metal Classification Mt U O t U O Mlb U O regional centre of Derby. The project now comprises one 3 8 3 8 3 8 application for an EPL covering approximately 450km². Indicated 4.7 1,366 6,400 14.1
In 1998, Paladin acquired a call option in relation to the Inferred 2.8 1,144 3,200 7.1 purchase of Oobagooma. This arrangement was more ANALYSIS AND MANAGEMENTDISCUSSION Additionally, in the Ngalia Basin, Paladin holds, as part of recently varied so that Paladin Energy Minerals NL is now the BJV, Mineral Lease North (MLN) and Mineral Claim the applicant and will, upon the anticipated grant, hold the South (MCS) applications covering the Karins deposit, exploration licence directly. together with interests in granted ELRs covering the The Oobagooma project area was explored by AFMEX Walbiri (58%) and Malawiri (48%) prospects; both in between 1983 and 1986, during which time extensive partnership with EME. Paladin also holds 100% of the Mt zones of uranium mineralisation were discovered. AFMEX Wedge retention lease applications in the Ngalia Basin. On 1 July 2015 Energy Metals announced an Inferred (JORC identified a historic resource of 21.9Mlb U3O8 at 0.12% 2012) Mineral Resource of 1.5Mlb U O at 0.06% U O for U3O8 with a 0.035% cut-off. Paladin has classified this 3 8 3 8 mineralisation as an exploration target, but, after examining the Karins deposit. Previous explorers defined exploration the AFMEX data, Paladin believes that following validation targets on all leases and it is expected that exploration of all existing data, there is good potential to upgrade the will be carried out on these leases, in the coming years to further expand the resource base of the project. exploration target within the area to 40 to 50Mlb U3O8.
Previous tonnages, grades, assays and other technical data for Oobagooma are taken from historical records prior to the implementation of JORC or NI 43-101. While the data are believed to have been acquired, processed and disclosed by persons believed to be technically competent, it is unverifiable at present. A Competent Person as defined under the JORC Code or Qualified Person as defined under NI 43-101 has not done sufficient work to classify the historical estimate as current Mineral Resources. Paladin is not treating any historical estimates as current Mineral Resources as defined in either the JORC Code or NI 43-101 and the historical estimates should not be relied upon.
PALADIN ENERGY LTD ANNUAL REPORT 2015 19 ANGELA-PAMELA PROJECT The Mineral Resource estimate is based on 794 holes totalling 180,468m and covers the Angela (1 to 5) and Angela is a sandstone-hosted roll-front type uranium Pamela deposits. The mineralisation plunges shallowly, deposit (held 100% by Paladin) with an Inferred Mineral approximately 9°, to the west and the resource of the
Resource of 30.8Mlb U3O8 at 0.13% U3O8 located in larger of the deposits, Angela 1, has been defined the Amadeus Basin of Australia’s Northern Territory, up to 4.3km to the west at depths up to 600m and approximately 25km from Alice Springs. remains open. In November 2006, Cameco Australia Pty Ltd (Cameco) The cut-off for the Mineral Resource is a combination and Paladin, in a 50:50 joint venture, won a tender in of grade greater than or equal to 300ppm U3O8 and competition with numerous other applicants, for an thickness greater than 0.5m. The Mineral Resource Exploration Licence covering the Angela and Pamela estimate conforms to the JORC(2004) Guidelines and uranium prospects. complies with NI 43-101. The joint venture conducted drilling programmes during 2009 and 2010, including 172 holes totalling 32,810m. Mineral Grade Resource Cameco formally withdrew from the joint venture in Tonnes ppm Metal Metal Classification 2013 after determining that the project did not meet its Mt U3O8 t U3O8 Mlb U3O8 investment criteria at that time and Paladin then assumed 100% ownership. Inferred 10.7 1,310 13,980 30.8 Importantly the mineralisation includes a higher grade core at a cut-off of 1500ppm which still contains 20.2Mlb
at a grade of 2,500ppm U3O8.
NIGER (WEST AFRICA)
REVIEW OF OPERATIONS OF REVIEW PROJECT AGADEZ MINERAL RESOURCE AND ORE RESERVE Project Agadez is located in northern Niger, north-west SUMMARY Africa, 30km west and north-west of the township of The following tables detail the Company’s Mineral Agadez. It includes three exploration concessions: Tagait Resources and Ore Reserves and the changes that have 4 (TAG4); Toulouk 1 (TOU1); Terzemazour 1 (TER1); and, occurred within FY2015. The only changes to Mineral MANAGEMENT DISCUSSION AND ANALYSIS AND MANAGEMENTDISCUSSION one application Ekazan 1 (EKA1), all covering a total Resource and Ore Reserve information were due to 2 area of 990km . The concessions cover sandstone type depletion for mining to 30 June 2015 at Langer Heinrich uranium mineralisation in the Tim Mersoï Basin. In 2012 as well as minor reductions due to the establishment of in- Areva produced in excess of 11Mlb U3O8 from two mines pit tailings facilities which have sterilised some mined-out located less than 100km north of Paladin’s concessions. areas within the resource/reserve. There were no other Since start up in the 1970’s, close to 300Mlb U3O8 have material changes to the Company’s Mineral Resources been produced out of the basin. and Ore Reserves. Paladin’s TER1 concession contains a low-grade Inferred
Mineral Resource of 11Mlbs U3O8 at 210ppm U3O8 at a
cut-off grade of 120ppm U3O8 in shallow sediments. An in- house evaluation of the estimate indicated the possibility of higher grade mineralisation controlled by a previously unrecognised paleochannel. However, further drilling was put on hold due to an escalation of terrorist activities in the area. At this stage Paladin has suspended all field activities in the Arlit and Agadez areas and a force majeure has been requested from the government authorities for indefinite suspension of expenditure requirements.
20 PALADIN ENERGY LTD ANNUAL REPORT 2015 30 June 2014 30 June 2015 Change Mineral M Grade % Metal M Grade % Metal M Metal
Resources tonnes U3O8 t tonnes U3O8 t tonnes t
Canada Measured Jacques Lake 0.86 0.087 747 0.86 0.087 747 – – Michelin 15.57 0.099 15,458 15.57 0.099 15,458 – – Rainbow 0.21 0.092 193 0.21 0.092 193 – –
Indicated Gear 0.35 0.077 270 0.35 0.077 270 – – Inda 1.2 0.069 826 1.2 0.069 826 – – Jacques Lake 6.04 0.072 4,327 6.04 0.072 4,327 – – Michelin 21.93 0.104 22,701 21.93 0.104 22,701 – – Nash 0.68 0.083 564 0.68 0.083 564 – – Rainbow 0.76 0.086 655 0.76 0.086 655 – –
Inferred Gear 0.3 0.093 279 0.3 0.093 279 – – Inda 3.26 0.067 2,171 3.26 0.067 2,171 – – Jacques Lake 8.1 0.051 4,103 8.1 0.051 4,103 – – Michelin 8.81 0.118 10,378 8.81 0.118 10,378 – –
Nash 0.51 0.072 367 0.51 0.072 367 – – Rainbow 0.91 0.082 739 0.91 0.082 739 – –
Malawi Measured Kayelekera 0.74 0.101 753 0.74 0.101 753 – –
Indicated 12.71 0.070 8,901 12.71 0.070 8,901 – –
Inferred 5.35 0.062 3,334 5.35 0.062 3,334 – –
Stockpiles 1.59 0.076 1,199 1.59 0.076 1,199 – –
Namibia Langer OPERATIONS OF REVIEW Measured Heinrich 22.42 0.055 12,410 19.60 0.056 10,912 -2.82 -1,498
Indicated 66.98 0.055 36,877 62.94 0.054 34,051 -4.04 -2,826
Inferred 17.59 0.058 10,246 16.99 0.058 9,842 -0.60 -404 30.42 0.041 12,500 32.09 0.040 12,867 +1.67 +367 Stockpiles ANALYSIS AND MANAGEMENTDISCUSSION
Niger Inferred Takardeit 23.21 0.021 4,943 23.21 0.021 4,943 – –
Australia Measured Valhalla 16.02 0.082 13,116 16.02 0.082 13,116 – –
Indicated Bigrlyi 4.7 0.136 6,400 4.7 0.136 6,400 – – Andersons 1.4 0.145 2,079 1.4 0.145 2,079 – – Bikini 5.77 0.050 2,868 5.77 0.050 2,868 – – Duke Batman 0.53 0.137 728 0.53 0.137 728 – – Odin 8.2 0.055 4,534 8.2 0.055 4,534 – – Skal 14.3 0.064 9,177 14.3 0.064 9,177 – – Valhalla 18.64 0.084 15,662 18.64 0.084 15,662 – – Manyingee 8.37 0.085 7,127 8.37 0.085 7,127 – –
Inferred Angela 10.7 0.131 13,980 10.7 0.131 13,980 – – Bigrlyi 2.8 0.114 3,200 2.8 0.114 3,200 – – Andersons 0.1 0.164 204 0.1 0.164 204 – – Bikini 6.7 0.490 3,324 6.7 0.490 3,324 – – Duke Batman 0.29 0.110 325 0.29 0.110 325 – – Honey Pot 2.56 0.070 1,799 2.56 0.070 1,799 – – Mirrioola 2 0.056 1,132 2 0.056 1,132 – – Odin 5.8 0.059 3,430 5.8 0.059 3,430 – – Skal 1.4 0.052 708 1.4 0.052 708 – – Valhalla 9.1 0.064 5,824 9.1 0.064 5,824 – – Watta 5.6 0.040 2,260 5.6 0.040 2,260 – – Warwai 0.4 0.036 134 0.4 0.036 134 – – Manyingee 5.41 0.085 4,613 5.41 0.085 4,613 – –
PALADIN ENERGY LTD ANNUAL REPORT 2015 21 30 June 2014 30 June 2015 Change Ore M Grade % Metal M Grade % Metal M Metal
Reserves tonnes U3O8 t tonnes U3O8 t tonnes t Malawi Kayelekera Proven 0.39 0.117 457 0.39 0.117 457 –– Probable 5.34 0.088 4,709 5.34 0.088 4,709 –– Stockpiles 1.59 0.076 1,199 1.59 0.076 1,199 –– Namibia Langer Heinrich Proven 17.0 9 0.057 9,653 15.80 0.057 8,955 -1.29 -698 Probable 56.31 0.056 31,764 52.83 0.055 29,273 -3.48 -2,491 Stockpiles 30.42 0.041 12,500 32.09 0.040 12,867 +1.67 +367
Mineral Resources and Ore Reserves quoted on a 100% basis.
All of the Company’s Mineral Resources and Ore Reserves are internally peer reviewed at the time of estimation and are subject to ongoing review, as and when required. Should any Mineral Resources or Ore Reserves be utilised within a Bankable or Definitive Feasibility Study, it is expected that an audit by independent experts would be conducted. For both mine sites, ongoing reconciliations between Mineral Resource, Ore Reserve, Mining Production and Mill Feed tonnes and grade are completed on a regular basis and, to date, there have been no material differences identified in any of these processes.
The information above relating to exploration, mineral resources and ore reserves is, except where stated, based on information compiled by David Princep B.Sc and Stephanie Raiseborough B.E., both of whom are members of the AusIMM. Mr Princep and Ms Raiseborough each have sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity that he/she is 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”, and Mr Princep and Ms Raiseborough as a Qualified Person as defined in NI 43-101. Mr Princep and Ms Raiseborough are full-time employees of Paladin Energy Ltd and consent to the inclusion of this information in the form and context in which it appears. REVIEW OF OPERATIONS OF REVIEW URANIUM DATABASE DEEP YELLOW LTD (DYL) Paladin owns a substantial uranium database, compiled PALADIN 16.70% over 30 years of investigations by the international uranium Deep Yellow Limited (DYL) is an ASX-listed, Namibian- mining house, Uranerzbergbau in Germany, incorporating focussed advanced stage uranium exploration company. MANAGEMENT DISCUSSION AND ANALYSIS AND MANAGEMENTDISCUSSION all aspects of the uranium mining and exploration industry It also has a listing on the Namibian Stock Exchange. worldwide and including detailed exploration data for Africa and Australia. DYL’s operations in Namibia are conducted by its 100% owned subsidiary Reptile Uranium Namibia (Pty) Ltd Since acquiring this substantial uranium database, which (RUN). RUN holds 100% of two Exclusive Prospecting consists of extensive collections of technical, geological, Licences (EPLs) covering 1,346km2 and another four metallurgical, geophysical and geochemical resources, EPLs under two different joint ventures of which RUN is including resource evaluations, drill hole data, downhole also the operator. All of these EPLs are situated in the logging data, airborne radiometric surveys results, open- Namib Naukluft Desert Park inland from Walvis Bay and file data, and photographic archives, the Company has south and west of Paladin’s LHM. maintained and expanded this valuable library of data. The company’s flagship is the higher grade alaskite The data continues to be utilised by the Company as an Omahola Project on which studies are being conducted asset for project generation to evaluate opportunities to supplement a recently completed (internal) preliminary and generate new uranium prospects and projects for economic analysis. Scoping level metallurgical testwork is acquisition and exploration. also being planned, which will be required to demonstrate the technical feasibility of developing Omahola as a heap leach project. During the past year DYL attempted to secure a domestic offtaker for the Tubas Sand Project but marginal economics prevented a successful outcome and the project is now on hold. Subsequently the company commenced evaluating fast track development options for its surficial calcrete deposits, similar in nature and some close to Paladin’s LHM, which appear to be amenable to various physical beneficiation upgrading techniques that have been successfully tested over the last four years.
22 PALADIN ENERGY LTD ANNUAL REPORT 2015 HEALTH AND SAFETY
Paladin is “committed to provide and maintain a safe The Company Lost Time Injury Frequency Rate (LTIFR) and healthy work environment with the aim of ‘Zero decreased from 3.1 to 2.1 over the previous year. For Harm’ from occupational injuries and illnesses in the FY2015, there were six LTIs compared to twelve LTIs for work place”. The Company also “considers excellence the previous year. in radiation management performance is essential to our business success and is fully committed to achieving Lost Time Injury (LTI): minimum radiation exposure to its workers, members of Work injury that results in an absence from work for at the public and the surrounding natural environment and least one full day or shift, any time after the day or shift on minimising the potential impact by the safe management which the injury occurred. of radioactive waste at its uranium mining and processing Lost Time Injury operations” as stated in its Occupational Health and Frequency Rate (LTIFR): Number of lost time injuries Safety Policy and Radiation Policy respectively. inclusive of fatalities per million hours worked.
Duration Rate: Average number of workdays lost per injury.
FY2015 COMPANY SAFETY STATISTICS
Langer Heinrich Mine Kayelekera Mine
Mine Other Mine Other Employees Contractors Contractors Employees Contractors Contractors Hours Worked 732,993 1,069,165 197,8 46 659,977 15,344 83,700 Lost Time Injuries 3 2 0 1 0 0 Fatalities 0 0 0 0 0 0 HEALTHAND SAFETY LTIFR 4.1 1.9 0 1.5 0 0
Langer Heinrich Mine Total LTIFR = 2.5 Kayelekera Mine Total LTIFR = 1.3 Duration Rate = 10.6 Duration Rate = 39.0
FY2014 COMPANY SAFETY STATISTICS ANALYSIS AND MANAGEMENTDISCUSSION
Perth Exploration Group
Corporate Paladin All Office Employees Contractors Employees Contractors Hours Worked 86,000 59,657 206 1,538,627 1,366,261 Lost Time Injuries 0 0 0 4 2 Fatalities 0 0 0 0 0 LTIFR 0 0 2.6 1.5
Perth LTIFR Exploration Paladin Group + = 0.0 LTIFR = 0.0 All Contractors Duration Rate Duration Rate LTIFR = 2.1 = 0.0 = 0.0 Duration Rate = 15.3
The Paladin Group’s decreased LTIFR highlights the need for constant focus in order to maintain a safe and healthy work environment within the mining and resources industry and further determined the Company’s resolve to achieve ‘Zero Harm’. Paladin’s safety and health performance of its operations is measured through the external internationally recognised National Occupational Safety Association (NOSA) Five Star System ensuring transparency and complementing its own internal audit processes.
PALADIN ENERGY LTD ANNUAL REPORT 2015 23 LANGER HEINRICH MINE KAYELEKERA MINE During the year, LHM reported five LTIs, of which three The Kayelekera Mine is currently under care and were LHM employees and two were contractors. The maintenance therefore the workforce numbers and thus site’s annual LTIFR decreased from 3.7 to 2.5 with the man hours have significantly decreased from the previous decrease being attributed to an increased focus on safety, financial year. health, and radiation (SHR) management and training. The site reported one LTI, relating to an employee, The mine’s 2014 NOSA grading audit, conducted in March decreasing the annual LTIFR from 2.9 to 1.3. Similar 2015, resulted in the operation attaining a 4 Star Platinum to LHM, a fresh and increased focus and awareness (health, safety and environment) grade rating, up from programme instigated as a result of last year’s poor its previous 3 star Platinum grade rating. This increased performance has resulted in this reduction in LTIFR. performance resulted in an audit score of 82.6% up from 73.1% highlighting the impact of additional resources and A NOSA Health, Safety and Environment external audit ongoing review of procedures and training on the site’s was conducted for the period July 2014 to May 2015 comprehensive safety programmes. resulting in Kayelekera Mine being awarded a 5 Star Platinum rating – NOSA’s highest standard. LHM has reviewed and strengthened key areas of the general induction which now covers the revised The designated worker mean annual radiation dose was procedures such as permit to work, hazard identification, 1.1 mSv for 5 months of operating in CY2014 compared risk assessments, isolations, working in confined spaces, with the internationally recommended annual dose limit working at heights and performing hot work. Mine of 20 mSv. personnel have undergone and are undergoing revised training, further up skilling and broadening of their safety EXPLORATION and health knowledge base to ensure a safer work
environment. Paladin’s exploration activities included drilling in Canada and limited ground surveys in remote locations LHM continues to be actively involved with the Chamber undertaken for its other projects. of Mines Uranium Institute in Namibia, a leading source of advocacy, training and research on uranium related No LTI’s were recorded for the year with the LTIFR rate issues. The mine participates in the Chamber of Mines decreasing from 11.0 to 0. Safety Committee who together with a group of mines Exploration continues to maintain and enhance its Safety safety managers conduct quarterly peer safety reviews. and Health Management System particularly in the The Safety Committee carried out a safety inspection at
HEALTHAND SAFETY aspects of remote area operations. the Langer Heinrich Mine during September 2014. The 2014 Annual Radiation Report was compiled and delivered to the Namibian Radiation Protection Authority (NRPA) in March 2015. Radiation doses reported include: The mean dose to Designated Workers was 3.1 mSv,
MANAGEMENT DISCUSSION AND ANALYSIS AND MANAGEMENTDISCUSSION compared with 3.7 mSv in 2013; The dose to Non-Designated Workers was 1.6 mSv (compared to 1.9mSv in 2013); and The dose to a hypothetical group living on the site boundary (Remote Gate) for the entire 2014 year would have been 1.9 mSv. This compares with the mean world member of the public dose as reported by the United Nations Scientific Committee on the Effects of Atomic Radiation (UNSCEAR) of 2.4 mSv. In April the NRPA issued LHU with a consolidated Authorisation to Export Radioactive Material and Licences for the Possession and Use of Sources. This is the first time that LHU has been able to obtain a consolidated authorisation replacing numerous documents that were previously required to be renewed at various times during the year.
24 PALADIN ENERGY LTD ANNUAL REPORT 2015 FINANCIAL REVIEW
Construction of KM, with a 3.3Mlb U O design capacity, OPERATIONAL OVERVIEW 3 8 commenced in 2007 and, after a two-year construction The Group has two uranium mines in Africa1, uranium phase, the mine entered its production ramp-up phase exploration projects in Australia, Africa and Canada, in CY2009. KM continued to ramp-up its production and a strategy to become a major uranium mining volumes through to July 2010. Commercial production house. The Company is incorporated under the laws of was declared from 1 July 2010. KM made its first delivery of Western Australia with a primary share market listing on uranium to customers in December 2009. During FY2012, the Australian Securities Exchange (“ASX”) and additional the operation made substantial positive steps toward the listings on the Toronto Stock Exchange (“TSX”) in Canada; design of 3.3Mlb U3O8 pa through a programme of plant as well as the Munich, Berlin, Stuttgart and Frankfurt upgrades aimed at addressing bottlenecks. The plant Stock Exchanges in Europe; and the Namibian Stock achieved record annual production totalling 2.963Mlb Exchange in Africa. U3O8 for FY2013, 20% higher than FY2012. The focus at KM turned to production optimisation with the acid LHM commenced production in 2007 with a capacity recycling (nano-technology) project representing a key of 2.7Mlb U O pa. After operating at this level for a 3 8 element. The acid recovery plant was operational up to sustained period of time, construction of the Stage the cessation of ore processing and continued to improve 2 expansion to 3.7Mlb U O pa commenced in 3 8 beyond its design criteria. CY2008. LHM reached the Stage 2 design capacity in December 2009. The plant consistently operated at the On 7 February 2014, the Company announced that it
3.7Mlb U3O8 pa rate from the beginning of CY2010. was suspending production at KM and placing the mine
Construction of the Stage 3 expansion to 5.2Mlb U3O8 on care and maintenance due to the low uranium price commenced at the beginning of CY2010 and was and non-profitability of the operation. The plant operated completed on 31 March 2012. Commercial production until all reagents in the supply chain were consumed was declared from 1 April 2012. The plant achieved to the maximum extent possible and the plant ceased Stage 3 design performance in FY2013. production on 6 May 2014. After a transition period, during
which the site was made safe, the plant cleaned and all FINANCIALREVIEW In FY2014, the focus turned to process innovation and remaining product dispatched to customers, the care and production optimisation. The plant achieved record maintenance period commenced on 26 May 2014. During annual production totalling 5.822Mlb2 U O for FY2014, 3 8 care and maintenance the project will be maintained with 6% higher than FY2013. In FY2015 the production an adequate component of staffing to keep the project in optimisation strategy continued and focused on the good working order and to preserve the critical aspects of better utilisation of existing equipment, operator and Intellectual Property and operational knowhow. supervision training and the further integration of process control. Process innovation was focused on The Feasibility Study for recommencement of production ANALYSIS AND MANAGEMENTDISCUSSION the Bicarbonate Recovery Plant (BRP). The BRP was at KM is near completion with a final internal review of commissioned in early March 2015 and apart from minor the study underway. The study to date has confirmed that downtime to complete priority construction punch list KM remains a valuable strategic asset. KM can provide items, the plant has run continuously since, at or above an additional 2.5Mlb pa in production and has clear design throughput. The process performance of the plant potential to produce strong cash flow at uranium prices is substantially better than predicted and bicarbonate of US$75/lb, for at least six years, as more than 50% recovery levels are much higher than forecast. The high of the project’s total reserves and resources remain for degree of success from this project also augurs very well future development. Further regional exploration has the for the ongoing innovation programme and subsequent potential to provide additional upside. expected reductions in C1 costs. 1 Langer Heinrich Mine, Namibia (operating). Kayelekera Mine, Malawi (on care and maintenance). 2 Langer Heinrich Mine production volumes were restated and include an adjustment to in-circuit inventory.
PALADIN ENERGY LTD ANNUAL REPORT 2015 25 NON IFRS MEASURE C1 cost of production = cost of production excluding measures prepared in accordance with IFRS, certain product distribution costs, sales royalties and depreciation investors use this information to evaluate our performance. and amortisation before adjustment for impairment. C1 C1 cost information (unaudited) has been extracted from cost, which is a non-IFRS measure, is a widely used the financial statements. For an analysis of total cost of ‘industry standard’ term. We use this measure as a sales refer to Note 12 to the financial statements. Refer to meaningful way to compare our performance from period page 28 for reconciliation. to period. We believe that, in addition to conventional
FINANCIAL RESULTS
Year Ended 30 June
Change from 2014 to 2015 2015 2014 2013
Production volume (Mlb) (37)% 5.037 7.943 8.255 Sales volume (Mlb) (38)% 5.367 8.665 8.253 Realised sales price (US$/lb) (2)% 37.0 37.9 49.5
US$M US$M US$M
Revenue (39)% 199.5 329.5 411.5 Cost of Sales 43% (189.7) (332.9) (355.6) Impairment – inventory, stores and consumables 87% (8.0) (61.7) (30.9)
Gross (loss)/profit 103% 1.8 (65.1) 25.0
FINANCIALREVIEW Impairments 27% (241.4) (331.7) (305.0)
Loss after tax attributable to members of the parent 21% (267.8) (338.4) (420.9) Other comprehensive income/(loss) for the period, net of tax (101.0) 1.9 (69.2)
Total comprehensive loss attributable to the members of the parent (10)% (368.8) (336.5) (490.1) Loss per share - basic and diluted (US cents) 42% (18.9) (32.7) (49.1)
MANAGEMENT DISCUSSION AND ANALYSIS AND MANAGEMENTDISCUSSION References below to 2015 and 2014 are to the equivalent Segment Information (refer to Note 5) year ended 30 June 2015 and 2014 respectively. The Namibian segment loss increased by US$23.7M, due Revenue decreased by 39%, due to a 2% decrease in mainly to the tax expense in 2015, which has arisen as realised sales price and a 94% (3.272Mlb) decrease in a result of deferred tax recognised on foreign exchange sales volume from KM, which ceased production on 6 temporary differences. The Malawian segment loss May 2014, and is now on care and maintenance. The last decreased by US$48.2M as a result of KM ceasing of KM finished goods were sold in December 2014. production and being placed on care and maintenance. Exploration activities loss has decreased by US$59.1M Gross Profit in 2015 of US$1.8M is a turnaround from a predominantly due to a lower impairment expense in 2015 US$65.1M gross loss in 2014 due to a lower impairment discussed earlier. In the Unallocated portion, the Group of inventory, stores and consumables in 2015 of US$8.0M reflected the remaining Income Statement activities, (2014: US$61.7M impairment of inventory, stores and which for 2015 comprise mainly marketing, corporate, consumables). The gross loss in 2014 included a gross finance and administration costs. The loss (costs) in loss before impairments from KM of US$19.6M and a this area has decreased by US$5.9M mainly through a gross profit before impairments from LHM of US$15.5M. cost rationalisation review and due to the recognition Impairments of US$241.4M (2014: US$331.7M) were of an income tax benefit on the issue of the US$150M recognised in 2015 relating to US$229.1M (US$180.8M convertible bond. after tax) (2014: US$323.6M (US$226.5M after tax)) Three Year Trend impairment of the Queensland exploration assets, US$8.4M impairment of the Bigrlyi exploration asset, Revenue has decreased by 51% since 2013, due to a 25% US$1.0M (2014: US$3.8M) impairment of the aircraft and decrease in realised sales price and a 35% decrease in US$2.9M (2014: US$4.3M) impairment of available-for- sales volume. Gross profit in 2015 of US$1.8M is lower sale financial assets predominantly due to the impairment than the gross profit in 2013 of US$25.0M, due to lower of the investment in Deep Yellow Ltd (DYL). sales prices and sales volumes in 2015 being partially offset, in 2013, by a higher impairment of inventory, stores Loss after Tax Attributable to the Members of the Parent and consumables of US$30.9M. for 2015 of US$267.8M is lower than the loss of US$338.4M in 2014, and is predominantly due to the impairment of the Queensland exploration assets discussed earlier, a 38% decrease in sales volume, a 2% decrease in realised sales price and finance costs of US$57.0M. In 2014, the loss was predominantly due to the impairment of the Queensland exploration assets.
26 PALADIN ENERGY LTD ANNUAL REPORT 2015 FOURTH QUARTER FINANCIAL RESULTS
Three Months Ended 30 June % Change 2015 2014 2013
Production volume (Mlb) (16)% 1.336 1.600 2.143 Sales volume (Mlb) (3)% 1.766 1.812 2.326 Realised sales price (US$/lb) 9% 41.5 38.2 46.2
US$M US$M US$M Revenue 6% 73.9 69.4 109.6 Cost of Sales 4% (67.5) (70.1) (92.8) Impairment – inventory, stores and consumables 78% (8.0) (36.8) (17.2)
Gross loss 104% (1.6) (37.5) (0.4)
Impairments (6,208)% (239.7) (3.8) (164.2)
Loss after tax attributable to members of the parent (309)% (195.9) (63.5) (173.3) Other comprehensive income/(loss) for the period, net of tax 3.2 13.1 (86.1)
Total comprehensive loss attributable to the members of the parent (382)% (192.7) (50.4) (259.4) Loss per share - basic & diluted (US cents) (89)% (11.7) (6.2) (19.6)
References below to 2015 and 2014 are to the equivalent Three Year Trend three months ended 30 June 2015 and 2014 respectively. Revenue has decreased by 33% since 2013 due to a 10% Revenue increased by 6%, due to a 9% increase in realised decrease in realised sales price and a 24% decrease in FINANCIALREVIEW sales price, which was partially offset by a 3% decrease in sales volume. Gross loss in 2015 of US$1.6M is a slight sales volume as there were no sales from KM. The last of increase from a US$0.4M gross loss in 2013 predominantly KM finished goods were sold in December 2014. due to lower sales prices and sales volumes in 2015 being partially offset by a lower impairment of inventory, stores Gross Loss in 2015 of US$1.6M is lower than the gross loss and consumables in 2015 of US$8.0M (2013: US$17.2M). in 2014 of US$37.5M predominantly due to there being a lower impairment of inventory, stores and consumables in 2015 of US$8.0M (2014: US$36.8M). The gross loss in ANALYSIS AND MANAGEMENTDISCUSSION ANALYSIS OF REALISED SALES PRICE AND 2014 included a gross loss before impairments from KM SALES AND PRODUCTION VOLUMES of US$9.2M. Impairments of US$239.7M (2014: US$3.8M) were Year Ended 30 June recognised in 2015 relating to US$229.1M (US$180.8M after tax) (2014: US$Nil) impairment of the Queensland % 2015 2014 exploration assets, US$8.4M (2014: US$Nil) impairment Change US$ US$ of the Bigrlyi exploration asset, US$1.0M (2014: LHM realised uranium US$3.8M) impairment of the aircraft and US$1.2M (2014: sales price (7)% US $ 37.2 / lb US$39.9/lb US$Nil) impairment of available-for-sale financial assets KM realised uranium predominantly due to the impairment of the investment in sales price (6)% US$32.8/lb US$35.0/lb Deep Yellow Ltd (DYL). Group realised Loss after Tax Attributable to the Members of the Parent uranium sales price (2)% US $ 37.0/ lb US $ 37.9/ lb for 2015 of US$195.9M is higher than the loss of US$63.5M Mlb U O Mlb U O in 2014, and is predominantly due to the impairment of the 3 8 3 8 Queensland exploration assets discussed earlier. LHM sales volume -% 5.164 5.190 KM sales volume (94)% 0.203 3.475
Total sales volume (38)% 5.367 8.665 LHM production (13)% 5.037 5.822 KM production (100)% – 2.351
Total production (38)% 5.037 8.173
The average realised uranium sales price for the year
ended 30 June 2015 was US$37.0/lb U3O8 compared to the TradeTech weekly spot price average for the year of
US$35.8/lb U3O8.
PALADIN ENERGY LTD ANNUAL REPORT 2015 27 RECONCILIATION OF C1 COST OF PRODUCTION TO COST OF GOODS SOLD
Year Ended 30 June 2015 Year Ended 30 June 2014
LHM KM Total LHM KM Total Volume Produced (Mlb) 5.037 - 5.037 5.822 2.351 8.173 Cost of Production/lb (C1) US$29.0/lb - US$27.7/lb US$35.9/lb
US$M US$M US$M US$M US$M US$M Cost of Production (C1) 146.4 - 146.4 161.3 84.5 245.8 Depreciation and amortisation 24.0 - 24.0 36.6 6.8 43.4 Production distribution costs 5.7 - 5.7 6.2 6.6 12.8 Royalties 5.8 - 5.8 4.3 4.3 8.6 Inventory movement 1.7 6.8 8.5 (15.9) 32.2 16.3 Other (0.7) - (0.7) (0.9) 6.9 6.0
Cost of goods sold 182.9 6.8 189.7 191.6 141.3 332.9
The C1 cost of production for the year for LHM increased
by 5% to US$29.0/lb U3O8 (2014: US$27.70/lb U3O8);
however, total C1 cost of production for the year decreased by 9%, to US$146.4M. Production ceased at KM on 6 May 2014.
ANALYSIS OF ADMINISTRATION, MARKETING AND NON-PRODUCTION COSTS FINANCIALREVIEW
Year Ended 30 June
% 2015 2014 Change US$M US$M
Total 12% (19.3) (21.9) MANAGEMENT DISCUSSION AND ANALYSIS AND MANAGEMENTDISCUSSION Costs for the year ended 30 June 2015 decreased by US$2.6M, primarily due to a reduction of US$2.9M in non-production mine site costs as KM has been placed on care and maintenance.
28 PALADIN ENERGY LTD ANNUAL REPORT 2015 SUMMARY OF QUARTERLY FINANCIAL RESULTS
2015 2015 2014 2014 Jun Qtr Mar Qtr Dec Qtr Sep Qtr
LHM
Production U3O8* Mlb 1.336 1.234 1.377 1.090 C1 cost of production* US$/lb 26.0 29.4 28.6 33.0 KM
Production U3O8 Mlb – – – – C1 cost of production US$/lb – – – –
Total revenues US$M 73.9 17.1 70.4 39.3 Sales volume Mlb 1.766 0.440 1.911 1.250 Realised uranium sales price US$/lb 41.5 38.0 36.4 31.2 Impairments US$M (247.7) – (1.7) – Loss after tax attributable to members US$M (195.9) (12.6) (20.5) (38.8) Basic and diluted loss per share US cents (11.7) (0.8) (1.7) (3.8)
2014 2014 2013 2013 Jun Qtr Mar Qtr Dec Qtr Sep Qtr
LHM
Production U3O8* Mlb 1.416 1.463 1.514 1.429 C1 cost of production* US$/lb 29.5 27.6 26.0 28.0 FINANCIALREVIEW KM
Production U3O8 Mlb 0.262 0.697 0.777 0.615 C1 cost of production US$/lb 44.7 32.9 33.1 39.3
Total revenues US$M 69.4 88.6 102.1 69.4 MANAGEMENT DISCUSSION AND ANALYSIS AND MANAGEMENTDISCUSSION Sales volume Mlb 1.812 2.405 2.775 1.673 Realised uranium sales price US$/lb 38.2 36.8 36.7 41.4 Impairments US$M (40.6) – (337.3) (15.5) Loss after tax attributable to members US$M (63.5) (19.9) (215.0) (40.0) Basic and diluted loss per share US cents (6.2) (2.0) (21.2) (3.9)
* LHM production volumes and unit C1 cost of production for the quarters ended December 2014, September 2014, June 2014, March 2014 and December 2013 include an adjustment to in-circuit inventory relating to leached uranium within the process circuit.
PALADIN ENERGY LTD ANNUAL REPORT 2015 29 The unit C1 cost of production for LHM decreased 12% The high degree of success from the BRP project augurs over the last year, from US$29.5/lb in the June 2014 well for the ongoing success of Paladin’s innovation quarter to US$26.0/lb in the June 2015 quarter, due to programme. The new technology underpinning this a combination of a weaker Namibian dollar and cost programme is the key driver of the forecast further saving initiatives. reductions in C1 costs at LHM. It should be noted that at the end of FY14 the combined sodium bicarbonate and Cash flow optimisation remains an ongoing priority and caustic reagent costs represented approximately 56% of further improvements in C1 costs are expected due to a process operating costs. This is expected to fall to 32% in number of additional initiatives. FY16 with potential remaining for further reductions. Process innovation was focused on the Bicarbonate Total revenue for the quarter ended June 2015 was higher Recovery Plant (BRP). The BRP was commissioned in than the comparative quarter, due to higher realised early March 2015. The process performance of the plant uranium prices. Total revenue for the quarter ended is substantially better than predicted and bicarbonate March 2015 was lower than the comparative quarter, recovery levels are much higher than forecast. The high because of lower uranium sales volumes. Total revenues degree of success from this project also augurs very well for the quarters ended September 2014 and December for the ongoing innovation programme and subsequent 2014 were lower than the comparative quarters, due to expected reductions in C1 costs. lower realised uranium prices and lower sales volumes. The BRP operated well throughout the June 2015 Additionally, KM is now in care and maintenance with quarter, achieving 115% to 120% of design capacity in production ceasing on 6 May 2014. terms of both volume processed and sodium bicarbonate recovered. Significant process optimisation has taken CERTAIN BALANCE SHEET ITEMS ARE SET OUT place during the June 2015 quarter such that, for the BELOW: month of June 2015, the plant achieved 147% of its
design capacity, a level of performance that is expected to be maintained, or exceeded, through the September SUMMARISED STATEMENT OF FINANCIAL POSITION quarter. This equates to a potential direct annual saving of approximately 22,500tpa of sodium bicarbonate and Year Ended 30 June 10,700tpa of caustic soda totalling about US$16M in reagent cost savings. 2015 2014 2013 US$ US$ US$ Further optimisation is ultimately expected to lift the BRP
FINANCIALREVIEW Cash and cash performance to higher than 200% of design (in terms of equivalents 183.7 88.8 78.1 sodium bicarbonate recycled and caustic savings) by Inventories 231.6 238.3 300.2 December 2015 and without the need for the installation of any additional equipment. Further associated innovations Total assets 1,100.0 1,565.7 1,837.7 are either in the implementation or design phase and Interest bearing loans scheduled for both FY16 and FY17. and borrowings 534.5 725.6 677.8 As expected, the BRP has had a significant additional Total long-term
MANAGEMENT DISCUSSION AND ANALYSIS AND MANAGEMENTDISCUSSION positive impact on broader process plant performance liabilities 859.3 1,049.1 1,058.1 and subsequent unit operating cost with: Net Assets 198.3 432.4 648.2 Soluble loss down approximately 70%; Resin loadings approximately double previous levels Cash and Cash Equivalents have increased by US$94.9M, and consequently planned resin replacement ($0.50/ mainly as a result of the final US$170.0M proceeds lb cost) may no longer be required; received in July 2014 from the sale of a 25% interest in LHM, US$119.7M from the entitlement offer, US$52.7M Stabilised process operability; and from the share placement to HOPU, and the proceeds Stabilised site water balance with greater from the issue of a US$150.0M convertible bond at 31 discretionary control. March 2015, which have been partially offset by the repurchase of the US$300.0M November 2010 convertible In addition to the direct savings, there are a number of bond, a US$39.9M repayment of the LHM project finance indirect savings and recovery improvements that were facility and syndicated loan and costs attributable to expected. These too are being realised at a substantially the capital raisings. Additionally, there were payments greater level. One of these indirect benefits is a reduction in for plant and equipment of US$11.5M, exploration and soluble loss that has allowed the recognition of additional evaluation project expenditure of US$5.8M and net dissolved uranium inventory within Tailings Facility TSF3, interest paid of US$28.8M. which will now be converted to drummed product in the normal course of operations. A consequential adjustment Inventories have decreased by US$6.7M, predominantly of 509,694lb was required, and has been made, for all due to a decrease in the number of pounds of finished production since TSF3 was commissioned in October goods at 30 June 2015 which has been partially offset by 2013 (FY2015: 280,046lb and FY2014: 229,648lb). a planned increase in ROM stockpiles at LHM as part of Stage 3 production expansion required to meet the future In addition, following the commissioning of the BRP, mine plan ore-blend requirements. process improvements have increased product in circuit by 334,101lb. The impact of the BRP has been to: (i) Interest Bearing Loans and Borrowings have decreased concentrate the uranium in the SDU reactors, (ii) increase by US$191.1M, primarily as a result of the repurchase the slurry density to improve final product quality, and (iii) of the US$300M November 2010 convertible bond and reduce in process water inventory. Additional inventory US$39.9M repayment of the LHM project finance facility has also accumulated in the circuit, due to operational and syndicated loan, which has been partially offset by factors associated with the SDU thickener. It is expected the issue of a US$150M convertible bond on 31 March that this inventory will be processed and drummed in the 2015, establishment costs for the new syndicated loan of normal course of operations. US$1.5M, convertible bond raising costs of US$4.2M less non-cash accretion of the convertible bonds of US$18.2M.
