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o | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 |
þ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Cnr Champion Parade and Musgrave Street
Port Moresby, NCD, Papua New Guinea
None
Lihir Gold Limited Ordinary Shares of no par value | NASDAQ National Market* | |
American Depositary Shares, each of which represents ten Lihir Gold Limited Ordinary Shares and which are evidenced by American Depositary Receipts | NASDAQ National Market |
None
Lihir Gold Limited Ordinary Shares of no par value: | 1,284,048,639 fully paid shares | |
Lihir Gold Limited Treasury “B’’ Shares | 161,527,405 | |
Lihir Gold Limited Restricted Executive Shares | 176,071 |
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EX-99.4.T: FACILITY AGREEMENT | ||||||||
EX-99.4.U: DEED OF CHANGE | ||||||||
EX-99.4.V: PARENT DEPOSIT AGREEMENT | ||||||||
EX-99.4.W: MANAGEMENT SERVICES AGREEMENT | ||||||||
EX-99.4.X: MANAGEMENT SERVICES AGREEMENT | ||||||||
EX-99.4.Y: MERGER IMPLEMENTATION AGREEMENT | ||||||||
EX-99.4.Z: SHARE SUBSCRIPTION AGREEMENT | ||||||||
EX-99.4.AA: DEED POLL | ||||||||
EX-99.8: SIGNIFICANT SUBSIDIARIES | ||||||||
EX-99.12.A: CERTIFICATION | ||||||||
EX-99.12.B: CERTIFICATION | ||||||||
EX-99.13.A: CERTIFICATION | ||||||||
EX-99.13.B: CERTIFICATION |
* | Not applicable to annuals reports on Form 20-F. |
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Year ended December 31, | ||||||||||||||||||||
(In $ millions, except where indicated) | ||||||||||||||||||||
2006 | 2005 | 2004 | 2003 | 2002 | ||||||||||||||||
Amounts calculated in accordance with IFRS: | ||||||||||||||||||||
Income Statement Data: | ||||||||||||||||||||
Sales revenue(1) | 310.5 | 224.9 | 234.7 | 214.5 | 213.2 | |||||||||||||||
Operating profit(2) | 80.8 | 18.1 | 313.1 | 37.3 | 72.4 | |||||||||||||||
Profit from ordinary activities after taxation(3) | 53.8 | 9.8 | 329.2 | 34.8 | 53.2 | |||||||||||||||
Earnings per share, basic and diluted(4) | 0.042 | 0.008 | 0.256 | 0.030 | 0.047 | |||||||||||||||
Number of ordinary shares (millions)(5) | 1,284.2 | 1,284.2 | 1,284.2 | 1,282.3 | 1,142.3 | |||||||||||||||
Balance Sheet Data(6): | ||||||||||||||||||||
Total assets | 1,496.1 | 1,319.4 | 1,156.9 | 748.9 | 576.7 | |||||||||||||||
Cash and current receivables held | 51.7 | 133.2 | 88.7 | 163.2 | 38.5 | |||||||||||||||
Current liabilities | 177.4 | 80.8 | 104.3 | 60.3 | 27.5 | |||||||||||||||
Long term obligations | 506.8 | 455.1 | 215.4 | 227.2 | 122.7 | |||||||||||||||
Total shareholders’ equity(7) | 811.9 | 783.5 | 837.2 | 461.4 | 426.4 | |||||||||||||||
Paid up capital (8) | 1,027.1 | 1,027.5 | 1,027.5 | 1,025.3 | 873.8 | |||||||||||||||
Cash dividends per ordinary share(4) | — | — | — | 0.016 | — | |||||||||||||||
Expenditure and Financing Data: | ||||||||||||||||||||
Cash flow from operating activities | 58.7 | 9.5 | 30.3 | 16.7 | 22.8 | |||||||||||||||
Financing activities: | ||||||||||||||||||||
Issuance of ordinary shares | — | — | 2.2 | 151.5 | — | |||||||||||||||
Drawdown of term debt | 65.6 | 245.5 | — | — | — | |||||||||||||||
Restructure hedge book | — | (62.2 | ) | — | — | — | ||||||||||||||
Repayment of loans | — | (49.5 | ) | (14.0 | ) | (7.0 | ) | (3.8 | ) | |||||||||||
Dividend paid | — | — | — | (14.2 | ) | — | ||||||||||||||
Purchase of treasury shares | (0.4 | ) | — | — | — | — | ||||||||||||||
Total financing activities | 65.2 | 133.8 | (11.8 | ) | 130.3 | (3.8 | ) | |||||||||||||
Total expenditure on investing activities | (204.7 | ) | (99.1 | ) | (87.6 | ) | (26.9 | ) | (24.4 | ) | ||||||||||
Amounts calculated in accordance with US GAAP: | ||||||||||||||||||||
Sales revenue(1) | 310.5 | 224.9 | 234.7 | 214.5 | 213.2 | |||||||||||||||
Net income (9)(10) | 36.3 | 21.8 | 141.6 | 0.4 | 38.6 | |||||||||||||||
Earnings per share, basic and diluted(4) | 0.03 | 0.02 | 0.11 | 0.00 | 0.03 | |||||||||||||||
Number of ordinary shares (millions)(5) | 1,284.2 | 1,284.2 | 1,284.2 | 1,282.3 | 1,142.3 | |||||||||||||||
Total assets(6) | 1,187.7 | 1,112,5 | 928.0 | 683.4 | 536.7 | |||||||||||||||
Total shareholders’ equity(6) | 500.8 | 542.4 | 584.1 | 395.9 | 395.3 | |||||||||||||||
Long term obligations(6) | 506.8 | 482.7 | 239.6 | 227.2 | 113.9 |
(1) | Alternative terminology: “net sales” or “operating revenues”. | |
(2) | Alternative terminology: “income/(loss) from operations” or “income/(loss) from continuing operations”. | |
(3) | Alternative terminology: “Net income/(loss)” since Lihir has no discontinued operations | |
(4) | In US$ per share. Lihir paid its maiden dividend of $A0.02 per share on July 16, 2003. | |
(5) | As adjusted to reflect changes in capital. Does not reflect an additional 111,957,502 shares issued on March 8 2007 and 38,494 shares issued on March 23 2007, in connection with the purchase of Ballarat. | |
(6) | At period end. | |
(7) | Alternative terminology: “net assets”. | |
(8) | Alternative terminology: “capital stock”. | |
(9) | Includes the cumulative effect in 2004 of a change in accounting policy with respect to the method of accounting for deferred mining costs. Please refer Note 34 (g) of the financial statements. | |
(10) | Includes the cumulative effect in 2006 of adopting EITF 04-6. Please refer to Note 34(f) of the financial statements. |
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i. | extension of the North Kapit Stockpile; | ||
ii. | higher than long term average rainfall over the previous six months prior to the landslide; and | ||
iii. | a magnitude 7.7 earthquake on September 9, 2005. |
(a) | flow of water into tension cracks and blockage of subsurface drainage; | |
(b) | geothermal activity; and | |
(c) | loss of side restraint and extension upslope. |
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Price in $ Per Ounce of Gold | ||||||||||||
Year | High | Low | Average | |||||||||
1988 | 484 | 395 | 437 | |||||||||
1989 | 416 | 356 | 381 | |||||||||
1990 | 424 | 346 | 384 | |||||||||
1991 | 403 | 344 | 362 | |||||||||
1992 | 360 | 330 | 344 | |||||||||
1993 | 406 | 326 | 360 | |||||||||
1994 | 396 | 370 | 384 | |||||||||
1995 | 396 | 372 | 384 | |||||||||
1996 | 415 | 367 | 397 | |||||||||
1997 | 366 | 283 | 331 | |||||||||
1998 | 313 | 273 | 294 | |||||||||
1999 | 326 | 253 | 279 | |||||||||
2000 | 313 | 264 | 279 | |||||||||
2001 | 293 | 256 | 271 | |||||||||
2002 | 349 | 278 | 310 | |||||||||
2003 | 416 | 319 | 363 | |||||||||
2004 | 454 | 375 | 409 | |||||||||
2005 | 537 | 411 | 445 | |||||||||
2006 | 725 | 525 | 603 | |||||||||
2007 (to March 31) | 686 | 608 | 650 |
10. | Lihir’s prospects are partly dependent on reserves estimates and future experience. |
11. | Lihir cannot guarantee it can obtain all the mining and processing inputs required for its operation, including staff. |
12. | Lihir is subject to the effects of rising oil prices |
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16. | Lihir’s mining and exploration rights may be terminated under PNG law |
17. | Lihir is vulnerable to a limited market for the Kina and foreign exchange controls |
18. | Lihir’s dividends to U.S. shareholders are subject to withholding tax |
19. | Lihir’s shareholders are subject to different rights under certain circumstances |
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20. | Difficulty may be experienced in the pursuit of litigation against Lihir or its executive officers, directors, or experts who are not resident in the United States |
• | the presence of the person to be served within the jurisdiction of the relevant court; or |
• | the consent of that person to receive service outside the jurisdiction. |
21. | Risk Associated with the Ballarat Acquisition |
• | establish the presence, and to quantify the extent and grades (metal content), of mineralized material through exploration drilling; | |
• | determine appropriate metallurgical recovery processes to extract gold from the ore; | |
• | estimate ore reserves; | |
• | undertake feasibility studies and to estimate the technical and economic viability of the project; and | |
• | construct, renovate or expand mining and processing facilities. |
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(in US$ millions) | 2006 | 2005 | 2004 | |||||||||
Projects | 148.3 | 49.0 | 47.6 | |||||||||
Mining | 23.7 | 34.9 | 27.4 | |||||||||
Processing | 15.7 | 15.6 | 12.7 | |||||||||
Total | 187.7 | 99.5 | 87.7 | |||||||||
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• | it enables the treatment of ore into a higher grade sulphide concentrate for pressure oxidation feed, and |
• | sensitivity analyses indicate that the flotation expansion has a lower risk profile than the current plant configuration case, because it is less sensitive to most adverse variations in sulphur feed types. |
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2006 | 2005 | 2004 | ||||||||||
High-Grade Sulphide Ore (K tonnes) | 4,204 | 3,518 | 5,036 | |||||||||
High-Grade Sulphide (g Au/t) | 5.51 | 6.11 | 5.11 | |||||||||
Low-Grade Sulphide Ore (K tonnes) | 3,751 | 5,857 | 6,550 | |||||||||
Low-Grade Sulphide Ore (g Au/t) | 2.27 | 2.05 | 2.23 | |||||||||
Total Ore (K tonnes) | 7,955 | 9,375 | 11,586 | |||||||||
Total Ore (g Au/t) | 3.98 | 3.57 | 3.52 | |||||||||
Total Waste | 48,195 | 32,177 | 35,170 | |||||||||
Total Material | 56,150 | 41,552 | 46,756 |
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50 minutes residence time
30 deg. C feed temperature pre heat recovery
90 deg. C max feed temperature post heat recovery
Oxygen utilisation = 90%
Quench water added to compartments 1a, 1b and 1c = 7 m3/h/autoclave
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• | The heat recovery circuit commissioned in the third quarter of 2001 enables the pressure oxidation circuit to treat a lower grade of sulphide in ore feed. | ||
• | Flotation plant capacity provides an opportunity to increase the sulphide grade of stockpile ore. | ||
• | Blending of stockpile ores combined with operation of the flotation circuit will enable feeding of the autoclave circuit at the optimum sulphur level. |
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2006 | 2005 | 2004 | 2003 | 2002 | 2001 | |||||||||||||||||||
Kina millions | 31.4 | 24.8 | 37.2 | 25.2 | 26.5 | 18.1 | ||||||||||||||||||
$ millions equivalent | 10.7 | 8.5 | 11.8 | 7.2 | 6.6 | 5.0 |
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1998 | 1999 | 2000 | 2001 | 2002 | 2003 | 2004 | 2005 | 2006 | ||||||||||||||||||||||||||||
LTI | 12 | 11 | 11 | 16 | 11 | 12 | 13 | 12 | 5 | |||||||||||||||||||||||||||
LTIFR | 2.05 | 1.70 | 1.75 | 2.30 | 1.80 | 1.50 | 1.50 | 1.53 | 0.53 |
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Symbol | Production Parameter | Unit | Value | |||
A | Estimated Stock Pile Material | Mtonnes | 113 | |||
B | Plant Annual Throughput | Mtonnes | 5.6 | |||
(calculation = A/B) | years | 20 | ||||
C | Gold Grade – average | Au g/t | 2.15 | |||
D | Plant Recovery | % | 86.7% | |||
E | Conversion | grams to ounces | 31.1035 |
(calculation = B*C*D/E)]
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Contained | ||||||||||||||||
Reserve | Tonnes | Average grade | Ounces | |||||||||||||
Category | (In millions) | (g Au/t) | (millions) | |||||||||||||
Un-mined Ore | Proven | 0 | 0 | 0 | ||||||||||||
Probable | 212.0 | 2.89 | 19.7 | |||||||||||||
Economic Stockpiled Ore* | Proven | 46.5 | 2.57 | 3.8 | ||||||||||||
Total Reserves | 258.5 | 2.83 | 23.6 | |||||||||||||
* Economic Stockpiled Ore | ||||||||||||||||
High Grade | 0.6 | 5.26 | 0.1 | |||||||||||||
Medium Grade | 2.9 | 3.47 | 0.3 | |||||||||||||
Low Grade | 43.7 | 2.47 | 3.4 | |||||||||||||
Total Stockpiled | Proven | 46.5 | 2.57 | 3.8 |
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1. | Distribution of bioactive mine-derived contaminants, including secondary precipitates/flocs (particularly As speciation (e.g. arsenobetane)) formed on neutralization of mine tailings with seawater (CSIRO Centre for Advanced Analytical Chemistry & company – sponsored post graduate student); | ||
2. | Assessment of bentho/pelagic coupling mechanisms within the severe impacted zone, examining both vertical (near-slope) feeding communities, and near and far-shore pelagic communities (<500m) exposed to sub-surface plumes (CSIRO Marine Research and CSIRO Centre for Environmental Contaminants Research); | ||
3. | Further definition of the tailings footprint using remote sensing (acoustic seabed classification) techniques, combined with calibration and gap (sediment) sampling (Ian Hargreaves and Associates); |
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4. | Deep water physical marine investigations including additional water column current velocity monitoring and sub-surface plume definition (Ian Hargreaves and Associates); and | ||
5. | Inshore monitoring/modeling of interactions between shallow marine communities and anthropogenic sources (mine and non-mine related), incorporating food web, human health and socio-economic data (CSIRO Marine Research) |
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• | Carrying value of Lihir’s non-current assets (IAS 36 “Impairment of Assets” and IAS 4 “Depreciation Accounting”) |
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2006 | 2005 | 2004 | 2003 | 2002 | ||||||||||||||||
Long term gold price — $ / oz | 500 | 425 | 380 | 340 | 305 | |||||||||||||||
Risk adjusted pre-tax rate | 7 | % | 7 | % | 7 | % | 7 | % | 7 | % | ||||||||||
Impairment (charge) /reversal | ||||||||||||||||||||
- IAS GAAP $ millions | — | — | 205.7 | 31.1 | 37.9 | |||||||||||||||
- US GAAP $ millions | — | — | — | — | — |
• | Non-current liabilities (IAS 37 “Provisions, Contingent Liabilities and Contingent Assets”) |
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• | Inventory valuation (IAS 2 “Inventories”) |
• | Deferred tax position (IAS 12 “Income Taxes”) |
• | Derivative financial instruments (IAS 39 “Financial Instruments: Recognition and Measurement”) |
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• | Deferred mining costs (IAS 16 “Property, Plant and Equipment”) |
• | short term changes in the mine plan and scheduling within the period; | ||
• | changes in the reserves and strip ratio with a change in cut-off grade policy; and | ||
• | changes in pit wall design and operating strategies. |
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$ millions | ||||||||||||
Amounts calculated in accordance with IFRS | 2006 | 2005 | 2004 | |||||||||
Sales Revenue | 324.8 | 238.8 | 238.7 | |||||||||
Gold lease rate fees | 2.8 | 5.0 | 4.6 | |||||||||
Fair value gains | (1.7 | ) | (5.4 | ) | 8.6 | |||||||
Realisation of deferred hedging costs | (17.1 | ) | (13.5 | ) | (17.2 | ) | ||||||
Other revenue | 1.6 | — | — | |||||||||
Total revenue | 310.4 | 224.9 | 234.7 | |||||||||
Gross cash costs | 258.2 | 222.2 | 213.8 | |||||||||
Deferred waste and inventory movements – cash | (50.5 | ) | (34.3 | ) | (34.1 | ) | ||||||
Economic grade stockpile current year – cash | (17.2 | ) | (22.4 | ) | (18.1 | ) | ||||||
Total cash costs* | 190.5 | 165.5 | 161.6 | |||||||||
Depreciation and amortization | 37.4 | 35.8 | 32.9 | |||||||||
Deferred waste and inventory movements – non cash | (6.2 | ) | (4.7 | ) | (7.3 | ) | ||||||
Economic grade stockpile current year – non cash | (1.8 | ) | (2.9 | ) | (7.1 | ) | ||||||
Other corporate costs | 3.9 | 7.1 | 6.9 | |||||||||
Exploration | 5.9 | 6.0 | 5.3 | |||||||||
Net interest | 4.8 | 2.4 | (1.4 | ) | ||||||||
Total costs before impairment adjustments | 234.5 | 209.2 | 190.9 | |||||||||
Profit before impairment adjustments | 75.9 | 15.7 | 43.8 | |||||||||
Asset impairment reversal | — | — | 205.7 | |||||||||
Economic grade stockpile impairment reversal | — | — | 65.0 | |||||||||
Income tax benefit/(charge) recognized | (22.1 | ) | (5.9 | ) | 14.7 | |||||||
Net earnings | 53.8 | 9.8 | 329.2 | |||||||||
* | equal to cash costs per oz multiplied by ounces produced less the finished goods cash movement for the year. |
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2006 | 2005 | 2004 | ||||||||||||||
Gold sales | $/oz | 643 | 592 | 610 | ||||||||||||
Gold sales at spot | 596 | 446 | 403 | |||||||||||||
Hedging gains / (losses) – cash | (93 | ) | (43 | ) | (11 | ) | ||||||||||
Gold lease rate fees | 4 | 8 | 7 | |||||||||||||
Deferred hedging gains / (losses) – non cash | (27 | ) | (22 | ) | (29 | ) | ||||||||||
Average gold price realized (excl. fair value gains and losses) | $/oz | 480 | 389 | 370 | ||||||||||||
Fair value gains and losses | 3 | (9 | ) | 15 | ||||||||||||
Average gold price realized (incl. fair value gains and losses) | $/oz | 483 | 380 | 385 | ||||||||||||
Average gold price realized (excl. fair value gains and losses) | $/oz | 480 | 389 | 370 | ||||||||||||
Average spot price | $/oz | 603 | 445 | 409 | ||||||||||||
Premium/(discount) to spot price | % | (20 | ) | (13 | ) | (10 | ) |
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Residual Other | ||||||||||||
Deferred hedging | Comprehensive | Total OCI recycled to | ||||||||||
Costs / (Gains) | Income | income | ||||||||||
Year | $ millions | $ millions | $ millions | |||||||||
2007 | (2.2 | ) | 90.2 | 88.0 | ||||||||
2008 | (2.8 | ) | 74.1 | 71.3 | ||||||||
2009 | (1.5 | ) | 85.5 | 84.0 | ||||||||
2010 | (0.1 | ) | 66.1 | 66.0 | ||||||||
2011 | — | 36.7 | 36.7 | |||||||||
2012 | — | 5.2 | 5.2 | |||||||||
2013 | — | 5.6 | 5.6 | |||||||||
Total | (6.6 | ) | 363.4 | 356.8 | ||||||||
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2006 | 2005 | 2004 | ||||||||||
Ore Processed (Tonnes 000’s) | 4,344 | 3,482 | 4,091 | |||||||||
Gold Produced (Ounces) | 650,811 | 595,966 | 599,386 | |||||||||
Grade (g Au/t) | 5.14 | 5.98 | 5.11 | |||||||||
Operating Expenses ($000’s) | ||||||||||||
Mining expenses | 107,551 | 95,304 | 89,687 | |||||||||
Exploration expenses | 5,976 | 6,198 | 5,306 | |||||||||
Processing costs | 47,875 | 41,654 | 41,524 | |||||||||
Power generation costs | 27,000 | 27,413 | 29,237 | |||||||||
General and administrative costs | 66,618 | 57,884 | 53,102 | |||||||||
Refining, royalty and management fees | 12,972 | 6,813 | 7,144 | |||||||||
Deferred mining costs | (56,349 | ) | (25,048 | ) | (37,865 | ) | ||||||