30 PALADIN ENERGY LTD ANNUAL REPORT 2015 Segment Assets: Namibian assets have increased facility establishment costs, US$3.0M in costs attributable predominantly due to an increase in cash, which was to sale of a non-controlling interest in LHM, US$6.2M in partially offset by a decrease in inventory and trade and equity capital raising costs and US$4.2M in convertible other receivables. Malawian assets have decreased as bond raising costs. The net inflow in 2014 of US$26.3M a result of a decrease in the value of inventory held by was attributable to the net proceeds received from the KM, as all finished product has now been sold, and a share placement of US$80.7M and from the drawdown of decrease in cash and trade debtors. KM is on care and debt funding of US$110.0M, which was partially offset by maintenance. The Exploration segment assets have a repayment of project financing of US$178.8M. decreased predominantly due to the impairment of the Queensland exploration assets discussed under the Financial Results section and as a result of a decrease GOING CONCERN in the US dollar value of exploration assets, which is due As at 30 June 2015, the Group had a net working capital to the decremental foreign exchange movement of the surplus of US$231.8M (30 June 2014: US$288.5M), Australian and Canadian dollar currencies against the including cash on hand of US$183.7M (30 June 2014: US dollar. In the Unallocated portion, assets decreased US$88.8M). Included within this cash on hand is primarily due to a decrease in trade and other receivables, US$31.2M (30 June 2014: US$13.2M), which is restricted which in 2014 included a US$170M receivable relating to for use in respect of the LHM syndicated loan facility and the outstanding proceeds for the sale of a 25% equity supplier guarantees provided by LHM. stake in LHM, which was partially offset by an increase in cash from the placement and entitlement offer and the The amount outstanding at 30 June 2015 on the issue of a US$150M convertible bond. syndicated loan facility was US$60.9M. Repayment obligations during the next twelve months LIQUIDITY AND CAPITAL RESOURCES to 30 June 2016 in respect of interest bearing loans and
borrowings are summarised as follows: The Group’s principal source of liquidity as at 30 June 2015, was cash of US$183.7M (30 June 2014: US$88.8M). secured bank loan principal repayments of US$9.1M Any cash available to be invested is held with Australian for syndicated loan facility; and banks with a minimum AA- Standard & Poor’s credit interest payments of US$29.7M for syndicated loan rating over a range of maturities. Of this, US$178.6M is facility and 2012 (due 2017) and 2015 (due 2020) held in US dollars. unsecured convertible bonds.
Net Cash Outflow from Operating Activities was US$24.7M In December 2014, the Group successfully completed FINANCIALREVIEW in 2015 (2014: inflow US$10.1M), primarily due to receipts an equity capital raising of A$205M (US$172.4M) through from customers of US$215.4M (2014: US$370.3M), which the introduction of a strategic investor, together with were offset by payments to suppliers and employees of completion of a well-supported entitlement offer. US$210.9M (2014: US$326.3M) and net interest paid of US$28.8M (2014: US$32.3M). On 31 March 2015, the Company issued a US$150M convertible bond with a coupon rate of 7.00% maturing Net Cash Outflow from Investing Activitieswas US$15.6M on 31 March 2020 and a conversion price of US$0.356 in 2015 and is due primarily to plant and equipment for Company shares. US$100M was issued to high ANALYSIS AND MANAGEMENTDISCUSSION acquisitions of US$11.5M, including, at LHM, the BRP quality institutional investors, whilst US$50M was issued and spiral heat exchangers, as well as capitalised to Leader Investment Corporation, a controlled subsidiary exploration expenditure of US$4.2M. The net cash of CIC, one of the largest sovereign wealth funds in the outflow of US$25.3M in 2014 was due primarily to plant world. The issue was approved by shareholders on and equipment acquisitions of US$20.3M, predominantly 30 March 2015. the new tailings facility at LHM and BRP and tailings pipeline at KM, as well as capitalised exploration The proceeds from the convertible bond issue, along with expenditure of US$5.8M. the existing cash balance, were used to fund a concurrent tender offer to acquire the outstanding US$300M Net Cash Inflow from Financing Activities of US$137.6M convertible bonds due November 2015, issued by the in 2015 is attributable to the proceeds received from the Company on 4 November 2010. sale of a 25% interest in LHM for US$170M, from the entitlement offer of US$119.7M, from the share placement At the date of this report, the Directors are satisfied there to HOPU of US$52.7M and from the convertible bond are reasonable grounds to believe that, having regard to issue of US$150M, and has been partially offset by the the Group’s position and its available financing options, repurchase of the US$300M November 2010 convertible the Group will be able to meet its obligations as and when bond, a US$39.9M repayment of the LHM project finance they fall due. and syndicated loan facility, US$1.5M in syndicated loan
PALADIN ENERGY LTD ANNUAL REPORT 2015 31 The following is a summary of the Group’s outstanding debt or opportunity losses that may arise on fixed rate commitments as at 30 June 2015: convertible bonds in a falling interest rate environment. Interest rate risk on cash and short-term deposits is not considered to be a material risk due to the historically low Less 1 to 5yrs+ or US dollar interest rates of these financial instruments. Payments due Total than 1 yr 5yrs Unknown by period US$M US$M US$M US$M The Group has no significant monetary foreign currency assets or liabilities apart from Namibian Dollar cash, Tenements 21.6 0.6 9.8 11.2 receivables, payables and provisions and Australian dollar Operating leases 0.9 0.8 0.1 - cash and, payables and Canadian payables. Mining, transport and reagents 17.2 15.3 1.9 - The Group currently does not engage in any hedging or derivative transactions to manage uranium price Manyingee movements, interest rate or foreign currency risks. acquisition costs 0.6 -- 0.6 The Group’s credit risk is the risk that a contracting entity Total will not complete its obligation under a financial instrument commitments 40.3 16.7 11.8 11.8 that will result in a financial loss to the Group. The carrying amount of financial assets represents the maximum credit exposure. The Group trades only with recognised, credit In relation to the Manyingee Uranium Project, the worthy third parties. In addition, receivable balances are acquisition terms provide for a payment of A$0.75M monitored on an ongoing basis with the result that the (US$0.57M) by the Group to the vendors when all project Group’s exposure to bad debts is not material. development approvals are obtained. The Group’s treasury function is responsible for the The Group has no other material off balance sheet
Group’s capital management, including management arrangements. of the long-term debt and cash as part of the capital structure. This involves the use of corporate forecasting OUTSTANDING SHARE INFORMATION models which enable analysis of the Group’s financial position, including cash flow forecasts, to determine As at 27 August 2015, Paladin had 1,711,927,688 fully paid the future capital management requirements. To ensure ordinary shares issued. The following table sets out the sufficient funding for operational expenditure and growth fully paid ordinary shares and those issuable under the activities, a range of assumptions are modelled so as to FINANCIALREVIEW Group Employee Performance Share Rights Plan and in provide the flexibility in determining the Group’s optimal relation to the Convertible Bonds: future capital structure.
As at 28 August 2015 Number OTHER RISKS AND UNCERTAINTIES Ordinary shares 1,711,927,688 RISK FACTORS Issuable under Employee Performance The Group is subject to other risks that are outlined in the
MANAGEMENT DISCUSSION AND ANALYSIS AND MANAGEMENTDISCUSSION Share Rights Plan 788,754 Annual Information Form 51-102F2, which is available on Issuable under Share Option Plan 1,000,000 SEDAR at sedar.com Issuable in relation to the US$274 million Convertible Bonds 149,726,776 Issuable in relation to the US$150 million TRANSACTIONS WITH RELATED PARTIES Convertible Bonds 421,348,315 During the year ended 30 June 2015, no payments were Total 2,284,791,533 made to Director related entities. Directors of the Company receive fees as outlined in the Company’s management circular forming part of the Company’s Notice of AGM. The only related party transactions are with Directors and CRITICAL ACCOUNTING ESTIMATES Key Management Personnel. Refer to Note 27. Details of material controlled entities are set out in Note 32. The preparation of the Financial Report requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and DISCLOSURE CONTROLS disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of The Group has applied its Disclosure Control Policy to the revenues and expenses during the reporting period. preparation of the Consolidated Financial Report for year Significant areas requiring the use of management ended 30 June 2015, associated Management Discussion estimates relate to the determination of the following: and Analysis and Report to Shareholders. An evaluation carrying value or impairment of inventories, financial of the Group’s disclosure controls and procedures used investments, property, plant and equipment, intangibles, has been undertaken and concluded that the disclosure mineral properties and deferred tax assets; carrying value controls and procedures were effective. of rehabilitation, mine closure, sales contracts provisions and deferred tax liabilities; and the calculation of share- INTERNAL CONTROLS based payments. The Group has designed appropriate Internal Controls over Financial Reporting (ICFR) and ensured that FINANCIAL INSTRUMENTS these were in place for the year ended 30 June 2015. At 30 June 2015, the Group has exposure to interest rate An evaluation of the design of ICFR has concluded risk, which is the risk that the Group’s financial position that it is adequate to prevent a material misstatement will be adversely affected by movements in interest rates of the Group’s Consolidated Financial Report as at that will increase the cost of floating rate project finance 30 June 2015.
32 PALADIN ENERGY LTD ANNUAL REPORT 2015 During the year, the Group continued to have an internal CHANGE OF CHIEF EXECUTIVE OFFICER audit function externally contracted to Deloitte Touche On 30 July 2015, the Company advised that its Board Tohmatsu. Internal audit reports and follow-up reviews and Managing Director and CEO Mr John Borshoff had were completed during the year and the Group continues agreed that Mr Borshoff would step down from his role to address their recommendations. The resultant changes with the Company. to the ICFR have improved and will continue to improve the Group’s framework of internal control in relation to A process to identify a suitable new CEO is now financial reporting. underway. In the interim, Mr Alexander Molyneux has been appointed Interim CEO. Mr Molyneux joins with substantial experience in natural resources executive CHANGES IN ACCOUNTING POLICIES leadership, including both public mining company CEO The Group has adopted all new and amended Australian and uranium experience. Accounting Standards and AASB Interpretations effective Mr Molyneux’s core mandate will be to: (i) to continue from 1 July 2014. The nature and impact of each new the optimisation of Paladin’s overall cash flow break- standard and amendment is described in Note 3 – Basis even level with the aim to become cash flow generative of Preparation. in the current uranium price environment; (ii) focus on accelerating strategic initiatives that deliver value; and (iii) SUBSEQUENT EVENTS to assist the Board in its search for a permanent CEO. Other than disclosed below, since 30 June 2015, BOARD AND MANAGEMENT RESTRUCTURING the Directors are not aware of any other matter or circumstance not otherwise dealt with in this report, that On 21 August 2015, the Company advised of board has significantly or may significantly affect the operations and management changes, and a reduction in board of the Group, the results of those operations or the remuneration. state of affairs of the Group in subsequent periods with the exception of the following, the financial effects of Paladin’s board accepted the resignation of Non- which have not been provided for in the 30 June 2015 Executive Director Mr Sean Llewelyn. Financial Report: Ms Gillian Swaby, Group Company Secretary and EGM Corporate Services, and the Company agreed Ms MATERIAL REDUCTION IN COSTS Swaby would step down from her role at the Company. Mr Ranko Matic was appointed Company Secretary. FINANCIALREVIEW On 30 July 2015, the Company advised of a material reduction in its cash flow break-even level through a Paladin’s board adjusted its remuneration structure with sustainable reduction in its all-in cash costs (including an effective date of 1 July 2015. The revised structure capital expenditure, corporate costs and debt servicing). will alter the base salary for Non-Executive Directors to These measures will reduce Paladin’s total cash costs by A$65,000 and the Non-Executive Chairman to A$125,000. more than US$33M compared to FY2015. Subsequent to the US$33M in cost reductions announced MANAGEMENT DISCUSSION AND ANALYSIS AND MANAGEMENTDISCUSSION on 30 July 2015, Paladin has identified further significant cash flow optimisation initiatives. Such initiatives include: LHM operating initiatives – As a consequence of the BRP, barren solution used for wash in the counter current decantation section of the LHM plant is
expected to reduce from approximately 50ppm U3O8 to less than 10ppm. This will result in a significant improvement in wash efficiency. The Company’s original FY2016 outlook assumed wash efficiency of 93.1%. Paladin now anticipates a wash efficiency in the range of 95% to 98% for FY2016. The Company has also revised its FY2016 life of mine plan for LHM
resulting in an average feed-grade of 694ppm U3O8, i.e., an increase of 11ppm over the guidance provided in the last Quarterly Activities Report announced on 16 July 2015. Corporate costs, exploration and KM initiatives – Paladin has implemented reductions in these areas to further reduce annualised cash expenditure by approximately US$8M over the initiatives set out in the cost reduction announcement of 30 July 2015 (i.e., a cumulative US$14M less than FY2015). The additional initiatives include a reduction in approximately 50% of corporate staff that was undertaken on 21 August 2015 concurrent with the reduction in the number of directors and reduction in board fees announced the same day. Exploration has been put on care and maintenance whereby the Company will undertake the work required to meet minimum license expenditures only.
PALADIN ENERGY LTD ANNUAL REPORT 2015 33 SUSTAINABLE DEVELOPMENT
Paladin is committed to the goal of sustainable development, which is reflected in its corporate values. The Company’s values include promoting the creation of shared wealth, becoming a major uranium supplier, operating at global best practice, safety and environmental stewardship, employee welfare and recognition, and contributing and responding to the attitudes and expectations of local communities in the countries in which Paladin operates.
The Company is cognisant of the extra diligence that is CORPORATE SUSTAINABILITY REPORTING required for those in the uranium industry. It has therefore Paladin produced its third Sustainability Report (FY2014), established an in-house team with extensive knowledge which can be found on the Company’s website www. about uranium and the stringent requirements related paladinenergy.com.au. to the commodity. The Company emphasises acting with integrity, honesty and cultural sensitivity in all of its Paladin is continuing the data collection process from dealings. In support of this commitment, Paladin applies LHM and KM for input into the FY2015 Sustainability and adheres to established and internationally recognised Report. Data is collected specifically to meet the principles of sustainable development for all of its reporting guidelines of the Global Reporting Initiative global activities. (GRI) Framework applying the G4 requirements. The GRI Sustainability Reporting Guidelines provide principles for In implementing its sustainable development programme, and guidance on defining report content. Paladin’s focus Paladin aims to achieve a balance between economic, is on those indicators that are considered material to environmental and social needs in all phases of its projects, the Company and have therefore conducted materiality and takes into consideration its employees, communities, assessments to define the reporting parameters. To shareholders and other key stakeholders. Paladin ensures allow sufficient time for comprehensive data collection, that its high standards are not compromised despite the assessment and reporting for the FY2015 period, the difficult economic climate that it is currently operating in. report is expected to be available on the website towards SUSTAINABLE DEVELOPMENT SUSTAINABLE To deliver on Paladin’s commitment to sustainable the end of CY2015. development, the Company has a Sustainability The following discussion provides an overview of Committee whose role is to provide the Board with an Paladin’s environmental management. More detail on overview of Paladin’s performance in the areas of health, environmental performance, specific management and safety, radiation, environment, social responsibility quantitative data for the reporting period will be provided and sustainable development, and to offer advice and in the 2015 Sustainability Report. recommendations where significant sustainability related issues arise. The Sustainability Committee comprises three members: the Chairman of Paladin’s Board, Paladin’s Managing Director/CEO and a Non-executive independent Director who is also the Chairman of that Committee. ENVIRONMENT
OUR COMMITMENT Paladin is committed to ensuring that effective striving to achieve continuous improvement in environmental management is planned and undertaken environmental performance; for all aspects of its operations. The approach to preventing and mitigating pollution; environmental management is guided by Paladin’s Environmental Policy, which promotes a standard of communicating environmental responsibility to excellence for environmental performance across its employees and contractors; operations. The key points of the Policy include: effective consultation with stakeholders on environmental issues; complying with applicable environmental legislation; inspections and audits of environmental performance; ensuring operations have developed an environmental and management system; reporting on environmental performance. identifying, assessing and managing environmental risks; Paladin has established Corporate Sustainable Development Standards for all of its operational implementing and assigning accountabilities for subsidiaries. Operational compliance with Paladin’s standards, guidelines and procedures; Standards forms part of the Corporate Environmental Audit Programme.
34 PALADIN ENERGY LTD ANNUAL REPORT 2015 ENVIRONMENTAL MANAGEMENT SYSTEM to ensure that the Company’s objectives around water usage, supply and resource protection are achieved. Within the Paladin Environmental Management System Reuse and recycling of water is maximised as much as (EMS) Standard, each operating site is required to possible at Paladin’s operations. develop and implement an EMS that is consistent with the requirements of ISO14001:2004. The EMS for LHM A specific care and maintenance water management was re-certified in April 2015 for a period of three years. strategy has been developed for KM which focuses on The development and implementation of an EMS at KM is reducing stored water in the water collection ponds to continuing for the care and maintenance phase. ensure sufficient capacity remains in the ponds to capture rainfall runoff from the mining and processing areas of Operational Environmental Management Plans (EMP) for disturbance. Water from the ponds is being treated in both LHM and KM have been submitted to and reviewed an on-site water treatment plant to a quality suitable for by the Namibian and Malawian Governments, as well as discharge. Treated water is discharged into the local river to other stakeholders and international financial lending under licence conditions. institutions as part of the project financing agreement conditions. The Operational EMPs are regularly updated A comprehensive surface and groundwater monitoring and revised as part of the sites’ continual improvement programme is undertaken at LHM and KM. All water process. A care and maintenance EMP has been monitoring data are collated in annual water reports that prepared for KM and will be adhered to during the care consolidate and summarise the key water aspects across and maintenance phase. Paladin’s operations. Water aspects as per the GRI indicator requirements will ENVIRONMENT REGULATORY REPORTING be presented in the 2015 Sustainability Report. Both LHUPL and PAL prepare various environmental reports for the Namibian and Malawi Governments, LAND USE, BIODIVERSITY AND REHABILITATION respectively. Regulatory reporting for LHM is conducted monthly and annually for water aspects, and, annually Land use and understanding land values are important for general environmental reporting. Regulatory components of sustainable development. Prior to environmental reporting at KM is conducted on a quarterly disturbance for project development or expansions, basis for data provision and for regulatory compliance, and studies are conducted to determine land use and land on an annual basis for general environmental reporting values including for biodiversity, ecological, social and cultural heritage. Land clearing approval processes are in place at all Paladin sites with the aim of minimising the INSPECTION AND AUDIT PROGRAMME area of disturbance, and ensuring areas are surveyed to assess impacts prior to clearing. Progressive rehabilitation The Paladin Environmental Audit Standard requires of disturbed areas is undertaken where practicable at all operating sites to establish and implement environmental DEVELOPMENT SUSTAINABLE of Paladin’s exploration sites and mining operations. inspection and audit programmes to ensure that the environmental performance of the operations is reviewed, Paladin’s aim is to conserve biodiversity by obtaining audited and reported to the Board. These audits are knowledge of the ecosystems within the regions in which undertaken to ensure that there is not only compliance the Company operates, and to ensure that impacts on with regulatory and Paladin requirements, but also with biodiversity are minimised and managed. Data on land the World Bank Equator Principles and other industry use and biodiversity management aspects is being standards, particularly those specified for the uranium collated from LHM and KM and will be presented in the industry. During the reporting period, inspections and 2015 Sustainability Report. audits were undertaken at both LHM and KM, with the findings documented and actions developed to rectify and manage identified issues. Corporate Environmental AIR EMISSIONS Audit Reports are provided to the Paladin Energy Board Paladin has an Air Quality Standard in place with the intent Sustainability Committee. to ensure that air pollutant emissions generated by any of Paladin’s activities are identified, impacts assessed and ENERGY management measures established and implemented. The common air pollutants generated by Paladin activities Energy requirements at Paladin’s operations are principally which have the potential to impact on human health and/ in the form of fuel for vehicles and electricity generation. or the environment include; particulate matter (dust), Electricity at LHM is purchased from the Namibian grid, sulphur oxides (SOX); carbon oxides (CO and CO2), and which can be supplemented, if necessary, with power nitrogen oxides (NOx). generated from the on-site power plant. Power for the care and maintenance activities at KM is generated by a Dust generation during exploration activities and at the diesel-fuelled power station. Fuel usage at both sites for mine sites is suppressed using water sprays to enable a vehicles comprises diesel and minor amounts of petrol. safe working environment and to minimise impacts on the Emulsion is used at LHM as an explosive for blasting. environment and surrounding communities. Fugitive dust The volume of the fuels used and the energy purchased level monitoring is conducted at both the LHM and KM during the reporting period is being collated and will be sites and the results are collated in Annual Environmental reported in the 2015 Sustainability Report. Reports and submitted to the respective Governments.
SOX emissions are generated at the operations by WATER the burning of fuel for heating and power generation, and vehicle emissions. The sulphuric acid plant at Paladin applies a Standard for Water Use and Water KM has been mothballed whilst the site is on care and Quality at its operations to ensure that there is efficient, maintenance. Ambient ground level concentrations of SO2 safe and sustainable use of water and that water are monitored around KM. Monitoring data are analysed resources and ecosystems around its sites are protected. and the results reported in the Annual Environmental Both LHM and KM have implemented water management Report submitted to the Malawi Government. strategies and maintain whole-of-site water balances
PALADIN ENERGY LTD ANNUAL REPORT 2015 35 The principal direct greenhouse gas emissions from NON-MINERAL WASTE Paladin’s operations are those from fuel burning for power Non-mineral waste includes typical general wastes, generation, boilers, burners, emulsions for explosives sewage and some water that may be considered and automotive exhausts. The key indirect greenhouse hazardous. The LHM and KM operations both have waste gas emissions relate to the energy purchased from the management programmes and procedures in place Namibian electricity grid to power the LHM operations. with the aim of applying the principles of reduce, reuse Greenhouse gas emissions data are collected from the and recycle wherever possible. At LHM, domestic solid operating sites and will be calculated as Carbon Dioxide wastes are separated into recyclable and non-recyclable. (CO ) equivalent emissions. Paladin’s current Australian 2 Recyclable domestic waste is collected and taken to activities are confined to Paladin’s limited exploration off-site recycling depots whilst the non-recyclables are activities and the corporate Perth office. delivered to the municipal landfill sites. Facilities for the recycling of waste materials in Malawi are very limited, as WASTE ROCK are suitable off-site waste disposal locations. The majority of the waste materials generated at KM require on-site Waste rock is removed to allow access to the uranium disposal so the wastes are categorised and segregated ore in the mine pit and placed in dumps. Waste rock into their types and directed to appropriate on site waste dump location, design and placement are important to disposal sites. Sewerage treatment plants are installed at the Company in terms of environmental considerations both mine sites to treat sewage. Treated sewage from the and cost. The main objectives for the final landform of plants is directed to the process water pond at LHM, and the dumps are to be stable, blend in with the surrounding at KM to the water pond and TSF. Waste oils are collected landscape and be capable of supporting a self-sustaining by licensed contractors in both Namibia and Malawi and ecosystem. taken off-site for recycling or disposal. Studies have been conducted at both mine sites to determine the best locations for the waste rock dumps, ENVIRONMENTAL INCIDENTS taking haulage costs and environmental aspects into consideration. The design of the dumps and the A standardised Paladin Incident Reporting Procedure placement of waste rock also considers other factors is in place to ensure there is consistency across the such as the physical and geochemical properties of the business in terms of incident classification and reporting. material placed in the dumps. Statistics and information on incidents occurring during the reporting period will be included in the 2015 Sustainability Report. TAILINGS
Tailings and tailings storage facility (TSF) management CLOSURE continues to be a high priority at the LHM operational SUSTAINABLE DEVELOPMENT SUSTAINABLE site and also at KM whilst in care and maintenance. Mine closure planning is a key component of Paladin’s Paladin applies measures to ensure that its TSF are commitment to Sustainable Development. A Closure appropriately designed, operated and managed Standard is in place for all of Paladin’s developing and according to acceptable standards. Specialist TSF operational sites. The intent of the Standard is to ensure engineers have designed the TSFs at both LHM and KM. that Paladin’s sites are left in a safe and stable manner The specialists have also defined the operational practice and that environmental and social impacts are minimised and management to ensure that the tailings and TSFs so that tenements can be relinquished without future are appropriately managed and any potential liability to the Company, government or the community. environmental impacts from the tailings or the facility are During the reporting period, the LHM Draft Mine Closure minimised. Independent experts conduct peer reviews of Plan was being revised and updated to reflect current and the design, construction and operations of the TSFs on future mine plans. A Closure Strategy has been prepared an ongoing basis. for KM and progress continued on the preparation of a Draft Mine Closure Plan.
36 PALADIN ENERGY LTD ANNUAL REPORT 2015 CORPORATE SOCIAL RESPONSIBILITY
Paladin’s purpose is to create value for its shareholders. Paladin seeks to achieve these objectives by example, In pursuit of this goal, the Company recognises that both through its own actions and by its active participation encompassing economic, environmental and social in industry and community-based organisations that values are all important components of corporate foster and promote these values and aspirations. Below success. Paladin stakeholders expect their Company is a summary of the organisations in which the Company to be a good corporate citizen, with fair and beneficial participates: business practices focused on: operating to the highest ethical standards; contributing to the growth and Paladin played an instrumental role in establishing prosperity of host countries and responding positively the Australia-Africa Mining Industry Group (AAMIG) to community needs. Paladin’s approach to Corporate – an industry body that facilitates the sharing of Social Responsibility (CSR) – as with its commitment to knowledge and experience to create better outcomes sustainability – involves: on the ground. It partners with Australian and African governments to promote active engagement and Top-level support of the Board of Directors and promotes best practice in CSR among Australian Managing Director/CEO; mining companies active in Africa. Adherence to principles enunciated in Corporate Paladin has committed to the principles contained Policy and Procedures; in Enduring Value – the Australian Minerals Industry Programmes aligned with host country Millennium Framework for Sustainable Development. This Development Goals; commitment is aligned with the Ten Sustainable Development Principles of the International Council Personnel dedicated to achieving CSR objectives; on Mining and Metals. Compliance with recognised international codes of Paladin supports the Extractive Industries conduct; Transparency Initiative (EITI) and has registered as an Acknowledgement of voluntary standards; and, EITI Supporting Company, endorsing its principles Reporting in accordance with the Global Reporting and criteria. Taxes paid by Paladin to the Malawian Initiative. and Namibian governments are presented in the Company's Sustainability Report. Paladin supports and respects a number of international guiding documents and seeks to SUSTAINABLE DEVELOPMENT SUSTAINABLE conduct its business in accordance with the spirit and intent of them. These include the UN International Bill of Human Rights, the UN Guiding Principles on Business and Human Rights, The UN Global Compact, the ILO Declaration, the Voluntary Principles on Security and Human Rights, the OECD Guidelines for Multi-National Enterprises and the Equator Principles. These are embodied in Paladin’s governance framework. Paladin’s CSR programmes are developed, managed and assessed in compliance with the Group’s Community Relations Policy. Paladin contributes significantly to those economies in its countries of operation through a variety of government taxes. These are detailed below for both Malawi and Namibia, where the Group’s mines are located. It should be noted that the Kayelekera Mine in Malawi is currently on care and maintenance.
PALADIN ENERGY LTD ANNUAL REPORT 2015 37 PAYMENTS TO THE GOVERNMENT OF MALAWI FOR THE YEAR ENDED 30 JUNE 2015
Withholding tax USD 112,898
Non-Resident tax USD 90,551
Royalties USD 164,469
Payroll Tax USD 1,509,525
PAYMENTS TO THE GOVERNMENT OF NAMIBIA FOR THE YEAR ENDED 30 JUNE 2015
Namibia Training Authority USD 158,451
Rates, Taxes & Licenses USD 3,095
NamPower USD 5,723,469 Payroll Tax USD 2,970,385
NamPost USD 581
NamWater USD 6,514,310
Royalties USD 5,382,161
SUSTAINABLE DEVELOPMENT SUSTAINABLE Erongo Regional Electricity Distributor USD 233,374
PAYMENTS TO THE CANADIAN GOVERNMENT FOR THE YEAR ENDED 30 JUNE 2015
Workers Health, Safety & Compensation Commission (Gov't of Newfoundland & Labrador) USD 12,051
Health & Post Secondary Education Tax (Gov't of Newfoundland and Labrador) USD 21,755
Employment Insurance (Gov't of Canada) USD 28,376
Income Tax USD 364,656 Canada Pension Plan (Gov't of Canada) USD 61,574
PAYMENTS TO THE AUSTRALIAN GOVERNMENT FOR THE YEAR ENDED 30 JUNE 2015
Deartment Of Mines & Petroleum USD 16,160 Department Of Natural Resources & Mines USD 8,496 Dept Of Environment & Heritage Protection USD 1,609
Shire Of Ashburton USD 37,776 Payroll Tax WA USD 526,174 Department of Transport USD 5,166 BAS USD 107,162
Payroll Tax QLD USD 1,282
38 PALADIN ENERGY LTD ANNUAL REPORT 2015 HUMAN RIGHTS LHUPL also supports the Namibian Uranium Association (NUA), an advocacy body that represents the uranium Paladin is committed to respecting human rights and industry exclusively. fundamental freedoms. The Company’s overall approach to human rights issues is reflected in its Human Rights Members of the NUA work co-operatively to ensure the Policy, which can be found on the Paladin website. Namibian uranium exploration, mining and exporting industry is able to operate, expand and thrive safely The Human Rights Policy provides the overarching and efficiently. The NUA’s Board of Directors, of which framework to assist in achieving Paladin’s commitment LHUPL’s Managing Director, Simon Solomons, is a to respect human rights throughout its business. The member, also governs the NUI, which is an industry Board reviews this regularly to ensure that it is current training and research centre. LHUPL is represented on and that the requirements of the Policy reflect Paladin’s four of its working groups – Water Quality, Sustainable commitment to human rights principles. Development, Radiation Safety and Swakop River Training on human rights is conducted across the entire Farmers. Paladin Group at all levels. This also extends to key LHM continues to provide strong support to the Namibian external stakeholders and suppliers with specific training Chamber of Mines, which organised a major Mining tailored for the security contingents at each site. Conference in May 2015 under the theme “Mining Industry - A Catalyst for Vision 2030”. This very successful conference was attended by almost 500 delegates from INDUSTRY PARTICIPATION all over the country and from South Africa and provided As a leading participant in the global uranium sector, an important forum for interaction between industry Paladin plays an active and responsible role in public leaders and stakeholders. policy development, both corporately in Australia and through Group subsidiary companies in their respective constituencies. MALAWI DELEGATION TO AUSTRALIA The Company is a member of the Minerals Council of The Minister of Mines and Energy visited Paladin’s Head Australia (MCA), which represents Australia’s exploration, Office in September 2014 as part of his attendance at mining and minerals processing industry, nationally a mining conference. This provided a useful forum for and internationally, in its contribution to sustainable interaction and understanding of the Paladin Group. development and society. The Australian Uranium Association (AUA) has been STAKEHOLDER INTERACTION integrated into the MCA and is now represented specifically Regular meetings are conducted with the stakeholder through the Uranium Forum of the MCA. As such, Paladin groups in countries where Paladin has interests. These is committed to abiding by and implementing the terms interactions include regular and/or informal meetings with: DEVELOPMENT SUSTAINABLE of the Uranium Industry Code of Practice. Along with the Code, the Group observes the Charter and Principles of o Community groups; Uranium Stewardship, which provide a guide to doing o Environmental groups; business ethically, responsibly and safely. Together, the Code, Charter and Stewardship Principles make up a vital o Host nation government ministers and senior civil standards framework for the uranium industry. servants; Senior management across the Group at both board o Indigenous groups; and committee level are actively involved in a number of industry and policy making organisations. These o Civil Society Organisations; and include the MCA, Uranium Council of Australia, Advisory o Employees and their representative organisations. Group for IAEA, AAMIG and the Chamber of Mines and Energy of Namibia. In addition, Mr Greg Walker, General Manager-International Affairs, who is resident INTERNATIONAL INITIATIVES in Malawi, is Australia’s Honorary Consul to Malawi. Mr Walker provides consular assistance as well as assisting the Australian Embassy in Harare to promote Australia’s MALARIA TREATMENT FOR CHILDREN political and commercial interests in Malawi. Paladin has continued to provide support to Suda Ltd It is pleasing to note that a report issued in 2015 by the for Suda’s development of ArTiMist™, a sub-lingual Danish Institute for International Studies titled “Corporate (under the tongue) spray for the treatment of severe and Engagement in Non-Proliferation along the Nuclear complicated malaria in children. Supply Chain and Material Stewardship and Traceability Suda announced the results from a Phase III trial of in Uranium Procurement” shows Paladin as an example ArTiMist™ in 2013, which was a comparative study against …”Paladin can be seen as having one of the most robust intravenous quinine. The report from the trial identified that approaches to this issue among all eight leading mining ArTiMist™ was superior when compared to IV quinine. companies…..; and …” sets the example on Uranium Approximately 95% of the patients treated with ArTiMist™ Stewardship”. had parasite count reduced by more than 90% within 24 LHUPL was a founding member of the Swakopmund- hours versus 40.6% of the patients treated with IV quinine. based Namibian Uranium Institute (NUI) in 2009. The Suda is working with the Medicines for Malaria Venture NUI provides support and advice for industry members, and other groups to expand the opportunity for ArTiMist™ operates a Uranium Information Centre, and engages by evaluating the product as an early interventional with the public and scientific community through treatment before patients are referred to hospital. Suda hosting training and information events, meetings and and its Clinical Advisory Board are finalising the design workshops. The Institute’s aim is to improve the quality of a pivotal clinical trial of ArTiMist™ in the pre-referral of healthcare, environment management and radiation setting and Suda aims to secure philanthropic funding safety in Namibia. from global organisations to support the trial.
PALADIN ENERGY LTD ANNUAL REPORT 2015 39 The majority of deaths from severe malaria in childhood KM also supports the Karonga Youth Entrepreneurs by are caused by the delayed administration of effective anti- providing them with all the shredded office paper from malarial treatment. There is a relentless deterioration in site as material to assist in their cooking fuel project. the clinical condition of a young child with malaria who fails to get effective treatment, with death ensuing in a COMMUNITY EDUCATION AND HIV/AIDS matter of hours or days. AWARENESS Suda believes that ArTiMist™ has the potential to be Paladin continues its commitment in relation to HIV/ an effective pre-referral medication. It has the potential AIDS awareness campaigns and to promote good health to significantly reduce child mortality and the adverse and hygiene in order to improve the quality of life of effects suffered by children, particularly within the first 24 local communities. This effort includes its ongoing, very hours of infection. successful “education-through-storybooks” project, with publication of another seven books during the year. These MALAWI covered the topics of bribery in the workplace, Christmas, dangers of loans and debt, alcohol, obesity, dangerous Paladin has continued to fulfil its Social Development situations and communication. responsibilities in Malawi under the terms of the Kayelekera Development Agreement and Environmental The collection now comprises 36 titles, covering a variety Impact Assessment Social Impact Control Programme. of community-focused subjects, and has been translated Following on from its decision to place KM on care into a number of local languages. They continue to be and maintenance last year, Paladin has maintained its a very effective communications medium and remain community relations presence in Karonga, albeit at a extremely popular, given the general lack of reading reduced level of expenditure consistent with Kayelekera’s material in the district, particularly in local languages. non-producing status. A further 3,226 books were distributed broadly through to Paladin has continued its ongoing community the community during the year, covering KM employees programmes focused primarily on health and education. and local schools and communities and government Through its corporate CSR programmes and projects agencies, bringing the total number distributed to-date to undertaken and funded by the Paladin staff charity, over 157,000. Friends and Employees for African Children (FEPAC), HIV/AIDS awareness programmes continued through the Company social development footprint extends the medium of the Nyange Nyange drama group and throughout the Karonga District, so ensuring that villages distribution of related story books. Books are rare and other than those in the immediate vicinity of KM benefit precious in the region. It is not uncommon in rural areas from its programmes. for school children to be the only family members who are literate. As a result, local language books distributed SUSTAINABLE DEVELOPMENT SUSTAINABLE GARNET HALLIDAY KARONGA WATER SUPPLY by Paladin are frequently taken home and read to other PROJECT family members, thus becoming a very effective means of communicating with the community at large. In an The Garnet Halliday Karonga Water Project was built at effort to make learning fun and to increase awareness a cost of more than US$10M and is the centrepiece of of potentially damaging lifestyle issues, the storybooks Paladin’s Social Development commitment to Malawi, the are distributed to employees and then followed by a quiz objective being to provide a safe and reliable water supply with small prizes awarded. This has become very popular to the Town of Karonga. amongst the local population. The plant is now operating as per design, providing Paladin continues to support the local Nyange Nyange Karonga with a safe and reliable water supply that will drama group, which uses theatre in an effective and meet the town’s projected needs until 2025. During the popular way to communicate key social messaging year maintenance support continued to be provided. across the community. Through Paladin’s support, Nyange Nyange has used the funds earned by performing COMMUNITY LIAISON in schools for Paladin to produce several DVDs on HIV prevention. These have been purchased by Paladin for Engagement with the community locally is formalised distribution as quiz prizes providing a very effective and through the District Executive Committee (DEC) popular medium for the message. stakeholders’ meetings, which are held monthly and are used as a community information forum and to address any stakeholder questions or concerns that arise. COMMUNITY HEALTH CARE Weekly meetings are held with the Kayelekera village Paladin continued its support of local health clinics by leadership and, on a more informal basis, with the providing transport for government medical staff in the Karonga District Commissioner and her staff together region, alleviating the need for local villagers to travel with traditional authorities and their advisors. Attendance long distances, and facilitating an under-fives clinic. at the Village Development Committee assists in Paladin’s Community Relations team, both being health communicating about current CSR projects. The professionals, provided support services, including a Company engages individually with NGOs in the region large number of health talks at rural schools reaching and is in regular contact with the District Education over 4,500 children; hosting international researchers and Manager, the District Health Administrator and the District other NGO staff; liaising with the District Health Office on Ministry of Water and Irrigation. local programmes; and, assisting with audiology clinics at the School for the Deaf and Karonga District Hospital. These forums ensure open communication between local stakeholders and the Company, particularly with the local In relation to Paladin’s commitment to construction CSR team on the ground and operating in the community of a local clinic, the assigned land has been cleared on a daily basis. and graded. The building design and budget has been agreed with the village leadership and construction is scheduled to commence in early FY2016 with Paladin’s funding commitment.
40 PALADIN ENERGY LTD ANNUAL REPORT 2015 Paladin also runs a mosquito control programme in 10TH NATIONAL MATHEMATICS CONGRESS Kayelekera Village and at Karonga Airport, in addition to LHUPL sponsored the 10th National Mathematics the mine and accommodation areas, as a very effective Congress held in April 2015. The three day meeting, malaria-control mechanism. attended by close to 300 mathematics teachers from across the country, discussed factors hampering the EDUCATIONAL SUPPORT teaching of mathematics in Namibia. LHUPL has been the main sponsor of the Annual National Mathematics Paladin’s Community Relations team continues to Congress since 2009. assist in the maintenance of local schools and teacher housing, assistance with teacher wages and provision of a variety of educational supplies. The local primary school SCHOOL SUPPORT PROJECTS was fully renovated during the long school holiday with maintenance also undertaken on the secondary school. Text Book Donations The Coastal High and Swakopmund Secondary Schools Schools in the area are regularly visited to present became the beneficiaries of LHUPL’s 4th textbook interactive lessons on health issues with small tokens donation initiative. The donation was made on the relevant to the lesson given to the children such as soap recommendation of the Ministry of Education as these or colouring projects to assist with their learning. schools took in the bulk of grade eight learners in 2015. Paladin continued its practice of delivering a Christmas gift to over 2000 school students in the area, providing Mathematics Enrichment Programme school supplies, an individual personal item and snacks. This included cloth shoulder bags made by graduates of LHUPL has been supporting this programme for the past the FEPAC sponsored tailoring classes thereby extending four years, focused on the development of secondary the benefit. school learners who have the potential to excel in more advanced levels of mathematics than that offered at An annual donation from a Paladin board member pays schools. The programme benefits on average 200 learners for the school fees for 105 girls who would otherwise not annually through several activities such as after-school be able to finish their education to a secondary level. learning, spring schools, mathematics competitions and others. In the past academic year, all learners on this CONSULAR SERVICE programme achieved above average to average results, whilst no learners achieved below average marks or Paladin continues to promote positive bilateral relations were ungraded. between Australia and Malawi by providing Consular services for the Department of Foreign Affairs and Trade (DFAT) in Malawi. The Company’s office in Lilongwe is the Laptop Donation to Polytechnic of Namibia Students designated Australian Consulate, augmenting services LHUPL sponsored laptops to Environmental Health DEVELOPMENT SUSTAINABLE provided by the nearest Australian diplomatic mission Sciences Programme students at the Polytechnic of located in Harare, Zimbabwe. The Consulate provides Namibia.to assist in their studies. consular support for Australian expatriates and visitors in Malawi and Malawians wishing to visit or study in Australia. Book Vouchers PAL’s resident director in Malawi, Mr Greg Walker serves as Australia’s Honorary Consul to Malawi. In the past year book vouchers have been donated to three government schools from the Erongo Region. These awards, aimed at grade or specific best in school NAMIBIA performers, encourage learners to work hard during their school careers and achieve high marks. This programme In line with Paladin Energy’s policies and procedures, has been supported for the past six years. LHUPL continues to play a significant role in improving the living conditions of the people of the Erongo region. Its focus is on education, sports and youth development, ENVIRONMENT feeding programmes and environmental projects. GOBABEB TRAINING AND RESEARCH INTERNSHIP EDUCATION PROGRAMME (GRTIP) MONDESA YOUTH OPPORTUNITIES (MYO) LHUPL and the Gobabeb Research and Training Centre signed a five year agreement in December 2014 to assist A five year agreement reached between LHUPL and MYO the centre in running its Internship programme aimed in April 2015 will ensure the long term sustainability of at training 20 Namibian students studying towards the centre. A donation of N$1.2M was made during the becoming environmental scientists. The GRTIP is a five- year towards the annual running costs of the centre and month field course presented to students who are tasked LHUPL has been the major supporter since 2010. The with designing and implementing original, independent non-profit organisation was established in 2003 as an research projects focused on management and after-school programme for youth from the Mondesa and restoration of degraded ecosystems. DRC Township. The centre offers these underprivileged yet academically able performers with after school classes in mathematics, English, music and computer RENOVATION OF THE PARK RANGER’S skills. Redundant computer equipment was also donated STATION HOUSE to the centre. In 2014, LHUPL made a commitment to renovate the Ministry of Environment and Tourism’s Park Ranger’s Station House located in the Namib Naukluft Park, approximately 80km from the Langer Heinrich Mine. The house will be utilised by the park rangers who monitor park activities within the national park.