Costs deferred and transferred to inventories | (19,395 | ) | (39,208 | ) | (3,557 | ) | ||||||
192,248 | 171,010 | 184,578 | ||||||||||
Production Costs ($ per tonne of ore processed) | ||||||||||||
Mining | 24.8 | 27.4 | 21.9 | |||||||||
Exploration | 1.4 | 1.8 | 1.3 | |||||||||
Processing | 11.0 | 12.0 | 10.2 | |||||||||
Power generation | 6.2 | 7.9 | 7.1 | |||||||||
General and Administrative | 15.2 | 16.6 | 13.0 | |||||||||
Total | 58.6 | 65.7 | 53.5 | |||||||||
• | Lower than expected mill feed grade; and |
• | Total plant gold recovery was 90.2% in 2006, which was marginally below the plan of 90.6% recovery being adversely impacted by the higher than plan autoclave throughput which marginally reduced the % oxidation of sulphides. |
• | Autoclave operating time averaged 90.6% in 2006, which was ahead of the planned 89.2%; and, |
• | Autoclave throughput for 2006 was 184.5 tonnes per operating hour per autoclave which was ahead of the planned 180 tph/ac. |
• | Increase in supervisory manning levels to raise the utilization rates; | |
• | Improved equipment availabilities; |
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• | Quick reaction to geothermal issues with corresponding controls; and | |
• | Mining on inclined benches in all areas to produce better floors. |
• | Geothermal event in April in Phase 7 delayed production from this area. This arose when an eruption of steam and rock occurred from an undetected zone of pressure beneath an area being mined. Procedures have now been modified to prevent a recurrence of this event; and | |
• | Ground water levels in Phase 5 locked out high grade ore during the fourth quarter. |
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$/ounce | ||||||||||||
2006 | 2005 | 2004 | ||||||||||
Gross operating costs | 403 | 378 | 356 | |||||||||
- Exploration | (9 | ) | (10 | ) | (9 | ) | ||||||
- Other corporate costs | (8 | ) | (4 | ) | — | |||||||
Direct mining expenses * | 385 | 364 | 347 | |||||||||
- Deferred mining costs | (76 | ) | (37 | ) | (53 | ) | ||||||
- Refining costs * | 1 | 1 | 1 | |||||||||
-Inventory adjustment | (24 | ) | (54 | ) | (33 | ) | ||||||
Cash operating costs | 287 | 274 | 262 | |||||||||
- Royalties * | 10 | 8 | 8 | |||||||||
Total cash costs | 297 | 282 | 270 | |||||||||
- Depreciation | 57 | 60 | 55 | |||||||||
- Restoration and mine closure | — | — | — | |||||||||
- Non-cash deferred mining costs | (10 | ) | (5 | ) | (10 | ) | ||||||
- Non-cash inventory adjustment | 1 | (1 | ) | (2 | ) | |||||||
- Economic Grade Stockpile Adjustment — Non Cash | (3 | ) | (5 | ) | (12 | ) | ||||||
Total production costs | 342 | 331 | 301 |
* | Components of Gross Cash Costs |
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(i) | in August 2005, the International Accounting Standards Board (“IASB”) issued International Financial Reporting Standard (IFRS) 7 “Financial Instruments: Disclosures”. IFRS 7 revises and enhances IAS 30 “Disclosures in the Financial Statements of Banks and Similar Financial Institutions” and IAS 32 “Financial Instruments: Disclosures and Presentation”. IFRS 7 is applicable to annual periods beginning on or after January 1, 2007. The group has not elected to early adopt IFRS 7. |
(ii) | in November 2006, the IASB issued IFRS 8 “Operating Segments”. IFRS 8 replaces IAS 14 “Segment Reporting” and aligns segment reporting with the requirements of Statement of Financial Accounting Standard (SFAS) 131. IFRS 8 is applicable to annual periods beginning on or after January 1, 2009. The group has elected not to early adopt IFRS 8. |
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Net debt as at December 31 | ||||||||||||
$ 000 | ||||||||||||
2006 | 2005 | 2004 | ||||||||||
Syndicated Facility Agreement – revolving credit facility | (30,000 | ) | — | (19,509 | ) | |||||||
Syndicated Facility Agreement – gold loan | (215,520 | ) | (215,520 | ) | — | |||||||
Ballarat Goldfields bilateral facility agreement | (35,595 | ) | — | — | ||||||||
Less cash on hand | 47,032 | 127,836 | 83,559 | |||||||||
Net (debt)/cash1 | (234,083 | ) | (87,684 | ) | 64,050 | |||||||
Equity | (811,877 | ) | (783,472 | ) | (837,223 | ) | ||||||
Net debt to debt plus equity1 | 22.4 | % | 10.0 | % | N/A |
1 | Does not include cash from the Ballarat Goldfields bilateral facility agreement that was paid to Ballarat prior to the Ballarat merger. |
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Later than 1 year | Later than 2 years | |||||||||||||||||||
but not later than | but not later than | |||||||||||||||||||
Total | Less than 1 year | 2 years | 5 years | More than 5 years | ||||||||||||||||
$ 000 | $ 000 | $ 000 | $ 000 | $ 000 | ||||||||||||||||
Project financing facility | 215,520 | 26,940 | 44,900 | 143,680 | — | |||||||||||||||
Ballarat Goldfields facility | 35,595 | 35,595 | — | — | — | |||||||||||||||
Revolving Credit Facility | 30,000 | — | — | 30,000 | — | |||||||||||||||
Operating leases | 5,349 | 971 | 749 | 1,302 | 2,327 | |||||||||||||||
Capital expenditure commitments | 68 | 68 | — | — | — | |||||||||||||||
Other liabilities reflected on the Company’s balance sheet* | 427,396 | 175,399 | 45,531 | 205,289 | 1,177 | |||||||||||||||
Total in cash | 713,928 | 238,973 | 91,180 | 380,271 | 3,504 |
* | The majority of these liabilities are out-of-the-money hedge positions at December 31, 2006, totaling $332.8 million. | |
Gold ounces | ||||||||||||||||||||
Total | Less than 1 year | 1 to 3 years | 4 to 5 years | More than 5 years | ||||||||||||||||
Long term debt | 480,000 | 60,000 | 230,000 | 190,000 | — | |||||||||||||||
Total in ounces | 480,000 | 60,000 | 230,000 | 190,000 | — |
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Independent director
Independent director
Independent director
Independent director
Managing Director and Chief Executive Officer
Independent director
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Independent director
Name | Position with Lihir Gold Limited | Year Joined | ||||||
Arthur Hood | Managing Director | 2005 | ||||||
Philip Baker | Chief Financial Officer | 2007 | ||||||
Joseph Dowling | General Manager Corporate Affairs | 2005 | ||||||
Murray Eagle | General Manager External Affairs & Sustainable Development | 2005 | ||||||
Noel Foley | Executive General Manager | 2006 | ||||||
Graham Folland | General Manager Corporate Development | 2006 | ||||||
Richard Laufmann | Executive General Manager Australian Operations and Business Development | 2007 | ||||||
Stuart MacKenzie | Group Secretary and General Counsel | 2006 | ||||||
Wojciech Ozga | General Manager BGF Operations | 2007 | ||||||
Ron Yung | General Manager Organization Performance | 2006 |
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Board fees(1) | ||||
Directors (non-executive) | $ | |||
Dr Ross Garnaut(3) (4) | 210,000 | |||
Mr John O’Reilly(3) (5) | 70,000 | |||
Mr Geoff Loudon(2) | 70,000 | |||
Dr Peter Cassidy(3) | 70,000 | |||
Mrs Winifred Kamit(2) | 70,000 | |||
Mr Bruce Brook | 70,000 |
Notes | ||
(1) | Board fees are denominated in US dollars. | |
(2) | Fees are paid to Mrs Kamit and Mr Loudon in PNG Kina. Mr Loudon’s fees are donated to the Port Moresby City Mission. | |
(3) | Fees are payable to Dr Garnaut, Mr O’Reilly, Dr Cassidy and Mr Brook in Australian Dollars. | |
(4) | The services of Dr Garnaut are provided through Dr Garnaut’s family company, Maccullochella Pty Limited. | |
(5) | Mr O’Reilly retired on December 31, 2006. |
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• | To provide total remuneration which is competitive in structure and quantum with comparator organizations so as to attract, retain and motivate appropriately qualified and experienced executives; | |
• | To achieve alignment between the structure of remuneration incentives for individual employees with shareholder value creation; | |
• | To tie variable elements of remuneration to the achievement of challenging performance criteria that are consistent with the best interests of the Company and shareholders; and | |
• | To provide an appropriate balance of fixed and variable or “at-risk” remuneration. |
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• | Company’s average annual total shareholder return over the performance period against announcement date VWAP (expressed as a percentage); and | |
• | average annual total shareholder return of the Comparator Group over the performance period against the Comparator Group’s VWAP on the announcement date (expressed as a percentage). |
• | is greater by 10% or more, all of the rights subject to this condition will vest; | |
• | does not exceed the Comparator Group’s, no rights subject to this condition will vest; or | |
• | is greater by less than 10%; a straight-line calculated proportion of the rights subject to this condition will vest. |
• | 15% or more, Mr Hood will be entitled to all of the TSR growth shares; | |
• | 5% or less, Mr Hood will not be entitled to any TSR growth shares; and | |
• | more than 5% but less than 15%, Mr Hood will be entitled to a pro rated number of TSR growth shares calculated on a straight line basis. |