PALADIN ENERGY LTD ANNUAL REPORT 2015 41 COMMUNITY CANADA Aurora continues to maintain an active presence in the BLUE WATERS SPORTS CLUB Labrador communities. Donations focus on education and training, aboriginal cultural initiatives, youth and sport. Sponsorship of the Blue Waters Sports Club’s youth During the year, Aurora contributed to 21 community development programme continued. As principal sponsor, events and initiatives. Community activities have included LHUPL provides equipment, transport and financial public meetings to inform residents of Aurora’s activities backing to ensure a continued flow of young sports stars and to seek their feedback. Regular contact with are developed through the youth development structures Provincial and Nunatsiavut government officials has been of both the cricket and football teams. maintained and Aurora continues to enjoy good support from the governments and local residents. Aurora’s 4TH ANNUAL CHARITY GOLF TOURNAMENT contribution to the economic well-being of Labrador continues through extensive use of local contractors for The Langer Heinrich Uranium 4th Annual Charity Golf camp support and by hiring up to 25 local staff per field Tournament took place at the Rossmund Golf Course in season, a practice that has been widely appreciated by March 2015, and raised N$150,000 which was divided Nunatsiavut officials and residents. between three children-centred organisations from Swakopmund. The Swakopmund Football Club, the Namibian Association for Children with Disabilities and EMPLOYEE CHARITABLE FOUNDATION, SUPPORTED the House of Safety each received N$50 000. BY PALADIN Friends and Employees of Paladin for African Children ANNUAL CAREER AWARENESS DAY (FEPAC) is a charitable foundation established in 2008 by Paladin employees to fund social projects that are Held in June 2015, the one day event was a success outside the scope of the Company’s CSR programmes. with 230 Grade 10 learners from various Swakopmund Paladin supports the involvement of its employees in schools attending. The event, in its second year, is aimed FEPAC and donates 25c for every A$1 raised and also at exposing the learners to a variety of career fields provides administrative support. To date, FEPAC has within LHUPL. Departmental presentations pointing out raised A$809,972 through employee donations, golf days the qualifications/skills needed for certain careers were and quiz nights. given to around 230 Grade 10 students to help motivate them to work hard toward a goal or career they are The charity supports six projects in Malawi that assist passionate about. orphaned children with educational needs and vocational training courses. These include two projects that support LHUPL also hosted a stand at the annual Mining Expo kindergarten aged children where they receive porridge in Windhoek and participated in the mining conference SUSTAINABLE DEVELOPMENT SUSTAINABLE for breakfast, which for many may be their only meal of hosted by the Chamber of Mines during the same period. the day, and age appropriate lessons. Two vocational training projects are also supported where FOOD ASSISTANCE PROGRAMME courses such as brick laying, carpentry and tailoring are Support continued during the year for 2 feeding provided. Currently, 158 teenagers have completed these organisations, Promiseland Trust and Eagle Christian courses and have been given the tools of their trade to Centre which cater for disadvantaged children in Walvis enable them to earn money to support their younger Bay and Swakopmund. siblings. On completion of the courses, the students also complete a five-day, small business training course to teach them the basic fundamentals for setting up their AUSTRALIAN INITIATIVES own small businesses. In 2011, Paladin made a five-year financial commitment FEPAC also supports a school for the visually impaired to the Hammond-Nisbet Geoscience Fund administered and a school for deaf children. Over the years FEPAC has by the University of Western Australia (UWA). The fund helped fund the construction of classrooms, dormitories supports the creation of an endowed professorship and teacher’s houses for these schools as well as within UWA’s Centre for Exploration Targeting (CET). assisting with their monthly running costs. This research-intensive position focusses on mentoring new generations of geoscientists in interpretation During the year FEPAC funded the construction of four of fieldwork and structural geophysics and in classrooms in the Chiteka village in a remote part of applying this understanding to mineral systems and Kayelekera where no schooling infrastructure previously exploration targeting. existed. This was a very successful project in collaboration with the local community despite extremely difficult Paladin also continued its involvement with the ASX access conditions. Thomson Reuters Charity Foundation. Along with other companies listed on the S&P ASX 200 Index, Paladin There were numerous small projects funded by FEPAC contributed to the creation of a share portfolio which was during the year such as providing stationery, books, auctioned off at a major charity fundraiser organised by furniture and school uniforms to local schools. FEPAC the Foundation. Proceeds from the fundraiser go to a employs former carpentry and tailoring students to make set of pre-determined charities, the main focus being on the furniture and school uniforms and many of the former medical research for children. students use the profits from this work to help establish their own businesses. The 4th annual Charity Golf Day was held in Namibia, organised by local employees. The event was an outstanding success, raising N$150,000. The funds were divided between three organisations focussed on children – the Swakopmund Football Club, Namibian Association for Children with Disabilities and the House of Safety.
42 PALADIN ENERGY LTD ANNUAL REPORT 2015 OUR PEOPLE
The Company has spent the past year focussing on A Group-wide analysis of HR policies and procedures was stabilising and retaining its workforce throughout undertaken with the intention of ensuring an appropriate all projects. Following on from the previous period, suite in place at each location with an effort made to consolidation and rationalisation of organisational standardise processes where possible with collaboration structures have been ongoing and contributed to the across sites. A focus on identifying and tracking decrease in total employee numbers seen across employee metrics saw the introduction of a Group-wide the Group. data collection process allowing the tracking of numerous employee aspects such as turnover, retention, training and development, recruitment, workforce demographics and employee relations consistently across the Group.
Turnover for the Group is detailed in the following table.
Local Total Female Nationals Turnover Location % % %* Australia Corporate, administration, financial & marketing 27 51.85% n/a 10.81% Technical Services 9 33.33% n/a 53.57%** Exploration 10 20.00% n/a 9.60% Namibia LHM 344 17.44% 94.47% 19.53% Malawi KM* 215 9.30% 88.37% 20.19% Exploration 2 0% 100% 101.12%*** Canada Exploration 11 27.27% 72.72% 8.89%
Total 618 16.50%
* Employee turnover is based on a 12 month rolling average. DEVELOPMENT SUSTAINABLE ** High turnover seen due to internal transfers within Group. *** Due to exploration retrenchments at 30 June
Diversity overall, and gender diversity specifically, remains market parity discrepancies. For the second consecutive a focus and, despite the overall headcount decreasing year the senior management team maintained a 10% over the period, the percentage of female representation salary reduction. within the workforce has remained reasonably steady. Supporting a diverse workforce remains one of the As part of a senior management review all executive cornerstones of Paladin’s strategy with a commitment to managers undertook a 360 degree performance equitable gender representation amongst its workforce, evaluation in an effort to reinforce both a culture of balanced with availability of appropriate candidates in continuous improvement and provide an element to the region of operation. Further information on diversity measure performance within the leadership team. This can be found in the Corporate Governance Statement process will be cascaded to the next level of senior available on Paladin’s website. management and to some key technical roles across the Group within the upcoming year. The year ahead will see a continued focus on retaining key AUSTRALIA (HEAD OFFICE AND skills in an environment of cost rationalisation. In addition, MOUNT ISA) a review of succession plans that are currently in place for key roles will be undertaken ensuring a robust strategy to The Perth head office currently has 46 employees, address concerns should they arise. a reduction from 52 at the same time last year. Females within the head office represent 41.3% of employees and 47.3% of all females employed hold EXPLORATION roles within the professional, managerial or senior management categories. Group-wide the exploration team totals 23 spread across projects based in Australia, Malawi and Canada. During the period, the 12 month rolling total turnover was Paladin places a large focus on the development of its 24.27% in comparison to 30.43% at the same time last geoscience capabilities and has the benefit of exposing its year. In light of the continued focus on consolidating the professionals to a number of different geological terrains organisational structure two roles were made redundant and environments within the global project portfolio. and an additional two roles were restructured to part time. Additionally, a number of senior technical individuals In instances of natural attrition only those roles that were within the Group are consistently invited to present deemed essential were replaced, resulting in a reduction papers at industry conferences, providing yet another of a further seven roles. opportunity to transfer expert knowledge amongst the In line with the continued focus on rationalising costs, only Group and aid in the development of junior professionals. a small number of salary increases were awarded for the The Perth based exploration team is a small group period and only in instances where there were significant predominantly comprised of senior technical roles
PALADIN ENERGY LTD ANNUAL REPORT 2015 43 focussed on providing support and guidance across the NAMIBIA (LANGER HEINRICH MINE) Group. This small group consistently has minimal turnover and currently has an average tenure of 8.8 years of service In response to Swakop Uranium’s ongoing and within the team. aggressive recruitment campaign for its Husab Mine, LHM has struggled with the retention of skilled roles Unfortunately, as a result of the Malawian government resulting in a 12 month rolling total turnover of 19.53%. not renewing Paladin’s exploration licences, at the end of Hardest hit has been the processing department with June 2015 14 employees within the Kayelekera exploration the highest level of employee turnover. With such a large team were retrenched resulting in only two members number of experienced operators departing, and the of the original team being retained. Those individuals availability of replacements within the local area limited, a retrenched all received generous severance packages in number of operators who previously worked at KM have recognition of their service with the Company. been recruited into Namibia. This strategy has provided The Aurora exploration team based in Canada have again the benefit of recruiting individuals who are familiar with had low turnover for the period with only one individual Paladin’s operations, whilst providing employment to leaving. The Aurora team have been together now for a individuals who Paladin had to unfortunately retrench number of years with the average tenure growing to 6.7 when the mine went onto C&M in February 2014. years. In addition to the permanent team the project With further turnover likely to be experienced when employs approximately 30 seasonal staff for each field Husab moves to the engineering phase of its recruitment season. Of these individuals currently 80% are employed campaign, LHU has renewed its focus on training and from the surrounding communities of Postville, Makkovik development programmes. Currently the internal training and Rigolet and 73% of the seasonal staff has consistently modules are being updated and a competency based been re-employed for the past three field seasons. training programme implemented to allow recruitment of individuals with less experience. This strategy allows for a sustainable solution to the shortage of skilled labour MALAWI (KAYELEKERA MINE) currently being experienced. The Namibian government With KM now on C&M, the focus has been on adapting the has recently introduced a Vocational Educational & workforce and operations to this significant change. As Training Levy which is set at 1% of a company’s total the operation has moved into a more settled state within annual payroll. In the past 12 months LHU has invested C&M, the organisational structure was again reviewed N$3.8M into the training and development of its resulting in further decreases to both the national and employees, representing 2.3% of total annual payroll. expatriate employee numbers throughout the year. At As in previous years LHU places a focus on attracting year end there were 192 national employees, of which graduates and trainees allowing development of a 95 are within the site security team, and an additional pipeline of future skilled individuals and potential 24 expatriates. Turnover has slowly started to steady leaders. To enable this, LHU offers a number of bursary SUSTAINABLE DEVELOPMENT SUSTAINABLE with the rolling 12 month total turnover for national opportunities within the year, both internal and external, employees sitting at 15.42%, and the expectation that this allowing for formal training and education opportunities will reduce further. to be coupled with internal development and mentoring. The focus at KM will remain one of consolidation whereby There are currently 12 graduates within the disciplines of all HR processes, procedures and policies are under engineering, metallurgy, supply chain, human resources, review to ensure a solid foundation for restart. This finance, corporate relations and radiation management, process will also include a training element to ensure and LHU places a large focus on transitioning those that all new processes and procedures are understood graduates into permanent roles within the organisation by the senior leadership team and cascaded throughout which has been consistently successful. LHU’s long the workforce. standing relationship with the Namibian Institute of Mining Technology creates an opportunity to provide the hands- A relationship with the Miracle Technical School in on training components of the skilled trade and, in turn, Karonga has proved beneficial whereby hospitality LHU has access to a number of skilled artisans upon students are rotated for practical experience through the completion of their studies. With the current shortage of site services department to gain hands-on experience in local artisans, this relationship will play a significant and areas of cooking, cleaning and general service. In turn, ongoing role in the ability to attract skilled individuals. KM has access to high performing and experienced individuals after they graduate, should a vacancy arise. During the year the relationship between the Mineworkers Union of Namibia (MUN) and LHU has been positive with Although cost reduction is a priority, a conscious effort both parties agreeing in principle to the Recognition has been made to ensure that the opportunity to develop and Procedural Agreement (RPA), which has been in high performing employees has been retained via ongoing development for a number of years, and it is anticipated study assistance programmes. A number of employees that in the coming months the final agreement will be are currently undergoing further education relevant to their signed. The RPA details the partnership between LHU and roles, with KM both paying the fees and providing paid MUN and sets out the standards by which the two parties leave for study and examination purposes. Additionally, will deal with all relevant matters pertaining to employee mentoring and one-on-one career development remains concerns. Additionally, both parties have recently agreed a focus and KPI for the leadership team. to a three year Remuneration Agreement, which sets out Cross-development opportunities are also made the bargaining unit’s annual salary increases for the next available where possible in order to provide exposure to three year period, allowing employees the assurance of other operations within the Paladin portfolio for key roles clear expectations in this area. and individuals. During the year LHU undertook a job-grading project to align all roles into the Patterson Grading System. This was a lengthy process, yet the benefits it has provided have been numerous. With a solid basis for comparison now in place, a remuneration review of all roles measured against peers within the Namibian mining industry was undertaken, allowing LHU to ensure that competitive
44 PALADIN ENERGY LTD ANNUAL REPORT 2015 remuneration packages are offered. In addition, a Senior LHU places significant importance on employee health Employee Retention Scheme has been introduced with and wellness and collaborates with external health benefits awarded based on the performance of both the organisations (e.g. The Cancer Association of Namibia individual and the Company, coupled with a long-term and Namibian Blood Transfusion Service), who provide retention hook, to assist in retention of key individuals and employee wellness screenings and counselling events on top performers. site. Membership to private health insurance is a condition of employment at LHU and the Medical Aid providers LHU is compliant with all requirements of the Affirmative counsel employees on healthy lifestyle choices and in Action Act and has a consultative forum which is an identifying the risks associated with unhealthy practices integral part of its affirmative action strategy. Furthermore, resulting in issues such as high blood pressure, elevated it is committed to, and fully supports, the policy of equal cholesterol, HIV and other themes common to Namibia. opportunity employment and non-discrimination through its measurable Affirmative Action Plan. The LHU Affirmative The year ahead will see a continued focus on the internal Action Report reflects the following demographics based training and development in response to the current on the calendar year reporting cycle: tight labour market, coupled with retention measures to attempt to stabilise the turnover rate.
CY2013 CY2014 % Female Employees 21.2% 18.7% % Historically Racially Disadvantaged Employees* 89.5% 89.3% % Non Namibians 1.7% 1.7%
Total Employees 402 363
* As defined in the Affirmative Action (Employment) Act 1998. CORPORATE GOVERNANCE STATEMENT GOVERNANCE CORPORATE CORPORATE GOVERNANCE STATEMENT
The Board of Directors of Paladin Energy Ltd is responsible Recommendations. For FY2015, Paladin has complied for the corporate governance of the Group. with all the recommendations and has referenced these throughout this Corporate Governance Statement. Paladin has adopted systems of control and Further, the Company also complies with the Ontario accountability as the basis for the administration of Securities Commission’s corporate governance corporate governance. requirements as set out in National Instrument 58-101. This Corporate Governance Statement, dated 30 Paladin’s Corporate Governance Statement can be found June 2015 and approved by the Board on 20 August in the Corporate Governance section of the Investor 2015, outlines the key principles and practices of the Centre on its website at www.paladinenergy.com.au, Company which, taken as a whole, represents the system along with the ASX Appendix 4G, a checklist cross- of governance. referencing the ASX Principles and Recommendations to Shareholders are reminded that Paladin operates with disclosures in this statement, the current Annual Report a dual-listing in Australia on the ASX and in Canada on and the Company website. The Corporate Governance the Toronto Stock Exchange (TSX). In formulating the Statement, together with the 4G, have been lodged with governance framework, the regulatory requirements in the ASX on 27 August 2015. both Australia and Canada have been taken into account. The Company reviews and amends its corporate The ASX Listing Rules require the Company to report governance policies as appropriate to reflect the growth on the extent to which it has followed the Corporate of the Company, current legislation and good practice. Governance Recommendations contained in the Copies or summaries of key corporate governance policy ASX Corporate Governance Council’s (ASX CGC) 3rd documents can be found on the Company’s website Edition of its Corporate Governance Principles and (www.paladinenergy.com.au).
PALADIN ENERGY LTD ANNUAL REPORT 2015 45 DIRECTORS' REPORT
DIRECTORS The following persons were Directors of Paladin Energy Ltd and were in office for this entire period unless otherwise stated:
MR RICK WAYNE CRABB B. Juris (Hons), LLB, MBA, FAICD (Non-executive Chairman) Age 58 Mr Crabb holds degrees of Bachelor of Jurisprudence (Honours), Bachelor of Laws and Master of Business Administration from the University of Western Australia. He practised as a solicitor from 1980 to 2004 specialising in mining, corporate and commercial law and advised in relation to numerous project developments in Australia and Africa. Mr Crabb now focuses on his public company directorships and investments. He has been involved as a director and strategic shareholder in a number of successful public companies. He is also the non-executive chairman of Platypus Minerals Ltd (formerly Ashburton Minerals Ltd) (since 1999), Golden Rim Resources Ltd (since 2001) and Otto Energy Ltd (since 2004). Mr Crabb is a councillor on the Western Australian Division of the Australian Institute of Company Directors. Mr Crabb was appointed to the Paladin Board on 8 February 1994 and as Chairman on 27 March 2003.
Special • Chairman of the Board • Member of Remuneration Committee from 1 June 2005 • Member of Nomination Responsibilities Committee from 1 June 2005 • Member of Sustainability Committee from 25 November 2010
MR JOHN BORSHOFF B.SC., F.AusIMM, FAICD (resigned 10 August 2015) DIRECTORS'REPORT (Managing Director/Chief Executive Officer) Age 70 Mr Borshoff is a geologist who has been involved in the Australian and African exploration and mining industry for over 30 years. Mr Borshoff worked for International Nickel and Canadian Superior Mining before joining a German mining group, Uranerz from 1976 to 1991. He became Chief Geologist/ Exploration Manager during the period 1981-1986 and served as its chief executive from 1987 to mid- 1991, when the German parent of Uranerz made the decision to close its Australian operations. The primary focus of the Uranerz Group was the search for and development of uranium with the company operating extensively throughout Australia, North America and Africa. Mr Borshoff has extensive knowledge of the uranium industry and experience in company management and strategic planning. He serves on the Board of the Minerals Council of Australia. Mr Borshoff founded Paladin and was appointed to the Paladin Board on 24 September 1993.
Special • Managing Director/Chief Executive Officer • Member of Nomination Committee from 1 June 2005 Responsibilities • Member of Sustainability Committee from 25 November 2010
MR SEAN REVEILLE LLEWELYN LL.B, MAICD (resigned 21 August 2015) (Non-executive Director) Age 67 Mr Llewelyn originally qualified, and practised, as a solicitor in Australia and then re-qualified in England. He has subsequently worked in the finance and merchant banking industries for more than 20 years in Australia, the UK, the United States and South Africa. His considerable finance experience has been in derivatives (a founder, President and CEO of Capital Market Technology Inc.), structured finance and early stage investment relating to the metal markets. He has been involved with the uranium industry for many years and has a comprehensive understanding of the uranium market. Mr Llewelyn was the instigator and driving a force in the formation of Nufcor International Ltd, a major uranium marketing company, initially jointly owned between Anglo Gold and First Rand International. Mr Llewelyn was appointed to the Paladin Board on 12 April 2005.
Special • Member of Audit Committee from 12 April 2005 • Chairman of Remuneration Committee from 26 Responsibilities November 2008 (member from 1 June 2005) • Chairman of Nomination Committee from 26 November 2008 (member from 1 June 2005)
46 PALADIN ENERGY LTD ANNUAL REPORT 2015 MR DONALD SHUMKA B.A., MBA (Non-executive Director) Age 73 Mr Shumka is a Vancouver-based Corporate Director with more than 40 years’ experience in financial roles. From 2004 to 2011, he was President and Managing Director of Walden Management, a consulting firm specialising in natural resources. From 1989 to 2004, he was Managing Director, Investment Banking with CIBC World Markets and Raymond James Ltd. Prior to 1989, Mr Shumka was Vice President, Finance and Chief Financial Officer of West Fraser Timber Co. Ltd., one of Canada’s largest forest products companies. He holds a Bachelor of Arts Degree in Economics from the University of British Columbia and a Master of Business Administration Degree from Harvard University. Mr Shumka is also a director of Eldorado Gold Corp. (since May 2005), Alterra Energy Corp. (since March 2008) and Odin Mining and Exploration Ltd (since July 2014). Mr Shumka was appointed to the Paladin Board on 9 July 2007.
Special • Chairman of Audit Committee from 9 July 2007 • Member of Remuneration Committee from 10 August 2007 Responsibilities • Member of Nomination Committee from 9 July 2007
MR PETER MARK DONKIN BEC, LLB., F FIN, MAICD (Non-executive Director) Age 58 Mr Donkin has over 30 years’ experience in finance, including 20 years arranging finance in the mining sector. He was previously the Managing Director of the Mining Finance Division of Société Générale in Australia, having worked for that bank for 21 years in both their Sydney and London offices. Prior to that, he was with the corporate and international banking division of the Royal Bank of Canada. His experience has involved arranging transactions for mining companies, both in Australia and internationally, in a wide variety of financial products, including project finance, corporate finance, acquisition finance, export finance and early stage investment capital. Mr Donkin holds a Bachelor of Economics degree and a Bachelor of Law degree from the University of Sydney. He is a director of Allegiance Coal Ltd (since 2010) and was previously a director of Sphere Minerals Ltd (from March
2010 to November 2010) and Carbine Tungsten Ltd (from February to April 2013). DIRECTORS'REPORT Mr Donkin was appointed to the Paladin Board on 1 July 2010.
Special • Member of Audit Committee from 25 November 2010 • Member of Nomination Committee from 1 July 2010 Responsibilities
MR PHILIP BAILY BSC, MSC (Non-executive Director) Age 71 Mr Baily is a metallurgist with more than 40 years’ experience in the mining industry, including some 11 years in the uranium sector. Throughout his career, he has been involved in the design, construction, commissioning and operation of mineral processing plants, including two uranium plants. Project locations have varied from the deserts of Australia to the tropics of Papua New Guinea and the high altitudes of Argentina. He has extensive experience, at senior management level, in the evaluation of projects from grass roots development to the acquisition of advanced projects and operating companies. These projects have been located throughout the world, many in developing countries and environmentally sensitive areas. Mr Baily holds a Bachelor of Science and a Master of Science degree in Metallurgy from the University of NSW. Mr Baily was appointed to the Paladin Board on 1 October 2010.
Special • Chairman of Sustainability Committee from 25 November 2010 • Member of Nomination Committee from Responsibilities 1 October 2010
MR WENDONG ZHANG BA (Non-executive Director) Age 45 Mr Zhang has over 23 years’ experience in financial services and international capital markets and was among the first generation Chinese bankers on Wall Street working with Morgan Stanley, UBS and Citi across New York, Hong Kong and Beijing. He also co-founded two boutique investment advisory firms focusing on China opportunities. He has completed a number of advisory, financing and investment transactions and established relationships with leading players in various sectors including conventional energy, nuclear utilities and natural resources. Mr Zhang graduated from Dartmouth College, New Hampshire USA, in 1991 with a B.A. in Engineering and Economics. Mr Zhang was appointed to the Paladin Board on 25 November 2014.
Special • Member of Remuneration Committee from 12 February 2015 Responsibilities
PALADIN ENERGY LTD ANNUAL REPORT 2015 47 Directors' continued) COMPANY SECRETARY AND EXECUTIVE GENERAL MANAGER - CORPORATE SERVICES
MS GILLIAN SWABY B.Bus, FCIS, FAICD (resigned 21 August 2015) Age 55 Ms Swaby has been involved in financial and corporate administration for listed companies, as both Director and Company Secretary, covering a broad range of industry sectors, for over 30 years. Ms Swaby has extensive experience in the area of secretarial practice, corporate governance, management accounting and corporate and financial management. In addition to her role as Group Company Secretary, the divisions of human resources, legal and corporate social responsibility also fall under her management in the role of EGM-Corporate Services. Ms Swaby is past Chair of the Western Australian Council of Chartered Secretaries of Australia, a former Director on their National Board and a lecturer for the Securities Institute of Australia. Ms Swaby is the principal of a corporate consulting company and was a member of the Paladin Board for a period of 10 years. She is a director of Australia-Africa Mining Industry Group (AAMIG).
BOARD AND COMMITTEE MEETINGS The number of Directors’ meetings and meetings of committees held in the period each Director held office during the financial year, and the number of meetings attended by each Director were:
Remuneration Nomination Sustainability Board of Directors Audit Committee Committee Committee Committee
Number Number Number Number Number eligible eligible eligible eligible eligible Number to Number to Number to Number to Number to
DIRECTORS'REPORT Name attended attend attended attend attended attend attended attend attended attend Mr Rick Crabb 13 13 - - 4 4 2 2 3 3 Mr John Borshoff 13 13 - - - - 2 2 3 3 Mr Sean Llewelyn 13 13 5 5 4 4 2 2 - - Mr Donald Shumka 13 13 5 5 4 4 2 2 - - Mr Peter Donkin 13 13 5 5 - - 2 2 - - Mr Philip Baily 13 13 - - - - 2 2 3 3 Mr Wendong Zhang 7 7 - - 2 2 2 2 3 3
Of the above Board meetings, 4 were face to face with the remainder held via electronic means. The Board meeting schedule also includes a scheduled conference call mid quarter between the face to face meetings.
INTERESTS IN THE SECURITIES RESIGNATION, ELECTION AND OF THE COMPANY CONTINUATION IN OFFICE OF DIRECTORS As at the date of this report, the interests of the Directors In accordance with the Constitution of the Company, in the securities of Paladin Energy Ltd were: Mr Donald Shumka and Mr Peter Donkin will seek re- election at the 2015 Annual General Meeting, following their retirement by rotation. Mr Wendong Zhang was appointed as a Non-executive Director by the Board Share rights (issued Paladin under the Paladin effective 25 November 2014. Mr Zhang will seek election Director Shares Employee Plan) by shareholders at the 2015 Annual General Meeting. Mr Rick Crabb 5,981,528 Nil Mr Donald Shumka 200,000 Nil PRINCIPAL ACTIVITY Mr Peter Donkin 22,500 Nil The principal activity of the Group was the development Mr Philip Baily 18,000 Nil and operation of uranium mines in Africa, together with Mr Wendong Zhang 1,180,000 Nil global exploration and evaluation activities in Africa, Australia and Canada.
REVIEW AND RESULTS OF OPERATIONS A detailed operational and financial review of the Group is set out on pages 9 to 33 of this report under the section entitled Management Discussion and Analysis. The Group’s loss after tax for the year is US$267.8M (2014: US$338.4M) representing a decrease of 21% from the previous year.
48 PALADIN ENERGY LTD ANNUAL REPORT 2015 DIVIDENDS CHANGE OF CHIEF EXECUTIVE OFFICER No dividend has been paid during the financial year and On 30 July 2015, the Company advised that its Board no dividend is recommended for the current year. and Managing Director and CEO Mr John Borshoff had agreed that Mr Borshoff would step down from his role with the Company. SIGNIFICANT CHANGES IN THE STATE A process to identify a suitable new CEO is now OF AFFAIRS underway. In the interim, Mr Alexander Molyneux has There were no significant changes in the state of affairs been appointed Interim CEO. Mr Molyneux joins with of the Group during the financial year not otherwise dealt substantial experience in natural resources executive with in this report. leadership, including both public mining company CEO and uranium experience. SIGNIFICANT EVENTS AFTER THE Mr Molyneux’s core mandate will be to: (i) to continue the optimisation of Paladin’s overall cash flow break- BALANCE DATE even level with the aim to become cash flow generative Other than disclosed below, since the end of the year, in the current uranium price environment; (ii) focus on the Directors are not aware of any other matter or accelerating strategic initiatives that deliver value; and (iii) circumstance not otherwise dealt with in this report, that to assist the Board in its search for a permanent CEO. has significantly or may significantly affect the operations of the Group, the results of those operations or the BOARD AND MANAGEMENT RESTRUCTURING state of affairs of the Group in subsequent years with the exception of the following, the financial effects of On 21 August 2015, the Company advised of board which have not been provided for in the 30 June 2015 and management changes, and a reduction in board Financial Report: remuneration. Paladin’s board accepted the resignation of Non- MATERIAL REDUCTION IN COSTS Executive Director Mr Sean Llewelyn. On 30 July 2015, the Company advised of a material Ms Gillian Swaby, Group Company Secretary and reduction in its cash flow break-even level through a EGM Corporate Services, and the Company agreed sustainable reduction in its all-in cash costs (including Ms Swaby would step down from her role at the Company. capital expenditure, corporate costs and debt servicing). Mr Ranko Matic was appointed Company Secretary. DIRECTORS'REPORT These measures will reduce Paladin’s total cash costs by Paladin’s board adjusted its remuneration structure with more than US$33M compared to FY2015. an effective date of 1 July 2015. The revised structure Subsequent to the US$33M in cost reductions announced will alter the base salary for Non-Executive Directors to on 30 July 2015, Paladin has identified further significant A$65,000 and the Non-Executive Chairman to A$125,000. cash flow optimisation initiatives. Such initiatives include: LHM operating initiatives – As a consequence of the LIKELY DEVELOPMENTS BRP, barren solution used for wash in the counter current decantation section of the LHM plant is Likely developments in the operations of the Group constituted by the Company and the entities it controls expected to reduce from approximately 50ppm U3O8 to less than 10ppm. This will result in a significant from time to time are set out under the section entitled improvement in wash efficiency. The Company’s Management, Discussion and Analysis. original FY2016 outlook assumed wash efficiency of 93.1%. Paladin now anticipates a wash efficiency in ENVIRONMENTAL REGULATIONS the range of 95% to 98% for FY2016. The Company has also revised its FY2016 life of mine plan for LHM The Group is subject to significant environmental regulation
resulting in an average head-grade of 694ppm U3O8, in respect to its exploration, evaluation, development i.e., an increase of 11ppm over the guidance provided and operational activities for uranium projects under the in the last Quarterly Activities Report announced on laws of the countries in which its activities are conducted. 16 July 2015. The Group currently has mining and processing Corporate costs, exploration and KM initiatives – operations in Namibia and Malawi (placed on care and Paladin has implemented reductions in these areas maintenance in February 2014), as well as exploration to further reduce annualised cash expenditure by projects in Australia, Niger and Labrador, Canada. The approximately US$8M over the initiatives set out in the Group’s Policy is to ensure compliance with all applicable cost reduction announcement of 30 July 2015 (i.e., a environmental laws and regulations in the countries in cumulative US$14M less than FY2015). The additional which it conducts business. initiatives include a reduction in approximately 50% Specific environmental regulations, approvals and of corporate staff that was undertaken on 21 August licences for the exploration, development and operation 2015 concurrent with the reduction in the number are required to conduct the activities at each site. In of directors and reduction in board fees announced addition, many other international and industry standards the same day. Exploration has been put on care and are also applied to the Group’s activities, including maintenance whereby the Company will undertake those specified for the global uranium industry. These the work required to meet minimum license environmental laws, regulations and standards relate expenditures only. to environmental factors such as radiation, water, flora, fauna, air quality, noise, waste management and pollution control. The Directors are not aware of any environmental matters which would have a significant adverse effect on the Group.
PALADIN ENERGY LTD ANNUAL REPORT 2015 49 REMUNERATION FOR THE YEAR EXECUTIVE REMUNERATION – CASH VALUE OF AT A GLANCE EARNINGS REALISED (UNAUDITED) In keeping with the Company’s practice since 2011, the Details of the remuneration received by the Key tables below set out the cash value of earnings realised Management Personnel are prepared in accordance with by the Managing Director/CEO and other executives statutory requirements and accounting standards, and considered to represent Key Management Personnel are detailed further in the Remuneration Report. (KMP) for 2015 and 2014 and the intrinsic value of share- The disclosure below aims to provide an overall picture based payments that vested to the executives during the of the group-wide remuneration platform and not simply period. This is in addition and different to the disclosures focus on Key Management Personnel. Given the economic required by the Corporations Act and Accounting conditions associated with the continuing poor uranium Standards, particularly in relation to share rights. As a price, and resulting cash constraints that the Company general principle, the Accounting Standards require a faced during the past year, with the exception of a small value to be placed on share rights based on probabilistic number of employees who received adjustments for calculations at the time of grant, which may be reflected in parity issues seen within local labour markets, there were the remuneration report even if ultimately the share rights no general salary increases granted across the Group. do not vest because performance and service hurdles A significant number of management personnel agreed are not met. By contrast, this table discloses the intrinsic to extend a 10% reduction in salary with a non-cash value of share rights, which represents only those share compensation option to offset the reduction, tailored to rights which actually vest and result in shares issued to a individual circumstances to assist in retention. KMP. The intrinsic value is the Company’s closing share price on the date of vesting. The Managing Director/CEO agreed to extend the voluntary 10% reduction in salary setting the tone The Company believes that this additional information is for the cost rationalisation programme to continue useful to investors as recognised by the 2009 Productivity across the Group. Commission Inquiry Report ‘Executive Remuneration An extension of the 10% reduction in directors’ fees in Australia’. The Commission recommended that and management personnel base salaries during remuneration reports should include actual levels of the year. At a management level, this affected 21 remuneration received by the individuals named in the individuals and resulted in further overall cash savings report in order to increase its usefulness to investors. of approximately A$1 million. This reduction in fees The cash value of earnings realised include cash salary and salaries will remain in place until certain market DIRECTORS'REPORT and fees, superannuation, cash bonuses and other conditions are met, at which point they will return to benefits received in cash during the year and the intrinsic their pre-adjusted rates. To compensate, individuals value of long-term incentives vesting during the 2015 (other than directors) were offered a choice of an year. The tables do not include the accounting value issue of share rights, additional leave or an option of for share rights granted in the current and prior years, reduced working hours, to the value of the 12 months as this value may or may not be realised as they are of their reduction in salary. dependent on the achievement of certain performance No cash bonuses were paid across the Group hurdles. The accounting value of other long-term benefits this year. which were not received in cash during the year have also Given the salary freeze, the Company absorbed been excluded. the superannuation increase of 0.25% legislated All cash remuneration is paid in Australian dollars to those in Australia. parties listed below (with the exception of Mr D Garrow, A focus on rationalisation and consolidation of the who is paid in US$), therefore the tables are presented workforce continued with a reduction in overall in both A$ and US$ being the functional and presentation headcount across the Group and certain roles made currency of the Company. The detailed schedules redundant over the period. Additionally, where natural of remuneration presented later in this report are attrition occurred, only those roles deemed to be presented in US$. critical were replaced. Certain positions within the Group moved from full time to part time to reflect the business needs. 1,791,992 share rights were granted during the year as an allocation to those employees affected by the 10% reduction in management personnel salaries. A total of 2,388,072 share rights vested during the year (0.14% of issued capital). Long-term incentives on issue at balance date comprise 788,754 share rights representing 0.05% of the issued capital. All were issued as an offset to salary reductions.
50 PALADIN ENERGY LTD ANNUAL REPORT 2015 2015 (A$’000) / (US$’000)
LTIP LTIP LTIP Base Salary & LTI (1) Total 5 Nov 15 Feb 2 Apr Name Superannuation Bonus Other Cash 2010(2) 2012(3) 2013(4) Total
A$ US$ A$ US$ A$ US$ A$ US$ A$ US$ A$ US$ A$ US$ A$ US$ Mr John Borshoff(5) 1,382 1,151 –– 210(6) 175 (6) 1,592 1,326 48 40 –––– 1,640 1,366 Mr Dustin Garrow(7) 591 492 –––– 591 492 – – 8 7 63 52 662 551 Ms Gillian Swaby(8) –––– 510 (9) 425(9) 510 425 – – 7 6 52 43 569 474 Mr Mark Chalmers 465 387 513 427 25(10) 21(10) 1,003 835 –– 29 24 26 22 1,058 881 Mr Craig Barnes 410 342 –––– 410 342 –––––– 410 342
Total 2,848 2,372 513 427 745 621 4,106 3,420 48 40 44 37 141 117 4,339 3,614
Refer to the Compensation of Key Management Personnel table later in the Remuneration Report for audited information required in accordance with the Corporations Act 2001 and its Regulations.
Exchange rate used is average for year US$1 = A$1.20149. (1) Payment of LTI retention bonus granted 1 January 2012. Refer to page 57. (2) Value of share rights granted on 5 November 2010 and vesting on 14 November 2014 at a market price of A$0.38. (3) Value of share rights granted on 2 April 2012 and vesting on 1 September 2014 and 8 September 2014 at a market price of A$0.38. (4) Value of share rights granted on 15 November 2013 that either vested immediately and were held in escrow to 14 November 2014 or vested on 14 November 2014 at a market price of A$0.38. (5) Mr John Borshoff resigned effective 10 August 2015. (6) Represents 40 days accrued annual leave paid out. (7) Mr Dustin Garrow resigned effective 21 August 2015. (8) Ms Gillian Swaby resigned effective 21 August 2015. (9) Fees for services paid to a company of which Ms Gillian Swaby is a director and shareholder. (10) Mark Chalmers resigned on 30 June 2015. Represents accrued annual leave paid out at 30 June 2015. DIRECTORS'REPORT
2014 (A$’000) / (US$’000)
LTIP LTIP LTIP Base Salary & LTI (1) Total 5 Nov 15 Feb 2 Apr Name Superannuation Bonus Other Cash 2010(2) 2012(3) 2013(4) Total
A$ US$ A$ US$ A$ US$ A$ US$ A$ US$ A$ US$ A$ US$ A$ US$ Mr John Borshoff 1,433 1,314 ---- 1,433 1,314 ------1,433 1,314 Mr Dustin Garrow 606 556 729 668 -- 1,335 1,224 11 11 - - 5 5 1,351 1,240 Ms Gillian Swaby -- 547 502 529(5) 485(5) 1,076 987 8 8 53 48 5 4 1,142 1,047 Mr Mark Chalmers 482 443 -- 39(6) 36(6) 521 479 - - - - 7 6 528 485 Mr Alan Rule(7) 468 430 ---- 468 430 ------468 430
Mr Craig Barnes(8) 64 57 ---- 64 57 ------64 57
Total 3,053 2,800 1,276 1,170 568 521 4,897 4,491 19 19 53 48 17 15 4,986 4,573
Refer to the Compensation of Key Management Personnel table later in the Remuneration Report for audited information required in accordance with the Corporations Act 2001 and its regulations.
Exchange rate used is average for year US$1 = A$1.09006. (1) Payment of LTI retention bonus granted 1 July 2010. Refer to page 57. (2) Value of share rights granted on 5 November 2010 and vesting on 1 September 2013 at a market price of A$0.58. (3) Value of share rights granted on 15 February 2011 and vesting on 15 February 2014 at a market price of A$0.485. (4) Value of share rights granted on 2 April 2012 and vesting on 1 September 2013 at a market price of A$0.58. (5) Fees for services paid to a company of which Ms Gillian Swaby is a director and shareholder. (6) Living away from home allowance. (7) Mr Alan Rule resigned effective 30 June 2014. (8) Mr Craig Barnes commenced on 5 May 2014. Appointment as Chief Financial Officer effective on 1 July 2014.