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Short Term | Other | Share Based | ||||||||||||||||||||||
Base | Superannuation | Incentive/bonus | benefits | Payments | ||||||||||||||||||||
Salary | contribution | Accrued | Received | Accrued | Total | |||||||||||||||||||
Executive Officers | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
Arthur Hood Managing Director | 433,486 | 39,302 | 138,084 | (1) | 3,203 | 450,561 | 1,064,636 | |||||||||||||||||
Paul Fulton(2) Chief Financial Officer | 277,945 | 434,011 | (12) | — | 15,148 | — | 727,104 | |||||||||||||||||
Jan Anderson(3) General Manager Operations | 48,031 | 438,881 | (13) | — | 13,716 | — | 500,628 | |||||||||||||||||
Mark Laurie(4) Company Secretary/ General Counsel, Manager Corporate & Towns | 126,058 | 21,203 | 296,734 | (5) (14) | 54,841 | — | 498,836 | |||||||||||||||||
Noel Foley(6) Executive General Manager | 204,539 | 18,409 | 48,372 | — | 102,928 | 374,278 | ||||||||||||||||||
Murray Eagle General Manager External Affairs & Sustainable Development | 227,447 | 22,495 | 53,580 | (7) | 6,267 | 116,457 | 426,246 | |||||||||||||||||
Graham Folland(8) GM Corporate Development | 173,716 | 15,634 | 37,693 | 139 | 88,225 | 315,406 | ||||||||||||||||||
Joe Dowling General Manager Corporate Affairs | 163,959 | 17,231 | 53,205 | (9) | 7,155 | 77,197 | 318,746 | |||||||||||||||||
Stuart MacKenzie(10) Group Secretary and General Counsel | 58,061 | 5,226 | 17,276 | 5,810 | 21,169 | 107,539 | ||||||||||||||||||
Ron Yung(11) General Manager Organisation Performance | 104,229 | 9,381 | 22,615 | 695 | 28,372 | 165,292 |
(1) | This amount includes a bonus payment made to Mr Hood in 2006 in the amount of $35,156 which relates to services provided in 2005 | |
(2) | Mr Fulton ceased to be an executive on February 23, 2007 | |
(3) | Mr Anderson ceased to be an executive on February 22, 2006 | |
(4) | Mr Laurie ceased to be an executive on November 24, 2006 | |
(5) | Includes a bonus payment of $34,083 made to Mr Laurie in 2006 which relates to services provided in 2005 | |
(6) | Mr Foley commenced employment with the Company on January 13, 2006 | |
(7) | This amount includes a bonus payment made to Mr Eagle in 2006 in the amount of $12,118 which relates to services provided in 2005 | |
(8) | Mr Folland commenced employment with the Company on March 1, 2006. | |
(9) | This amount includes a bonus payment made to Mr Dowling in the amount of $21,477 which relates to services provided in 2005 | |
(10) | Mr MacKenzie commenced employment with the Company on August 14, 2006 | |
(11) | Mr Yung commenced employment with the Company on July 1, 2006 | |
(12) | Includes termination payment of $408,996 per contract | |
(13) | Includes termination payment of $434,558 per contract | |
(14) | Includes termination payment of $262,651 per contract |
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• | final approval of corporate strategy and performance objectives, resources and reserves and financial plans; |
• | capital management, including capital raisings, approval and monitoring of significant capital expenditure; |
• | monitoring of financial performance, review and approval of significant financial and other reporting; |
• | assessing the appropriateness and adequacy of, and monitoring compliance with, corporate governance policies and ethical standards; |
• | evaluating the performance of the senior management team; |
• | determining the Company’s risk management policies and reviewing and ratifying its risk management and internal control framework, including insurance, corporate security and prudential limits; |
• | determining the Company’s treasury policies, including gold price hedging, foreign currency and interest rate exposure; and |
• | the engagement of auditors to review and report to the Board on the Company’s financial results and reporting systems, internal controls and compliance with statutory and regulatory requirements. |
• | the Board may, in accordance with the Company’s constitution, be comprised of a minimum of five directors and maximum of twelve; and | ||
• | the roles of the Chairman of the Board and of Managing Director should be exercised by different individuals. |
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Year Appointed | ||||||
Name | Position | As Director | Term Ends | |||
Ross Garnaut | Chairman of Board, Independent Director Member of Audit Committee Member of Environmental and Lihir Impact Committee Chairman of Remuneration and Nomination Committee | 1995 | ||||
Geoffrey Loudon | Independent Director Member of Safety and Technical Committee Member of Environmental and Lihir Impact Committee | 1995 | ||||
Peter Cassidy | Independent Director Chairman of Safety and Technical Committee Member of Remuneration and Nomination Committee | 2003 | ||||
Winifred Kamit | Independent Director | 2004 | ||||
Chair of Environmental and Lihir Impact Committee Member of Audit Committee Member of Remuneration and Nomination Committee | ||||||
Arthur Hood | Managing Director | 2005 | October 1, 2010 | |||
Bruce Brook | Independent Director Chairman of Audit Committee Member of Safety and Technical Committee | 2005 | ||||
Michael Etheridge | Independent Director | 2007 | ||||
Alister Maitland | Independent Director | 2007 |
If employment is terminated... | ...the relevant multiple is... | |
Before October 1, 2006 | 3 | |
Between October 1, 2006 and September 30, 2008 | The number of whole months in the period commencing on the day after the date of termination of employment and ending on October 1, 2010, divided by 24. | |
Between October 1, 2008 and September 30, 2010 | 1 or, if the date of termination of employment is after October 1, 2009, the relevant multiple is a fraction, the numerator of which is the number of whole months in the period commencing the day after the date of termination of employment and the denominator of which is 12. |
• | Audit; | ||
• | Remuneration and Nomination; | ||
• | Environmental and Lihir Impact; and | ||
• | Safety and Technical. |
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Dr Ross Garnaut
Mrs Winifred Kamit
(a) | determining the appropriateness of accounting principles and disclosure practices adopted by management and monitoring compliance with applicable accounting standards and other requirements; | ||
(b) | overseeing the preparation and audit of, and verifying and ensuring the integrity of, the Company’s financial statements and reports; | ||
(c) | the appointment, compensation, retention and oversight of the Company’s external auditor or any other public accounting firm engaged for the purpose of performing audit, review or attestation services for the Company; | ||
(d) | reviewing and evaluating the independence, qualifications and performance of the external auditor and managing the relationship between the Company and its external auditor; | ||
(e) | monitoring the adequacy of the Company’s internal financial controls, risk management, and compliance systems and processes; | ||
(f) | overseeing the retention, tasking and resourcing of the Company’s internal auditors, monitoring their progress and evaluating their performance; and | ||
(g) | reviewing the financial management of the Company generally and undertaking such other tasks as the Board or the Managing Director may request from time to time. |
• | requires that no person may play a significant role in managing the audit for more than five out of any seven successive years; | ||
• | must approve all non audit work which may be undertaken by the external auditor and exclude them from undertaking such work where it may give rise to a conflict of interest; | ||
• | receives periodic statements, at least annually, from the auditors outlining all work undertaken for the Lihir Gold, and confirming that the auditor has satisfied all professional regulations relating to auditor independence; and | ||
• | meets with the external auditor independently of management. |
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Dr Peter Cassidy
Mrs Winifred Kamit
• | reviewing remuneration of non-executive directors, the Managing Director and other senior executives; | ||
• | establishing criteria for membership of the Board and its committees, and processes for the identification of suitable candidates; | ||
• | reviewing membership of the board and its committees; | ||
• | nominating members of the board and its committees; | ||
• | formulating policies relating to the retirement of non-executive directors; | ||
• | reviewing management succession planning, reviewing human resources and remuneration policies for the Company generally; and | ||
• | ensuring the Company’s obligations in relation to employee benefits and entitlements, including superannuation, are met. |
Dr Ross Garnaut
Mr Geoff Loudon
• | the interaction between the Company’s activities and the local community, and the ways in which these activities contribute to social and economic development; | ||
• | policies and practices followed in dealings with the local community in relation to land; | ||