PALADIN ENERGY LTD ANNUAL REPORT 2015 51 REMUNERATION REPORT (Audited)
This Remuneration Report outlines the Director and executive remuneration arrangements of the Company and the Group in accordance with the requirements of the Corporations Act 2001 (Cth) and its Regulations. For the purposes of this report, Key Management Personnel of the Group are defined as those persons having authority and responsibility for planning, directing and controlling the major activities of the Group, directly or indirectly, including any Director, whether executive or otherwise, of the parent company. Key Management Personnel comprise: Mr Dustin Garrow, Executive General Manager - Marketing (resigned 21 August 2015) Mr Rick Crabb, Non-executive Chairman Mr Mark Chalmers, Executive General Manager – Mr John Borshoff, Managing Director/CEO (resigned Production (resigned 30 June 2015) 10 August 2015) Mr Craig Barnes, Chief Financial Officer Mr Alexander Molyneux, Interim CEO (appointed 10 August 2015) Following the resignation of Mr Mark Chalmers, effective 30 June 2015, the ultimate responsibility for planning, Mr Sean Llewelyn, Non-executive Director (resigned directing and controlling production has been transferred 21 August 2015) to Mr John Borshoff (10 August 2015, Alexander Mr Donald Shumka, Non-executive Director Molyneux was appointed Interim CEO). This reflects the Mr Philip Baily, Non-executive Director fact that the Company now has only one operating mine Mr Peter Donkin, Non-executive Director being Langer Heinrich, with Kayelekera on care and maintenance. There were no other changes to KMP after Mr Wendong Zhang, Non-executive Director the reporting date and before the date the financial report (appointed 25 November 2014) was authorised for issue. Ms Gillian Swaby, Group Company Secretary and Executive General Manager – Corporate Services For the purposes of this report, the term ‘Executive’ (resigned 21 August 2015) encompasses the Managing Director/CEO, senior executives, managers and company secretary of the Parent and the Group. DIRECTORS'REPORT
REMUNERATION REPORT APPROVAL AT FY2014 ANNUAL GENERAL MEETING (AGM) The FY2014 remuneration report received a 69% vote for approval at the FY2014 AGM. The 31% proxy vote against represented just 5.08% of Paladin’s total issued capital. Proxies representing 17% of Paladin’s total issued capital were received for this resolution. This is a particularly low voting turnout compared to past years, as reflected in the table below:
Year Issued Capital Total Votes Received % of Issued Capital Total No Vote % of Votes Received 2014 965,752,118 160,202,690 16.588 49,050,562 30.618 2013 964,118,567 303,547,579 31.484 48,947,968 16.125 2012 836,825,651 347,577,412 41.535 27,20 6,523 7.827
The number of proxies tendered against the Remuneration Report was in line with voting at the 2013 AGM. Due to significantly higher shareholder participation in 2013 (which reflected previous years), some 83% of voting shareholders, representing 26% of the Company’s total issued capital, voted in favour of the Remuneration Report and the resolution was carried. Paladin believes it has worked hard to improve the transparency of its Remuneration Report and ensure remuneration across the business reflects the challenging conditions being experienced by uranium producers since the incident at Fukushima in 2011. In 2014, Paladin implemented a 10% reduction in directors’ fees and the base salaries of senior management. This reduction also applied to Managing Director and CEO John Borshoff, whose salary has fallen by 32.5% since June 2012.
REMUNERATION APPROVAL PROCESS The Remuneration Committee is charged with assisting Messrs Crabb, Shumka and Zhang are also Committee the Board by reviewing and making appropriate members. The Managing Director/CEO is invited to recommendations on remuneration packages for the attend those meetings which consider the remuneration Managing Director/CEO, Non-executive Directors and strategy of the Group and recommendations in relation to senior executives. In addition, it makes recommendations senior executives. on long-term incentive plans and associated performance hurdles together with the quantum of grants made, Having regard to the recommendations made by the taking into account both the individual’s and the Managing Director/CEO, the Committee approves the Company’s performance. quantum of any short-term incentive bonus pool and the total number of any long-term incentive grants to be made The Remuneration Committee, chaired by and recommends the same for approval by the Board. Mr Sean Llewelyn, held four meetings during the year. Individual awards are then determined by the Managing
52 PALADIN ENERGY LTD ANNUAL REPORT 2015 Director/CEO in conjunction with senior management, as Consideration of the Company’s earnings will be more appropriate. The remuneration for the Managing Director/ relevant as the Company matures from its development CEO is determined by the Remuneration Committee. and consolidation phase to profitability which is of course highly dependent on prevailing uranium prices. Any salary reviews and bonus payments are effective from 1 January in the year. Whilst the market capitalisation of the Company has dropped significantly due to continued poor uranium prices, the Remuneration Committee considers the KEY ELEMENTS OF KEY MANAGEMENT level of remuneration for Key Management Personnel/ PERSONNEL/EXECUTIVE REMUNERATION Executives is appropriate given the complexity of the STRATEGY uranium business and its markets; and the geographic spread of assets. The overall focus of Paladin’s remuneration strategy is to: The Board is cognisant of general shareholder concern provide competitive and fair reward; that long-term equity-based remuneration be linked to be flexible and responsive in line with market Company performance and growth in shareholder value. expectations; The share rights plan addresses this with performance align Executive interests with those of the Company’s conditions, including reference to Earnings per Share shareholders; and, (EPS), Total Shareholder Return (TSR) and Market comply with applicable legal requirements and Price conditions. These performance conditions will be appropriate standards of governance. reviewed to determine the appropriateness to the business prior to any further issues. Since April 2012, the only share The above strategies also need to recognise the economic rights issued were those issued pursuant to the 10% situation of the Group given the prevailing uranium prices. reduction in management personnel base salaries This strategy applies group wide for all employees. and accordingly have no performance conditions. The Information in relation to the compensation of remaining share rights currently outstanding (totalling Non-executive Directors is detailed later in this 788,754; 0.05% of issued capital) will all vest on 1 Remuneration Report. December 2015. At that point, no share rights will remain on issue under current plans. The overall level of compensation takes into account the Company’s earnings and growth in shareholder wealth of The table below compares the earnings per share to the the Company together with the achievement of strategic closing share price for the Company's five most recently
goals but must also reflect current economic conditions. completed financial years. DIRECTORS'REPORT
30 June 2011 30 June 2012 30 June 2013 30 June 2014 30 June 2015
EPS US$(0.11) US$(0.21) US$(0.49) US$(0.34) US$(18.9) Share Price A$2.52 A$1.25 A$0.88 A$0.29 A$0.245
The remuneration structure for the Key Management Personnel/Executives has three elements: fixed remuneration; short-term variable remuneration; and, long-term incentives.
COMPONENTS OF KEY MANAGEMENT PERSONNEL/EXECUTIVE REMUNERATION These are detailed as follows:
Remuneration Elements Details Component Fixed Remuneration Annual base salary The ‘not at risk’ cash component which may include certain salary determined as at 1 January sacrifice packaging. each year Statutory superannuation Statutory % of base salary. contributions Expatriate benefits Executives who fulfil their roles as an expatriate may receive benefits including relocation costs, health insurance, housing and car allowances, educational fees and tax advisory services. Foreign assignment An additional % of base salary is payable in relation to foreign allowance assignments being 15% for Malawi and 10% for Namibia. Variable Performance Short-term incentive, paid as Rewards Executives for performance over a short period, being the year Linked Remuneration a cash bonus ending 31 December. Bonuses are awarded at the same time as the ("at risk" remuneration) salary reviews. Assessment is based on the individual’s performance and contribution to team and Company performance. Long-term incentive, granted Award determined in the September quarter of each year, based under the Rights Plan on individual performance and contribution to team and Company performance. Vesting dependent on creation of shareholder value over a three year period, together with a retention element.
PALADIN ENERGY LTD ANNUAL REPORT 2015 53 FIXED REMUNERATION This is reviewed annually with consideration given to risk” component of overall remuneration designed to both the Company and the individual’s performance encourage exceptional performance whilst adhering to and effectiveness. Market data, focused on the mining the Company values. Specific targets for individuals have industry, is analysed with a focus on maintaining parity not been set due to the philosophy of achieving a common or above with companies of similar complexity and goal for the Company, however, the following measures size operating in the resources sector and becoming are taken into account where these are applicable to the an employer of choice. The Company did not engage Key Management Personnel and individual Executives remuneration consultants, however it subscribes to a and have been selected to align their interests to those number of remuneration surveys and reports including of shareholders: Boardroom Remuneration Review (Connect 4), and AUSREM. The Company also takes into consideration the (a) health, safety and environmental performance; annual publication, Executive and Board Remuneration (b) production performance; Report produced by Ernst & Young. (c) project development performance; Despite the challenging economic times, local reviews against industry salary benchmarks were undertaken and (d) additional uranium resources delineated; in instances where there were parity issues, adjustments (e) performance of the Company in meeting its various were made accordingly as part of the effort to maintain a other objectives; competitive remuneration structure. (f) financial performance of the Company; and Mr John Borshoff is referred to as both Managing Director/CEO to clarify the understanding of his position (g) such other matters determined by the Remuneration in both North America and Australia, given Paladin’s stock Committee in its discretion. exchange listings in each jurisdiction. The above must, however, be viewed in the context of the operating environment and the priorities in terms of the MANAGING DIRECTOR/CEO allocation and preservation of cash. The current contract for the period 27 November 2013 Given the priority of cost reduction and cash conservation to 31 December 2014, with an option for the parties to with the uranium industry continuing to experience difficult agree for a further 1 or 2 years to 31 December 2015 or times, no cash bonuses were paid across the Group this
DIRECTORS'REPORT 2016 respectively was extended on 26 August 2014 until year (CY2014 US$32,000). 31 December 2016 on the same terms and conditions. Base salary was voluntarily reduced by 25% at 1 The expectation is that short-term incentives will not be December 2011 to A$1,533,600 (US$1,276,415), with a reinstated until such time as the operating environment further 10% reduction to A$1,382,000 (US$1,150,238), improves and, at that time, a more structured incentive effective 27 November 2013. If at any time during the programme linked both to individual and corporate performance will be implemented. term the month-end U3O8 spot price as published by UxC equals or exceeds US$45/lb for a period of 3 consecutive months, and Mr Borshoff achieves other key MANAGING DIRECTOR/CEO strategic objectives as agreed between Mr Borshoff and the Board, Mr Borshoff’s base salary will be reinstated A bonus of up to 100% of base salary can be achieved to $1,533,600 (including superannuation), with effect from under the terms of his contract, having consideration to the day after the end of the said 3 consecutive months. outcomes achieved during the year, to be determined In addition, his contract provides for payment of a benefit by the Remuneration Committee. For the calendar year on retirement or early termination by the Company, other 2014 no bonus was awarded in line with the philosophy than for gross misconduct, is equal to one year’s average applying to all staff referred to earlier. No bonus was base salary for the 3 years immediately preceding the paid the previous year given the similar economic termination date. The remuneration level reflects the circumstances at that time. Matters to be considered as extensive knowledge and experience Mr John Borshoff key outcomes for CY2015 when considering payment of has in the uranium sector gained over the past 40 years, a bonus to J Borshoff fall within the following parameters as a recognised global authority. Expertise at this level is which the Board considers best capture the essential in extremely limited supply, particularly given the period elements for increasing shareholder returns: of over 20 years of non-activity in the uranium sector and the very small number of uranium producers worldwide. His knowledge and expertise of the sector have been key Indicative to the growth and acquisition strategy of the Company Factor Weighting and integral to its development from a junior explorer to a 1 Production and financial performance 30% uranium producer with two mines. This benefit reflects 22 meeting or exceeding expectations. years of service to the Company by John Borshoff, being 2 Successful outcome of strategic initiatives 30% the founder in 1993. in accordance with strategy. 3 Economic sustainability of business 20% VARIABLE REMUNERATION achieved/substantially progressed. SHORT-TERM INCENTIVES 4 Sustainability matters achieving 10% expectations. The Company provides short-term incentives comprising 5 Other factors at the discretion of the 10% a cash bonus to Executives of up to 30% of base salary. Remuneration Committee. The bonus is entirely discretionary with the goal of focusing attention on short-term strategic and financial The Remuneration Committee may, in its discretion, vary objectives. The amount is dependent on the Company’s the weighting to account for unusual/unexpected events performance in its stated objectives and the individual’s or outcomes during the year. Any bonus payable, relating performance, together with the individual’s position to the 2015 calendar year, would be paid out in CY2016. and level of responsibility. This component is an “at
54 PALADIN ENERGY LTD ANNUAL REPORT 2015 LONG-TERM INCENTIVES Proportion of The Company believes that encouraging its employees share rights to to become shareholders is the best way of aligning their which performance Vesting and Performance interests with those of its shareholders. In 2009, the hurdle applies Conditions Company implemented an Employee Performance Share 10% Time based – must remain in employ Rights Plan (the Rights Plan) together with a Contractor for 1 year from date of grant Performance Share Rights Plan (the Contractor Rights 15% Time based – must remain in employ Plan). These plans are referred to jointly as the Rights for 2 years from date of grant Plans and were reaffirmed by shareholders at the 2012 25% Time based – must remain in employ Annual General Meeting. for 3 years from date of grant The Rights Plans are long-term incentive plans aimed 20% Total Shareholder Return (TSR) relative at advancing the interests of the Company by creating to mining companies in ASX S&P 200 a stronger link between employee performance and Index reward and increasing shareholder value by enabling 30% Market Price Performance (MPP) participants to have a greater involvement with, and share measuring the increase in share price in, the future growth and profitability of the Company. over the period They are an important tool in assisting to attract and retain talented people. MANAGING DIRECTOR/CEO Share rights are granted under the plan for no consideration. Share rights are rights to receive fully The share rights issued to the Managing Director/CEO paid ordinary shares in the capital of the Company have different vesting hurdles to reflect the “at risk” nature (Shares) in the future if certain individual and/or corporate of 100% of this component of his remuneration and performance metrics (Performance Conditions) are met in provide a direct link between Managing Director/CEO the measurement period. reward and shareholder return, and provide a clear line of sight between Managing Director/CEO performance and The number of share rights able to be issued under Company performance. No share rights were granted to the Plans is limited to 5% of the issued capital. The 5% Mr Borshoff during the years ended 30 June 2014 and limit includes incentive grants under all plans made in 2015. During the year ended 30 June 2015, 125,000 share the previous 5 years (with certain exclusions under the rights vested in accordance with their vesting conditions Australian corporate legislation). This percentage now
(the TSR measure, as detailed later in this report). (2014: DIRECTORS'REPORT stands at 0.05%. no share rights vested). The performance conditions of those share rights granted CLAWBACK to Managing Director/CEO which vested during the A clawback policy will be put in place prior to any general year were: grant of long-term incentives across the Group. The Board is cognisant of general shareholder concern Proportion of share that long-term equity-based rewards should be linked rights to which performance hurdle to the achievement by the Company of a performance applies Performance measure condition. Share rights granted under the Rights Plan are subject to certain vesting and performance conditions 50% Total Shareholder Return (TSR) as determined by the Board from time to time. Future relative to mining companies in ASX performance conditions are likely to more closely address S&P 200 Index* alignment between remuneration and the strategic 50% Earnings Per Share (EPS) objectives of the Company together with internal financial Measuring the increase in earnings and operational measures. over the period The Company does not offer any loan facilities to assist in the purchase of shares by employees. Following the vesting as outlined above, Mr Borshoff holds no share rights. SHARE RIGHTS PLAN *The initial measurement date of the share rights subject to the relative TSR condition is at the end of year three, VESTING AND PERFORMANCE CONDITIONS calculated from the date of grant. At the end of year three, The following vesting and performance conditions applied Mr John Borshoff can either: to share rights that vested during the year. These were accept the vesting outcome achieved; or, originally issued on 2 April 2012 and there are no more share rights on issue with these conditions. elect to have his share rights retested at the end of year four (in which case the same vesting schedule applies, but the retest period covers the entire four year period from the date the share rights were granted). He is not permitted to “double dip”, so by electing to have his share rights retested at the end of year four, he forfeits any entitlement to share rights, which otherwise would have vested at the end of year three. All share rights subject to the relative TSR condition will expire at the end of year four. The Remuneration Committee allows one retest to reflect the volatile nature of the industry. The way in which the retest is applied maintains alignment with shareholder interests.
PALADIN ENERGY LTD ANNUAL REPORT 2015 55 WHY WERE THESE VESTING CONDITIONS SELECTED? The Board considered the measures reflected an appropriate balance in terms of alignment between comparative shareholder return and individual reward, a market based performance measure and the encouragement of long-term retention. A review will be undertaken prior to any future issues to determine more appropriate hurdles. Details of the various vesting and performance conditions for the Employee and Contractor Performance Share Rights Plan follow:
Time-based Vesting 50% of the share rights will vest based on the participant continuing to be employed with the Group. These are not subject to a performance condition and are staggered over time and this condition is designed to assist in long-term retention of staff. Such benefits also assist in recruitment of suitably qualified personnel in a market place where both mining, and more particularly uranium experience, are in particularly short supply. Paladin competes in the global recruitment market and must offer competitive benefits to be successful and attract quality candidates. The available talent pool with uranium expertise is both small and internationally focussed and competition is high for quality personnel. Costs for replacement of personnel and the hidden costs of disruption to the business can be substantial. This vesting criteria does not apply to the Managing Director/CEO.
Total Shareholder Return (TSR) Except for the MD/CEO, 20% of the share rights will vest based on the Company’s TSR relative to the TSRs of a peer group of companies. This measure represents the change in the Company’s share price over the measurement period, plus dividends (if any) notionally reinvested in the Company’s shares, expressed as a percentage of the opening value. The peer group will comprise of mining companies in the S&P/ASX 200 Index as at the date of the offer, excluding steel companies and any companies that pay a dividend during any year of the performance period. Mining companies are companies under the Global Industry Classification Standard (GICS) sub-industries: Oil & Gas – Coal & Consumable Fuels (10102050), Metals & Mining – Aluminium (15104010), Metals & Mining – Diversified Metals & Mining (15104020), Metals & Mining – Gold (15104030), Metals & Mining – Precious Metals & Minerals (15104040) and Metals & Mining – Steel (15104050). The limited number of uranium development and production companies globally presents difficulties in determining a suitable peer group. It was therefore decided that, as the primary listing is on the ASX and the majority of share trading takes place in that market, the peer group set out above is the most appropriate. This also reflects the Group’s competitors for capital and talent. Relative TSR is independent of market conditions and is considered a more relevant measure of management performance in terms of value delivered to shareholders over the medium to long-term.
50% of the share rights granted to the Managing Director/CEO will vest based on the Company’s Relative TSR to the TSRs of a peer DIRECTORS'REPORT group of companies as described above. The base and stretch targets for the TSR performance condition are as follows:
Percentage of share rights that may vest if the relative TSR performance Relative TSR percentile ranking condition is met Less than 50th percentile 0% of the share rights subject to the TSR condition
at 50th percentile 50% of the share rights subject to the TSR condition
Greater than the 50th percentile but less Pro-rated vesting between 51% and 99% of the share rights subject to the TSR condition than the 75th percentile
At 75th percentile or greater 100% of the share rights subject to the TSR condition
Market Price Performance (MPP) 30% of the share rights are subject to MPP vesting condition which measures the increase in share price of the Company. Share rights will vest if, at the end of the measurement period, the share price of the Company is 25% above the market price at the date of the offer. As part of the mix of performance conditions this provides a market based performance measure. The base price for each grant is detailed in the table on the following page. This does not apply to the Managing Director/CEO.
Earnings Per Share (EPS) EPS is determined by dividing the operating profit or loss attributable to members of Paladin Group by the weighted average number of ordinary shares outstanding during the financial year. Prior to 1 July 2013, in the event that EPS is negative (representing a loss per share) a reduction of the loss per share is, for this purpose, treated as a growth in EPS. This was due to the development phase the Company was in and the importance of the CEO leading the Company into positive earnings growth. However in respect of any share rights issued after 1 July 2013, only EPS growth measured to a positive number will be applicable. Growth in EPS will be measured by comparing the EPS in the base year (being the full financial year ending prior to the date of grant) and the measurement year. EPS has been chosen as a performance condition because it provides a clear line of sight between Managing Director/CEO performance and Company performance. It is also a generally recognised and understood measure of performance. 50% of the share rights granted to the Managing Director/CEO will vest based on the Company’s EPS. The base and stretch targets for the share rights subject to the EPS conditions are as follows:
Compound growth in EPS over the performance period Percentage of share rights that may vest if the EPS hurdle is met Less than 10% pa 0% of the share rights subject to the EPS condition
At 10% pa 50% of the share rights subject to the EPS condition
More than 10% pa but less than 20% pa Pro rated vesting between 51% and 99% of the share rights subject to the EPS condition
At 20% pa or greater 100% of the share rights subject to the EPS condition
56 PALADIN ENERGY LTD ANNUAL REPORT 2015 SHARES ACQUIRED UNDER THE RIGHTS PLAN CESSATION OF EMPLOYMENT Shares to be allocated to participants on vesting are Under the Rights Plan, employees’ share rights will be currently issued from equity. No consideration is paid on cancelled on cessation of employment, unless special the vesting of the share rights and resultant shares carry circumstances exist such as retirement, total and full dividend and voting rights. permanent disability, redundancy or death. Contractors will have their share rights cancelled, other than on death at which point the contractor’s legal representative will be CHANGE OF CONTROL entitled to receive them. All share rights will vest on a change of control event. The Remuneration Committee considers that this is appropriate given that shareholders (or a majority thereof) would have collectively elected to accept a change of control event. Moreover the number of share rights relative to total issued shares is very insignificant (0.05%) and thus are not considered a disincentive to a potential bidder.
OTHER RIGHTS AT 30 JUNE 2015
Date rights granted Vesting date Vesting performance conditions Number 1 December 2014 1 December 2015 Time based 788,754(!)
Total 788,754
(1) Issued pursuant to 10% reduction in management personnel base salaries. Issue of Share Rights - A number of management personnel agreed to extend a 10% reduction in salary and fees. This reduction in fees and salaries will remain in place until certain market conditions are met, at which point they will return to their pre-adjusted rates. To compensate, individuals (other than directors) were offered a choice of an issue of share rights, additional leave or an option of reduced working hours, to the value of the 12 months of their reduction in salary. Accordingly, this award has no performance conditions. 506,647 share rights were granted to KMPs.
In summary, this balance represents 0.05% of the issued capital. DIRECTORS'REPORT HEDGING OF INCENTIVE GRANTS PROHIBITED average annual salary over the 3 year period. The second grant under this programme was on 1 January 2012 The Company’s policy prohibits hedging of equity with a payment date on 1 January 2015. US$1,655,088/ compensation grants. Prohibited hedging practices A$1,988,572 of this grant vested to key personnel include put/call arrangements over “in money” options employed across the Group at head office, Namibia to hedge against a future drop in share price. The and Malawi, and was paid in the financial year ended 30 Board considers such hedging to be against the June 2015 (first grant paid 1 July 2013: US$7,352,574/ spirit of such remuneration and inconsistent with A$8,014,077). shareholder objectives. A Senior Employee Retention Scheme has been introduced with benefits awarded based on the performance of both RETENTION PROGRAMME the individual and the Company, coupled with a long-term The remaining balance/second grant of the programme retention hook, to assist in retention of key individuals and was paid on 1 January 2015. No further grants have been top performers. made and no balance is outstanding/payable. This Scheme encourages, tracks and rewards performance As a component of the strategy for retention of key based on the achievement of set performance targets personnel, certain executives and staff participated in and distributes benefits at predetermined times and upon a retention bonus programme. Participation extended achieving certain conditions, one of which is continued to a limited number of selected individuals that were employment with LHU. identified as possessing the requisite skills, expertise and The Scheme applies to all permanent LHU employees experience in the uranium sector and those with specialist who are appointed in a role, which is graded at a D3 corporate and commercial skills that the Company level (Paterson grading) and higher. In addition to the required to achieve its aggressive goals. This initiative was designated group of employees, Line Managers may driven by a desire to retain the intellectual property pool motivate for the further inclusion of a select number of considered necessary to ensure the continued success employees from grade C3 to D2. of the Company. The programme entitled the participants to receive a cash award at the end of the three year In addition, from time to time, the Board may make specific retention period. In the event employment terminated grants of share rights subject only to time vesting as part for any of retirement, disablement, redundancy or death, of the Company’s strategy for attracting key individuals. after the first anniversary one third became payable and This has proved to be an important tool when seeking to after the second anniversary two thirds became payable. fill senior management roles. The cash award varied between 50% and 100% of the
PALADIN ENERGY LTD ANNUAL REPORT 2015 57 KEY ELEMENTS OF NON-EXECUTIVE OTHER FEES/BENEFITS DIRECTOR REMUNERATION STRATEGY In addition, the Company’s Constitution provides for additional compensation to be paid if any of the Directors The focus of the remuneration strategy is to: are called upon to perform extra services or make any Attract and retain talented and dedicated directors. special exertions on behalf of the Company or the business Remunerate appropriately to reflect the: of the Company. The Company may compensate such Director in accordance with such services or exertions, – size of the Company; and such compensation may be either in addition to or in – the nature of its operations; substitution for the Directors’ fees referred to above. No additional fees were paid during the year, other than the – the time commitment required; and, Directors’ fees disclosed. – the responsibility the Directors carry. Non-executive Directors are also entitled to be reimbursed for reasonable expenses incurred whilst engaged on Company business. There is no COMPONENTS OF NON-EXECUTIVE entitlement to compensation on termination of non- DIRECTOR REMUNERATION executive directorships. Non-executive Directors do not earn retirement benefits (other than the statutory In accordance with corporate governance principles, superannuation) and are not entitled to any form of Non-executive Directors are remunerated solely by way performance linked remuneration. of fees and statutory superannuation. The aggregate annual remuneration permitted to be paid to Non- executive Directors is A$1.2M (US$1.0M) as approved by ROTATION OF DIRECTORS shareholders at the 2008 AGM. Fees paid for the year to 30 June 2015 total A$924,000 (US$769,000). The Mr Donald Shumka and Mr Peter Donkin will seek re- Directors agreed to extend a 10% reduction in salary. election at the 2015 Annual General Meeting, following their retirement by rotation. Mr Wendong Zhang was appointed as a Non-executive Director by the Board effective 25 November 2014. Mr Zhang will seek election by shareholders at the 2015 Annual General Meeting. Remuneration Details Component Elements (per annum)
DIRECTORS'REPORT Base Fee Must be Chairman contained A$306,472 (US$255,077) within aggregate limit Non-executive Director A$150,447 (US$125,217) Committee Paid to the A$18,033 (US$15,009) Fees* Chairman of the Audit Committee Superannuation Statutory Statutory % of fees contributions are included in the fees set out above
* This is the only fee paid to any committee member. All other duties are remunerated as part of the base fee.
The following graph is provided to give a clearer understanding of the Non-executive Directors’ remuneration.
1200 Maximum Fee Cap A$1.2M
1000 166 156 150 800 166 156 P Baily 150 600 166 156 P Donkin 150
400 187 175 168 S Llewelyn
perannum A$,000 200 D Shumka* 338 317 307
0 Chairman 2013 2014 2015
* Includes A$18K in relation to Audit Committee Chair fees
58 PALADIN ENERGY LTD ANNUAL REPORT 2015 SHARE RIGHTS HOLDINGS OF KEY MANAGEMENT PERSONNEL (GROUP)
Granted as Fair value at Vested as 01 Jul 14 remuneration(1) grant date(2) shares Lapsed (3) 30 Jun 15 30 June 2015 number number US$ number number number
Directors Mr John Borshoff 250,000 - - (125,000) (125,000)(4) -
Executives Ms Gillian Swaby 41,250 174,529 50,435 (193,779) (22,000)(5) - Mr Dustin Garrow 209,979 245,582 70,967 (185,979) (24,000)(5) 245,582 Mr Mark Chalmers 174,373 86,536 25,007 (144,373) (30,000)(5) 86,536(6)
Total 675,602 506,647 146,409 (649,131) (201,000) 332,118
No other Key Management Personnel held share rights during the year ended 30 June 2015. (1) Allocation of share rights to offset 10% reduction in salary/fees. (2) Fair value per right at grant date was US$0.32. (3) Lapsed as performance conditions were not met. (4) Granted 5 November 2010. (5) Granted 2 April 2012. (6) Rights vested but cannot be exercised until 1 December 2015.
SHARES HELD IN PALADIN ENERGY LTD (number)
30 June 2015 Balance On Vesting Balance 01 Jul 14 of Rights Net Change Other 30 June 15 Directors
Mr Rick Crabb 5,181,528 – 800,000 5,981,528 DIRECTORS'REPORT Mr John Borshoff 16,081,794 125,000 6,488,111 22,694,905 Mr Sean Llewelyn 100,000 – 50,000 150,000 Mr Donald Shumka 200,000 – – 200,000 Mr Peter Donkin 15,000 – 7,50 0 22,500 Mr Philip Baily 12,000 – 6,000 18,000 Mr Wendong Zhang – – 1,180,000 1,180,000
Executives Ms Gillian Swaby 554,632 193,779(1) – 748,411 Mr Mark Chalmers 18,750 144,373(2) 81,562 244,685 Mr Dustin Garrow 15,000 185,979(2) (79,979) 121,000
Total 22,178,704 649,131 8,533,194 31,361,029
No other Key Management Personnel held shares during the year ended 30 June 2015. (1) Includes 174,529 share rights issued on 1 December 2014 to offset 10% reduction in fees. Vested immediately, to be held in escrow to 1 December 2015. (2) Includes 233,102 share rights issued on 14 November 2013 to offset 10% reduction in fees. Vested on 14 November 2014.
All equity transactions with Key Management Personnel have been entered into under terms and conditions no more favourable than those the Group would have adopted if dealing at arm’s length. Other Transactions and Balances with Key Management Personnel Fees paid in the normal course of business in 2015 for corporate services totalling US$425,000 (2014: US$485,000) were paid/payable (balance outstanding at 30 June 2015 and included in trade creditors US$Nil (2014: US$Nil)) to a company of which Ms Gillian Swaby is a director and shareholder. All amounts are excluding GST.
PALADIN ENERGY LTD ANNUAL REPORT 2015 61 COMPENSATION OF KEY MANAGEMENT PERSONNEL FOR THE YEAR ENDED 30 JUNE 2014 OF THE GROUP
Share- Total Based Performance Total Performance Short-Term Benefits Post Employment Long-Term Benefits Payment* Total Total Related Related
Other Long-Term Salary Company Super- Retirement Incentive Long Service Share & fees Cash bonus Benefits Other annuation Benefits Plan Leave Rights
US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 A$’000 US$’000 % Directors Mr Rick Crabb 274 --- 17 ---- 291 317 -- Mr John Borshoff 1,297 --- 17 (118) (1) - 18 366 1,580 1,723 366 23.2 Mr Sean Llewelyn 131 --- 12 ---- 143 156 -- Mr Donald Shumka 160 ------160 175 -- Mr Philip Baily 131 --- 12 ---- 143 156 -- Mr Peter Donkin 131 --- 12 ---- 143 156 -- Subtotal 2,124 --- 70 (118) - 18 366 2,460 2,683 366
Key Management Personnel Ms Gillian Swaby -- 485(2) ---- 195 680 741 17 2.4 Mr Alan Rule(3) 413 --- 17 - 214 (4) - 44 260 283 -- Mr Dustin Garrow 556 ------83 97 736 802 19 2.6 Mr Mark Chalmers 426 - 36(5) - 17 - 197 - 90 766 835 16 2.1 Mr Craig Barnes(6) 54 -- 3 - - - - 57 63 -- Subtotal 1,449 - 36 485 37 (17) 83 426 2,499 2,724 52
DIRECTORS'REPORT Total 3,573 - 36 485 107 (118) (17) 101 792 4,959 5,407 418
Notes to the Compensation Table Presentation Currency The compensation table has been presented in US$, the Company’s functional and presentation currency. The A$ value has also been shown as this is considered to be the most relevant comparator between years, given that in 2014 more than 89% of KMP’s contracts for services were denominated in A$ and this eliminates the effects of fluctuations in the US$ and A$ exchange rate. Exchange rate used is average for year US$ 1 = A$1.09006 (1) This is the amount required to be accrued in 2014 for the payment at a future date (as yet undetermined) of a retirement benefit to Mr Borshoff under the terms of his Services Contract. The credit has arisen due to the reduction in Mr Borshoff's base salary. (2) Other represents fees paid for services to a company of which Ms Gillian Swaby is a director and shareholder. (3) Mr Alan Rule resigned on 30 June 2014. (4) The credit has arisen due to Mr Alan Rule’s resignation on 30 June 2014. (5) Living away from home allowance. (6) Mr Craig Barnes – commenced on 5 May 2014. Appointment as Chief Financial Officer effective on 1 July 2014. * A reconciliation of this figure in A$ follows to enable a clearer understanding of how this number is calculated.
RECONCILIATION OF SHARE-BASED PAYMENT COMPENSATION OF KEY MANAGEMENT PERSONNEL FOR THE YEAR ENDED 30 JUNE 2014 OF THE GROUP.
Share Rights Share Rights Share Rights Share Rights Share Rights granted 26 March 2010 granted 5 November 2010 granted 15 February 2011 granted 2 April 2012 granted 15 November Total (vesting CY2010 (vesting CY2011 (vesting CY2012 (vesting CY2012 2013(1) (vesting CY2013 Share-Based to CY2014 to CY2014) to CY2014) to CY2014) to CY2014) Payment
A$’000 US$’000 A$’000 US$’000 A$’000 US$’000 A$’000 US$’000 A$’000 US$’000 A$’000 US$’000 Directors Mr John Borshoff 74 68 325 298 –––– 399 366 Subtotal 74 68 325 298 –––– 399 366
Executives Ms Gillian Swaby – – 9 8 123 (2) 113 (2) 25 23 55 51 212 195 Mr Alan Rule –––––––– 47 44 47 44 Mr Dustin Garrow –– 12 11 –– 27 25 67 61 106 97 Mr Mark Chalmers – –– 71(3) 65(3) 28 25 99 90 Subtotal – 21 19 123 113 123 113 197 181 464 426
Total 74 68 346 317 123 113 123 113 197 181 863 792
It should be noted that time or performance vesting conditions are attached to all of the share rights referred to above. These are detailed elsewhere in this report. Exchange rate used as the average for year US$1 = A$1.09006 (1) Share rights granted as a one-off allocation to offset 10% reduction in salaries and fees. (2) Issued pursuant to retention programme, vesting time based only in order to retain quality personnel. (3) Includes A$37,000/US$34,000 relating to 50,000 time-based shares negotiated as a sign-on bonus to assist in attracting quality personnel.
60 PALADIN ENERGY LTD ANNUAL REPORT 2015 SHARE RIGHTS HOLDINGS OF KEY MANAGEMENT PERSONNEL (GROUP)
Granted as Fair value at Vested as 01 Jul 14 remuneration(1) grant date(2) shares Lapsed (3) 30 Jun 15 30 June 2015 number number US$ number number Number -
Directors Mr John Borshoff 250,000 - (125,000) (125,000)(4) Executives Ms Gillian Swaby 41,250 174,529 50,435 (193,779) (22,000)(5) - Mr Dustin Garrow 209,979 245,582 70,967 (185,979) (24,000)(5) 245,582 Mr Mark Chalmers 174,373 86,536 25,007 (144,373) (30,000)(5) 86,536(6)
Total 675,602 506,647 146,409 (649,131) (201,000) 332,118
No other Key Management Personnel held share rights during the year ended 30 June 2015. (1) Allocation of share rights to offset 10% reduction in salary/fees. (2) Fair value per right at grant date was US$0.32. (3) Lapsed as performance conditions were not met. (4) Granted 5 November 2010. (5) Granted 2 April 2012. (6) Rights vested but cannot be exercised until 1 December 2015.
SHARES HELD IN PALADIN ENERGY LTD (number)
30 June 2015 Balance On Vesting Balance 01 Jul 14 of Rights Net Change Other 30 June 15 Directors
Mr Rick Crabb 5,181,528 – 800,000 5,981,528 DIRECTORS'REPORT Mr John Borshoff 16,081,794 125,000 6,488,111 22,694,905 Mr Sean Llewelyn 100,000 – 50,000 150,000 Mr Donald Shumka 200,000 – – 200,000 Mr Peter Donkin 15,000 – 7,50 0 22,500 Mr Philip Baily 12,000 – 6,000 18,000 Mr Wendong Zhang – – 1,180,000 1,180,000
Executives Ms Gillian Swaby 554,632 193,779(1) – 748,411 Mr Mark Chalmers 18,750 144,373(2) 81,562 244,685 Mr Dustin Garrow 15,000 185,979(2) (79,979) 121,000
Total 22,178,704 649,131 8,533,194 31,361,029
No other Key Management Personnel held shares during the year ended 30 June 2015. (1) Includes 174,529 share rights issued on 1 December 2014 to offset 10% reduction in fees. Vested immediately, to be held in escrow to 1 December 2015. (2) Includes 233,102 share rights issued on 14 November 2013 to offset 10% reduction in fees. Vested on 14 November 2014.
All equity transactions with Key Management Personnel have been entered into under terms and conditions no more favourable than those the Group would have adopted if dealing at arm’s length. Other Transactions and Balances with Key Management Personnel Fees paid in the normal course of business in 2015 for corporate services totalling US$425,000 (2014: US$485,000) were paid/payable (balance outstanding at 30 June 2015 and included in trade creditors US$Nil (2014: US$Nil)) to a company of which Ms Gillian Swaby is a director and shareholder. All amounts are excluding GST.
PALADIN ENERGY LTD ANNUAL REPORT 2015 61 CONTRACTS FOR SERVICES Remuneration and other terms of employment for the Key Management Personnel are normally formalised in contracts for services. All contracts with Key Management Personnel may be terminated early by either party providing between three to twelve months written notice or providing payments in lieu of the notice period (based on fixed component of remuneration). On termination notice by the Company, any rights that have vested, or that will vest during the notice period, will be released. Rights that have not yet vested will be forfeited.
MR JOHN BORSHOFF, MR MARK CHALMERS MANAGING DIRECTOR/CEO EXECUTIVE GENERAL MANAGER – PRODUCTION (Resigned effective 10 August 2015) (Resigned effective 30 June 2015) Term of agreement – 27 November 2013 to 31 December Term of Agreement – no fixed term. 2014, extended for a further 2 years to 31 December 2016 on the same terms and in accordance with the Base salary, inclusive of superannuation of A$514,500. original agreement. 10% reduction in salary to A$464,827 offset with an allocation of 86,536 share rights. Base salary, inclusive of superannuation, A$1,533,600. Further 10% reduction in salary to A$1,382,000. If at No termination benefit is specified.
any time during the term the month-end U3O8 spot price Notice period three months. as published by UxC equals or exceeds US$45/lb for a period of three consecutive months, and Mr Borshoff achieves other key strategic objectives as agreed between MR CRAIG BARNES Mr Borshoff and the Board, Mr Borshoff’s base salary will CHIEF FINANCIAL OFFICER be reinstated to $1,533,600 (including superannuation), Term of agreement – no fixed term. with effect from the day after the end of the said three consecutive months. Base salary, inclusive of superannuation of A$410,000. Three months long service leave after five years No termination benefit is specified in the agreement. continual service. Notice period six months. DIRECTORS'REPORT Payment of a benefit on retirement or early termination Remuneration for all parties referred to above includes by the Company, other than for gross misconduct, equal provision of an annual discretionary bonus and initial and to one year’s average base salary over the three years ongoing discretionary participation in the Company’s immediately preceding the termination date. long-term incentive plans. Notice period three months.
SHARE RIGHTS VESTED AS SHARES - MS GILLIAN SWABY, GROUP COMPANY SECRETARY KEY MANAGEMENT PERSONNEL (GROUP) AND EXECUTIVE GENERAL MANAGER – CORPORATE Services (Resigned effective 21 August 2015) 30 June 2015 Vested as shares Fees are paid in the ordinary course of business for services to a company of which Ms Gillian Swaby is a Directors director and shareholder. Mr John Borshoff 125,000 Consultancy agreement with no fixed term. Executives Annual fee A$567,000. 10% reduction in fees to A$510,300 (1) offset with an allocation of 174,529 share rights. Ms Gillian Swaby 193,779 185,979(2) Notice period twelve months. Mr Dustin Garrow Mr Mark Chalmers 144,373(2) No termination benefit is specified in the agreement. Total 649,131(3) MR DUSTIN GARROW (1) Includes 174,529 share rights issued on 1 December 2014 to offset EXECUTIVE GENERAL MANAGER - MARKETING 10% reduction in fees. Vested immediately, to be held in escrow to 1 December 2015. (Resigned effective 21 August 2015) (2) Includes 233,102 share rights issued on 14 November 2013 to offset 10% reduction in salary. Vested on 14 November 2014. Term of agreement – no fixed term. (3) All shares issued for nil consideration. Base salary, of US$683,385. 10% reduction in salary and 20% reduction in time to US$492,037 offset with an allocation of 245,582 share rights. End of audited Remuneration Report No termination benefit is specified in the agreement. Notice period six months.
62 PALADIN ENERGY LTD ANNUAL REPORT 2015 SHARE RIGHTS AUDITOR’S INDEPENDENCE The outstanding balance of share rights at the date of this DECLARATION TO THE DIRECTORS report are as follows: OF PALADIN ENERGY LTD In relation to our audit of the financial report of Paladin Vesting Energy Ltd for the year ended 30 June 2015, to the Date rights performance best of my knowledge and belief, there have been no granted Vesting date conditions Number contraventions of the auditor independence requirements 1 December 2014 1 December 2015 Time based 788,754(1) of the Corporations Act 2001 or any applicable code of professional conduct. Total 788,754
(1) Issued pursuant to 10% reduction in management personnel base salaries. 2,388,072 shares were issued on the vesting of share rights during the year ended 30 June 2015.
DIRECTORS’ INDEMNITIES Ernst & Young During the year the Company has incurred premiums to insure the Directors and/or officers for liabilities incurred as costs and expenses that may be incurred in defending civil or criminal proceedings that may be brought against the officers in their capacity as officers of the Company and or its controlled entities. Under the terms and conditions of the insurance contract, the nature of liabilities insured against and the premium paid cannot be disclosed. G H Meyerowitz Partner INDEMINIFICATION OF AUDITORS 27 August 2015 To the extent permitted by law, the Company has agreed
to indemnify its auditors, Ernst & Young, as part of the NON-AUDIT SERVICES DIRECTORS'REPORT terms of its audit engagement agreement against claims The following non-audit and assurance services were by third parties arising from the audit (for an unspecified provided by the Company’s auditor, Ernst & Young. The amount). No payment has been made to indemnify Directors are satisfied that the provision of non-audit Ernst & Young during or since the financial year. and assurance services is compatible with the general standard of independence for auditors imposed by the ROUNDING Corporations Act. The nature and scope of each type of non-audit and assurance service provided means that The amounts contained in this report, the Financial Report auditor independence was not compromised. and the Management, Discussion and Analysis have been rounded to the nearest US$100,000 (where rounding is Ernst & Young received or are due to receive the following applicable) under the option available to the Company amounts for the provision of non-audit services: under ASIC Class Order 98/0100. The Company is an entity to which the Class Order applies. US$’000 Other services 99 AUDITOR Tax compliance services 154 Ernst & Young were appointed auditors for the Company International tax consulting 44 on 21 June 2005, which was approved by shareholders at the 2005 Annual General Meeting on 9 November 2005. Other tax advice 23 Total 320 AUDITOR INDEPENDENCE AND NON-AUDIT Signed in accordance with a resolution of the Directors. SERVICES The Directors received the following declaration from the auditor of Paladin Energy Ltd.
Rick Crabb Chairman Perth, Western Australia 27 August 2015
PALADIN ENERGY LTD ANNUAL REPORT 2015 63 CONTENTS OF THE FINANCIAL REPORT
CONSOLIDATED INCOME STATEMENT 65 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 66 CONSOLIDATED STATEMENT OF FINANCIAL POSITION 67 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 68 CONSOLIDATED STATEMENT OF CASH FLOWS 70 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 71 BASIS OF PREPARATION 71 NOTE 1. CORPORATE INFORMATION 71 NOTE 2. STRUCTURE OF THE FINANCIAL REPORT 71 NOTE 3. BASIS OF PREPARATION 71 NOTE 4. GOING CONCERN 74 SEGMENT INFORMATION 75 NOTE 5. SEGMENT INFORMATION 75 CAPITAL STRUCTURE 77 NOTE 6. CASH AND CASH EQUIVALENTS 77 NOTE 7. INTEREST BEARING LOANS AND BORROWINGS 77 NOTE 8. OTHER INTEREST BEARING LOANS - CNNC 79 NOTE 9. CONTRIBUTED EQUITY AND RESERVES 80 NOTE 10. FINANCIAL RISK MANAGEMENT 82 PERFORMANCE FOR THE YEAR 87 NOTE 11. REVENUE 87 NOTE 12. OTHER INCOME AND EXPENSES 87 NOTE 13. INCOME AND OTHER TAXES 89 CONTENTSOF THE FINANCIAL REPORT NOTE 14. EARNINGS PER SHARE 91 NOTE 15. RECONCILIATION OF EARNINGS AFTER INCOME TAX TO NET CASH FLOW FROM OPERATING ACTVITIES 92 OPERATING ASSETS AND LIABILITIES 93 NOTE 16. TRADE AND OTHER RECEIVABLES 93 NOTE 17. INVENTORIES 94 NOTE 18. ASSETS CLASSIFIED AS HELD FOR SALE 95 NOTE 19. OTHER FINANCIAL ASSETS 95 NOTE 20. PROPERTY, PLANT AND EQUIPMENT 96 NOTE 21. MINE DEVELOPMENT 98 NOTE 22. EXPLORATION AND EVALUATION EXPENDITURE 99 NOTE 23. INTANGIBLE ASSETS 101 NOTE 24. TRADE AND OTHER PAYABLES 102 NOTE 25. PROVISIONS 102 NOTE 26. UNEARNED REVENUE 103 OTHER NOTES 104 NOTE 27. KEY MANAGEMENT PERSONNEL 104 NOTE 28. AUDITORS’ REMUNERATION 105 NOTE 29. COMMITMENTS AND CONTINGENCIES 106 NOTE 30. RELATED PARTIES 107 NOTE 31. SHARE-BASED PAYMENT PLANS 107 NOTE 32. GROUP INFORMATION 108 NOTE 33. EVENTS AFTER THE BALANCE DATE 112 NOTE 34. NEW ACCOUNTING STANDARDS AND INTERPRETATIONS 113
64 PALADIN ENERGY LTD ANNUAL REPORT 2015 Loss per share (US cents) (US share per Loss tax after loss Net parent the of Members ANNUAL REPORT 2015 REPORT ANNUAL LTD ENERGY PALADIN (1) notes. accompanying the with conjunction in read be should Statement Income Consolidated above The cents) (US diluted and – basic Company the of holders equity to ordinary attributable operations from tax after Loss Non-controlling interests to:Attributable tax after loss Net Income benefit tax Net loss before income tax Finance costs tax and interest before Loss Other expenses Administration, marketing and non-production costs expenses evaluation and Exploration Other income profit/(loss) Gross Impairment – inventories sales of Cost Revenue Revenue 2015 JUNE 30 ENDED YEAR THE FOR CONSOLIDATED INCOME STATEMENT The loss per share calculations for all periods prior to 31 March 2015 have been adjusted by factors of 1.03 and 1.02 to reflect the bonus element of the institutional and retail retail and institutional the of element bonus the 1.02 1.03 of to reflect and factors by adjusted 2015 been have to 31 March prior periods all for calculations share per loss The entitlement offers. (1) NOTES 22 13 12 12 12 12 12 14 17 11 (300.1) (267.8) (300.1) (338.2) (281.2) (267.6) (189.7) (32.3) US$M 199.5 2015 (18.9) (57.0) (19.3) 38.1 (8.0) (1.6) 5.5 1.8 (389.6) (338.4) (389.6) (485.6) (425.9) (337.6) (332.9) 329.5 US$M 2014 (51.2) (32.7) (59.7) (21.9) (61.7) (65.1) 96.0 (1.7) 0.4 65
FINANCIAL REPORT FINANCIAL REPORT 66 The above Consolidated Statement of Comprehensive Income should be read in conjunction with the accompanying notes. accompanying the with conjunction in read be should Income Comprehensive of Statement Consolidated above The parent the of Members Non-controlling interests Total comprehensive loss attributable to: year the for loss comprehensive Total tax of net year, the for income/(loss) comprehensive Other Foreign currency translation attributable to non-controlling interests loss: or profit to reclassified subsequently be not will that Items Income on tax items of other comprehensive income Foreign currency translation statement income to assets financial available-for-sale on loss impairment of Transfer assets financial available-for-sale of disposal on income to other gains realised of Transfer Net loss on available-for-sale financialassets loss: or profit to reclassified subsequently be may that Items income comprehensive Other Net loss tax after from operations 2015 JUNE 30 ENDED YEAR THE FOR CONSOLIDATED STATEMENT COMPREHENSIVE OF INCOME ANNUAL REPORT 2015 REPORT ANNUAL LTD ENERGY PALADIN (406.7) (368.8) (406.7) (106.6) (300.1) US$M 2015 (37.9) (99.2) (5.6) (0.6) (0.4) (3.7) 2.9 (387.9) (336.5) (387.9) (389.6) US$M 2014 (51.4) (0.2) (0.3) (3.4) 1.3 1.7 4.3 - ANNUAL REPORT 2015 REPORT ANNUAL LTD ENERGY PALADIN notes. accompanying the with conjunction in read be should Position Financial of Statement Consolidated above The EQUITY TOTAL Non-controlling interests interests Parent Accumulated losses Reserves Contributed equity EQUITY NET ASSETS TOTAL LIABILITIES TOTAL NON CURRENT LIABILITIES revenueUnearned Provisions liabilities Deferred tax -CNNC loans bearing Interest Other borrowings and loans bearing Interest Non current liabilities LIABILITIES TOTAL CURRENT Provisions borrowings and loans bearing Interest payables other Trade and Current liabilities LIABILITIES TOTAL ASSETS TOTAL NON CURRENT ASSETS Intangible assets Exploration and evaluation expenditure Mine development equipment and plant Property, Other financialassets Inventories receivables other Trade and Non current assets ASSETS TOTAL CURRENT Assets classifiedas held forsale Inventories Prepayments receivables other Trade and Cash and cash equivalents Current assets ASSETS 2015 AT JUNE 30 AS CONSOLIDATED STATEMENT POSITION FINANCIAL OF NOTES 22 32 20 23 26 25 25 21 24 16 16 19 18 13 17 17 9 9 8 7 7 6 (1,901.7) 1,100.0 2,094.9 US$M 200.0 198.3 254.3 198.3 901.7 859.3 427.3 825.8 337.9 273.7 156.3 274.2 183.7 2015 (56.0) 85.4 47.9 42.4 43.0 75.3 61.1 98.7 30.4 11.7 2.6 3.5 2.8 8.5 0.6 2.9 9.5 (1,633.9) 1,565.7 1,133.3 1,049.1 1,193.0 1,926.9 200.0 432.4 454.9 161.9 432.4 590.2 687.3 281.8 160.2 372.7 198.7 US$M 2014 (22.5) 72.7 90.2 84.2 43.9 78.1 96.0 39.4 39.3 12.2 88.8 6.6 5.5 3.8 1.0 3.3 67
FINANCIAL REPORT FINANCIAL REPORT 68 Balance at 1 July 2013 1 July at Balance Balance at 30 June 2015 June 30 at Balance to CNNC Heinrich Langer in 25% of interest Sale 15% shareholding to maintain Malawi of to Govt (Africa) Paladin in interest of Allotment Convertible bond, buy back Convertible bond, component equity – net of transaction costs costs transaction of net equity, of Contributions Vesting rights performance payment Share-based Total comprehensive income/(loss) for the year net of tax Other comprehensive income/(loss) period the for Loss 2014 June 30 at Balance to CNNC Heinrich Langer in 25% of interest Sale 15% shareholding to maintain Malawi of to Govt (Africa) Paladin in interest of Allotment costs transaction of net equity, of Contributions Vesting rights performance payment Share-based Total comprehensive income/(loss) for the year net of tax Other comprehensive income/(loss) period the for Loss 2015 JUNE 30 ENDED YEAR THE FOR CONSOLIDATED STATEMENT IN EQUITY CHANGES OF The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes. accompanying the with conjunction in read be should Equity in Changes of Statement Consolidated above The - CONTRIBUTED CONTRIBUTED 1,845.7 2,094.9 1,926.9 EQUITY 166.2 US$M 78.1 1.8 3.1 - ------AVAILABLE -FOR-SALE RESERVE US$M (4.2) (5.4) (3.6) (1.8) (1.8) 0.6 0.6 ------ANNUAL REPORT 2015 REPORT ANNUAL LTD ENERGY PALADIN
PAYMENTS RESERVE SHARE- BASED BASED US$M 50.2 46.4 47.6 (1.8) (3.1) 0.6 0.5 ------CONVERTIBLE CONVERTIBLE BOND NON- RESERVE DISTRIB- UTABLE UTABLE US$M 85.5 94.3 85.5 16.0 (7.2) ------REVALUATION CURRENCY CURRENCY RESERVE FOREIGN FOREIGN (137.6) US$M (39.7) (38.4) (99.2) (99.2) 1.3 1.3 ------PREMIUM ON ON PREMIUM ACQUISITION ACQUISITION RESERVE US$M 14.9 14.9 14.9 ------APPLICATION RESERVE OPTION US$M 0.1 0.1 0.1 ------RESERVE CONSOL- IDATION US$M 62.7 48.4 55.8 (0.2) (3.0) (4.4) (6.7) ------ACCUMU- (1,295.5) (1,901.7) (1,633.9) LOSSES LATED LATED (267.8) (267.8) (338.4) (338.4) US$M ------ATTRIBUTABLE ATTRIBUTABLE TO OWNERS PARENT OF THE THE OF (368.8) (101.0) (267.8) (336.5) (338.4) 656.8 166.2 254.3 454.9 US$M 62.7 16.0 78.1 (3.0) (4.4) (6.7) (7.2) 0.6 0.5 1.9 - - CONTROLLING CONTROLLING INTERESTS US$M NON- (56.0) (22.5) (37.9) (32.3) (51.4) (51.2) 30.8 (8.6) (5.6) (0.2) 4.4 6.7 ------TOTAL (406.7) (106.6) (300.1) (387.9) (389.6) 648.2 166.2 198.3 432.4 US$M 16.0 93.5 78.1 (3.0) (7.2) 0.6 0.5 1.7 - - - - The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes. accompanying the with conjunction in read be should Equity in Changes of Statement Consolidated above The 2015 June 30 at Balance to CNNC Heinrich Langer in 25% of interest Sale 15% shareholding to maintain Malawi of to Govt (Africa) Paladin in interest of Allotment Convertible bond, buy back Convertible bond, component equity – net of transaction costs costs transaction of net equity, of Contributions Vesting rights performance payment Share-based Total comprehensive income/(loss) for the year net of tax Other comprehensive income/(loss) period the for Loss 2014 June 30 at Balance to CNNC Heinrich Langer in 25% of interest Sale 15% shareholding to maintain Malawi of to Govt (Africa) Paladin in interest of Allotment costs transaction of net equity, of Contributions Vesting rights performance payment Share-based Total comprehensive income/(loss) for the year net of tax Other comprehensive income/(loss) period the for Loss 2013 1 July at Balance - CONTRIBUTED CONTRIBUTED 2,094.9 1,926.9 1,845.7 EQUITY 166.2 US$M 78.1 1.8 3.1 - ------AVAILABLE -FOR-SALE RESERVE US$M (5.4) (3.6) (4.2) (1.8) (1.8) 0.6 0.6 ------
PAYMENTS RESERVE SHARE- BASED BASED US$M 46.4 47.6 50.2 (1.8) (3.1) 0.6 0.5 ------CONVERTIBLE CONVERTIBLE BOND NON- RESERVE DISTRIB- UTABLE UTABLE US$M 94.3 16.0 85.5 85.5 (7.2) ------ANNUAL REPORT 2015 REPORT ANNUAL LTD ENERGY PALADIN 2015 JUNE 30 ENDED YEAR THE FOR CONSOLIDATED STATEMENT IN EQUITY CHANGES OF REVALUATION CURRENCY CURRENCY RESERVE FOREIGN FOREIGN (137.6) US$M (38.4) (39.7) (99.2) (99.2) 1.3 1.3 ------PREMIUM ON ON PREMIUM ACQUISITION ACQUISITION RESERVE US$M 14.9 14.9 14.9 ------APPLICATION RESERVE OPTION US$M 0.1 0.1 0.1 ------RESERVE CONSOL- IDATION US$M 62.7 48.4 55.8 (0.2) (3.0) (4.4) (6.7) ------ACCUMU- (1,901.7) (1,633.9) (1,295.5) LOSSES LATED LATED (267.8) (338.4) (267.8) (338.4) US$M ------ATTRIBUTABLE ATTRIBUTABLE TO OWNERS PARENT OF THE THE OF (267.8) (336.5) (368.8) (338.4) (101.0) 166.2 254.3 454.9 656.8 US$M 78.1 16.0 62.7 (3.0) (4.4) (6.7) (7.2) 0.5 0.6 1.9 - - CONTROLLING CONTROLLING INTERESTS US$M NON- (56.0) (22.5) (32.3) (51.4) (37.9) (51.2) 30.8 (8.6) (0.2) (5.6) 4.4 6.7 ------TOTAL (300.1) (387.9) (406.7) (389.6) (106.6) 166.2 198.3 432.4 648.2 US$M 78.1 93.5 16.0 (3.0) (7.2) 0.5 0.6 1.7 - - - - 69
FINANCIAL REPORT FINANCIAL REPORT 70 The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes. accompanying the with conjunction in read be should Flows Cash of Statement Consolidated above The YEAR FINANCIAL THE OF AT END THE EQUIVALENTS CASH AND CASH equivalents cash and cash on changes rate exchange of Effects year financial the of beginning the at equivalents cash and Cash EQUIVALENTS CASH AND CASH IN INCREASE NET ACTIVITIES FINANCING FROM INFLOW CASH NET Proceeds from sale of non-controlling interest interest non-controlling of sale from Costs Proceeds from borrowings borrowings of Repayment costs establishment Project facility finance Equity costs fundraising issue entitlement from Proceeds Share placement Convertible bond financecosts Proceeds from convertible bonds Repayment of convertible bonds ACTIVITIES FINANCING FROM FLOWS CASH ACTIVITIES INVESTING FROM OUTFLOW CASH NET Proceeds from sale of available-for-sale investments &equipment plant property, of sale from Proceeds Payments for available-for-sale investments equipment and plant property, for Payments Capitalised exploration expenditure ACTIVITIES INVESTING FROM FLOWS CASH ACTIVITIES OPERATING FROM (OUTFLOW)/INFLOW CASH NET Other income Exploration and evaluation expenditure Interest paid received Interest employees and to suppliers Payments Receipts from customers ACTIVITIES OPERATING FROM FLOWS CASH 2015 JUNE 30 ENDED YEAR THE FOR CONSOLIDATED STATEMENT FLOWS CASH OF NOTES 15 ANNUAL REPORT 2015 REPORT ANNUAL LTD ENERGY PALADIN 6 (300.0) (210.9) US$M 183.7 137.6 170.0 119.7 150.0 215.4 2015 (39.9) (15.6) (11.5) (24.7) (29.7) 88.8 97.3 52.7 (2.4) (3.0) (1.5) (6.2) (4.2) (0.2) (4.2) (1.6) 0.3 1.2 0.9 - - (178.8) (326.3) 110.0 370.3 US$M 2014 (25.3) (20.3) (33.0) 78.1 11.1 80.7 10.1 88.8 26.3 20.0 (0.4) (3.1) (2.5) (5.8) (1.7) 0.4 0.4 0.1 0.7 ------ANNUAL REPORT 2015 REPORT ANNUAL LTD ENERGY PALADIN 2014. June 30 ended year the for Report Financial the in disclosed those with consistent are adopted policies accounting the below, noted policies accounting in changes the from Apart Changes inAccounting Policies applies. order class the to which entity an is Company 98/100. The Order Class unless otherwise stated under (US$100,000) the option available dollars to the Company thousand under Australian Securities hundred and Investments Commission nearest (ASIC) to the rounded are values all and dollars US in presented is Report Financial The Exchange. Toronto the on Stock listed is Company law, the as securities Canadian applicable with 2015 to comply June 30 order in ended year In addition to these Australian requirements information further has been included in the Consolidated Financial Statements for the disclosures. For the purposes of preparing the consolidated financial statements, theCompany is a for-profit entity. been measured at fair have value. Where necessary, which comparatives have investments, been reclassifiedand repositioned forconsistency available-for-sale with for current except year basis, cost ahistorical on prepared been also has Report Financial The Board. The complies Financial with Report International Financial Standards Reporting as issued by the International Accounting Standards Standards Board. the of Corporations Act requirements 2001 the with accordance in prepared been has which Report, Financial purpose ageneral is Report Financial The Introduction andStatement of Compliance PREPARATION OF BASIS 3. NOTE categories. other the of any into fall not do that notes remaining the with deals section This Other Notes relating to the group’s financing activitiesare addressed in the CapitalStructure section. This section shows the assets used to generate the group’s trading and the performance liabilities incurred as a result. Liabilities Operating Assets and Liabilities via earnings per share combined withshareholders cash generation.to return resultant the and profitability both covers This group. the of performance and results the on focuses section This Performance fortheYear This section outlines how the group manages its capital and related financingcosts. Capital Structure This section compares across performance operating segments. Segment Information in the financial statements. disclosed longer no are that policies Group’s accounting the to changes no been have There statements. financial the in included not are non-significant determined policies Accounting relates. it notewhich to the in described is policy note,the one to specific is policy accounting an Where whole. asa statements financial the to relate that policies accounting group’s the significant out sets section This Basis ofPresentation follows: as summarised are which key categories, six into grouped been have Statements Financial Consolidated to the Notes The REPORT FINANCIAL THE OF STRUCTURE 2. NOTE 9 to 33 pages on (unaudited) Analysis and Discussion Management the in described are Group the of The Group’s principal place of business is Hay Street, Subiaco, Western Australia. The nature of the operations and principal activities Africa. in Exchange Stock Namibian the and Europe; in Exchanges Stock Frankfurt and Stuttgart Berlin, Munich, as well as Canada in Toronto Exchange the on Stock listings additional with ASX, the on traded publicly are shares whose Australia in domiciled and incorporated by shares, limited acompany is Paladin 2015. 27 on August Directors the of aresolution with accordance in issue for 2015 June 30 authorised was ended year the for Paladin of Report Financial The NOTE 1. CORPORATE INFORMATION PREPARATION OF BASIS 2015 JUNE 30 ENDED YEAR THE FOR CONSOLIDATED TO THE STATEMENTSNOTES FINANCIAL , Australian Accounting Standards and other authoritative pronouncements of the Australian Accounting Accounting Australian the of pronouncements authoritative other and Standards Accounting , Australian . 71
FINANCIAL REPORT FINANCIAL REPORT 72 2010–2012 Cycle 2010–2012 Improvements A-Annual Part 2014-1 ASB A AASB 1031 AASB AASB 2013-3 AASB REFERENCE below: described is amendment and standard new each of impact and nature The 2014. 1July from effective Interpretations AASB and Standards Accounting Australian amended and new all adopted has Group The New AccountingStandards andInterpretations (CONTINUED) PREPARATION OF BASIS 3. NOTE 2015 JUNE 30 ENDED YEAR THE FOR CONSOLIDATED TO THE STATEMENTSNOTES FINANCIAL
items: following the 2010–2012 addresses to IFRSs Cycle Improvements Annual 2011–2013 to IFRSs Improvements Annual Cycle 2010–2012 to IFRSs and Standards Cycle Improvements (IFRSs) Annual Reporting Financial International of (IASB) Board Standards Accounting International by the issuance the from arising Standards Accounting to Australian amendments out sets 2014-1 standard AASB This A: Part The amendments are effective from 1 July 2014. 1July from effective are amendments The 1031. to AASB references their to delete Standards Accounting Australian to eight 2014 2014-1 amendments June in makes AASB Cissued Part removed. been have Interpretations and Standards 1031 all in to AASB references when 1031 withdrawn be will AASB guidance on materiality. Framework the and Standards other to cross-references that standard 1031 interim an is AASB revised The Materiality costs of disposal. of costs less value fair on based is assets impaired of amount recoverable the disclose additional information about the fair value measurement when of Assets Impairment 136 AASB in requirements disclosure the 2013-3 amends AASB Financial Assets Non- for Disclosures Amount 136 to AASB –Recoverable Amendments TITLE ▶ ▶ ▶ ▶ ▶ of KMP services shouldof be separately KMP services disclosed. respect in entity to amanagement made Payments entity. management 124 AASB Disclosures of Related Party 17 paragraph in requirements disclosure detailed the from exemption an added amendments The entity. reporting the of party arelated as services KMP providing entity 124management a AASB -Defines amounts. carrying net and gross the between difference the as calculated is it that and technique depreciation does not depend on the selection of the valuation accumulated of determination the that 116 138AASB -Clarifies & AASB assets. total entity’s to the assets segment reportable total of areconciliation to provide required also is entity An aggregated. been have segments operating when segments reportable entity’s the to identify used factors to disclose entities 8-Requires AASB 137. ASB A to references all by removing combination abusiness in consideration 3AASB - Clarifies the classificationrequirements for contingent ‘service condition’. condition’ and introduces the definition of condition’ ‘performance and ‘market and conditions’ ‘vesting of definition the 2-Clarifies AASB . The amendments include the requirement to requirement the include amendments . The (issued December 2013) that contain 2013) contain that December (issued for KMP services provided by a provided services KMP for . adoption of 1031. AASB the of aresult as required were statements financial the in amounts carrying the of to any adjustments No Annual Report. Report. Annual the on impact material no was There IMPACT Annual Report. the on impact material no was There ANNUAL REPORT 2015 REPORT ANNUAL LTD ENERGY PALADIN ANNUAL REPORT 2015 REPORT ANNUAL LTD ENERGY PALADIN it: asubsidiary, over control loses Group the If transaction. equity an as for accounted is control, of aloss without asubsidiary, of interest ownership the in A change full on consolidation. in eliminated are Group the of members between transactions to relating flows cash and expenses income, equity, liabilities, and assets intra-group All policies. Group’s accounting the with line into policies accounting their to bring subsidiaries of statements financial to the made are adjustments necessary, When balance. adeficit having interests non-controlling the in results this if even interests, non-controlling to the and Group the of parent the of holders equity to the attributed are (OCI) income Profit or lossand each component of othercomprehensive the subsidiary. to control ceases Group the date the until control gains Group the date the from income comprehensive of statement the in included are year the during of disposed or acquired subsidiary a of expenses and income liabilities, Assets, subsidiary. the of control loses Group the when ceases and subsidiary the over control obtains Group the when begins asubsidiary of one or more of the three elements of control. Consolidation to changes are there that indicate circumstances and facts if investee an controls it not or whether re-assesses Group The investee, including: an over power has it whether assessing in circumstances and facts relevant all considers Group the investee, an of rights When the Group has less than a of majority the voting or similar the Group has: if only and if investee an controls Group the Specifically, investee. the over power its through returns those to affect ability the has and investee the with involvement its from returns to variable rights, has or exposed, is Group the when achieved is Control 2015June Group). (the 30 at as subsidiaries its Ltd and Energy Paladin of statements The consolidated financial statementscomprise the financial Basis ofConsolidation (CONTINUED) PREPARATION OF BASIS 3. NOTE 2015 JUNE 30 ENDED YEAR THE FOR CONSOLIDATED TO THE STATEMENTSNOTES FINANCIAL acquisition method. Business combinations are accounted for usingthe disposed of therelated assets orliabilities appropriate, as wouldbe required iftheGroup had directly recognised in OCItoprofit orloss as retained earnings, Reclassifies theparent’s share ofcomponents previously Recognises any surplus or deficitinprofit orloss Recognises the fair value ofany investment retained Recognises the fair value ofthe consideration received in equity De-recognises the cumulative translation differences recorded interests De-recognises the carrying amount ofanynon-controlling the subsidiary De-recognises the assets (including goodwill) and liabilitiesof The Group’s voting rights andpotential voting rights Rights arisingfrom other contractual arrangements the investee The contractual arrangement with theother vote holdersof returns. The ability to useitspowerover the investeetoaffect its with theinvestee; and Exposure, orrights,tovariablereturns from its involvement current abilitytodirect therelevant activitiesofthe investee); Power overthe investee (i.e.existing rights that give itthe dollar functional currency: The following material operating subsidiaries have a Canadian dollar functional currency: The following material operating subsidiaries have an Australian functional currency: The following material operating subsidiaries have a US dollar Statement. Income to the recycled is parent the Functional Currency Translation (FCTR) Reserve attributable to currency translation reserve. Upon the sale of a the subsidiary a foreign in recognised is translation from difference resulting The transactions. of dates the at prevailing rates exchange at translated are transactions equity and year; statement income the for prevailing rates exchange average using translated are expenses and date; revenues balance the at prevailing rates purposes. Assets and liabilities are translated using exchange presentation for dollars US into translated been has currency presentational currency. For all other Group entities the functional which is consistent with the Company’s functional and Some Group entities have a functional currency of US dollars Group Companies assets are included in the available-for-sale reserve. Statement. Translation on differences available-for-sale financial denominated in foreign currencies are recognised in the Income year at the settlement of such transactions and from the translation from resulting losses and gains exchange Foreign transactions. the of dates the at prevailing rates exchange the using currency Foreign currency transactions are converted into the functional Transactions and Balances Company’s functional and presentation currency. the is which dollars), (US dollars States United in presented are functional currency’). The Consolidated Financial Statements (‘the operates entity the which in environment economic primary the of currency the using measured are Group’s entities the of each of Statements Financial the in included Items Currency Functional Presentation and Foreign Currency Translation Paladin Canada Investments (NL) Ltd Paladin Canada Holdings (NL) Ltd Michelin Uranium Ltd Aurora Energy Ltd Fusion Resources Pty Ltd Summit Resources (Aust) Pty Ltd Paladin Energy Minerals NL Mount IsaUraniumPtyLtd Northern TerritoryNorthern Uranium Pty Ltd Paladin Nuclear Ltd Langer Heinrich Uranium (Pty) Ltd Paladin (Africa) Limited Paladin Finance Pty Ltd ‑ end exchange rates of monetary assets and liabilities liabilities and assets monetary of rates exchange end 73
FINANCIAL REPORT FINANCIAL REPORT 74 reporting period, are dealt with elsewhere in the notes. the in elsewhere with dealt are period, reporting annual next the within liabilities and assets certain of amounts carrying the to adjustment material a causing of risk significant a have that assumptions, and key estimates The events. future of assumptions and estimates on based determined often are liabilities and assets certain of amounts carrying The periods. future in affected liabilities or assets of amount carrying to the adjustment amaterial require that outcomes in about these assumptionsUncertainty and estimates could result disclosures, and the disclosure of contingent liabilities. accompanying the and liabilities, and assets expenses, revenues, of amounts reported the affect that assumptions and estimates judgements, to make management requires The preparation of the Group’s consolidated financial statements Assumptions Significant Accounting Judgements,Estimatesand (CONTINUED) PREPARATION OF BASIS 3. NOTE 2015 JUNE 30 ENDED YEAR THE FOR CONSOLIDATED TO THE STATEMENTSNOTES FINANCIAL able to meet its obligations as and when they fall due. due. fall they when and as obligations its to meet able position and its available financing options, theGroup will be Group’s to the regard having that, to believe grounds reasonable are there satisfied are Directors the report, this of date At the 2010. 4November on Company 2015, by the November issued due bonds convertible US$300M outstanding the to acquire offer tender aconcurrent to fund used were balance, cash existing The proceeds from the convertible bond issue, along with the 2015. March 30 on by shareholders approved was issue The world. the in funds controlled of subsidiary CIC, one of the largest sovereign wealth a Corporation, Investment to Leader issued was US$50M whilst investors, institutional quality to high issued was US$100M shares. Company for US$0.356 of price aconversion and 2020 7.00% 31 of rate on March acoupon maturing with bond aUS$150M convertible issued 2015, 31On March Company the supported entitlement offer. awell- of completion with investor, together astrategic of capital raising of A$205M (US$172.4M) through the introduction equity an completed 2014, successfully Group the December In summarised as follows: are borrowings and loans bearing interest of 2016 respect in June to 30 months twelve next the during obligations Repayment was US$60.9M.facility loan 2015 syndicated June 30 the at on outstanding amount The by LHM. provided guarantees supplier and facility loan syndicated LHM the of respect in use for restricted is which 2014: US$31.2M is June (30 hand on US$13.2M), cash this within US$183.7M of 2014:hand June Included (30 US$88.8M). on cash 2014: US$231.8Mof June (30 including US$288.5M), surplus capital working a net 2015, had June 30 at Group As the NOTE 4. GOING CONCERN convertible bonds. and 2012(due 2017) and2015(due2020)unsecured interest payments of US$29.7Mforsyndicated loan facility syndicated loan facility;and secured bankloanprincipal repayments of US$9.1Mfor ANNUAL REPORT 2015 REPORT ANNUAL LTD ENERGY PALADIN are attributed to the geographic location of the mines being the reporting segments Namibia and Malawi. Malawi. and Namibia segments reporting the being mines the of location geographic to the attributed are revenues These UK. Taiwan and China, Australia, USA, in mainly located entities other and utilities major are Group’s customers The Unallocated. in remaining balance the with allocations timesheet of basis the on Malawi and to are Namibia allocated charges corporate the of proportion A expenses. office corporate as such expenses non-segmental comprise charges Corporate rate. spot to the reference with priced are sales Inter-entity the in prior period. and accounts the in contained those as same the are internally segments reporting in Group by the used policies accounting The operating decision makers) on at least a monthly(chief team basis. management Group’s the executive to reported is segments operating these of each about information financial Discrete treasury, corporate marketing, and administration. and sales Company’s the covers portion Unallocated Canada. and Niger Australia, in projects evaluation and exploration and sale of uranium from the mines located in these geographic regions. The Exploration segment is focused on developing ANNUAL REPORT 2015 REPORT ANNUAL LTD ENERGY PALADIN Note to 19). (refer assets financials available-for-sale US$2.6M and equivalents cash and US$116.0 cash M in (1)Includes by country instruments) Non current assets (excluding financial customers to external Sales 2015 June 30 Year ended 2014.2015 June 30 June 30 and ended years the for segments operating regarding information asset and expenditure revenue, present tables following The 2014. 6May on ceased Production price. uranium to low due maintenance and care on (1)Currently and geographical location and different regulatory environments. The main segment activity in Namibia and Malawi The Company has identified its operating segments toExploration,be Namibia and Malawi, on the basis of the nature of the activity Identification ofReportableSegments NOTE 5. SEGMENT INFORMATION INFORMATIONSEGMENT 2015 JUNE 30 ENDED YEAR THE FOR CONSOLIDATED TO THE STATEMENTSNOTES FINANCIAL Namibia) and 14% (US$27.5M Namibia, Malawi) of the Group’s total sales revenue. 14% sales Group’s total the of and Malawi) (US$27.5MNamibia) Namibia, 22%(US$44.6M Namibia), to 25%basis (US$50.2M proportionate on a equated customers significant 2015,In most three the revenue Other Total consolidated revenue Cost of goods sold goods of Cost Impairment of Inventory Impairment Gross profit Gross Other expenses expenses Other Impairment of asset of Impairment Write off of Exploration and evaluation and Exploration of off Write and finance costs finance and tax income before (loss)/profit Segment Finance costs (Loss)/profit before income tax income before (Loss)/profit Income tax benefit/(expense) tax Income Loss after income tax income after Loss Segment assets/total assets 2015 June 30 At EXPLORATION AUSTRALIA (168.3) (237.5) (240.4) (240.4) 111.1 340.9 US$M US$M 72.1 (1.5) (1.4) ------NAMIBIA CANADA (182.9) 231.1 191.9 191.9 622.8 US$M US$M (28.4) (10.2) (11.4) (17.0) (8.0) (2.2) (1.2) 1.0 - - - NAMIBIA MALAWI 481.0 US$M US$M (25.9) (23.6) (23.7) (25.9) 12.6 (6.8) (0.1) (2.2) 6.7 6.7 - - - - - UNALLOCATED OTHER 123.7 US$M US$M (77.5) (12.9) (15.9) (44.6) (60.5) (17.0) (3.9) 0.9 0.9 0.9 - - - - - (1) (1) is the production CONSOLIDATED CONSOLIDATED 1,100.0 (300.1) (189.7) (241.4) (281.2) (338.2) 823.2 198.6 199.5 US$M US$M (40.2) (57.0) 38.1 (8.0) (1.4) 0.9 1.8 75
FINANCIAL REPORT FINANCIAL REPORT 76 (1) financial instruments) by country Non current assets (excluding customers to external Sales 2014 June 30 Year ended NOTE 5. SEGMENT INFORMATION (CONTINUED) 2015 JUNE 30 ENDED YEAR THE FOR CONSOLIDATED TO THE STATEMENTSNOTES FINANCIAL Namibia, Malawi) and 10% (US$33.4M Namibia, Malawi) of the Group’s total sales revenue. Group’s sales total the of Malawi) Namibia, 10% and (US$33.4M Malawi) Namibia, Malawi), 18% (US$57.7M Namibia, (US$66.8M to 20% basis proportionate on a equated customers 2014, significant In most three the Other revenue Other Total consolidated revenue Cost of goods sold goods of Cost Impairment of inventory Impairment Gross (loss)/profit Gross Other expenses expenses Other Impairment of asset of Impairment and finance costs finance and tax income before (loss)/profit Segment Finance costs Loss before income tax income before Loss Income tax benefit/(expense) tax Income Loss after income tax income after Loss Segment assets/total assets 2014 June 30 At Includes US$170.0M LHM purchase consideration receivable (refer to Note 16) and US$6.6M available-for-sale financials assets (refer to Note Note to 19). (refer assets financials available-for-sale US$6.6M 16) and to Note (refer receivable consideration purchase US$170.0M LHM Includes EXPLORATION AUSTRALIA (227.4) (323.6) (324.8) (324.8) 429.3 691.3 US$M US$M 97.4 (1.2) ------NAMIBIA CANADA (191.5) 264.3 207.0 207.0 615.9 US$M US$M (21.0) (15.4) 10.7 (4.7) (5.5) (1.1) (6.6) (8.8) - - NAMIBIA MALAWI (141.4) 492.8 121.8 121.8 US$M US$M (74.1) (40.7) (60.3) (68.7) (74.1) 47.0 (8.4) (5.4) - - - ANNUAL REPORT 2015 REPORT ANNUAL LTD ENERGY PALADIN UNALLOCATED OTHER 211.5 US$M US$M (83.4) (18.4) (25.8) (45.5) (71.3) (12.1) (8.1) 0.7 0.7 0.7 - - - - (1) CONSOLIDATED CONSOLIDATED 1,565.7 1,186.4 (389.6) (332.9) (331.7) (425.9) (485.6) 328.8 329.5 US$M US$M (61.7) (65.1) (29.1) (59.7) 96.0 0.7 Unsecured convertible bonds ANNUAL REPORT 2015 REPORT ANNUAL LTD ENERGY PALADIN (3) (2) (1) Unsecured convertible bonds Non Current borrowings and loans bearing interest Total current Secured bank loans Current BORROWINGS AND LOANS BEARING 7.NOTE INTEREST rates. deposit short-term respective the at interest earn and Group, the of requirements cash immediate the on depending periods varying for made are deposits Short-term rates. deposit bank daily on based rates floating at interest earns bank at Cash overdrafts. bank and value, in changes of risk insignificant to an subject are which and cash of amounts to known convertible readily are that less or months three of maturities original with investments short other institutions, financial with call at held deposits hand, on cash includes equivalents cash and Cash Recognition and measurement by LHM. provided guarantees supplier and to 7) Note (refer facilities finance project the of US$31.2M respect (2014: in use for includes US$13.2M) restricted equivalents cash and Total cash Total cash and cash equivalents Short-term bank deposits hand on and bank at Cash EQUIVALENTS CASH AND CASH 6. NOTE entity. parent by the drawn being funds all with basis agroup on funds manages group The +equity). debt /(net debt anet as calculated ratio gearing the including covenants, bank with compliance and cash/debt net of level the also and capital on return of level the of basis the on capital monitors group The debt. to reduce assets sell or shares new issue may group the structure, capital the adjust or to maintain order In parent. the of holders equity to the attributable reserves equity other all and capital issued includes Capital of cost capital. the reduce to structure capital efficient an maintain to and stakeholders other for benefits and to shareholders returns provide to continue can it that so concern, a going as to continue ability its to safeguard are capital managing when group’s objectives The STRUCTURE CAPITAL 2015 JUNE 30 ENDED YEAR THE FOR CONSOLIDATED TO THE STATEMENTSNOTES FINANCIAL Unsecured convertible bonds Unsecured convertible bonds convertible Unsecured 10. Note in out set are liabilities bearing Group’s interest the of value fair the of Details Fair value disclosures Standards. Accounting of requirements the with accordance in balance the offset which costs transaction include figures above The borrowings and loans bearing interest Total current non Secured bank loan 10.68%) maturing on 30 April2017with a conversionprice of US$1.83 forCompanyshares. On 30April2012, the Company issuedUS$274Minconvertible bonds with a coupon rate of6%(underlying effective interest rateof 12.37%) maturing on 31March 2020 withaconversion price of US$0.356for Company shares. On 31March 2015,theCompany issued US$150Minconvertible bonds with a couponrateof 7% (underlyingeffective interest rateof exercise oftheCompany’s optional redemption right on 18May2015. due 2020.TheUS$10.75Mbonds,which remained outstanding following settlement of the tender offer, were redeemed through the US$289.25M bonds were repurchased pursuant to a tender offer concurrent with theissue of US$150M7.00%convertible bonds interest rateof7.47%)maturing on 5November 2015 withaconversionpriceofUS$4.688,forCompany shares. On 2April2015, On the5November 2010, theCompany issued US$300Minconvertible bonds with acouponrateof 3.625%, (underlying effective (3) (2) (1) amortised to 2019 amortised MATURITY 2020 2015 2017 ‑ term, highly liquid liquid highly term, US$M US$M 254.3 183.7 180.6 427.3 123.4 2015 2015 49.6 8.5 8.5 3.1 - 245.0 285.8 590.2 US$M US$M 2014 2014 39.4 39.4 88.8 78.5 10.3 59.4 - 77