• | maintaining and improving community health; and | ||
• | the impact and associated risks of the Company’s activities on the natural marine, atmospheric and terrestrial environment, together with monitoring compliance with the applicable regulatory regime. |
Mr Geoff Loudon
Mr Bruce Brook
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• | occupational health and safety standards, policies and issues; | ||
• | technical issues associated with the Company’s exploration, mining and processing activities, with reference to the standards set by the Company and the standards and norms of the industry more generally; and | ||
• | the status of major capital projects approved by the Board. |
2006 | 2005 | 2004 | ||||||||||
Management | 12 | 14 | 13 | |||||||||
Commercial, human resources, towns and site services, community and environment | 450 | 340 | 300 | |||||||||
Mining operations and mine technical | 642 | 414 | 407 | |||||||||
Plant operations and maintenance | 455 | 359 | 350 | |||||||||
LSA | 28 | |||||||||||
Total Lihir employees | 1,587 | 1,127 | 1,070 | |||||||||
Total contractors (full-time equivalent) | 2,250 | 1,506 | 1,500 | |||||||||
Total | 3,837 | 2,633 | 2,570 |
Director | Interest held by directors in shares of Lihir Gold Limited | |||||||
Ross Garnaut (Director) | 53,225 | (1) | ||||||
Peter Cassidy (Director) | 33,225 | (2) | ||||||
Geoffrey Loudon (Director) | 143,840 | |||||||
Winifred Kamit (Director) | 2,000 | (3) | ||||||
Bruce Brook (Director) | 10,000 | (4) | ||||||
Arthur Hood (Managing Director) | 228,371 | |||||||
Alister Maitland (Director) | 23,148 | (5) | ||||||
Michael Etheridge (Director) | 46,296 | (6) |
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Notes: | ||
(1) | Held by Maccullochella Pty Limited of which Dr Garnaut is a director and shareholder | |
(2) | 20,000 of which are held by Cassidy Waters Pty Limited as trustee for the Cassidy Superannuation Fund | |
(3) | Held by Kamchild Limited of which Mrs Kamit is a director and shareholder | |
(4) | Held by Eagle’s Rest 156 Pty Limited as trustee of the Brook Family Superannuation Fund | |
(5) | Held by the Alister Maitland Superannuation Fund. | |
(6) | Held by Tectonex Geoconsultants Pty Ltd as trustee for the Etheridge Superannuation Fund |
Name of Substantial Shareholder | Relevant interest | Percentage | ||||||
Nuveen Investments Inc. | 214,151,556 | 15.34 | ||||||
BlackRock Inc. | 140,531,491 | 10.07 |
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a) | The listed ADR programme was altered from October 2, 2006, such that the ratio of underlying Deposited Shares represented by each ADS was reduced from twenty (20) Deposited Shares to ten (10) Deposited Shares. | |
At February 16, 2006, there were 23,133,405 listed ADS representing 231,334,050 shares held by 17 registered holders. | ||
b) | The second, restricted ADR programme was terminated, effective from November 22, 2006. ADR holders have until November 22, 2007 to cancel their existing ADRs and exchanged for corresponding ordinary shares. Alternatively, after that date the Depositary will sell the stock and reimburse remaining holders. As at March 16, 2007, there was one registered holder, and there were 20,000 ADRs outstanding, representing 400,000 ordinary shares. |
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• | Dr Garnaut was re-appointed as chairman for a three-year period commencing on May 1, 2004, subject to his continuing to hold office as a director and to certain other termination rights set out in the agreement; | ||
• | No fees or benefits are payable to Dr Garnaut by reason of his retirement or other termination of office; and | ||
• | The Company has agreed to indemnify Dr Garnaut against any liability incurred in defending any proceedings arising from the performance of his duties and responsibilities in which judgment is given in his favour, he is acquitted, or relief is granted to him under the Companies Act. The indemnity does not apply to the extent it would be inconsistent with the Company’s constitution or to the extent the liability is otherwise insured. |
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Ordinary Shares | American Depositary Shares | |||||||||||||||
High | Low | High | Low | |||||||||||||
Year | A$ | A$ | $ | $ | ||||||||||||
2001 | 1.28 | 0.54 | 12.93 | 5.44 | ||||||||||||
2002 | 1.65 | 1.02 | 19.13 | 11.50 | ||||||||||||
2003 | 1.83 | 1.25 | 24.17 | 13.99 | ||||||||||||
2004 | 1.59 | 0.90 | 24.20 | 12.58 | ||||||||||||
2005 | 2.35 | 0.99 | 37.01 | 15.30 | ||||||||||||
2006 | 3.64 | 1.98 | 28.37 | * | 11.46 | * |
Ordinary Shares | American Depositary Shares | |||||||||||||||||||
High | Low | High | Low | |||||||||||||||||
Quarter Ending | A$ | A$ | $ | $ | ||||||||||||||||
2005 | March 31 | 1.18 | 1.02 | 18.85 | 15.30 | |||||||||||||||
June 30 | 1.28 | 0.99 | 19.77 | 15.45 | ||||||||||||||||
September 30 | 1.92 | 1.18 | 29.95 | 17.41 | ||||||||||||||||
December 31 | 2.35 | 1.57 | 37.01 | 22.67 | ||||||||||||||||
2006 | March 31 | 2.67 | 1.99 | 37.99 | 29.11 | |||||||||||||||
June 30 | 3.60 | 2.57 | 56.74 | 35.02 | ||||||||||||||||
September 30 | 3.17 | 2.66 | 49.50 | 39.45 | ||||||||||||||||
December 31 | 3.24 | 2.73 | 25.19 | * | 20.11 | * | ||||||||||||||
2007 | March 31 | 3.57 | 2.79 | 28.60 | * | 21.70 | * |
* | Each ADS represented 20 fully paid ordinary shares until October 2, 2006 and 10 fully paid ordinary shares from October 3, 2006. |
Ordinary Shares | American Depositary Shares | |||||||||||||||
High | Low | High | Low | |||||||||||||
A$ | A$ | $ | $ | |||||||||||||
December 2006 | 3.24 | 2.98 | 25.19 | 23.22 | ||||||||||||
January 2007 | 3.20 | 2.79 | 24.69 | 21.70 | ||||||||||||
February 2007 | 3.57 | 3.11 | 28.60 | 24.09 | ||||||||||||
March 2007 | 3.14 | 3.09 | 24.98 | 24.58 |
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• | the acquisition of, or an agreement to acquire, whether contingent or not, assets the value of which is more than half the value of assets of the company before the acquisition; | |
• | the disposal of, or an agreement to dispose of, whether contingent or not, assets of the company the value of which is more than half the value of the assets of the company before the disposal; or | |
• | a transaction which has or is likely to have the effect of the company acquiring rights or interests, or incurring obligations or liabilities, the value of which is more than half the value of the assets of the company before the transaction. |
• | the power to control the exercise of any right to vote attached to a voting share; | |
• | the power to acquire or dispose of the voting share; or | |
• | having the above powers by virtue of any trust, arrangement, agreement or understanding. |
(i) | reflected changes made under the new Companies Act (for example, the abolition of par value of shares, the increased power for directors to make distributions of money or property to members and the removal of the requirement that a company have specific objects and powers); or | |
(ii) | took advantage of specific provisions of the new Act which allow the Company to take a course of action (for example, to buy back the company’s shares, to indemnify directors or to pay for D&O liability insurance) if expressly permitted to do so by its constitution. |
• | The Company is incorporated and registered in Papua New Guinea (Number C1-23423) and is a registered foreign company in Australia (ARBN 069 803 998). Under section 17 of the Companies Act, a company has full capacity to carry on or undertake any business or activity, do any act or enter into any transaction, and in respect of these purposes, it has full rights, powers and privileges. Therefore it is not necessary to list the objects and purposes of the Company in its constitution. |
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• | In accordance with clause 17, a director may vote on a proposal, arrangement or contract in which he is materially interested provided that he has complied with the Companies Act, the Official Listing Rules of the ASX and provided the board does not otherwise determine. | |
• | The constitution contains provisions for the remuneration of directors (including reimbursement of expenses), the indemnification of directors in respect of certain liability or for costs incurred in defending or settling any claim or proceedings relating to such liability, and for effecting insurance for directors to the extent permitted under the Act. These are general powers of the Company which may in the normal course be exercised by a resolution of the Board. An interested director who has declared his or her interest would be entitled to vote on any such resolution unless the board has determined that the director should not exercise any power in relation to the matter. The interested director is not entitled to vote on a resolution to make that preliminary determination. | |
• | There are no specific provisions relating to borrowing powers in the constitution. Clause 20.1 provides that the Board has all necessary power for managing, and for directing and supervising the management of, the business and affairs of the Company to the exclusion of the Shareholders and in accordance with clause 21.9 every resolution of the board is decided by a majority of votes. Therefore, the borrowing by the Company is determined by a majority decision of the Board. | |
• | An exercise of the borrowing power may in certain circumstances be subject to the provisions of the Companies Act (section 110) requiring shareholder approval for major transactions. | |
• | There are no provisions for retirement or non-retirement of directors under an age limit in the constitution. | |
• | Clause 15.5 provides that a director of the Company need not be a shareholder. | |
• | Clause 10A.2(b) provides that Class B shares have no entitlement to dividends. | |
• | Clause 24.1 provides that the Board may declare distributions to the shareholders (other than Class B shareholders) including declaring the property to constitute the distribution and the time of the distribution. Shareholder approval is not required for a distribution. Clause 24.3 provides that where the Board has declared a dividend the obligation of the Company to make the distribution only arises when the Board fixes the time for distribution and that time has arrived. Clause 24.8 provides that each dividend in respect of each share must be distributed according to the amount paid up on that share save to the extent that the terms of issue of a share provide otherwise. The Company does not have any partly paid shares on issue. | |
• | Clause 24.18 provides that all dividends declared but unclaimed may (in the case of dividends not to be distributed as money) be realized into money and (in any case) be invested for the benefit of the Company until claimed or until required to be dealt with under any applicable law dealing with unclaimed money. | |
• | Clause 5.6 provides that if a call in relation to a share is due and payable and not paid, the shareholder has no right to receive any dividends and has no right to vote. | |
• | Clause 10A.2(a) provides that the Class B shareholders do not have any voting rights. | |
• | Clause 13.2 provides that each shareholder who is entitle to vote on a resolution (where not disqualified from voting pursuant to the Listing Rules or the Act) has one vote on voting by voice or show of hands, and on a poll he has the number of votes equal to the number of fully paid shares held by that person. | |
• | Under clause 15.3, one third of the directors (excluding the managing director) retire by rotation each year and are eligible for re-election. | |
• | Clause 27.3 provides that after distribution of assets to repay paid up capital any surplus assets will be distributed to the shareholders in proportion to the amount paid up by the shareholder on each share, save to the extent that the terms of issue of a share provide otherwise. | |
• | Clause 10A.2(d) provides that the Class B shares are redeemable at the option of the Company for consideration of K100 per million (or part thereof) of those shares. | |
• | Clause 2.6(b) provides that the Company is authorized to redeem any redeemable shares subject to the provisions of the Listing Rules and the securities clearing house business rules of Australia. | |
• | There are no provisions in the constitution in relation to sinking funds. | |
• | Clause 5 provides that the Board may make calls on a shareholder in respect of any or all of the amount unpaid on the share unless the terms of issue make that payment payable at a fixed time. The constitution does not expose the shareholders to any liability to further capital calls by the Company. | |
• | There are no provisions discriminating against any existing or prospective holder of such securities as a result of such shareholder owning a substantial number of shares in the constitution. |
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• | Under the Companies Act, any provision of the constitution can be altered by special resolution of the shareholders requiring a 75% majority vote of those attending and voting. | |
• | Clause 8.2 provides that where the Company by ordinary shareholders’ resolution consolidates, divides or sub-divides its shares, the Company may also by special resolution determine that, as between the shares resulting from the consolidation, division or sub-division, one or more of those shares has some preference or special advantage as regards dividends, capital, voting or otherwise over or compared with the other shares. |
• | Clause 8.3 provides that if the shares are divided into different classes of shares, the rights attached to any class of shares may only be varied or abrogated with either the written consent of 75% of the shareholders of that class, or, sanction of a special resolution passed at a separate meeting of that class of shareholders. | |
• | Clause 8.4 provides that the board may do anything to give effect to any resolution authorizing or effecting the alteration of the share capital of the Company, the variation or abrogation of rights attaching to any class of shares, or to adjust the rights of all parties. | |
• | Clause 11.3 provides that the board may convene a special meeting of the Company at any time. Alternatively, clause 11.4 provides that the shareholders may requisition the holding of a special meeting as provided by section 102(b) of the Companies Act, which requires a written request of shareholders holding shares carrying not less than 5% of the voting rights. | |
• | Clause 11.2 provides that the Company must hold an annual general meeting in accordance with the Companies Act, which must be held not later than 15 months after the previous annual general meeting. | |
• | Fourteen days’ written notice of the meeting must be sent to the shareholders, directors and auditor of the Company, stating the nature of the business, the text of any special resolution and, if required by the Official Listing Rules of the ASX, include a form of proxy. | |
• | All shareholders (including Class B shareholders) may attend a meeting of shareholders either in person, by proxy, by attorney or (in the case of a shareholder which is a body corporate) by a representative. | |
• | Clause 12.2 provides that no business may be transacted by a meeting of shareholders unless a quorum of three is present. Clause 12.3 provides that, where a quorum is not present within 30 minutes after the time appointed for the meeting, (in the case of a meeting requisitioned by shareholders), the meeting is dissolved, or in the case of any other meeting, it is adjourned to the same time and the same place the following week, and if there is not a quorum within 30 minutes of the appointed time of that meeting, it is dissolved. | |
In 1995, the Company was granted an exemption with respect to the quorum requirement under NASDAQ Rule 4350(f), which requires each issuer to provide for a quorum as specified in its by-laws for any meeting of the holders of common stock, which shall in no case be less than 33 1/3% of the outstanding shares of the Company’s common voting stock. The Company complied with the quorum requirements set forth in the previous paragraph. |
• | There are no limitations on rights to own securities, including the rights of non-resident or foreign shareholders to hold or exercise voting rights on the securities imposed by foreign law, or by the charter or other constituent document of the Company in the constitution. | |
• | There are no provisions in the constitution that would have an effect of delaying, deferring or preventing a change in control of the Company, and that would operate only with respect to a merger, acquisition or corporate restructuring involving the Company (or any of its subsidiaries). | |
• | There are no provisions in the constitution governing the ownership threshold above which shareholder ownership must be disclosed. | |
• | The Company is incorporated, and has its principal activities, in PNG. As such it is subject to the Companies Act, the Securities Act of PNG and the Takeovers Code under the Securities Act of PNG. The general effect of this legislation is referred to elsewhere in this Annual Report. | |
• | In relation to an increase in capital by the issue of new shares, clause 2.1 provides that this power is conferred on the board of directors subject to the listing rules of any applicable stock exchange (namely the Australian Securities Exchange, Port Moresby Stock Exchange and the Nasdaq Stock Exchange). The conditions in this regard are no more stringent than is required by law. There are no pre-emptive rights of existing shareholders. |
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• | previous arrangements under which management services were provided by the Rio Tinto group to the Company were terminated; | ||
• | the Company acquired all of the shares of LMC (which had been a wholly owned subsidiary of the Rio Tinto group used in connection with the provision of management services) with consideration consisting of a nominal sum, together with transfer of the cash holdings, accrued accounts receivable and net income tax credits receivable at that date; | ||