FINANCIAL REPORT FINANCIAL REPORT 78 Secured bank loans Unsecured convertible bonds Facilities unused at reporting date: Secured bank loans Unsecured convertible bonds Facilities used at reporting date: Secured bank loans Unsecured convertible bonds Total facilities: At reporting date, the following financing facilities hadbeen negotiatedand were available: Financing facilities available years. subsequent in remeasured not is component equity the of amount carrying The equity. shareholders’ in recognised is and component equity to the allocated is proceeds the of remainder The cost. afinance as recognised is time of passage to the due liability the in increase The redemption. or conversion on extinguished until basis cost amortised the on a liability as carried is amount this and bond non-convertible equivalent an for rate Position, net of transaction costs. On issue of convertible bonds, the fair value of the liability component is determined using a market The component of convertible bonds that exhibits characteristics of debt is recognised as a liability in the Statement of Financial date. balance the 12 after months Borrowings are classifiedas current liabilities unless theGroup hasan unconditionalright todefer settlement of the liability for at least method. interest effective the using borrowings the of period the over Statement Income the in recognised is amount redemption the and costs) transaction of (net proceeds the between difference Any cost. amortised at measured subsequently are borrowings loan Bank incurred. costs transaction of net value, fair at recognised initially are borrowings loan Bank measurement and Recognition borrowings. and loans bearing interest US$1.5M of (2014: totalled part as facility US$3.1M), the of included been have and establishment to the relating costs Transaction facility. loan syndicated the under 2014: 2015, June (30 June outstanding At 30 was US$100.8M) US$60.9M financiers. to the repayable to are PFPL LHU from distributions any of 50% facility, the of terms the 5.50%. Under plus LIBOR the at interest bears and US$9.550M of one and US$9.545M of 3 instalments and US$4.454M of instalments 2014 seven with December 31 commencing years) half a and (five loan the of term the over basis asemi-annual on Namibia Limited, along with the Standard Bank of South Africa Nedbank Limited and Standard Limited, Bank Namibia Limited. The Nedbank of facility is repayable adivision Capital, by Nedbank provided is 2016. facility new The 31 is date December calculation ratios covenant debt 2014.first The December 31 commencing periods calculations 6-monthly four first the for holiday covenant financial a has facility The LHMHL. in 75% its over PFPL interest from Agreement Pledge by aShare secured is facility new The facility. new the to support guarantees any providing or security any granting Ltd (“LHU”) (Pty) Uranium Heinrich (“LHMHL”) Langer nor Limited new facility remains Paladin Ltd Finance Pty (“PFPL”). the of Borrower The to US$70M. balance The new facility has with less security neither Heinrich Langer Mauritius outstanding Holdings the taking facility, existing the of US$30.8M to repay utilised were sale minority LHM the from Proceeds Agreement. Facility Syndicated US$70M new into a facility capital working US$20M and facility finance US$110M project existing the LHM to refinance lenders existing its with agreements into 2014, entered 23 July On Company the loans bank Secured follows: as adjusted been has Price 2014, 17 on Conversion the December offer Entitlement Retail 2014 the and 4December on offer Entitlement Institutional the of completion the Following Price. Market Current 95% the of than less at is shares of issue new any where to adjustment subject is Price Conversion prevailing the Bonds the of terms to the Pursuant bonds convertible (continued)Unsecured NOTE 7. LOANS (CONTINUED) AND BORROWINGS BEARING INTEREST 2015 JUNE 30 ENDED YEAR THE FOR CONSOLIDATED TO THE STATEMENTSNOTES FINANCIAL Convertible bonds due2017:US$1.83 (previously US$2.109) ANNUAL REPORT 2015 REPORT ANNUAL LTD ENERGY PALADIN US$M 484.9 484.9 424.0 424.0 2015 60.9 60.9 - - 684.0 110.0 704.0 130.0 574.0 574.0 US$M 2014 20.0 - ANNUAL REPORT 2015 REPORT ANNUAL LTD ENERGY PALADIN consolidated statement of financial position. the on recognised is to CNNC US$98.0M of LHU’s liability liabilities, and 100% of LHU’s of assets consolidation the of a result As position. financial of statement consolidated Paladin’s on appear not do they therefore, and PFPL in recorded receivable loans shareholder intercompany the against eliminated are loans PFPL’s shareholder intercompany consolidation, On LHU 75% the of share (i.e. 75% 25% to and PFPL to CNNC). balances, outstanding the against basis rata apro on paid be will LHU from repayments loan All deferred. be will loans the of repayment and repayment demand can PFPL nor CNNC neither loans, shareholder intercompany the repay to funds sufficient have not does LHU If Ltd (Paladin). Energy Paladin by guaranteed been not have loans the and loans the repay flows to cash free sufficient generating LHU on dependent 2016 from to 2021, range is dates however, repayment repayment agreements, loan shareholder intercompany to the Pursuant existing. presently those as 4.25%) conditions and 2% and between amargin plus (LIBOR rate interest same the under to CNNC assigned to were PFPL by LHU owing loans shareholder 25%) intercompany the of (representing US$96M operation, mining Heinrich Langer the in a25% of interest sale the of part As Intercompany loan assigned to CNNC Non Current -CNNC LOANS BEARING INTEREST OTHER 8. NOTE LHMHL. in 75% PFPL its over from interest Agreement Pledge by aShare secured is facility new The assets. project over security no holds facility loan syndicated The Total assets pledged as security Total non current assets pledged as security Intangible assets Mine development equipment and plant Property, Inventories Non Current Total current assets pledged as security Inventories receivables other Trade and Cash and cash equivalents Floating charge Current are: loans) bank (secured liabilities bearing interest current non and current for security as pledged assets of amounts carrying The Financing facilities available (continued) NOTE 7. LOANS (CONTINUED) AND BORROWINGS BEARING INTEREST 2015 JUNE 30 ENDED YEAR THE FOR CONSOLIDATED TO THE STATEMENTSNOTES FINANCIAL 2016 to 2021 MATURITY 30 JUNE US$M US$M 2015 2015 98.7 98.7 ------30 JUNE 612.3 495.9 279.6 160.2 116.4 US$M US$M 2014 2014 12.2 43.9 68.7 19.7 28.0 96.0 96.0 79
FINANCIAL REPORT FINANCIAL REPORT 80 August 2013 to dividends. right the carry and share vote per one carry shares ordinary paid Fully September 2014 Balance 30 June 2014 June 30 Balance February 2014 January 2014 December 2013 2013 November September 2013 (2)Includes 184 shares held by Paladin Employee Plan Pty Ltd. Pty Plan Employee Paladin by held 184 shares (2)Includes Ltd. Pty Plan Employee Paladin by held 1,084 shares (1)Includes 2013 June 30 Balance DATE Movements in Ordinary Shares onIssue as a deduction,equity netin of tax, fromshown theare proceeds. shares new of issue the to attributable directly costs Incremental equity. as classified are shares Ordinary Recognition and measurement paid fully and Issued shares Ordinary Issued and PaidUpCapital RESERVES AND EQUITY CONTRIBUTED 9. NOTE 2015 JUNE 30 ENDED YEAR THE FOR CONSOLIDATED TO THE STATEMENTSNOTES FINANCIAL September 2014 November 2014November November 2014November December 2014 December 2014 December 2014 Balance 30 June 2015 June 30 Balance Share placement Rights vested Rights Transaction costs reserve payments share-based from Transfer vested Rights vested Rights vested Rights vested Rights Rights vested Rights Rights vested Rights Rights vested Rights Share placement Rights vested Rights Institutional entitlement offer Retail entitlement offer Transaction costs reserves payments share-based from Transfer 1,666,927,668 NUMBER OF SHARES 2015 1,666,927,668 964,367,284 NUMBER OF SHARES 125,578,171 837,187,808 144,862,817 191,530,053 363,779,442 1,003,238 390,950 125,650 786,493 566,095 136,340 857,544 37,630 85,437 964,367,284 (2) (1) 2014 ISSUE PRICE 0.70 0.42 0.26 0.26 ANNUAL REPORT 2015 REPORT ANNUAL LTD ENERGY PALADIN A$ - - - 2,094.9 EXCHANGE US$M 2015 1.08998 1.15423 1.18827 1.21563 US$: A$ US$: RATE RATE - - - 1,926.9 1,845.7 2,094.9 1,926.9 TOTAL US$M US$M 2014 80.6 52.7 41.9 77.8 (2.5) (6.2) 3.1 1.8 ------At 1 July 2013At 1July ANNUAL REPORT 2015 REPORT ANNUAL LTD ENERGY PALADIN Reserves NOTE 9. AND CONTRIBUTED EQUITY RESERVES (CONTINUED) 2015 JUNE 30 ENDED YEAR THE FOR CONSOLIDATED TO THE STATEMENTSNOTES FINANCIAL available-for-sale investments on movement unrealised Net Share-based payments Share-based Foreign currency translation Income Statement to loss impairment of Transfer other income Transfer gains to realised maintain 15% shareholding to Malawi of to Govt (Africa) Paladin in interest of Allotment Heinrich to CNNC Langer in 25% of interest Sale At 30 June 2014 June 30 At available-for-sale investments on movement unrealised Net Share-based payments Share-based Foreign currency translation Income Statement to loss impairment of Transfer other income Transfer gains to realised Income Tax Income transaction costs transaction component – net of Convertible bond, equity Convertible bond, buy back maintain 15% shareholding to Malawi of to Govt (Africa) Paladin in interest of Allotment Heinrich to CNNC Langer in 25% of interest Sale At 30 June 2015 June 30 At RESERVE CONSOL- IDATION US$M 62.7 55.8 48.4 (0.2) (6.7) (4.4) (3.0) ------APPLICATION RESERVE OPTION US$M LISTED 0.1 0.1 0.1 ------
SHARE-BASED SHARE-BASED PAYMENTS RESERVE US$M 50.2 47.6 46.4 (2.6) (1.2) ------AVAILABLE -FOR-SALE RESERVE US$M (3.6) (5.4) (4.2) (3.4) (0.3) (3.7) (0.4) (0.6) 4.3 2.9 ------
TRANSLATION TRANSLATION CURRENCY CURRENCY RESERVE FOREIGN FOREIGN (137.6) US$M (38.4) (39.7) (99.2) 1.3 ------DISTRIBUTABLE DISTRIBUTABLE CONVERTIBLE CONVERTIBLE BOND NON- RESERVE US$M 85.5 85.5 16.0 94.3 (7.2) ------PREMIUM ON ACQUISITION ACQUISITION RESERVE US$M 14.9 14.9 14.9 ------106.6 161.9 US$M TOTAL (99.2) 62.7 16.0 61.1 (3.4) (2.6) (0.3) (6.7) (3.7) (1.2) (0.4) (0.6) (7.2) (4.4) (3.0) 1.3 4.3 2.9 81
FINANCIAL REPORT FINANCIAL REPORT 82 impact on profit orequity. a material have not would rate exchange the in change possible areasonably date, balance the at exposure Group’s net the on Based exposure Net payables other Trade and Financial liabilities receivables other Trade and Cash and cash equivalents Financial assets follows: as are dollar Namibian the in movements to exposed instruments financial The in place. However, the Group function treasury manages the purchase of foreign currency to meet operational requirements. The Group’s borrowings and deposits are largely denominated in US dollars. Currently there are no foreign exchange hedge programmes functional currency of the the relevant not is that Group company. acurrency in denominated are that liabilities and assets commitments, future from arises risk exchange Foreign exposures. currency various from arising risk exchange to foreign exposed is and internationally operates Group The Risk Exchange Foreign Market Risk Board. to the reported The Group’s forecast financialrisk positionwith respect to key financial objectives and compliance with practice treasury isregularly operations. from directly arise which payables, trade and receivables trade include instruments financial Other assets. The Group’s processes. and principal financial instrumentscomprise interest practices bearing debt, cash and short-term treasury deposits and available underpin forsale financial which directives approved Board under managed are risks These the of Group’s business. course normal the in arise risk) rate interest and price commodity exchange, foreign (including risk credit and liquidity Market, The Group monitors its forecast financial position on a regular basis. to: sufficient are flows cash net ensuring at aimed is risk financial of Group’s management The Financial RiskManagementObjectivesand Policies NOTE 10. FINANCIAL RISK MANAGEMENT This represents reserve the premium paid on the acquisition of a non-controlling interest in Summit. reserve Acquisition 7. Note in described as issued bonds convertible the of portion equity the records reserve This reserve bondConvertible non-distributable 3. Note in described as purposes, presentation for dollars US into translated been have and of dollars US currency afunctional have not do that entities group the of translation on arising differences exchange to record used is reserve This Foreign currency translation reserve Note in out 19. set as assets financial available-for-sale the on changes value fair the records reserve This Available-for-sale reserve payments. share-based on details to 31 Note further for Refer remuneration. their of part as consultants and employees Directors, to provided benefits equity of value the to record used is reserve This Share-based payments reserve reserve. this of distribution the for exists restriction no and unexercised expired options listed These issue. of expenses of net options, listed of issue the from proceeds of consists reserve This option reserve Listed application Corporation Limited, a of subsidiary Uranium China National to of China Nuclear Corporation, on 28 Ltd disposed June 2014 (Pty) Uranium under the Share Sale Heinrich Agreement dated 18 Langer and 2014. January limited Holdings Mauritius Heinrich Langer of assets net in 25% the over interest received proceeds the of excess the recognises PAL. of also It assets net the in interest non-controlling the 2007), and (22 February signed was Agreement Development the date the on Project Kayelekera the of value present net the at Malawi, of Government to the 15% PAL in the of allotted value interest fair the between difference the recognises reserve This Consolidation reserve Nature andPurposeofReserves NOTE 9. AND CONTRIBUTED EQUITY RESERVES (CONTINUED) 2015 JUNE 30 ENDED YEAR THE FOR CONSOLIDATED TO THE STATEMENTSNOTES FINANCIAL maintain thecapacitytofund corporate growth activities. meet allitsfinancialcommitments; and ANNUAL REPORT 2015 REPORT ANNUAL LTD ENERGY PALADIN US$M 2015 (11.5) (20.5) 9.0 7.0 2.0 US$M 2014 (23.7) 15.8 (7.9) 9.3 6.5 ANNUAL REPORT 2015 REPORT ANNUAL LTD ENERGY PALADIN payables other Trade and 2015 follows: as was date reporting the at payables of analysis maturity The obligations in respect of the amount ofrepayment the the facilities. details Note 7 necessary. if alternatives funding of range a pursue to flexibility the provides and basis along-term on flows cash to manage Group the enables This commitments. repayment to meet ability the has Group the to ensure assumptions forecast liquidity position and maintain appropriate liquidity levels. Sensitivity analysis is conducted on a range of pricing and market The Group function treasury continually reviews the Group’s liquidity position including cash flow forecasts todetermine the manner. effective cost and atimely in The liquidity position of the Group is managed to ensure liquid sufficient funds are available tomeet theGroup’s financial commitments Liquidity Risk profitor equity. on impact amaterial have not would LIBOR in change possible areasonably date, balance the at exposure Group’s net the on Based exposure Net Interest-bearing liabilities Financial liabilities deposits – short-term equivalents cash and Cash Financial assets follows: as are movements rates interest to exposed instruments financial rate floating The risk. rate interest to manage transactions derivative or hedging any in engage not does currently Group The bearing. non-interest are provisions, and payables shares, in investments receivables, of form the in liabilities and assets financial other All risk. rate interest value fair to Group the exposes debt rate fixed and risk rate interest flow to cash Group the exposes debt rate Floating debt. long-term from arises risk rate interest Group’s main The instruments. financial these of nature short-term to the due risk amaterial to be considered not is deposits short-term and cash on risk rate Interest environment. rate interest falling in a borrowings rate fixed on arise may that losses opportunity or debt rate floating of cost the increase will that rates interest in movements by affected adversely be will position Group’s financial the that risk the is risk rate Interest Risk Rate Interest Market Risk (continued) NOTE 10. (CONTINUED) RISK FINANCIAL MANAGEMENT 2015 JUNE 30 ENDED YEAR THE FOR CONSOLIDATED TO THE STATEMENTSNOTES FINANCIAL Loans and borrowings Interest payable Interest Total payables Trade and other payables other Trade and 2014 Loans and borrowings Interest payable Interest Total payables TOTAL 580.9 113.6 724.9 770.8 100.7 910.8 US$M 30.4 39.3 <1 YEAR <1 PAYABLES MATURITY ANALYSIS 113.4 US$M 30.4 12.9 33.4 76.7 39.3 39.9 34.2 1-2 YEARS 283.1 316.0 312.9 341.2 US$M 32.9 28.3 - - 2-3 YEARS (159.7) US$M 183.7 283.1 2015 305.5 US$M 24.0 14.1 16.0 30.1 22.4 - - >3 YEARS (118.3) (196.8) 270.8 302.1 134.9 150.7 US$M US$M 2014 78.5 31.3 15.8 - - 83
FINANCIAL REPORT FINANCIAL REPORT 84 No receivables are past due or impaired. or due past are receivables No Total receivables Other receivables Trade receivables 2014 Total receivables Other receivables Trade receivables 2015 rating. &Poor’s credit Standard AA- aminimum with banks Australian with held is invested to be available cash Any 57% (2014:equivalents. cash represents and 53%) cash of institution financial asingle with deposit Group’s maximum * The Total Other receivables – other entities Non Current Other receivables – other entities Trade receivables Cash and cash equivalents* Current receivables. and cash US$193.8M of (2014 a total was date comprising US$288.5M), reporting the at risk to credit exposure maximum The significant. not is debts to bad Group’s exposure recognised, with creditworthy thirdonly parties. In addition,trades receivableGroup balances are monitoredThe on an ongoing basis exposure. with thecredit result that the maximum the represents assets financial of amount carrying The Group. to the loss financial in a result will that instrument afinancial under obligation its complete not will entity acontracting that risk the is risk Credit Credit Risk NOTE 10. (CONTINUED) RISK FINANCIAL MANAGEMENT 2015 JUNE 30 ENDED YEAR THE FOR CONSOLIDATED TO THE STATEMENTSNOTES FINANCIAL TOTAL 199.7 180.8 US$M 18.9 10.1 8.0 2.1 ANNUAL REPORT 2015 REPORT ANNUAL LTD ENERGY PALADIN RECEIVABLES AGEING ANALYSIS AGEING RECEIVABLES CURRENT US$M 198.7 179.8 193.8 193.2 183.7 2015 US$M 18.9 7.4 2.1 9.5 0.6 7.4 2.1 <1 YEAR <1 288.5 287.5 179.8 US$M US$M 2014 18.9 88.8 1.0 1.0 0.6 0.6 1.0 - - Total non-current Listed investments investments Available-for-sale measured at fair value Financial assets ANNUAL REPORT 2015 REPORT ANNUAL LTD ENERGY PALADIN maturities. remaining and risk credit (2) terms, similar on debt for available currently rates market using flows cash future the discounting by determined been has value (1)The fair below: table the in summarised are value fair the estimate to used methods the as well as instruments financial the of value fair The data. market observable on based not are that liability or asset the for inputs using estimated is value fair 3–the Level prices). from (derived indirectly or prices) (as directly either liability, or asset the for observable are 1that Level in included prices quoted than other inputs using estimated is value fair 2–the Level markets. active in prices quoted using calculated is value fair 1–the Level comprise: methods The instrument. afinancial of value fair the estimating in methods various uses Group The Standards. Accounting of requirements the with accordance in balance the offset which costs transaction includes figure (1) This -Secured bank loan borrowings: and loans bearing Interest Financial liabilities 2015: June 30 at as values fair of approximations reasonable are that amounts carrying with those than other instruments, Group’s financial the of value fair and amounts carrying the of by class acomparison is below out Set Fair Values NOTE 10. (CONTINUED) RISK FINANCIAL MANAGEMENT 2015 JUNE 30 ENDED YEAR THE FOR CONSOLIDATED TO THE STATEMENTSNOTES FINANCIAL Total Total current -Secured bank loan borrowings and loans bearing Interest Convertible bonds of of component Debt -Debt component of Unsecured convertible bonds Floating rate borrowings and borrowings loans bearing Interest disclosed are values fair which Financial liabilities for The fair value has been determined using a valuation technique based on the quoted market price of the bonds less the estimated fair value of the equity component component equity the of value fair estimated the less bonds the of price market quoted the on based technique avaluation using determined been has value fair The attributable to the conversion feature, which was valued using an option pricing model. The estimated fair value of the equity component was not considered material at 30 30 at material considered not was component equity the of value fair estimated June 2015. The model. pricing option an using valued was which feature, conversion to the attributable (2) (1) MARKET PRICE (LEVEL 1) (LEVEL QUOTED US$M 2.6 2.6 - - - OBSERVABLE OBSERVABLE TECHNIQUE- VALUATION YEAR ENDED 30 JUNE 2015 JUNE 30 ENDED YEAR (LEVEL 2) (LEVEL MARKET US$M INPUTS INPUTS 401.1 462.0 60.9 - - NON MARKET OBSERVABLE OBSERVABLE TECHNIQUE- TECHNIQUE- VALUATION (LEVEL 3) (LEVEL US$M INPUTS INPUTS - - - - - US$M 401.1 462.0 TOTAL 60.9 CARRYING CARRYING 2.6 2.6 AMOUNT 377.7 US$M 427.3 435.8 49.6 MARKET PRICE 8.5 8.5 (1) (LEVEL 1) (LEVEL QUOTED US$M FAIR VALUE 6.6 6.6 - - -
US$M 401.1 452.9 462.0 2015 OBSERVABLE OBSERVABLE TECHNIQUE- 51.8 VALUATION 9.1 9.1 YEAR ENDED 30 JUNE 2014 JUNE 30 ENDED YEAR (LEVEL 2) (LEVEL MARKET INPUTS INPUTS 100.8 491.7 592.5 US$M - - CARRYING CARRYING AMOUNT NON MARKET OBSERVABLE OBSERVABLE TECHNIQUE- TECHNIQUE- 530.8 VALUATION 590.2 629.6 US$M (LEVEL 3) (LEVEL 39.4 39.4 59.4 INPUTS INPUTS US$M (1) - - - - - FAIR VALUE FAIR 491.7 552.6 592.5 100.8 491.7 592.5 US$M US$M 2014 TOTAL 39.9 39.9 60.9 6.6 6.6 85
FINANCIAL REPORT FINANCIAL REPORT 86 common industry published prices. Contracts may be subject to escalating floor and ceiling prices. prices. ceiling and floor to escalating subject be may Contracts prices. published industry common Contracted selling are prices determined by a range of including mechanisms base-escalated pricing and formulas which reference 2015 to period 2024. the over delivery Uranium is not traded in any significant volume on globalcommodity exchanges. The Group has customer sales contracts in place for Commodity PriceRisk RatioGearing Total Capital Total equity Net debt equivalents cash and cash Less Total borrowings undertakings. financial facility’s the of all with compliance in was Company the reporting, of time At the ratio. project and coverage ratio life coverage life loan ratio, coverage service debt pledge, negative a including undertakings financial to various subject is Group monitors treasury gearing and compliances with various contractual financialcovenants. The Company’s project finance facility the Group’sdetermining in optimal future capital structure. flexibility the to provide as so modelled are assumptions of arange activities, growth and expenditure operational position including cash flow forecasts Group’s financial the to of determine thefuture capital analysis management requirements. enable which Toensure funding sufficient for models forecasting corporate of use the involves This structure. capital the of part as The Group function treasury is responsible for the Group’s capital management, including management of the long-term debt and cash reviews the capital structure from Management time to time required. as appropriate. resources cash the to provide bonds convertible and equity debt, of acombination utilises Company The entity. to the available capital of cost lowest the ensuring through to shareholders returns optimal to maintain as well as maintained, When managing capital, management’s objective is to ensure adequate cash resources to meet the Company’s commitments are Capital Management period. reporting each of end the at awhole) as measurement value fair the to significant is that input level lowest the on (based categorisation by re-assessing hierarchy the in Levels between occurred have transfers whether determines Group the basis, recurring on a value fair at recognised are that instruments financial For These valuation techniques use participants. both and market by observable market unobservable inputs. used models relevant other and exist prices observable market which for instruments to similar comparison techniques, value present as such techniques valuation uses Group the markets, active in quoted not instruments financial For prices. market quoted on based are investments equity listed the of value fair The costs. transaction for deduction any without date reporting the at as markets active on prices quoted on based determined value fair the represents price market Quoted Fair Values (continued) NOTE 10. (CONTINUED) RISK FINANCIAL MANAGEMENT 2015 JUNE 30 ENDED YEAR THE FOR CONSOLIDATED TO THE STATEMENTSNOTES FINANCIAL ANNUAL REPORT 2015 REPORT ANNUAL LTD ENERGY PALADIN (183.7) US$M 549.1 198.3 350.8 534.5 2015 64% 1,069.2 432.4 636.8 725.6 US$M 2014 (88.8) 60% ANNUAL REPORT 2015 REPORT ANNUAL LTD ENERGY PALADIN Total Other KM mine site LHM mine site Corporate and marketing MarketingAdministration, and Non-Production Costs Total tenements of disposal on Gain investments available-for-sale of disposal on Gain (net) gain exchange Foreign Income Other Total Royalties Product distribution costs inventory of sale on reversed loss Impairment Depreciation and amortisation Production costs before depreciation and amortisation Sales of Cost NOTE 12. OTHER INCOME AND EXPENSES asset. financial the of amount carrying net to the asset financial the of life expected the through receipts cash future estimated discounts exactly that rate the is which rate, interest effective the using period relevant the over income interest the allocating and asset afinancial of cost amortised the calculating of amethod is This method. interest effective the using accrues interest as Statement Income the in recognised is cash in investments from revenue Interest Revenue Interest Group. by the treatment further no requires that a form in is product the when and estimated reasonably be can or known are prices selling when contract, enforceable to an pursuant Group the from passes product the of title when is which pass, ownership of reward and risk when recognised is uranium of sale from Revenue Uranium of Sale taxes paid. Revenue and is recognised for duties of net the are major business activities as revenue follows: as disclosed Amounts receivable. or received consideration the of value fair the at measured is Revenue Recognition and measurement Total Interest income from non-related parties Sale of uranium NOTE 11. REVENUE YEAR THE FOR PERFORMANCE 2015 JUNE 30 ENDED YEAR THE FOR CONSOLIDATED TO THE STATEMENTSNOTES FINANCIAL (189.7) (169.8) US$M US$M 199.5 198.6 2015 2015 (19.3) (14.7) (31.4) 24.9 (1.3) (3.3) (6.1) (7.3) 5.5 0.6 0.6 4.3 0.9 - (332.9) (300.9) 329.5 328.8 US$M US$M 2014 2014 (21.9) (14.5) (49.4) (16.5) 41.9 (2.9) (2.8) (1.7) (8.0) 0.4 0.4 0.7 - - 87
FINANCIAL REPORT FINANCIAL REPORT 88 Impairment of exploration assets exploration of Impairment Total (net) Loss Exchange Foreign KM slope remediation KM mine closure provision increase expenses maintenance and care KM shutdown plant during costs fixed KM LHM fixedcosts during plantshutdown Impairment for available for sale financialassets ofImpairment aircraft capitalised is the weighted average interest rate applicable to the entity’s outstanding borrowings during the year. the during borrowings outstanding entity’s to the applicable rate interest average weighted the is capitalised to be costs borrowing of amount the to determine used rate capitalisation The provisions. closure to mine related discounts of unwinding the including incurred as expensed are costs borrowing Other sale. or use intended its for asset the prepare and to complete required is that time of period the during capitalised are asset qualifying any of construction the for incurred costs Borrowing Borrowing Costs Note to 25. refer – benefits Employee to 20. Note – refer Depreciation 31. Note in disclosed are Company the for Plan Rights Share Performance Employee the of Details Employee PerformanceShare RightsPlan voluntary. are contributions Employee salary. employee’s each of percentage adefined represent Company by the Contributions Legislation. The Company contributes to employees’ superannuation plans in accordance with the requirements of Occupational Superannuation Superannuation Recognition and measurement Other employee benefits payments Share-based Definedcontribution superannuation salaries and Wages Employee BenefitsExpense expense amortisation and Total depreciation Total Facility costs expense interest discount provision closure Mine Profit onconvertible bond buyback Accretion relating to convertible bonds (non-cash) Interest expense Finance Costs (2) (1) assets exploration of Write-off Other Expenses NOTE 12. OTHER INCOME AND EXPENSES (CONTINUED) 2015 JUNE 30 ENDED YEAR THE FOR CONSOLIDATED TO THE STATEMENTSNOTES FINANCIAL The licence for Spinifex Well was surrendered on 22 September 2014. All capitalised costs were written off. off. written were costs 2014. capitalised All September 22 on surrendered was Well Spinifex for licence The Impairment charge of US$237.5M, Queensland exploration assets US$229.1M and Bigrlyi project US$8.4M. At 30 June 2015, due 2015, due June 30 At US$8.4M. project Bigrlyi US$229.1M and assets exploration US$237.5M, of Queensland charge Impairment Bigrlyi was written down to a carrying value of US$Nil. of value to acarrying down market. written was uranium Bigrlyi current the and transactions market recent more on based is which to US$0.75/lb, equated assets Queensland the for exploration amount recoverable estimated The to US$7.5/lb. US$0.3/lb from ranged which transactions market indicators market comparable other and recent by provided range avaluation using hierarchy), value 3fair fair of (level basis the to dispose on costs less determined was value US$100.0M of project the of amount recoverable estimated The assets. the of exploration value Queensland carrying the to reduce recognised was tax) after US$229.1M (US$180.8M price, uranium depressed continuing to the
(1) (2) ANNUAL REPORT 2015 REPORT ANNUAL LTD ENERGY PALADIN (237.5) (267.6) US$M 2015 (13.4) (33.8) (28.7) (57.0) (18.2) (33.5) 31.7 (1.4) (7.6) (3.8) (2.9) (1.0) (2.3) (0.5) (2.3) (0.6) (5.7) 1.0 - - - (323.6) (337.6) US$M 2014 (63.2) (56.5) (59.7) (18.1) (34.1) 51.0 (1.2) (0.1) (4.6) (4.3) (3.8) (3.1) (0.7) (2.9) (5.6) (1.9) - - - - - Unused tax losses for which no DTA has been recognised DTA no been which has for losses tax Unused recognised been has asset tax deferred no which for losses tax Total unused recognised been has asset tax deferred no which for losses tax unused Other recognised been has asset tax deferred no which for losses tax unused Australian Losses Tax Statement Income the in reported (expense)/benefit tax Income DTA not recognised Other foreign exchange differences Losses not recognised adjustment year prior Under/over Non - deductible items ANNUAL REPORT 2015 REPORT ANNUAL LTD ENERGY PALADIN rates tax overseas in Difference (2014 30% of rate tax –30%) Australian Tax the at expense tax income before Loss Payable Tax Facie Prima to Tax Benefit Income of Reconciliation Numerical equity in reported (expense)/benefit tax Income Other and prior period Foreign currency translation movement reserve to equity: directly credited or charged to items related tax income Deferred Equity to Directly Credited or Charged Amounts Statement Income the in reported (expense)/benefit tax Income differences temporary of reversal and origination to the Related tax income Deferred Current income tax benefit/(expense) tax income Current Income Tax Benefit/(Expense) NOTE 13. INCOME AND OTHER TAXES 2015 JUNE 30 ENDED YEAR THE FOR CONSOLIDATED TO THE STATEMENTSNOTES FINANCIAL (222.3) (772.4) (384.6) (387.8) US$M 101.4 338.2 2015 (43.2) (14.3) (27.1) 38.1 20.8 11.1 38.1 38.1 0.5 (6.9) 4.2 - - (207.2) (690.7) (381.1) (309.6) 145.7 485.6 US$M 2014 (39.4) (73.6) 96.0 41.7 25.0 96.0 96.0 (3.4) 0.4 0.7 0.3 - - 89
FINANCIAL REPORT FINANCIAL REPORT 90 (3)no changes in taxlegislation adversely affect the Consolidated Entities in realising the benefit from thedeductions forthelosses. (2)the Consolidated Entities continue tocomply with theconditions for deductibility imposed by tax legislation;and (1) if: obtained be only will losses tax for benefit This income. taxable future against offset to be expected losses revenue of respect in are recognised assets tax deferred net The law. tax Australian under group atax-consolidated of part are entities resident Australian wholly-owned its all and Paladin recognised assets tax deferred Net liabilities Set against deferred tax off assets tax deferred Gross Other Interest liabilities bearing Foreign currency balances Available for sale securities income taxable future against offset for available losses Revenue assets tax Deferred Net deferred tax liabilities Net deferred tax assets tax deferred of off Set liabilities Gross deferred tax Other Convertible bond Recognition of acquired exploration expenditure Inventory / Consumables Exploration expenditure the deferred tax assets and liabilities relate to the same taxable entity and the same taxation authority. taxation same the and entity taxable same to the relate liabilities and and assets tax liabilities tax deferred the current against assets tax current off to set exists right enforceable a legally if only offset are liabilities and Deferred equity. assets in tax directly recognised also are equity in directly recognised to amounts attributable balances tax deferred and Current losses. and differences temporary those to utilise taxable available be future that will amounts probable is it if only losses tax unused and differences temporary deductible for recognised are assets tax Deferred loss. or profit a in arose transaction, they if other than a business combination, that differences at the time of the temporary transaction to these did not either affect relation accounting in profit or taxable recognised is liability or asset tax deferred No aliability. or recognition asset an of initial the from arising differences temporary certain for made is exception An liability. or asset tax to deferred the measure differences temporary taxable and deductible of amounts cumulative to the applied are rates tax relevant The jurisdiction. each for enacted substantively or enacted are which rates tax those on based settled, are liabilities or recovered to are assets expected the rates when tax the at apply differences temporary for method liability full the using recognised are liabilities and assets tax Deferred are regulations subject to tax integration and establishes provisions applicable where appropriate. which in to situations respect with returns tax the in taken positions evaluates periodically Management loss. or profit of statement the in not and equity in recognised is equity in directly recognised to items relating tax income Current income. taxable generates and operates Group the where countries the in date reporting the at enacted, substantially or enacted are that those are amount the to compute used laws tax and rates tax The authorities. taxation the to paid or from recovered to be expected amount the at measured are period current the for liabilities and assets tax income Current Recognition and measurement Accelerated depreciation for purposes tax purposes tax for deduction prepayment Accelerated Deferred tax liabilities Deferred Income Tax NOTE 13. INCOME AND OTHER TAXES (CONTINUED) 2015 JUNE 30 ENDED YEAR THE FOR CONSOLIDATED TO THE STATEMENTSNOTES FINANCIAL deductions for thelosses to berealised; the Consolidated Entities derive future assessable income ofanature andofanamount sufficient toenablethebenefit from the ANNUAL REPORT 2015 REPORT ANNUAL LTD ENERGY PALADIN 100.6 US$M 131.6 2015 47.9 14.7 (83.7) (37.0) (33.5) (83.7) 83.7 11.2 4.4 (3.5) (9.7) 0.7 - - - - (106.7) (106.7) 106.7 196.9 109.2 US$M 2014 59.4 (48.2) (42.5) 90.2 16.5 (1.2) (5.8) (9.0) 1.3 9.7 0.8 - - ANNUAL REPORT 2015 REPORT ANNUAL LTD ENERGY PALADIN per position. 2015 in aloss in 2014 is share and earnings Group the as basic as same the is share per earnings Diluted shares. ordinary potential to dilutive relation in consideration no for issued been to have assumed shares of number average weighted the and shares ordinary potential dilutive with associated effect tax income after the account into take to share per earnings basic of determination the in used figures the adjusts share per earnings Diluted Share Per Earnings Diluted number of shares outstanding ordinary during the average period. weighted the by Company the of holders equity to attributable profit the by dividing calculated are share per earnings Basic Share Per Earnings Basic Recognition and measurement period. comparative the and period current to the offerings 1.03 was 1.02 respective and the for applied factor adjustment The 2014 17 and respectively. December 4December on completed offers entitlement retail and institutional the of element bonus the to reflect adjusted been have calculations share per earnings The future the in share per earnings basic dilute potentially could that period, current the in nature antidilutive to their due calculation average weighted in included not securities of Total number share per earnings diluted and basic for shares ordinary of number average Weighted operations continuing from Parent the of holders equity to ordinary attributable loss Net computations: share per earnings diluted and basic the in used data share and income the reflects following The SHARE PER EARNINGS 14. NOTE recovered. be to asset tax deferred the allow will profit taxable future that probable become has it that extent to the recognised are and date reporting each at reassessed are assets tax income deferred Unrecognised utilised. be to asset tax income deferred the of part or all allow to available be will profit taxable sufficient that probable longer no is it that extent to the reduced and date reporting each at reviewed is assets tax income deferred of amount carrying The is during theuncertain determination course ordinary of business. tax ultimate the which for calculations and transactions many are There liabilities. and assets tax deferred determining The Group is subject to income taxes in Australia and jurisdictions where it has foreign operations. Significant judgement is required in Deferred Tax Assets and Liabilities Significant Accounting EstimatesandAssumptions NOTE 13. INCOME AND OTHER TAXES (CONTINUED) 2015 JUNE 30 ENDED YEAR THE FOR CONSOLIDATED TO THE STATEMENTSNOTES FINANCIAL 1,417,331,645 552,056,462 OF SHARES NUMBER (267.8) US$M 2015 2015
983,170,716 180,688,256 OF SHARES NUMBER (338.4) US$M 2014 2014
91
FINANCIAL REPORT FINANCIAL REPORT 92 Net cash flows (used in)/provided by operating activities operating by in)/provided (used flows cash Net Increase/(decrease) in deferred liabilities tax Decrease/(increase) in inventories Increase/(decrease) in provisions payables other and trade in (Decrease)/increase receivables other and trade in Decrease/(increase) prepayments in Decrease liabilities and assets in Changes Exploration impairment Available-for-sale asset impairment Asset impairment Inventory impairment and obsolescence expense Non-cash financingcosts payments Share-based differences exchange Net investments of disposal on Gain equipment and plant property, of disposal on Gain bonds convertible of repayment on Gain Depreciation and amortisation for Adjustments loss Net Activities Operating in Used Flows Cash Tax Net to After Loss Net of Reconciliation ACTVITIES OPERATING FROM FLOW CASH NET TO TAX INCOME AFTER EARNINGS OF RECONCILIATION 15. NOTE 2015 JUNE 30 ENDED YEAR THE FOR CONSOLIDATED TO THE STATEMENTSNOTES FINANCIAL ANNUAL REPORT 2015 REPORT ANNUAL LTD ENERGY PALADIN (300.1) US$M 238.9 2015 (24.7) (38.0) 19.4 24.5 25.0 (1.4) (6.0) (4.3) (0.6) (1.0) 6.0 0.5 2.9 1.0 8.0 0.5 - (389.6) 323.6 US$M 2014 (95.6) (19.7) 10.1 48.7 26.6 44.8 61.7 (0.1) (5.8) (0.4) 0.3 5.9 4.3 3.8 0.4 1.2 - ANNUAL REPORT 2015 REPORT ANNUAL LTD ENERGY PALADIN impairment. of evidence objective considered are overdue days 60 than more debts or payments debtor, default the of difficulties Financial debt. the collect to able be not will group the that evidence objective is there when raised is debts doubtful for allowance An identified. when off written are uncollectible to be known are that Debts basis. ongoing an on reviewed is receivables trade of Collectability current assets. non as classified are which date balance the 12 after than months greater maturities with those for except assets, current in included are They receivable. the selling of intention no with to adebtor directly services or money, goods provides Group the when arise They market. active an in quoted not are that payments determinable or fixed with assets financial non-derivative are receivables and Loans Loans and Receivables Recognition and measurement Total non current receivables debtors Sundry Non Current (c) (b)GST andVAT debtorrelates toAustralia, Namibia, Malawi,Netherlands and Canada. (a) Total current receivables debtors Sundry LHM purchase consideration – receivable VAT and GST Trade receivables Current NOTE 16. AND OTHER TRADE RECEIVABLES LIABILITIES AND ASSETS OPERATING 2015 JUNE 30 ENDED YEAR THE FOR CONSOLIDATED TO THE STATEMENTSNOTES FINANCIAL consideration receivable on thesaleofits 25% interest in the LangerHeinrichMine. On 23July2014,the Company received US$170M from CNNC, being thebalance of the previous year. receivable is impaired. No allowancehasbeen recognised for the current year orthe allowance for doubtful debts is madewhen there isobjective evidence thatatrade value approximates fair value duetotheshort-term nature ofthe receivables. An Trade receivables are non-interest bearing andare generallyon30dayterms. Carrying NOTES (b) (a) (c) US$M 2015 5.6 2.1 0.6 0.6 9.5 1.8 - 170.0 198.7 US$M 2014 18.9 7.5 1.0 1.0 2.3 93
FINANCIAL REPORT FINANCIAL REPORT 94 determining net realisable value various factors are taken into account, including sales prices and costs to complete inventories to their final form. to their inventories to complete costs and prices sales including account, into taken are factors various value realisable net determining In value. realisable net exceed not does cost their that to ensure regularly inventories of value carrying the reviews Group The Inventories of Value Realisable Net Significant EstimatesandAssumptions overheads. production and ore; of processing and extraction the in used equipment and plant property, of depreciation the costs); stripping of expense recognised any (including ore of and processing extraction to the attributable directly are which expenses contractor and materials costs, labour include production of costs The grade. cut-off the than ore less at containing to stockpiles attributed is value accounting No passes. product to the title legal where point delivery to the up incurred overheads attributable and costs production variable and fixed both including basis, costing absorption an on derived is Cost method. cost average weighted the using value realisable net and cost of lower the at valued are inventory progress in work and goods Finished appropriate allowances for redundant and slow moving after items. method, cost average weighted the using value realisable net and cost of lower the at valued are inventory stores Consumable Recognition and measurement 2014 in sales. of cost recognised expense obsolescence an in resulted by US$17.8M This reduced were KM at to (2015: obsolescence. held due US$Nil) 2014 consumables and During stores 2014 in sales. of cost year,the recognised (2015: for US$8.2M of loss US$Nil) impairment an in resulting value realisable to net reduced were KM at held 2014,During stockpiles 2014 in sales. of cost year,(2015: the recognised for US$Nil) US$35.7Mof loss impairment an in resulting value realisable net to reduced were KM and LHM at held 2014,goods During finished 2015 in sales. of cost year, the recognised for US$Nil) (2014: US$8.0M of loss impairment an in resulting value realisable to net reduced was LHM at held 2015,During work-in-progress Impairment ofInventories 2015 US$189.7M June 30 totalled (2014: ended Group. the year for the for US$332.9M) expense an as recognised sold Inventories Inventory Expense date. sheet balance 12 the of months within processed to be unlikely are that LHM at Stockpiles value realisable net and cost of lower the at inventories Total current non Stockpiles (at cost) Non Current value realisable net and cost of lower the at inventories Total current Finished goods (at net realisable value) (at cost) goods Finished value) realisable (at net progress in Work Stockpiles (at cost) Stores and consumables (at cost) Current NOTE 17. INVENTORIES 2015 JUNE 30 ENDED YEAR THE FOR CONSOLIDATED TO THE STATEMENTSNOTES FINANCIAL ANNUAL REPORT 2015 REPORT ANNUAL LTD ENERGY PALADIN US$M 156.3 156.3 2015 75.3 35.0 19.8 11.1 9.4 - 160.2 160.2 US$M 2014 78.1 10.3 55.6 7.1 5.1 - Statement. Any subsequent increase in value is recognised in equity. in recognised is value in increase subsequent Any Income the Statement. in recognised and equity from removed is loss and profit in recognised previously asset financial that on loss impairment any less value, fair current the and cost acquisition the between difference the as measured is which loss cumulative the assets, below its cost is considered in determining whether the security is impaired. If any such evidence exists for available for exists evidence such any If impaired. is security the whether determining in considered is cost its below impaired. is Inassets the case of securities equity classifiedas available-for-sale,financial of group or asset a significant or prolongeddecline a financial in the that fair value of security a evidence objective is there whether date balance each at assesses Group The Impairment of Financial Instruments prices. bid current on based are investments quoted of values fair The Fair value of Financial Instruments securities. investment from losses and gains classifiedas available fair value of non securities monetary classifiedas available ANNUAL REPORT 2015 REPORT ANNUAL LTD ENERGY PALADIN Available ownership. of rewards and risks the all substantially transferred has Group the and transferred been have or expired have assets financial the from flows to cash rights the receive when de-recognised are assets Financial costs. transaction plus value fair at recognised initially are Investments asset. the trade on recognised are investments of sales and Purchases date. balance 12 the of months within investment the of dispose to intends management unless assets current non in included are They categories. other the of any in classified not or category this Available Recognition and measurement The Group also holds minor investments in other companies. (2014: share cents). per 1.9 cents 1.0 of Australian price Australian a share on based 2015 (2014: (US$2.4M) June DYL 30 at A$3.2M in is /US$5.5M) shares A$5.8M the of value market The ASX. on listed explorer 2015 a16.7% June 30 at (2014: DYL, of auranium interest represents shares 18.9%) shares ordinary the of ordinary paid fully these of 2015 319,106,156 June 30 at held DYL and in holding investment an The has Group shares. The (2014: ordinary paid 304,400,275) fully Total non current other financialassets Available-for-sale financialassets Non Current NOTE 19. OTHER FINANCIAL ASSETS information. segment the of portion ‘Unallocated’ the in recorded US$1.0M of been has expense impairment An months. twelve next the within completed be will sale the that probable highly is It aircraft. the of sale the for signed was agreement brokering 2014 3July on a and aircraft its to sell adecision made Company the maintenance, and care on placed being KM of aresult As Total assets classifiedas held forsale Plant and equipment SALE FOR HELD AS CLASSIFIED ASSETS 18. NOTE 2015 JUNE 30 ENDED YEAR THE FOR CONSOLIDATED TO THE STATEMENTSNOTES FINANCIAL ‑ ‑ for for ‑ ‑ sale financial assets are subsequently carried at fair value. Unrealised gains and losses which arise from changes in the the in changes from arise which losses and gains Unrealised value. fair at carried subsequently are assets financial sale sale financialassets, comprising principally marketable equity securities, are non ‑ for ‑ sale are sold or impaired, the accumulated fair value adjustments are included in the Income Statement as ‑ for ‑ date which is the date on which the Group commits to purchase or sell sell or to purchase commits Group the which on date the is which date ‑ sale are recognised in other comprehensive income. When securities ‑derivatives that are either designated in US$M US$M 2015 2015 2.6 2.6 2.8 2.8 ‑ for ‑ sale financial financial sale US$M US$M 2014 2014 6.6 6.6 3.8 3.8 95
FINANCIAL REPORT FINANCIAL REPORT 96 Net carrying value at end of year of end at value carrying Net Reclassification toassets held forsale Foreign currency translation Disposal of assets of Disposal Reclassification to minedevelopment Reclassification ofassets Impairment of assets of Impairment Depreciation and amortisation expense Additions Net carrying value at start of year of start at value carrying Net 2014 Net carrying value at end of year of end at value carrying Net Foreign currency translation Reclassification to minedevelopment Reclassification ofassets Depreciation and amortisation expense Additions Net carrying value at start of year of start at value carrying Net 2015 out below: set are year the of end and beginning the at equipment and plant property, of class each of amounts carrying the of Reconciliations Reconciliations Refer to Note 7 for information on property, plant and equipment pledged as security. Property, Plant and EquipmentPledgedasSecurity for Liabilities equipment and plant property, value carrying Net progress in work construction value carrying Net impairment Less cost –at progress in work Construction value land and buildings Net carrying Less accumulated depreciation andLand buildings - at cost equipment and plant value carrying Net Less accumulated depreciation and impairment cost –at equipment and Plant NOTE 20. PROPERTY, AND EQUIPMENT PLANT 2015 JUNE 30 ENDED YEAR THE FOR CONSOLIDATED TO THE STATEMENTSNOTES FINANCIAL TOTAL US$M 281.8 301.0 273.7 281.8 (17.8) (24.8) 16.7 10.5 (0.7) (0.1) (3.8) (2.4) (0.8) (4.2) 0.1 - - EQUIPMENT PLANT AND US$M 270.5 290.3 264.4 270.5 (17.2) (24.0) (0.2) (3.8) (2.1) (3.8) 9.0 4.9 9.3 2.0 - - - ANNUAL REPORT 2015 REPORT ANNUAL LTD ENERGY PALADIN BUILDINGS LAND AND AND LAND US$M (0.5) (0.4) (0.3) (0.4) (0.4) 8.7 0.1 0.5 9.2 7.9 0.1 8.7 (456.2) - - - - - US$M 273.7 264.4 720.6 2015 10.6 (2.7) 1.4 1.4 7.9 - CONSTRUCTION PROGRESS WORK IN WORK (436.1) US$M 281.8 270.5 706.6 US$M 2014 11.8 11.2 (0.1) (9.4) (0.2) (0.8) (9.5) (0.4) (3.2) (2.5) 2.6 1.5 1.4 8.5 2.6 2.6 5.8 8.7 - - - - - ANNUAL REPORT 2015 REPORT ANNUAL LTD ENERGY PALADIN recognised. was impairment 2016 the No and budget. Plan Mine of Life current the on based levels production and minerals recoverable of quantities requirements, capital costs, operating estimated pricing, TradeTechassumptions, rate forecast exchange foreign utilising method flow cash discounted the using determined was use in Value CNNC. with transaction recent the using determined was to sell costs less value Fair use. in value and tosell costs less value fair the of higher the on based determined been has equipment and plant property, LHM the of value carrying The which changes could impact the cost of production and technological futures legal changes, including future changes to environmental restoration resources, obligations. mineral inferred and indicated measured, and reserves probable and proved of level the rates, tax rates, exchanges foreign flows, cash discounted estimated the determining in used rates discount price, uranium including: key factors of anumber on dependent is intangibles and development mine equipment, and plant property, the of recoverability future The units). (cash-generating assets of groups or assets other from inflows cash the of independent largely are that inflows cash identifiable separately are there which for levels lowest the at grouped are assets impairment, assessing of purposes the For use. in value and to sell costs less value fair asset’s an of higher the is amount Recoverable amount. recoverable its exceeds amount carrying asset’s the by which amount the for recognised is loss impairment An amount is calculated. recoverable asset’s the of estimate an exists, impairment of indication any If impairment. of indicators for to assess costs monitored are processing and mining and performance production prices, uranium in changes as such Factors, impairment. of indicators any for to assess information of asource as used is which date, reporting each at values asset of review internal an conducts Group The recoverable. be not may value carrying the that indicate circumstances in changes or events whenever impairment for tested are intangibles and development mine equipment; and plant Property, Intangibles and Development Mine Equipment; and Plant Property, of Impairment Significant EstimatesandAssumptions units). generating (cash flows cash identifiable separately are there which for levels lowest the at grouped are assets impairment, assessing of purposes the For asset. the to specific risks the and money of value time the of assessments market current reflects that rate discount pre-tax a using value present their to discounted are flows cash future estimated the use, in value assessing In use. in value and to sell costs less value fair asset’s an of higher the is amount recoverable The amount. recoverable its exceeds amount carrying asset’s the by which amount the for recognised is loss impairment An recoverable. be may not amount carrying the that indicate circumstances in changes or events whenever impairment for reviewed are to amortisation subject are that Assets impairment. for annually are tested and amortisation to subject not are life useful indefinite an have that Assets Income Statement. the in included are These amounts. carrying with proceeds by comparing determined are disposals on losses and Gains amount. recoverable estimated its than greater is amount carrying asset’s the if amount recoverable to its immediately down written is amount carrying asset’s An follows: as lives, useful estimated their over values, residual their of net amount, cost their to allocate method line straight the or basis production of unit the either using calculated is assets other on Depreciation depreciated. not is Land located. is it which on site the restoring and asset the removing and dismantling of costs estimated the and mine, operating an of establishment with associated equipment of construction with associated costs the both include costs equipment and plant Property, incurred. are they which in period financial the during Statement Income to the charged are maintenance and repairs other All reliably. measured be can item the of cost the and Group the flow to will item the with associated benefits economi Mine plant and equipmentlesser of life asset andunit of production basi Leasehold improvementsperiod of lease Plant andequipment2-6years Databases10 years Buildings 20 years 97
FINANCIAL REPORT FINANCIAL REPORT 98 may have several components. The mine plans, and therefore amine body, and ore total the of asubset be will component a Generally, plans. mine the of each to analyse operation closely with the mining operations personnel for each mining works Group body, the ore the of components identifying In incurred. are they as costs operating as loss or profit of statement to the charged are costs stripping production the met, not are criteria the of all If c) b) a) met: are criteria following the if asset, activity astripping to as referred asset, anon-current as recognised are costs the future, the in mined to to be ore access improved of form the in realised are benefits the Where inventories. those producing of cost the of part as for accounted are costs of inventory produced in the period, the production stripping form the in realised are benefits the Where future. the in mined to be ore to the access improved or inventory of production the either being benefits, two to create considered generally Stripping costs incurred during the production phase are development stripping (as outlined above). as way same the in for accounted are stripping such of costs that is similar in nature to development phase stripping. The stripping of aphase require may mine the of development further production, of commencement the After below. out set as for accounted are stripping) (production mine asurface of Stripping activities during undertaken the production phase commissioned and ready for use as intended by management. development stripping costs ceases when the mine/component is useful life using a units-of-production method. The capitalisation of its over amortised subsequently and mine the constructing of cost the of part as capitalised are stripping), (development commences the development phase of a mine, before the production phase production phase of its operations. Stripping costs incurred in and phase development the during both costs removal) (waste stripping incurs Group the operations, mining its of part As Stripping (waste removal) costs cost of production. of production basis. Post-production costs are recognised as a aunits on depreciated and by management intended manner a in operated being of capable is asset the as time such until costs development as deferred are costs Pre-production development Mine Recognition and measurement year of end at value carrying Net Disposals Reclassificationfrom property, plantand equipment rates &discount assumptions underlying of changes in Effects Depreciation and amortisation expense Additions year of start at value carrying Net development –mine value carrying Net Less accumulated depreciation and impairment cost –at development Mine NOTE 21. MINE DEVELOPMENT 2015 JUNE 30 ENDED YEAR THE FOR CONSOLIDATED TO THE STATEMENTSNOTES FINANCIAL measured. reliably be can access improved the with associated costs The body) are probable; ore the to access improved (being benefits economic Future improved can be accurately identified; and identified; accurately be can improved be will access which for body ore the of component The very naturevery require judgements, estimates and assumptions. their by which account into taken are mine to a specific Code JORC the of edition 2004 the with accordance in measured reserves probable and proved the mine, of life determining appropriate period to discount mine closure provisions. In the and rates depreciation as things such to determine value accounting an as mine of alife of concept the uses Group The Reserves Probable and Proved 2015. 2014 June 30 and ended years the in cost aproduction as costs Accordingly, the Group has accounted for production stripping uniform. relatively is component of life the over ratio strip the that identifiablecomponents of the relative ore bodiesare and short individual the of lives useful the that assessed has Group The Key Assumptions and Estimates Judgements, losses. impairment any and depreciation less cost at carried then is asset activity stripping body. The ore the determine the expected useful life of the identifiedcomponent of to used are reserves, probable and proven comprise which reserves, recoverable Economically activity. stripping the of result a as accessible more became that body ore the of component identified the of life the over method units-of-production the The stripping activity asset is subsequently depreciated using financial position. of statement the in Development’ ’Mine of part as presented is and asset, mine the being asset, of, existing an enhancement an to, or addition an as for accounted is asset activity stripping The ore production of each component. of volume agiven for volume actual the with compared extracted waste of volume expected the uses Group The place. taken has benefit a future creating of activity additional the to which extent the to identify abenchmark as used is and body ore the of This production measure is calculated for the identifiedcomponent asset. activity stripping the and produced inventory the between measure is used to allocate the production stripping costs asset are not separately identifiable, a relevant production activity stripping the and produced inventory the of costs the If asset. activity stripping the of cost the in included not are production stripping activity to continue as planned, these costs production stripping activity, but are for not the necessary the as time same the at occurring are operations incidental If costs. overhead attributable directly of allocation an plus ore, of stripping activity that improves access to the identifiedcomponent the to perform incurred directly costs of accumulation the is which cost, at measured initially is asset activity stripping The location, and/or financialconsiderations. geographical body, the ore the of characteristics geological to: the limited not are but include, These reasons. of a number for mines between vary can components, of identification the ANNUAL REPORT 2015 REPORT ANNUAL LTD ENERGY PALADIN (170.1) US$M 213.1 2015 43.0 43.9 43.0 (7.5) 0.1 6.5 - - (162.6) 206.5 US$M 2014 (19.9) 43.9 42.8 43.9 19.9 (0.2) 0.8 0.5 (1) Labour evaluation expenditure Project exploration and payments Acquisition property 2014 June 30 Balance Areas of interest Outside services Other expenses Total expenditure Expenditure expensed Expenditure capitalised Write off of Spinifex Well Spinifex of off Write differences exchange Foreign Balance 30 June 2013 June 30 Balance Areas of interest 2015 June 30 Balance evaluation and exploration of Impairment ANNUAL REPORT 2015 REPORT ANNUAL LTD ENERGY PALADIN 2014: June 30 2015 June 30 and ended years the for interest of by area properties mineral in interests on expenditures the detail tables following The NOTE 22. EXPLORATION AND EVALUATION EXPENDITURE 2015 JUNE 30 ENDED YEAR THE FOR CONSOLIDATED TO THE STATEMENTSNOTES FINANCIAL Outside services Labour evaluation expenditure Project exploration and Other expenses Balance 30 June 2014 June 30 Balance evaluation and exploration of Impairment differences exchange Foreign Expenditure capitalised Expenditure expensed Total expenditure VALHALLA (181.7) (246.7) 332.5 576.1 332.5 US$M (61.2) /SKAL 89.6 (0.3) 0.1 0.2 0.3 0.1 0.3 2.7 0.4 0.4 ------
(38.2) 137.7 NORTH US$M (11.9) (76.9) 60.5 10.4 60.5 (0.3) (0.3) (0.3) 0.1 0.2 0.3 0.1 0.2 0.3 ISA ISA ------FUSION US$M (9.2) 11.3 10.9 11.3 (0.1) (2.1) 0.1 0.1 0.1 0.1 0.3 0.1 ------PAMELA ANGELA ANGELA US$M (0.1) (0.3) 0.1 0.1 0.1 0.2 0.3 ------BIGRLYI US$M (8.4) 10.3 10.0 10.3 (0.1) (1.9) 0.1 0.1 0.3 ------US$M NIGER (0.2) 0.1 0.1 0.2 ------US$M (0.2) (0.5) 0.1 0.1 0.2 0.2 0.2 0.1 0.5 KM ------US$M LHM ------CANADA 263.3 261.7 230.4 263.3 US$M (36.2) (0.1) (3.6) 1.7 0.4 1.3 3.4 3.3 2.3 0.9 2.0 5.2 5.2 - - - - - PROJECTS URANIUM URANIUM US$M OTHER OTHER (0.4) (1.7) (1.4) (0.4) 9.4 0.6 0.4 0.1 0.5 1.2 0.8 8.5 7.5 0.5 0.1 0.5 0.7 0.2 9.4 1.1 - - 1,004.9 (237.5) (115.0) (323.6) 687.3 337.9 687.3 US$M TOTAL 0.4 (1.6) (1.4) (1.7) (0.4) 2.6 0.5 2.6 5.7 4.1 3.4 1.2 3.5 6.4 8.1 99
FINANCIAL REPORT FINANCIAL REPORT 100 Bigrlyi project US$8.4M. US$8.4M. project Bigrlyi US$229.1M assets and exploration US$237.5M: of charge Queensland impairment an recognised has Group the indicators of range this on Based multiples. trading company uranium and valuations sum-of-parts brokers’ calculations, value asset net transactions, market recent similar including indicators market of a number on based are amounts recoverable of Estimates impairment. of indicators for expenditure evaluation and exploration capitalised its of value carrying the 2015, reassessed At June Group the value. economic future their and projects individual the of to as status the judgement requires This date. reporting each at expenditure evaluation and exploration of value carrying the reviews Group The Expenditure Evaluation and Exploration of Value Carrying Significant EstimatesandAssumptions amount. recoverable estimated their than greater is amount carrying interest’s of area the if amount recoverable to their down written be may interest of area an for amounts Capitalised production. maintain to and mine of a capacity the to expand interest, of areas in existing mineralisation further define to interest, of area the within bodies ore new to develop incurred expenditure include costs These cost. at carried and capitalised are interest of area the within operations mining of start to the prior amine to develop incurred subsequently costs All development. to mine transferred is area to that capitalised evaluation and exploration the made, is to development to proceed adecision When activities. operating from flows cash of part as included is expensed is that expenditure exploration evaluation and whereas activities, investing from flows cash of part as included is capitalised is that expenditure evaluation and Exploration incurred. are they which in period the in expensed are costs sale, by alternatively or interest, of area the of exploitation and development successful through recouped to be expected not are costs If interest. of areas to specific separately allocated are Resources Mineral contain that properties of acquisition to the related Costs interest. of area the in to activities related directly expenditure overhead related of portion costs appropriate an and direct net comprises expenditure Such interest. of areas to specific separately allocated is expenditure evaluation and Exploration 2. 1. that: extent to the forward carried and capitalised is interest of to areas related expenditure evaluation and Exploration Recognition and measurement NOTE 22. EXPLORATION AND EVALUATION EXPENDITURE (CONTINUED) 2015 JUNE 30 ENDED YEAR THE FOR CONSOLIDATED TO THE STATEMENTSNOTES FINANCIAL costs are expectedtobe recouped through successful development and exploitation of thearea of interest byits sale. or alternatively rights to tenure of the area ofinterest are current; and ANNUAL REPORT 2015 REPORT ANNUAL LTD ENERGY PALADIN option of renewal without significant cost at the end of this period. this of end the at cost significant without renewal of option the with utilities relevant by the 2007 April 17 of from years aminimum for granted been have supply power and water to use rights The testing Impairment used method Amortisation lives Useful supply power and water use to Right ofA summary the policies applied to the Group’s intangible assets is as follows: the with function of theconsistent intangible asset. category expense the in loss or profit in recognised is lives finite with assets intangible the on expense amortisation The estimate. accounting in a change is which appropriate, as method, or period amortisation the by changing prospectively for accounted are asset the in embodied benefits economic future of consumption of pattern expected the or life useful expected the in Changes year-end. financial each at least at reviewed are life useful a finite with asset intangible an for method amortisation the and period amortisation The impaired. be may asset intangible the that indication an is there whenever impairment for tested and life the over useful amortised are lives finite with assets Intangible indefinite. or finite either to be assessed are assets intangible of lives useful The incurred. is expenditure the in which year the in Statement Income the in recognised is expenditure and capitalised not are costs, development capitalised assets, excluding intangible generated Internally losses. impairment accumulated any and amortisation accumulated any less cost at carried acquired asset in a business combination is its intangible fair an of value as cost at the The date cost. at of acquisition. measured Following initial recognition, initially intangible are assets are combination abusiness in or separately acquired assets Intangible Recognition and measurement basis. production of aunit on amortised being is funded amount NamWater. with The rests pipeline the of However, ownership by LHM. funded was mine to the connection pipeline water the right, this to obtain order In LHM. at water to access right the for Namibia in NamWater with a contract into entered has LHUPL water of to supply 2.Right basis. production of aunit on amortised being is funded amount The NamPower. with rests line power the of However, ownership by LHM. funded was mine to the connection line power the right, this to obtain order In LHM. at power to access right the for Namibia in NamPower with a contract into entered has LHUPL power of 1.Right to supply Description of theGroup’s IntangibleAssets Net carrying value at 30 June 2014 June 30 at value carrying Net expense Amortisation 2013 1July at value carrying Net 2014 2015 June 30 at value carrying Net expense Amortisation 2014 1July at value carrying Net 2015 ANNUAL REPORT 2015 REPORT ANNUAL LTD ENERGY PALADIN below: out set are year financial the during asset intangible of group each in Movements Movements in IntangibleAssets Statement. Income the in sales of cost in (2014: US$0.5M of included is US$0.6M) Amortisation assets –intangible value carrying Net Less accumulated depreciation and impairment cost –at assets Intangible June 30 At ASSETS 23. INTANGIBLE NOTE 2015 JUNE 30 ENDED YEAR THE FOR CONSOLIDATED TO THE STATEMENTSNOTES FINANCIAL reviewed at each financial year-end. financial each at reviewed is method amortisation The exists. impairment of indication an when frequently more and Annually basis production of aunit on mine the of life the over Amortised mine of Life TO SUPPLY OF POWER RIGHT RIGHT US$M (0.1) (0.2) 3.6 3.8 3.5 3.6
TO SUPPLY OF WATER OF RIGHT RIGHT US$M 2015 US$M (16.1) 11.7 27.8 (0.4) (0.4) 8.6 9.0 8.2 8.6
TOTAL US$M US$M 2014 (15.6) 12.2 12.8 11.7 12.2 12.2 27.8 (0.5) (0.6) 101
FINANCIAL REPORT FINANCIAL REPORT 102 Non current Current 2014 Non current Current 2015 At 30 June 2015 June At 30 Foreign currency movements Effects of changes in discount rates discount in changes of Effects Arising during the year the during Arising At 1 July 2014At 1July below: out set are benefits, employee to relating provisions year, excluding financial the during provision of class each in Movements Movements in Provisions provisions Total current non Demobilisation provision Rehabilitation provision Employee benefits Non Current provisions Total current Employee benefits Current NOTE 25. PROVISIONS recognition. of days 30 within paid usually are and unsecured are amounts The services. and goods these of purchase the of respect in payments future make to obliged becomes Group the when arise and unpaid are that year financial the of to end the prior Group to the provided services and goods for liabilities represent and cost amortised at carried are payables other Trade and Recognition and measurement terms. day 30 on settled normally are and bearing non-interest are Trade payables payables Total current payables other Trade and Current NOTE 24. AND OTHER TRADE PAYABLES 2015 JUNE 30 ENDED YEAR THE FOR CONSOLIDATED TO THE STATEMENTSNOTES FINANCIAL DEMOBILISATION US$M (0.2) (0.2) 1.8 1.8 1.5 1.5 1.5 0.1 1.8 - - NOTES REHABILITATION 12 12 ANNUAL REPORT 2015 REPORT ANNUAL LTD ENERGY PALADIN US$M 68.9 68.9 82.5 82.5 82.5 12.6 68.9 (5.5) 6.5 - - US$M US$M 2015 2015 85.4 82.5 30.4 30.4 1.4 3.5 1.5 3.5 TOTAL US$M US$M US$M 2014 2014 70.7 70.7 84.0 84.0 84.0 12.7 70.7 72.7 68.9 39.3 39.3 (5.7) 6.3 2.0 5.5 1.8 5.5 - - ANNUAL REPORT 2015 REPORT ANNUAL LTD ENERGY PALADIN 13.73Mlb of atotal U to deliver France, in company distribution and generator EdF, electricity with amajor agreement off-take asix-year under US$200M of Total prepayment Income Statement on to an the undiscounted basis. released be will revenue unearned the customer to the delivered is product the When receipt. of time the at revenues unearned are payments customer Advance delivered. to be product future for apayment is agreement off-take long-term the from Revenue Recognition and measurement revenueUnearned Non Current NOTE 26. REVENUE UNEARNED provision. the of value carrying the to impact material a have could provision the determine to used rates), inflation or rates discount flows, cash (estimated assumptions key three the of any,in combination, or a change rate. A discount the and flows cash the of timing the required, work the performing of cost the of assessment management’s of combination a reflects value discounted The mine. the close and dismantle to restore, and mine the to rehabilitate obligation present the of value discounted the represents provision this of value The Provision Rehabilitation Significant Accounting Judgements,EstimatesandAssumptions possible, the as estimated future cash closely outflows. as match, that currency and to maturity terms with bonds government national on date reporting the at yields market discounted are using payments future Expected service. of periods and departures employee of experience levels, salary and wage future to expected given is Consideration date. reporting to the up by employees provided services of respect in made to be payments future of expected value present the as measured and benefits employee for provision the in recognised is leave service long for liability The Leave Service Long payable. or paid rates the at measured and taken is leave non for Liabilities settled. are liabilities the when paid to be expected amounts the at measured are and date reporting to the up services employees’ of respect in liability acurrent as recognised are date reporting the of months within 12 settled be to expected leave sick accumulating and salaries, and wages including benefits, short-term for Liabilities Short-term benefits Employee benefits liability. the to specific risks the and money of value time the of assessments market current the reflects that rate pre-tax the is used rate discount the and to restore estimate current the of value discounted the represents provision the of value The locations. operating to restore costs estimated the of value present the are for provided costs rehabilitation The development. or production of acost as recognised is this and arises obligation the when work rehabilitation for made is Provision liability. the to specific risks the and money of value time the of assessment market current the reflects that rate pre-tax is a used rate discount The cost. afinance as recognised is time of passage to the due provision this in increase the mine, the close and dismantle to restore, obligation present the of value discounted the represents closure mine for provision the of value the As costs. future estimated of value present net the on based phase, production the during or development mine the during occurs this whether occurs, disturbance related the from arising obligation the when period accounting the in for provided are costs closure Mine infrastructure. the to specific areas disturbed of remediation the and material residual of Mine closure and restoration costs include the costs of dismantling and demolition of infrastructure or decommissioning, the removal Provisions Recognition and measurement A provision for demobilisation has been recorded in relation to LHM for the costs of demobilising the mining contractor. Demobilisation time. 3to 23 years’ until place take not will remediation that assumption the using estimated is provision The authorities. various to acceptable state to a infrastructure the to specific areas disturbed of remediation the provision includes the the costs of dismantling and demolition Additionally of infrastructure or decommissioning, appropriate. as the removal of residual material development or and production of acost as recognised is this and arises obligation the when work A provision for rehabilitation and mine closure has been recorded in relation to LHM and KM. A provision is made fo is enhanced by the Group’s project that of ongoing value work. the as The Michelin can also security be replaced by agreement other appropriate by joint if security required. reduced be will secured Michelin of percentage The Canada. in project Group’s Michelin 60.1% over security the of holds EdF amount, prepayment the representing product to deliver obligation Company’s To the secure prices. ceiling and floor by escalating bounded delivery of time the at prevailing prices market at to EdF Total unearned revenue 3 O 8 in the period from 2019 to 2024. Uranium delivered under the off-take agreement will be sold sold be will agreement off-take the under 2019 from delivered to 2024. period Uranium the in ‑ accumulating sick leave are recognised when the the when recognised are leave sick accumulating 200.00 200.00 US$M 2015 200.0 200.0 US$M 2014 103
FINANCIAL REPORT FINANCIAL REPORT 104 Short-term employee benefits Compensation ofKeyManagement Personnel: Compensation by Category Mr Mark ChalmersExecutive General Manager – Production (Resigned effective 30 June 2015) Mr Craig BarnesChief Financial Officer – Marketing Manager General GarrowExecutive Dustin Mr Services –Corporate Manager General Executive and Secretary Company SwabyGroup Gillian Ms (ii) Executives Mr Wendong ZhangDirector (Non-executive) (Non-executive) BailyDirector Philip Mr (Non-executive) Director Donkin Peter Mr Mr Donald ShumkaDirector (Non-executive) Mr Sean LlewelynDirector (Non-executive) Mr John Director/CEO BorshoffManaging Mr Rick CrabbChairman (Non-executive) (i)Directors Details of KeyManagementPersonnel NOTE 27. KEY MANAGEMENT PERSONNEL NOTES OTHER 2015 JUNE 30 ENDED YEAR THE FOR CONSOLIDATED TO THE STATEMENTSNOTES FINANCIAL Post employment benefits Long-term benefits Share-based payment Share-based Personnel was, US$1 =A$1.20149 US$1 was, Personnel (2014: =A$1.09006). US$1 to Management Key remuneration dollar Australian 2015 the June to 30 to year translate the for used rate exchange average The ANNUAL REPORT 2015 REPORT ANNUAL LTD ENERGY PALADIN US$’000 3,666 3,642 2015 (371) 142 205 US$’000 4,094 4,959 2014 792 (11) 84 ANNUAL REPORT 2015 REPORT ANNUAL LTD ENERGY PALADIN for: &Young (Australia) by Ernst receivable and due or received Amounts & Young. Ernst is Ltd Group Energy Paladin the of auditor The NOTE 28. AUDITORS’ REMUNERATION 2015 JUNE 30 ENDED YEAR THE FOR CONSOLIDATED TO THE STATEMENTSNOTES FINANCIAL for: &Young (Australia) Ernst of practices by related receivable and due or received Amounts subjective, Ernst & Young policy requires approval by the Oceania Independence and Conflicts Leader. Conflicts and Independence Oceania by the approval requires &Young policy Ernst subjective, be to perceived be might service any Where firm. the of independence the impair way any in not do they opinion, that, professional his in confirming partner audit the of off sign the received that services allowable &Young were by Ernst provided services non-audit All Board. Standards Ethical and Professional 110 APES Accounting by the Accountants issued Professional for Ethics of Code the compromise not does provided services the of nature the that and auditor the of objectivity and integrity the affect adversely not do they that to ensure to commencement prior Committee Audit by the approved and reviewed are services non-audit all Policy Governance Corporate Company’s the of terms In Group. Paladin the of understanding &Young’s Ernst detailed and sector mining the and Africa both in experience specialised their of &Young because Ernst engaged Paladin advice. specialist available best the of value the to retain need the of cognisant also is Paladin standards, governance corporate highest the to meet striving always Whilst requirements advice of potential acquisitions specialist by the and group and restructures. jurisdictions multiple of requirements compliance tax by the driven was fees related non-audit of level The Audit or review ofthefinancial report oftheconsolidated Group Other services Audit or review ofthe financial report ofsubsidiaries andaudit related services Sub-total advice tax Other International consulting tax Tax compliance services Taxation services: Other International consulting tax Tax compliance services Taxation services: Sub-total US$’000 2015 571 319 129 109 197 99 44 23 45 - - US$’000 2014 527 672 143 188 52 53 10 30 36 5 4 105
FINANCIAL REPORT FINANCIAL REPORT 106 the Company’s quantum is likely to exceed any residual entitlement that may be due on the contractors’ claims. contractors’ the on due be may that entitlement residual any to exceed likely is quantum Company’s the result final the in that expected is it and good, to be considered are claims the against defences Company’s the of merits the however established, been yet not has claim cross and counter-claim the of quantum precise The contractor. another from cross-claiming and US$26.0M). The Group denies the claim and will vigorously defend it. The Group is also counter claiming damages from the contractor N$151.1M of sum disputed the of payment US$12.0M seeking is (2014: (2014: contractor approximately is The N$276M), which LHM. at 3expansion Stage the for contract to the relation in acontractor and company aGroup between arisen has A dispute Contingent Liability guarantee. performance environmental US$10M) KM (A$113,630) aUS$86,988 aUS$10M (2014: (2014: and tenements; cards, US$103,612 credit corporate /A$110,000) for guarantee US$143,538 a (A$187,500) lease; office (2014: corporate the for for byUS$248,199 abank guarantee provided A$263,500) / US$378,192 outstanding (A$494,021) 2015 has (2014: June Group 30 at the As US$679,877 /A$721,792) guarantee acurrent as Bank Guarantees obtained. are approvals development project all when A$0.75M (US$0.71M)) vendors to the Group by the A$0.75M of (2014: (US$0.57M) apayment for provide terms acquisition re-negotiated the Project, Uranium Manyingee to the relation In Total other commitment 5years than More 5years than later not but year one than Later Within one year payable: liabilities, as recognised not but date reporting the at for contracted reagents and transport mining, for Commitments Other Commitments Total operating lease commitment 5years than More 5years than later not but year one than Later Within one year follows: as are June 30 at as leases operating non-cancellable under payable rentals minimum Future conditions. market to prevailing according basis annual an on charge rental of revision upward to enable a clause include leases All 13 and months. 1month between of terms remaining have leases non-cancellable These accommodation. residential and offices of to rental relating leases property various into entered has Group The Operating Lease Commitments Australia and Canada. Malawi, Namibia, in legislation mining relevant the with accordance in granted were tenements the which under conditions the to meet committed are parties All involved. are parties other and Group the which in tenements the to maintain order in necessary are These made. is licence amining for application when or leases exploration the of expiry upon to re-negotiation subject are and Canadian, Western Australian, South Australian, Territorian Northern and Mines Queensland Departments attaching to the tenements These include commitments relating to tenement lease rentals and the minimum expenditure requirements of the Namibian, Malawian, Total tenements commitment 5years than More 5years than later not but year one than Later Within one year as liabilities, payable: recognised not but date reporting the at for contracted tenements for Commitments Tenements 2015 June than: 30 at as other Group the of Report Financial the in disclosed not are which contingencies, or commitments outstanding no were There NOTE 29. AND COMMITMENTS CONTINGENCIES 2015 JUNE 30 ENDED YEAR THE FOR CONSOLIDATED TO THE STATEMENTSNOTES FINANCIAL ANNUAL REPORT 2015 REPORT ANNUAL LTD ENERGY PALADIN US$M US$M US$M 2015 2015 2015 17.2 15.3 21.6 11.2 1.9 0.9 0.1 0.8 9.8 0.6 - - US$M US$M US$M 2014 2014 2014 24.3 22.2 25.8 16.8 2.1 2.0 1.0 1.0 6.4 2.6 - - Please refer to Outstanding Share Information table in the Management Discussion & Analysis for movements since the year end. year the since movements for &Analysis Discussion Management the in table Information Share to Outstanding refer Please Total Vested during the year the during Vested Forfeited during the year Outstanding at the end of the year the of end the at Outstanding ANNUAL REPORT 2015 REPORT ANNUAL LTD ENERGY PALADIN entitled to the rights. unconditionally become employees the which during period the over recognised and date grant at measured is value fair The in equity. increase corresponding a with expense benefit employee an as recognised is Plans Rights the under granted rights of value fair The Performance Share Rights Plan (Rights Plans). Share Recognition and measurement price). market and (TSR condition performance based amarket contained that rights for model Scholes valuation model for rights with non-market Black- the conditions based performance (time either based and EPS) using or the grant of date Monte-Carlo the at simulation as estimated is plan the under granted rights share equity-settled the of value fair The Rights Pricing Model (2014: A$0.32 was year the A$0.41). during granted rights share of value fair average weighted The Weighted Average FairValue 2015 (2014: June 30 at 0.4 is as years 0.3 years). outstanding rights share the for life contractual remaining average weighted The Weighted Average RemainingContractualLife 2014 1 December DATE GRANTED RIGHTS by: 2015 June 30 at represented is as balance outstanding The (2) (1) year the during Granted year the of beginning the at Outstanding year: the during issued rights share in movements (No.) and of number the illustrates table following The Summaries ofPerformanceShare Rights Granted UndertheRightsPlans reduction in management personnel salaries. 10% by the 1,791,992 affected employees to those (2014: allocation an as 1,621,104) year the during granted were rights share Report. Remuneration Directors’ the in described are plans payment share-based The expense payment Share-based PLANS PAYMENT SHARE-BASED 31. NOTE 32. Note in out set are entities controlled to 27. Note Refer material of Details Personnel. Key Management and Directors with are transactions party related only The Key ManagementPersonnel PARTIES RELATED 30. NOTE 2015 JUNE 30 ENDED YEAR THE FOR CONSOLIDATED TO THE STATEMENTSNOTES FINANCIAL The weighted average share price at the vesting date is A$0.35 (2014: A$0.48). A$0.35 is date vesting the at price share average weighted The (2014: Plan 240,690). Rights Share Performance Contractor the under granted were rights 306,888 ‑ based compensation benefitsare provided toemployees via the Employee SharePerformance Rights Planand theContractor (2) (1) 1 December 2015 1 December DATEVESTING Time based Time VESTING PERFORMANCE CONDITIONS (2,388,072) 1,791,992 2,079,094 (694,260) 788,754 US$M 2015 2015 NO. 0.5 (1,307,162) (1,643,805) 1,671,104 2,079,094 3,358,957 NUMBER 788,754 788,754 US$M 2014 2014 NO. 0.5 107