• | the Rio Tinto Group agreed to provide, at the Company’s option, certain defined technical and procurement services to the Company on certain commercial terms for a term of up to two years; and | ||
• | the Company granted certain releases and indemnities to the Rio Tinto Group in connection with the termination of the management agreements. |
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• | to construct the mine and operate in accordance with the approved proposal for development (including the environmental plan); | |
• | not to incur debt in violation of certain coverage tests; | |
• | to convert its foreign currency revenues into Kina, subject to certain exceptions; | |
• | not to keep gold in inventory for a period greater than three months without placing in its Kina bank account an amount equivalent to the cash value of such gold; | |
• | to comply with PNG Government notices forbidding certain sales of gold; | |
• | to comply with its various obligations to hire PNG employees or suppliers or contractors; | |
• | not to suspend its operations other than as permitted by the Mining Development Contract; and | |
• | to comply in all material respects with the environment plan (see Item 4. “Information on the Company – D. Property, Plant and Equipment – Environmental Considerations – Environmental Plan”). |
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• | MRDC and LMC agreed to each contribute K3,532,759 and $2,635,000 to MRL; and | ||
• | MRL agreed to sell down a proportion of its shareholding in the Company in two separate tranches and to invest the portion of the proceeds remaining, after meeting current commitments to the EIB, to enable it to meet future financing commitments to the EIB. |
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• | a Gold Facility of up to 480,000 ounces of gold; and | |
• | a revolving credit facility of $50 million (“RCF”). | |
1. | To repay the original Syndicated Facility agreement; | |
2. | To assist in funding the expansion of the Company’s gold production by approximately 140,000 ounces per year on average through the addition of a 3 million ton per annum flotation processing facility; and | |
3. | To finance a restructuring of the Company’s hedge book. |
• | Purpose: See above | |
• | Pricing: Benchmark rate for Gold Facility – LIBOR minus GOFO Benchmark rate for RCF – Reuters screen page LIBOR 01 Interest Margin 1.90% Political risk premium 0.95% Certain limited circumstances (such as changes in law and official regulations) could increase the cost of funds. | |
• | Prepayment: The gold loan can be prepaid on any interest payment date without penalty or at any other time on payment of any break costs, subject to a minimum amount of 10,000 ounces and a multiple of 2,500 ounces and giving 2 business days’ notice. Cash advances under the RCF can be prepaid on any interest payment date without penalty or at any other time on the payment of any break costs, subject to a minimum of $2,500,000 and a multiple of $500,000 and the giving of 2 business days’ notice. Any undrawn commitments under the RCF may be cancelled without penalty on giving 10 days’ notice. | |
• | Repayments: Gold loans are repayable in gold ounces to be delivered to the financiers in 16 quarterly instalments from September 2007 through to June 2011 inclusive. Cash advances under the RCF must be repaid on June 30 2011. | |
• | Security: The financiers and the hedge providers have the benefit of charges and mortgages over the assets of the Company. Further details are set out under the heading “Security Trust Deed in Connection with the Syndicated Facility Agreement”, below. The security does not include security over a distribution account into which amounts available for Permitted Distributions (as defined below) and Non-Project Cashflows are permitted to be paid. Fifty percent of the proceeds held in such account are pledged in favour of Australia and New Zealand Banking Group Limited as security for the borrowings under the ANZ Facility Agreement, as described in further detail below under the heading “ANZ Facility Agreement – Terms and Conditions”. | |
• | Conditions: The Gold Facility is fully drawn. No drawings may be made under the RCF if an event of default or a potential event of default subsists. | |
• | Representations and Warranties: The Company was required to make customary representations and warranties, certain of which are required to be repeated every six months. |
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• | Undertakings: Undertakings given by the Company include, without limitation: |
- | compliance with the 1998 World Bank Environmental Health and Safety Guidelines; | ||
- | providing the Facility Agent and the Independent Engineer each year with the annual life of mine plan and a certificate detailing the debt service cover ratio and the loan life cover ratio for the relevant period; | ||
- | a restriction on committing to forward sales or derivative hedging instruments which would create a commitment of more than (i) ten percent of its proven and probable reserves, and (ii) eighty percent of its annual exposure to foreign exchange and interest rate market risks; and | ||
- | negative undertakings, including but not limited to, agreements not to engage in any business activities other than those relating to its core business of gold production and related mining and processing activities, not to incur any additional indebtedness or encumbrances, not to provide financial accommodation, not to dispose of its assets and not to pay any dividends, nor make certain other restricted payments unless certain conditions are met (see Distributions to Subordinated Lenders and Shareholders, below). |
• | Distributions to subordinated lenders and shareholders: If, at December 31 and June 30 in any year the debt service cover ratio for the preceding 12 months is equal to or greater than 1.35:1 and the loan life cover ratio is equal to or greater than 1.65:1, the Company will have the right to withdraw from the secured accounts excess project cash flow which exceeds a minimum liquidity balance of $15 million (“Permitted Dividend”). This withdrawal right commences after December 31, 2007, and that minimum liquidity balance must be maintained at all times. However, pursuant to the terms of the parent deposit agreement entered into by the Company in connection with the ANZ Facility Agreement, the Company must deposit any such Permitted Dividends into the distribution account. Fifty percent of all such deposits are charged to ANZ as security for LAH’s borrowings under the ANZ Facility Agreement and may not be withdrawn from that account without the consent of ANZ. | |
• | Mandatory Prepayment :If a Permitted Dividend is paid, the Company must deliver to the Facility Agent a quantity of gold which has a US dollar value equal to fifty percent of that Permitted Dividend. | |
If on any December 31 or June 30, the debt service cover ratio is below 1.35:1, or if the loan life cover ratio is below 1.65:1, on the next interest payment date, the Company must: |
(i) | apply any excess project cash flow which would have been available to pay a Permitted Dividend had the requisite ratio tests been met; and | ||
(ii) | deliver any surplus gold (being gold in its unallocated bullion account which is not required to meet gold delivery obligations under the Syndicated Facility Agreement on that interest payment date), to reduce the gold loan. |
Any mandatory prepayment must be applied in inverse order of maturity. | ||
• | Events of Default: In addition to the normal default provisions relating to the non-payment, financial distress, misrepresentation, cross-default and breach of undertakings, the Syndicated Facility Agreement includes, without limitation, default provisions covering material adverse change, expropriation, political risk events, certain exchange control impositions and loss of political risk insurance. Further, it will be an event of default if at any December 31 or June 30 in any year, the debt service cover ratio for the previous 12 months is less than 1.1:1 or the loan life cover ratio is less than 1.2:1 and the Company does not remedy the breach within 30 days. | |
If an event of default is continuing, the Facility Agent acting on the consent of a majority of the financiers (being financiers whose RCF commitments exceed sixty-six percent of total RFC commitments) may cancel the RCF commitment and accelerate redelivery of all gold outstandings and the repayment of cash advances under the RCF. | ||
• | Review Event: If without the consent of the Facility Agent (acting on the instructions of a majority of the financiers), a person not in control of the Company acquires such control or the Lihir Gold Management Transition Plan Document is terminated, then the financiers may within 30 days of being notified, request the Company to agree to required amendments to the facilities (including a change in margin and facility limits). If no agreement is reached, the financiers may require all Gold outstanding to be redelivered and cash advances under the RCF to be repaid. |