FINANCIAL REPORT FINANCIAL REPORT 108 There are no contractual commitments by the parent entity for the acquisition of property, plant and equipment as at reporting date. reporting at as equipment and plant property, of acquisition the for entity parent by the commitments contractual no are There Details of AnyContractualCommitmentsbythe Parent EntityfortheAcquisitionofProperty, Plantand Equipment i. guarantees: following the provided has Paladin Details of AnyContingentLiabilitiestheParent Entity the supports Kayelekera which Mine. Facility Finance Project the for indemnity and aguarantee provided also has Paladin Agreement. Facility Syndicated the of lenders to the obligations other their all and money secured the of payment for indemnity and aguarantee provided has Paladin Details of AnyGuaranteesEntered IntobytheParent in RelationtotheDebts of itsSubsidiaries Total comprehensive loss operations from tax after loss Net Total shareholders’ equity Convertible bond non distributable reserve Available-for-sale investment revaluation reserve reserve payments Share-based Option application reserve Accumulated losses Issued capital Total liabilities Current liabilities assets Total Current assets Information Relating to Paladin Energy Ltd NOTE 32. GROUP INFORMATION 2015 JUNE 30 ENDED YEAR THE FOR CONSOLIDATED TO THE STATEMENTSNOTES FINANCIAL Guarantee of US$40.0M for the LHM Environmental Trust Fund. Environmental LHM the for US$40.0M of Guarantee ANNUAL REPORT 2015 REPORT ANNUAL LTD ENERGY PALADIN (1,737.4) 2,094.9 1,109.4 (174.3) US$M 498.4 611.0 120.4 2015 (72.2) 94.4 46.4 0.1 8.0 - (1,665.3) 1,926.9 1,160.8 (317.2) (316.6) 395.4 765.4 205.6 US$M 2014 85.5 47.6 0.6 0.1 9.5 ANNUAL REPORT 2015 REPORT ANNUAL LTD ENERGY PALADIN HeinrichLanger Mauritius Holdings Ltd (LHM) Summit Resources Ltd (SRL) Paladin (Africa) Limited (PAL) NAME Proportion ofequityinterest held bynon-controlling interests Ltd Pty Finance Paladin NAME Investments inMaterialControlled Entities losses. and income Group’s taxable the of share member’s contributing each on based Group the within liability taxation entity’s head the to apportion agreed have parties The date. consolidation the from Group by the payable taxes all for liable be will entity head the that provides that agreement atax-sharing into entered have Group the of Members Group. the of entity head the is Paladin 2003. 1July from effect with Group) (the group consolidated atax formed subsidiaries resident Australian 100% its owned and Paladin Tax Consolidation NOTE 32. GROUP INFORMATION (CONTINUED) 2015 JUNE 30 ENDED YEAR THE FOR CONSOLIDATED TO THE STATEMENTSNOTES FINANCIAL Paladin Energy Minerals NL PEM Malawi Pty Ltd Pty Malawi PEM Eden Creek Pty Ltd Pty Creek Eden Paladin Asset Management Pty Ltd Pty Management Asset Paladin Kayelekera Holdings SA (liquidated 2015) (liquidated SA Holdings Kayelekera Paladin (Africa) Limited Paladin Netherlands BV Paladin Netherlands Holdings Cooperatief U.A. Langer HeinrichLanger Mauritius Holdings Ltd Langer Heinrich Uranium (Pty) Ltd (Pty) Uranium Heinrich Langer Valhalla Uranium Ltd Pty Northern TerritoryNorthern Uranium Ltd Pty Mount Isa Uranium Pty Ltd Pty Uranium Isa Mount Paladin Nuclear Ltd Summit Resources Ltd Summit Resources (Aust) Ltd Pty Pacific Pty MinesLtd Paladin NT Pty Ltd Pty NT Paladin Paladin Intellectual Property Pty Ltd Pty Property Intellectual Paladin Fusion Ltd Resources Pty NGM Resources Pty Ltd Pty Resources NGM Indo Energy Ltd Energy Indo Paladin Energy Canada Ltd Canada Energy Paladin Michelin Uranium Ltd Paladin Canada Investment (NL) Ltd (NL) Investment Canada Paladin Paladin Canada Holdings (NL) Ltd Aurora Energy Ltd Financial information of subsidiaries that have material non-controlling interests is provided below: on the ASX and Paladin quoted Netherlands are Holdings Cooperatief which U.A. which issues membership equity. shares, Summit’s of exception the with unquoted, are held shares all and shares ordinary comprise investments All Mauritius Australia Malawi INCORPORATION COUNTRY OF Australia INCORPORATION COUNTRY OF Australia Australia Australia Australia Switzerland Malawi Netherlands Netherlands Mauritius Namibia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia B.V.I. Canada Canada Canada Canada Canada 2015 2015 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 85 82 82 82 75 75 25 18 15 % % - INTEREST HELD INTEREST PERCENTAGE 2014 2014 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 85 82 82 82 75 75 25 18 15 % %
109
FINANCIAL REPORT FINANCIAL REPORT 110 Dividends paid toDividends non-controlling interests toAttributable non-controlling interests Total income comprehensive tax after Profit tax Income Profitbefore tax Other expenses Finance costs Impairment of assets/exploration Sales of Cost Revenue Summarised incomestatement for theyearended30June 2014 Dividends paid toDividends non-controlling interests toAttributable non-controlling interests Total income comprehensive tax after Profit tax Income Profitbefore tax Other expenses Finance costs Impairment of assets/exploration Cost of Sales of Cost Revenue Summarised incomestatement for theyearended30 June 2015 intercompany eliminations. The summarised financial information of these subsidiaries is providedbelow. This information is based onamounts before HeinrichLanger Mauritius Holdings Ltd Summit Resources Ltd Paladin (Africa) Ltd Profit/(loss) allocated to material non-controlling interest HeinrichLanger Mauritius Holdings Ltd Summit Resources Ltd Paladin (Africa) Limited Accumulated balances of interest material non-controlling NOTE 32. GROUP INFORMATION (CONTINUED) 2015 JUNE 30 ENDED YEAR THE FOR CONSOLIDATED TO THE STATEMENTSNOTES FINANCIAL (213.5) (191.1) 207.1 191.8 US$M US$M (15.4) (15.4) (26.1) (34.6) (34.6) (17.6) (13.0) (17.0) (14.9) 10.7 LHM LHM (6.7) (8.6) (3.4) ANNUAL REPORT 2015 REPORT ANNUAL LTD ENERGY PALADIN - - - - - (182.1) US$M 121.8 2015 US$M US$M (74.1) (74.1) (74.1) (25.9) (25.9) (25.9) (20.3) (82.9) (10.5) (23.6) 22.2 (8.6) (3.4) PAL PAL (8.4) (5.4) (3.4) (2.2) (6.8) 6.7 4.7 ------(228.1) (227.2) (324.3) (173.7) (169.2) (169.2) (323.6) (168.5) US$M US$M US$M 2014 (40.9) (20.3) (40.9) (83.9) (10.5) 97.1 30.8 30.6 SRL SRL (0.9) (0.8) 0.2 0.1 ------Non-controlling interest -Equity holders of parent to:Attributable Total equity Non current liabilities Net decrease in cash and cash equivalents cash and cash in decrease Net Financing Investing Operating Summarised statementofcash flow fortheyearended30June2014 Net decrease in cash and cash equivalents cash and cash in decrease Net Financing Investing Operating Summarised statementofcash flow fortheyearended30June2015 -Non-controlling interest -Equity holders of parent to:Attributable Total equity Non current liabilities Current liabilities Non current assets Current assets ANNUAL REPORT 2015 REPORT ANNUAL LTD ENERGY PALADIN Summarised statementoffinancialposition asat30 June2014 Current liabilities Non current assets Current assets Summarised statementoffinancialposition asat30 June2015 NOTE 32. GROUP INFORMATION (CONTINUED) 2015 JUNE 30 ENDED YEAR THE FOR CONSOLIDATED TO THE STATEMENTSNOTES FINANCIAL (468.5) (522.9) 123.0 579.3 112.0 483.9 122.3 US$M US$M US$M US$M (25.4) (12.9) (10.2) (45.4) (46.2) 22.2 69.3 91.5 19.2 57.5 18.8 29.0 30.8 92.2 LHM LHM LHM LHM - (123.2) (552.1) (559.1) (569.0) (469.2) (606.7) (475.2) (126.6) 127.2 127.5 US$M US$M US$M US$M (82.9) (26.1) (83.9) 25.1 47.0 12.6 (7.8) PAL PAL PAL PAL (6.8) (0.5) 0.1 0.6 - 167.3 236.7 136.7 US$M US$M US$M US$M (10.2) (71.8) 18.0 22.7 30.6 31.4 (0.6) (0.5) SRL SRL SRL SRL (0.1) (0.2) (0.4) (0.3) (0.2) (0.1) 4.7 2.5 1.6 - - 111
FINANCIAL REPORT FINANCIAL REPORT 112 for Non-Executive Directors to A$65,000 and the Non-Executive Chairman to A$125,000. Chairman Non-Executive the and to A$65,000 Directors Non-Executive for salary base the alter will structure 2015. 1July of revised date The effective an with structure remuneration its adjusted board Paladin’s Secretary. Company appointed was Matic Ranko Mr Company. the at role her from down step would Swaby Ms agreed Company the and Services, Corporate EGM and Secretary Company Swaby, Group Gillian Ms Llewelyn. Sean Mr Director Non-Executive of resignation the accepted board Paladin’s remuneration. board in areduction and changes, management and board of advised 2015, 21On August Company the Board andManagementRestructuring CEO. apermanent for search its in Board the to assist value; (iii) and deliver that initiatives strategic accelerating on focus (ii) environment; price uranium current the in generative flow cash become to aim the with level break-even flow cash overall Paladin’s of optimisation the to: to be continue (i) will mandate core Molyneux’s Mr experience. and CEO uranium company mining public both including leadership, executive resources natural in experience substantial with joins Molyneux CEO. Mr Interim appointed been has Molyneux Alexander Mr interim, the In underway. now is CEO new asuitable to identify A process Company. the with role his from down step would Borshoff Mr that agreed had Borshoff John Mr CEO and Director Managing and Board its that advised 2015, July 30 Company On the Change ofChiefExecutiveOfficer initiatives. Such initiatives include: Subsequent to the cost reductions announced on 30 July 2015, Paladin has identified significantfurther cash flow optimisation servicing). debt and costs corporate expenditure, capital (including costs cash all-in its in reduction sustainable a through level break-even flow cash its in reduction a material of advised 2015, July 30 Company On the Material Reduction in Costs Report: 2015 June 30 Financial the in for provided been not have which of effects financial the following, the of exception the with years subsequent in Group the of affairs of state the or operations those of results the Group, the of operations the affect significantly may or significantly has that report, this in with dealt otherwise not circumstance or matter other any of aware not are Directors year, the financial the of end the since below, disclosed than Other DATE BALANCE THE AFTER 33. EVENTS NOTE 2015 JUNE 30 ENDED YEAR THE FOR CONSOLIDATED TO THE STATEMENTSNOTES FINANCIAL of theLHM plant isexpected to reduce from approximately 50ppmU LHM operating initiatives –As a consequenceof the BRP, barren solution used forwash in thecounter current decantation section resulting in anaveragefeed-gradeof694ppm U a washefficiency intherange of95%to98%forFY2016. TheCompanyhasalso revised its FY2016lifeofmineplanfor LHM improvement inwashefficiency. TheCompany’s originalFY2016 outlookassumed washefficiencyof 93.1%.Paladinnowanticipates whereby theCompanywillundertakeworkrequired to meetminimum license expenditures only. number of directors and reduction in board fees announced the same day. Exploration has beenput on care and maintenance a reduction inapproximately 50%ofcorporate staff that was undertaken on 21August 2015 concurrent with thereduction in the cash expenditure over the initiatives set outinthecost reduction announcement of 30July2015.Theadditional initiatives include Corporate costs, exploration and KMinitiatives – Paladinhasimplemented reductions in these areas tofurther reduce annualised Activities Report announced on 16July2015. 3 O 8 , i.e.,anincrease of11ppmover the guidanceprovided inthelast Quarterly 3 O 8 tolessthan 10ppm. Thiswillresult inasignificant ANNUAL REPORT 2015 REPORT ANNUAL LTD ENERGY PALADIN ANNUAL REPORT 2015 REPORT ANNUAL LTD ENERGY PALADIN REFERENCE 2015: June 30 ending period reporting annual the for Group by the applied been not have but Group to the relevant are effective yet not are but amended or issued been recently have that Standards Accounting Australian following The Accounting Standards andInterpretations issuedbutnotyeteffective NOTE 34. NEW ACCOUNTING STANDARDS AND INTERPRETATIONS 2015 JUNE 30 ENDED YEAR THE FOR CONSOLIDATED TO THE STATEMENTSNOTES FINANCIAL IFRS 9 IFRS 9/ AASB TITLE Instruments Financial SUMMARY more timely basis. on a losses expected lifetime full recognise to and recognised first are instruments financial when from losses credit expected for account to entities requires Standard new the Specifically, losses. credit expected of recognition timely more require will that model impairment expected-loss new a introduces 9 AASB of version final The Impairment discount. at a repurchased ever is liability the if loss or to profit recycled not are OCI in recognised amounts These OCI. in recognised be would risk credit own entity’s the in to changes attributable losses or gains that means accounting in change This value. fair at measured to be elected liabilities of risk credit the in by changes caused was that loss or profit in volatility the removes 9also AASB ▶ ▶ follows: as for accounted to be is value fair Where the fair value option is used for financial liabilities, thechange in option. value fair the using (FVPL) loss or profit through value fair at designated liabilities of measurement to the limited are Changes introduced by 9 AASB in respect of financial liabilities Financial liabilities c. b. a. Financial assets below. described are changes main The financial liabilities. to relation in made changes some also are 139. There AASB of requirements the with compared assets financial of measurement and 9AASB includes requirements for a simpler approach for classification Classificationand measurement changing the accounting for financial instruments. otherwise without isolation in adopted early be can changes credit own The adoption. early for available is 2018. However, Standard the 1 January after or on beginning periods annual for effective 9is AASB approach to hedge accounting. reformed a substantially and model impairment loss’ ‘expected a model for classificationand measurement, a single, forward-looking 2010) includes and December in 9(issued AASB and amended) (as 2009 December in 9issued AASB supersedes version 139. new This AASB replaces which 2014) standard anew is 9(December AASB The remaining change is presented in profit or loss or profit in presented is change remaining The other comprehensive income (OCI) in presented are risk credit in to changes attributable change The the gains and losses on them, on different bases. different on them, on losses and gains the recognising or liabilities, or assets measuring from arise would that significantly reduces measurementa or recognition inconsistency through profit or loss at initial recognition if doing soeliminates or value fair at measured and designated be can assets Financial financial assets; (2) the characteristics of the contractual cash flows. cash contractual the of characteristics (2)the assets; financial on (1) the objective of the entity’s business model for managing the based classified be will instruments debt are that assets Financial on disposal of the instrument. the of disposal on recycling or impairment no is there and loss or profit in recognised be can investment on areturn are that investments these of respect in Dividends income. comprehensive other in trading for held not are that instruments equity in investments on losses and gains to present recognition initial on election irrevocable an Allows STANDARD* OF DATE APPLICATION 2018 1 January GROUP* FOR DATE APPLICATION 1 July 20181 July 113
FINANCIAL REPORT FINANCIAL REPORT 114 REFERENCE Accounting Standards and Interpretations issuedbutnotyeteffective (continued) 2015 JUNE 30 ENDED YEAR THE FOR CONSOLIDATED TO THE STATEMENTSNOTES FINANCIAL AASB 2014-3 AASB AASB 15 AASB NOTE 34. NEW ACCOUNTING STANDARDS AND INTERPRETATIONS (CONTINUED) TITLE A ASB 11] ASB A 1& [AASB Operations in Joint Interests of Acquisitions for Accounting – Standards Accounting to Australian Amendments Customers with Contracts from Revenue SUMMARY after 1 January 2015. 1January after on beginning periods reporting to annual 2015 applies and February 2010)) 1 from 9 (December AASB and 2009) 9(December 9 (AASB AASB of versions existing the of application 2014-8 the limits AASB 2014. Dec 9in AASB of issuance the from arising amendments consequential the 2014-7AASB incorporates 2010-7,AASB 2010-10 2014-1 AASB AASB and E. –Part by 2009-11 by AASB superseded and 9, introduced AASB of result a as standards to other made also were amendments Consequential disclosures. and hedged be can that components risk costs, hedging of treatment testing, effectiveness to hedge changes including requirements, accounting hedge new the 2013 included December in 2013-9) issued AASB and &2010 2009 editions 9(December to AASB Amendments Hedge accounting (a) require: amendments operations in which the activity constitutes a business. The joint in interests of acquisitions for accounting the on guidance 11 Arrangements AASB 2014-3 Joint AASB amends (b) (b) This Standard also makes an editorial correction to AASB 11 to AASB correction editorial an makes also Standard This arising from the issuance of AASB 15. AASB of issuance the from arising number Australian Accounting Standards (including Interpretations) to a amendments consequential the 2014-5 incorporates AASB A) (Note 2017. permitted. is 1January application after or on Early commencing periods reporting annual for effective are standards these Currently, 2014.15, December in 15, AASB IFRS of being equivalent Australian the issued AASB The (e) (d) price transaction the 3:(c) Determine Step (b) Step 2: the Identify obligations performance in the contract a customer with contract(s) the 1:(a) Step Identify the following steps: by applying principle core that with accordance in revenue recognises entity An services. or goods those for exchange in entitled to be expects entity the which to consideration the reflects that amount an in to customers services or goods promised of transfer the depict to revenue recognises entity 15 an IFRS of that is principle core The Services Advertising Involving Transactions Barter Revenue— SIC-31 and Customers from 18 Assets of IFRIC Transfers Programmes Revenue Customers with Contracts from 15 IFRS Revenue 2014, May In issued IASB the Step 5: Recognise revenue when (or as) the entity satisfies a satisfies entity the as) (or when revenue 5: Recognise Step the acquirer of an interest in a joint operation in which the the which in operation ajoint in interest an of acquirer the the acquirer to disclose the information required by AASB 3 and 3and by AASB required information the to disclose acquirer the Step 4: Allocate the transaction price to the performance performance to the price transaction the 4:Step Allocate the guidance in AASB 11; AASB in and guidance the with conflict that principles those for except Standards Accounting Australian other 3and AASB in accounting combinations Combinations 3Business AASB in defined as abusiness, constitutes activity performance obligationperformance other Australian Accounting Standards for business combinations. obligations in the contract Customer Loyalty Loyalty 13 (IFRIC Customer Interpretations related and , which replaces IAS 11 IAS Construction replaces Contracts , which Agreements for the Construction of Real Estate Real of Construction the for 15, IFRIC Agreements , to apply all of the principles on business business on principles the of all , to apply ). to provide to provide , IAS 18, IAS ANNUAL REPORT 2015 REPORT ANNUAL LTD ENERGY PALADIN , STANDARD* OF DATE APPLICATION 2016 1 January Note A Note 2017 1 January GROUP* FOR DATE APPLICATION 1 July 20161 July Note B Note 20171 July ANNUAL REPORT 2015 REPORT ANNUAL LTD ENERGY PALADIN not expected that 2015, the new 1July Standards is from and it Interpretations will effective significantly affect theGroup’s Interpretations and financialperformance. Standards For determined. fully to yet be is Standards these of effect potential The 2018. periods 1January reporting after or on to annual date commencing effective the move would approved, if 15, 15/AASB which to IFRS deferral year aone proposed have AASB the and IASB The A: Note * Designates the beginning of the applicable annual reporting period unless otherwise stated. REFERENCE Accounting Standards and Interpretations issuedbutnotyeteffective (continued) NOTE 34. NEW ACCOUNTING STANDARDS AND INTERPRETATIONS (CONTINUED) 2015 JUNE 30 ENDED YEAR THE FOR CONSOLIDATED TO THE STATEMENTSNOTES FINANCIAL AASB 2015-2 AASB AASB 2015-3 AASB 10 2014- AASB TITLE to AASB 101to AASB Amendments Initiative: – Disclosure Standards Accounting to Australian Amendments Materiality 1031 AASB of the Withdrawal from arising Standards Accounting to Australian Amendments Venture Joint or its Associate and Investor an between Assets of Contribution or – Sale Standards Accounting to Australian Amendments SUMMARY financial disclosures. the in presented is information order what in and where determining thatalso clarify companies should use professional judgment in can inhibit the usefulness of financial disclosures.The amendments financial statementsand that the inclusion of immaterial information the amendments make clear that materiality applies to the whole of information to disclose in the financial statements. For example, companies to apply professional judgment in determining what project. The amendments are designed to encourage further Financial Statements arising from the IASB’s Disclosure Initiative of 101 to Presentation AASB amendments makes Standard The guidance on materiality from Australian Accounting Standards. Australian to remove project AASB’s the completes Standard The AASB 2014-10 10AASB C AASB amends (a) require: amendments The venture. joint or associate its and investor an between assets of contribution or sale the with dealing 2011), 128 (August AASB in 10 those and AASB in in requirements Statements (b) (b) after 1 January 2016. Early adoption permitted. 2016. adoption Early 1January after or on beginning periods 2014-10 reporting AASB to annual applies 10. to AASB 2014-10 correction AASB editorial an makes also a full gain or loss to be recognised when a transaction involves a involves atransaction when recognised to be loss or gain a full a partial gain or loss to be recognised when a transaction involves involves atransaction when recognised to be loss or gain a partial business (whether it is housed in a subsidiary or not); or and asubsidiary in housed is it (whether business housed in a subsidiary. are assets these if even abusiness, constitute not do that assets and AASB 128 to address an inconsistency between the the between inconsistency 128an to AASB address and onsolidated Financial STANDARD* OF DATE APPLICATION 2016 1 January 1 July 20151 July 2016 2016 1 January GROUP* FOR DATE APPLICATION 1 July 20161 July 1 July 20151 July 1 July 20161 July 115
FINANCIAL REPORT FINANCIAL REPORT 116 27 August 201527 August Perth, Western Australia Chairman Crabb Rick Board the of behalf On (d) (c) (b) (a) In the opinion of the Directors: that: Ltd, Istate Energy Paladin of Directors the of aresolution with accordance In DECLARATION DIRECTORS’ 295A oftheCorporationsAct 2001 forthefinancial yearending30June 2015. this declaration has been made afterreceiving the declarations required tobemade to the Directors in accordance with section and there are reasonable grounds to believethatthe Company willbeable to payitsdebts as andwhenthey become dueandpayable; FinancialReporting Standardsthe financial statements andnotesalsocomply withInternational asdisclosed innote3; (ii) (i) the financial statements andnotesofPaladin EnergyLtd are inaccordance withtheCorporations Act 2001,including: Regulations 2001; complying with Australian Accounting Standards (including the AustralianAccounting Interpretations) andthe Corporations ended onthatdate;and giving atrue and fairviewofthe consolidated entity’s financial positionas at30June2015andofits performancefor theyear
ANNUAL REPORT 2015 REPORT ANNUAL LTD ENERGY PALADIN ANNUAL REPORT 2015 REPORT ANNUAL LTD ENERGY PALADIN limitedLiability by a scheme approved under Professional Standards Legislation Limited & Global Ernst of Young firm A member directors of the company a written Auditor’s Independence Declaration, a copy of which is Corporations included the of in Act the 2001 directors’ report. requirements independence the with complied have we audit our conducting In Independence opinion. audit our for basis a provide to appropriate and sufficient is obtained have we evidence audit the that We believe report. financial the of presentation overall the evaluating as well as directors, by the made estimates accounting of reasonableness the and used policies accounting of appropriateness the evaluating includes also audit An controls. internal entity’s the of effectiveness the on opinion an expressing of purpose the for not but circumstances, the in appropriate are that procedures audit design to order in report financial the of presentation fair and preparation entity’s to the relevant controls internal considers auditor the assessments, risk those making error. In or to fraud due whether report, The procedures selectedreport. depend on the auditor’s financial the in judgment, including the assessment of disclosures the and risks of material amounts misstatement the of about the financial evidence audit to obtain procedures performing involves audit An material misstatement. to relating audit engagements and plan and the perform audit requirements to obtain reasonable ethical assurance about whether the relevant financial is free with report from comply we that require standards Those Standards. Auditing International and Australian Our responsibility is to express an opinion on the financial based onreport our audit. Weconducted our audit in accordancewith Auditor’s responsibility financial statementscomply with International FinancialStandards. Reporting Statements Financial of 101 Presentation AASB Standard Accounting with accordance in state, also 1,Note error. directors In or the fraud to due whether misstatement, material from free is that report financial the of preparation the to enable necessary Corporations the Act 2001 and Standards Accounting Australian with accordance in view fair and true a gives that report financial the of preparation the for responsible are Company the of directors The Directors’ responsibility forthefinancial report during the financial year. declaration of the consolidated entity comprising the Company and the entities it controlled at the year’s end or from time to time years then ended, notes the of comprisingeach of a summary significantfor accounting flows policiesand cash of other explanatory information, statement and the directors’ consolidated the and equity in changes of statement consolidated income, comprehensive of statement consolidated statement, income 2014, 2015June June 30 30 consolidated at and as the position financial of statement We have audited the accompanying financial ofreport Paladin Energy Ltd (“theCompany”), which comprises theconsolidated Report on thefinancial report INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF PALADIN ENERGY LTD LTD ENERGY PALADIN OF MEMBERS TO THE REPORT AUDITOR’S INDEPENDENT
and for such internal controls as the directors determine are are determine directors the as controls internal such for and . We have given to the to the given . We have , that the the , that 117
FINANCIAL REPORT FINANCIAL REPORT 118 b)
27 August 201527 August Perth Partner G HMeyerowitz &Young Ernst Corporations Act 2001 the of 300A section with 2015, June 30 complies ended year the Ltd for Energy Paladin of report remuneration the opinion, our In OPINION accordance with Australian Auditing Standards. Corporations Act the of 2001 300A section with accordance in report remuneration the of presentation and preparation the for responsible are Company the of 2015. June directors 30 The ended year the for report directors’ the in included report remuneration the audited We have REPORT ON THE REMUNERATION REPORT a) In our opinion: OPINION LTD ENERGY PALADIN OF MEMBERS TO THE REPORT AUDITOR’S INDEPENDENT
ii) the financialalso complies report with International FinancialStandards Reporting as disclosed in Note 1. i) Corporationsthe Actwith 2001 accordance in is Ltd Energy of Paladin report financial the complying with Australian Accounting Standards and the Corporations the Regulations and 2001 Standards Accounting Australian with complying performance for each of the years ended on those dates those on ended years the of each for performance 2014 2015June June its 30 30 of at and as position financial entity’s consolidated the of view fair and atrue giving . . Our responsibility is to express an opinion on the remuneration report, based on our audit conducted in , including: ANNUAL REPORT 2015 REPORT ANNUAL LTD ENERGY PALADIN (C) (B) ANNUAL REPORT 2015 REPORT ANNUAL LTD ENERGY PALADIN (E) (D) (A) 2015: 25 at August as ASX of Requirements Listing to the Pursuant INFORMATIONADDITIONAL
VOTING RIGHTS VOTING Ltd” Pte Corporation Investment Singapore of “Government as known (formerly Limited Private GIC HOPU Clean Energy (Singapore) Pte Ltd follows: as are Company to the given notices shareholder substantial in disclosed as shareholders Substantial UBS Wealth Management Australia Ltd Nominees Pty National Nominees Limited
TOTAL HOLDERS 27,889 3,439 5,867 1,045 9,287 8,251 NO. OF SHARES OF NO. 1,126,120,319 146,179,294 180,510,822 226,923,671 249,888,360 11,166,172 11,537,652 12,566,390 13,094,612 16,807,425 34,969,588 36,472,984 45,000,000 89,046,887 6,310,560 6,388,365 6,476,260 7,450,000 7,546,382 8,580,565 9,204,330 NO. OF SHARES OF NO. 1,711,927,668 1,467,440,238 188,736,398 249,888,360 108,647,452 26,785,891 24,822,439 4,142,702 65.77 10.54 13.26 14.60 0.37 0.37 0.38 0.44 0.44 0.50 0.54 0.65 0.67 0.73 0.76 0.98 2.04 2.13 2.63 5.20 8.54 % 119
FINANCIAL REPORT FINANCIAL REPORT 120 PROJECT PROJECT PROJECTS URANIUM HELD TENEMENTS INFORMATIONADDITIONAL Langer Heinrich Langer NAMIBIA – AFRICA Tagait 4 Tagait –AFRICA NIGER Gawib Terzemazour 1 Terzemazour Toulouk 1 Kayelekera –AFRICA MALAWI 1 Ekazan Walbiri Mapambo Rukuru Uliwa Nthalire Kopakopa Malawiri Central Mineral Belt – CANADALABRADOR/NEWFOUNDLAND Ngana Manyingee WESTERN AUSTRALIA Mount Gilruth Beatrice South Minerva Bigrlyi Pamela and Angela NORTHERN TERRITORY Valhalla North Isa North QUEENSLAND Oobagooma TENEMENTS 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 2 1 31 1 11 1 2 4 3 1 1 12 10 1 1 5 1 MLI EPL MLI EPL EPL MLI EPL EL ELR EPL EPL EPL EPL EPL MLN ELs ELR MLC EPL MCs EL MDLs MDLs MLs EL EL ELRs ELRs EL EPM EPMs EL (A) (A) (A) (A) (A) (A) (A) (A) (A) (A) (A) (A) (A) (A) (A) (A) (A) INTEREST % INTEREST 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 41.71% 100.00% 100.00% 100.00% 100.00% 100.00% 58.13% 41.71% 100.00% 100.00% 796% 47.9 41.71% 41.71% 100.00% 100.00% 82.08% 100.00% 33.33% 33.33% 100.00% 100.00% 41.71% 100.00% 100.00% 82.08% 100.00% JV PARTNER/S ------) - - - - - Energy Metals Limited ) - - Energy Metals Limited ) ) Southern Cross Exploration NL - - 4) Note (see - Afmeco Mining and Exploration Pty Ltd Pty Exploration and Mining Afmeco Ltd Pty Exploration and Mining Afmeco - Limited Metals ) Energy - - 4) Note (see - ANNUAL REPORT 2015 REPORT ANNUAL LTD ENERGY PALADIN OPERATOR LHU LHU IEL IEL IEL IEL EME PAL PAL PAL PAL PAL EME EME PAL PAL EME EME EME PDN FSN SRA AUR Afmeco Afmeco NTU PEM EME PDN FSN SRA PEM NOTE 1 1 2 2 2 2 2 2 2 3,4 3,4 ANNUAL REPORT 2015 REPORT ANNUAL LTD ENERGY PALADIN INFORMATIONADDITIONAL 4. 3. 2. 1. NOTES PERILYA PDN SRA PEM PAL PAC NTU MIU LHU IEL FSN EME AUR AML AFMECO MC Mineral Claim (Australia) ELR Exploration Licence in Retention (Australia) EPM Exploration Permit for Minerals (Australia) (Africa) Licence Prospecting Exclusive EPL EL Exploration Licence (Australia) TYPES TENEMENT 5. OPERATORS PROJECT PROJECTS NON-URANIUM HELD (CONTINUED)TENEMENTS Reaphook JV SOUTH AUSTRALIA Range Constance Mount Kelly Downs May Isa South (Summit Resources (Aust) Ltd, Pty Pacific Pty MinesLtd) Western Isa Joint Venture QUEENSLAND The Valhalla and Skal uranium deposits lie within the Isa North tenement block within defined blocks of land land (17kmof blocks defined within block tenement North Isa the within lie deposits uranium Skal and Valhalla The Ltd. Pty Mines Pacific and Ltd (“SRA”) Pty (Aust) Resources Summit in interest 100% equity holds turn in which Limited Resources Summit in holding 82.08% Paladin’s of equity by virtue held is tenements these in interest Paladin’s NL. Minerals Energy Paladin PAL and Malawi, of Government the between KM for Agreement Development the of terms to the pursuant Malawi of Government to the issued been having 15% PAL in with equity 85% equity holds Paladin 25% by CNNC. with held LHUPL in 75% ultimate interest an holds Paladin Aeon Metals Limited were formally known as Aston Metals (Qld) Limited. (Qld) Metals Aston as known formally were Limited Metals Aeon tenements. these of each in up equity to 20% retained have Ltd Pty Mines Pacific and 2007). SRA (10 December commencement of years three within A$8M of expenditure through tenements Venture Joint Isa Western the in equity 80% earned Limited Metals Aeon Ltd (50%). Pty Uranium Isa Mount and Operator) (50% and SRA between Venture Joint Uranium Isa to the subject respectively) Perilya Limited Ltd Energy Paladin Summit Resources (Aust) Ltd Pty Paladin Energy Minerals NL Paladin (Africa) Ltd Pacific Pty MinesLtd TerritoryNorthern Uranium Ltd Pty Ltd Pty Uranium Isa Mount Ltd (Pty) Uranium Heinrich Langer Ltd Energy Indo Fusion Ltd Resources Pty Energy Metals Limited Aurora Energy Ltd Aeon Metals Limited Ltd Pty Exploration and Mining Afmeco TENEMENTS 1 1 4 1 3 6
(See Note 4) Note (See
EPM EL EPMs EPM EPMs EPMs 18.00% 7.50% 20.00% 20.00% 20.00% 20.00% % INTEREST
Signature Resources NL Limited Perilya Aeon Metals Limited Aeon Metals Limited Aeon Metals Limited Metals Limited Centaurus Aeon Metals Limited Aeon Metals Limited JV PARTNER/S MLI Mining Licence (Africa) MDL Mineral Development Licence (Australia) (A)Pending Application MLC Mineral Licence (Newfoundland/Labrador) (Australia) Lease Mining ML PALADIN EQUITY (DIRECT (DIRECT EQUITY PALADIN AND INDIRECT) AND Perilya AML AML AML AML AML OPERATOR 82.08% 100% 100% 100% 100% 100% 100% 100% 85% 75% 0% 0% 0% 0% 2 and 10km and 5 5 5 5 5 NOTE NOTE 2
3 2 1 121
FINANCIAL REPORT FINANCIAL REPORT 122 Mlb M LTIFR LTI LHUPL LHM lb kW km KM km kg/t kg K JORC ISR ISO hr g/t g/m g ft DIFR DFS C&M CCD BRP BFS bcm A$ LIST OF ABBREVIATIONS INFORMATIONADDITIONAL 2 3 million pounds million rate frequency injury time lost lost time injury Ltd (Pty) Uranium Heinrich Langer Heinrich Mine Langer pounds kilowatts kilometres square Kayelekera Mine kilometres kilogram per tonne kilogram thousand Joint Ore Committee Reserves recovery situ in International Organisation for Standardisation hours grams per tonne metre cubic per grams gram feet disabling incident frequency rate definitive feasibility study care and maintenance decantation current counter bicarbonate recovery plant bankable feasibility study metres cubic bank Australian dollars t/m t RIP RC QC QAQC ppm ppb PFS PAL pa OK NPV NOSA 43-101 NI Mtpa mSv MMI mm MIK Ma m w:o US$ U U tph tpa 3 O 3 8 tonnes resin-in-pulp circulation reverse controlquality assurancequality and control quality million per parts billion per parts study pre-feasibility Paladin (Africa) Limited per annum kriging ordinary value present net National Occupational Safety Association Securities Administrators Disclosure for Mineral Projects of the Canadian 43-101 of Instrument –Standards National million tonnes per annum millisiverts mobile metal ion millimetres multiple indicator kriging million years metres waste to ore ratio to ore waste US dollars uranium oxide uranium tonnes per hour tonnes per annum tonnes per cubic metre ANNUAL REPORT 2015 REPORT ANNUAL LTD ENERGY PALADIN ANNUAL REPORT 2015 REPORT ANNUAL LTD ENERGY PALADIN 201617 November 11 2016 November 201610 November 201631 October 2016 1 September 201631 August 2016 July 29 13 2016 May 12 2016 May 2016 April 29 2016 12 February 201611 February 2016 January 29 2016 201519 November 201513 November 201512 November 2015 October 30 2015 DATES IMPORTANT early released be may reports and deadlines are dates lodgement the note Please TIMETABLE REPORTING SHAREHOLDER INFORMATIONADDITIONAL Annual General Meeting to be held in Perth, Western Australia Western Perth, in held to be Meeting General Annual date) (proposed Update Investor and Call Conference (TSX) MD&A including Statements Financial Quarterly September Report Activities Quarterly September date) (proposed Update Investor and Call Conference 4E) &(Appendix MD&A 2016 June 30 including ended year the for Statements Financial Annual Audited Report Activities Quarterly June date) (proposed Update Investor and Call Conference (TSX) MD&A including Statements Financial Quarterly March Report Activities Quarterly March date) (proposed Update Investor and Call Conference 4D) (Appendix MD&A and Quarter December incorporating Statements Financial Yearly Half Report Activities Quarterly December Australia Western Perth, in held to be Meeting General Annual date) (proposed Update Investor and Call Conference (TSX) MD&A including Statements Financial Quarterly September Report Activities Quarterly September 123
FINANCIAL REPORT FINANCIAL REPORT 124 www.paladinenergy.com.au. statements and other information are available on our website financial releases, press All Company. to the cost minimum at corporate reporting is timely, complete, and available globally our that ensured have we internet, the of use the Through SUBIACO WA 6008 Street 4, Hay 502 Level Ltd Energy Paladin place of business is: principal and office registered Its Australia. in domiciled and incorporated by shares, limited acompany Ltd is Energy Paladin Facsimile: Telephone: 2Y1 M5J Toronto, Ontario Floor 8th Avenue, 100 University Computershare Investor Inc. Services Canada Telephone: Perth Western Australia 6000 11,Level Terrace 172 Georges St Ltd Pty Services Investor Computershare Australia SHARE REGISTRIES Web: www.paladinenergy.com.au Email: [email protected] Facsimile: Telephone: Subiaco Western Australia 6008 Street 4, Hay 502 Level REGISTERED OFFICE Matic Ranko Mr COMPANY SECRETARY Mr Wendong Zhang Mr Philip Baily Donkin Peter Mr Mr Donald Shumka NON-EXECUTIVE DIRECTORS Molyneux Alexander Mr Interim CEO Crabb Rick Mr Non-executive Chairman DIRECTOR CORPORATE DIRECTORY Facsimile:
1 888 453 0330 (within North America) North (within 0330 453 1 888 (+1) 416 or 9394 263 (+1) 514 7555 982 or America) North 6253 (within 564 1 800 (+61 8)9381 4978 (+61 8)9381 4366 (+61 3) 9473 2500 (+61 Australia) 3) 9415 (outside 4000 1300 850 505 (within Australia) or
INVESTOR RELATIONSINVESTOR Code: NM-PDN Code: Namibian Stock Exchange Code: PUR and Stock Frankfurt Exchanges Munich, Berlin, Stuttgart PDN Code: and Toronto Stock Exchange Australian Securities Exchange STOCK EXCHANGE LISTINGS Perth Western Australia 6000 11 Road Bay Mounts &Young Ernst AUDITORS Email: [email protected] Facsimile: Telephone: (PO Box 201, Subiaco, 6904) Subiaco Western Australia 6008 Street 4, Hay 502 Level Mr Andrew Mirco Australia –Corporate Office (+61 8)9381 4978 (+61 8)9381 4366
ANNUAL REPORT 2015 REPORT ANNUAL LTD ENERGY PALADIN
THE YEAR AT A GLANCE
Bicarbonate Deleveraging Recovery Plant balance sheet commissioned
Retained key personnel to develop next World class asset pipeline generation in expanded and enhanced uranium mines
Safety Operations performance further significantly optimised with improved costs reduced
About Paladin...... 01 Financial Report...... 64 Chairman’s Letter...... 04 Contents of the Financial Report...... 64 Consolidated Income Statement...... 65 Insights From The Interim CEO...... 05 Consolidated Statement of Comprehensive Income...... 66 Nuclear Power – Getting Back on Track...... 06 Consolidated Statement of Financial Position...... 67 Management Discussion and Analysis...... 08 Consolidated Statement of Changes in Equity...... 68 Review of Operations...... 09 Consolidated Statement of Cash Flows...... 70 Health and Safety ...... 23 Notes to the Consolidated Financial Statements...... 71 Financial Review ...... 25 Directors’ Declaration...... 116 Sustainable Development ...... 34 Independent Audit Report...... 117 Environment ...... 34 Additional Information...... 119 Corporate Social Responsibility ...... 37 Corporate Directory...... 124 Our People ...... 43 Corporate Governance Statement ...... 45 Directors' Report...... 46 Remuneration Report...... 52
Paladin Energy Ltd ACN 061 681 098 The annual report covers the Group consisting of Paladin Energy Ltd (referred throughout as the Company or Paladin) and its controlled entities. Paladin Energy Ltd is a company limited by shares, incorporated and domiciled in Australia. Its registered office and principal place of business is: Paladin Energy Ltd, Level 4 502 Hay Street Subiaco WA 6008 Through the use of the internet, we have ensured that our corporate reporting is timely, complete, and available globally at minimum cost to the Company. All press releases, financial statements and other information are available on our websitewww.paladinenergy.com.au Paladin Energy Ltd Energy Paladin
MAINTAINING OUR FOCUS ANNUAL REPORT 2015 Annual Report Annual Designed by PE_2_16750 by Designed
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Paladin Energy Ltd