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Tranche A) | A$45 million to finance the acquisition of Ballarat shares under the Private Placement pursuant to the Share Subscription agreement (note 15) including associated transaction costs, interest and fees in relation to the facility and any transaction costs associated with the merger; |
Tranche B) | an amount of A$5 million to be made available to cover expenses following successful completion of the merger. |
• | Facility and Purpose: The facility is a cash advance facility consisting of two tranches, both of which are repayable on the date falling 364 days from the date of the ANZ Facility Agreement. Tranche A consists of a A$45,000,000 cash advance facility which was drawn in full in connection with the merger between Lihir and Ballarat Goldfields NL Tranche B consists of a A$5,000,000 cash advance facility which is permitted to be drawn by LAH for the purpose of financing capital expenditure in connection with the Ballarat East Gold Project. | |
• | Pricing: Interest on the facility is paid at the rate shown on the Reuters screen BBSY on the first day of each interest period plus a margin of one-seventy five percent. | |
Certain limited circumstances (such as changes in law and official regulations) could increase the cost of funds. | ||
• | Prepayment: The facility can be prepaid on any interest payment date without penalty or at any other time on payment of any break costs, subject to a minimum prepayment amount of A$5,000,000 and a multiple of A$1,000,000 and the giving of five days’ notice. The commitments under the facility will be automatically cancelled to the extent of any prepayment. | |
• | Repayments: All amounts outstanding under the facility must be repaid in full on the date falling 364 days from the date of the ANZ Facility Agreement. | |
• | Security: See description of the security under the heading “Security Agreements — ANZ Facility Agreement”, below. | |
• | Conditions: Tranche A is fully drawn. $2 million was drawn down under Tranche B on February 26, 2007. | |
• | Representations and Warranties: LAH was required to make customary representations and warranties, which are each required to be repeated on every drawdown date. | |
• | Undertakings: Undertakings given by LAH under the ANZ Facility Agreement include: |
- | undertakings in relation to the merger, including undertakings that Ballarat of use the proceeds of the private placement only to fund the development of the Ballarat East Project and to ensure that any documents in connection with the merger or the private placement contain similar undertakings; | ||
- | negative undertakings, including but not limited to, agreements not to sell or dispose of LAH’s shares in Ballarat Goldfields, not to incur any additional indebtedness or encumbrances, not to provide financial accommodation, not to dispose of its assets and not to pay any dividends, nor make certain other restricted payments unless certain conditions are met (see point, below); | ||
- | positive undertakings including reporting and corporate maintenance undertakings. |
• | Mandatory Prepayment: if the shares in Ballarat are sold or forfeited or otherwise disposed of, LAH is required to prepay the proceeds of such disposal against the principal outstanding under the facility. |
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• | Events of Default: In addition to the normal default provisions relating to the non-payment, financial distress, misrepresentation, cross-default and breach of undertakings, the Syndicated Facility Agreement includes default provisions covering change of control of LAH, compulsory acquisition of a material part of the pledge assets of LAH, government interference, material environmental claims or expenditure, no charge granted over the shares in Ballarat within 60 days of the date falling five business days after the second court hearing in respect of the merger between Lihir and Ballarat, Ballarat using private placement proceeds other than for the purposes of the Ballarat Gold East Project, and material adverse change. | |
If an event of default is continuing, the Lender may cancel any undrawn commitment and accelerate repayment of all outstanding advances. |
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• | a dealer in securities; | |
• | a trader in securities that elects to use a mark-to-market method of accounting for securities holdings; | |
• | a tax-exempt organization; | |
• | a life insurance company; | |
• | a person liable for alternative minimum tax; | |
• | a person that actually or constructively owns 10% or more of our voting stock; | |
• | a person that holds shares or ADSs as part of a straddle or a hedging or conversion transaction; or | |
• | a person whose functional currency is not the U.S. dollar. |
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• | a citizen or resident of the United States; | |
• | a domestic corporation; | |
• | an estate whose income is subject to United States federal income tax regardless of its source; or | |
• | a trust if a United States court can exercise primary supervision over the trust’s administration and one or more United States persons are authorized to control all substantial decisions of the trust. |
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• | is domiciled in PNG, unless the person’s permanent place of abode is outside PNG; or | ||
• | has been in PNG for more than one half of the year of income, unless that person has a usual place of abode outside PNG and does not intend to take up residence in PNG. |
• | if transferred through a stock broker registered to operate on the Port Moresby Stock Exchange, the transfer is exempt from stamp duty; | ||
• | otherwise at the rate of 1% of the value of the securities, payable by the purchaser or transferee. |
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Average | Put Revenue *1 | |||||||||||
Year | Ounces | Strike price | ($ millions) | |||||||||
($/Oz) | ||||||||||||
2007 | 76,000 | 315.00 | 23.9 | |||||||||
2008 | — | — | — | |||||||||
2009 | — | — | — | |||||||||
2010 | — | — | — | |||||||||
2011 | 13,000 | 375.00 | 4.9 | |||||||||
2012 | 26,000 | 375.00 | 9.8 | |||||||||
2013 | 26,000 | 375.00 | 9.8 | |||||||||
Total | 141,000 | 342.55 | 48.3 |
*1 | Lihir has the option to sell the above ounces in the future years at the price corresponding to that year. Normally, these options would only be exercised by Lihir, if the spot price for gold is below the put price at the time this put option is due for delivery. |
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Average | Call Revenue *2 | |||||||||||
Year | Ounces | Strike price | ($ millions) | |||||||||
($/Oz) | ||||||||||||
2007 | 76,000 | 307.00 | 23.3 | |||||||||
2008 | — | — | — | |||||||||
2009 | — | — | — | |||||||||
2010 | — | — | — | |||||||||
2011 | 13,000 | 375.00 | 4.9 | |||||||||
2012 | 26,000 | 375.00 | 9.8 | |||||||||
2013 | 26,000 | 375.00 | 9.8 | |||||||||
Total | 141,000 | 338.30 | 47.7 |
*2 | Lihir can be called upon to sell the above ounces in the future years at the price corresponding to that year. Normally, these options would only be exercised against Lihir, if the spot price for gold is above the call price at the time the call option is due for delivery. |
Average | Revenue | |||||||||||
Year | Ounces | Strike price | ($ millions) | |||||||||
($/Oz) | ||||||||||||
2007 | 115,000 | 330.26 | 38.0 | |||||||||
2008 | 145,000 | 327.12 | 47.4 | |||||||||
2009*3 | 240,000 | 350.00 | 84.0 | |||||||||
2010*3 | 240,000 | 350.00 | 84.0 | |||||||||
2011*3 | 120,000 | 350.00 | 44.6 | |||||||||
2012 | — | — | — | |||||||||
2013 | — | — | — | |||||||||
Total | 860,000 | 346.51 | 298.0 |
*3 | The gross price for the forwards in these years is $371.67. The price of $350.00 shown above is net of fees. |
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As at Dec 31, | As at Dec 31, | As at Dec 31, | ||||||||||
2006 | 2005 | 2004 | ||||||||||
Prevailing spot price | $ | 633.80 | $ | 517.38 | $ | 438.00 | ||||||
Minimum revenue from hedge programs | $ | 356m | $ | 424m | $ | 639m | ||||||
Revenue generated from same number of ounces at prevailing spot price | $ | 634m | $ | 625m | $ | 843m | ||||||
Out-of-the-money position | $ | 332.8m | $ | 263.2m | $ | 233.6m | ||||||
Fair value reserve | $ | 355.5m | $ | 304.6m | $ | 232.2m | ||||||
Revaluation (costs) / benefits relating to ineffective hedges | $ | (1.7m | ) | $ | (5.4m | ) | $ | 8.6m |
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• | full fair and accurate timely disclosure in all reports and documents including all public communications; | ||
• | commitment to a work environment where the health, safety and well-being of employees, contractors, visitors and other parties affected by the Company’s operations are paramount; | ||
• | compliance with all laws, regulations and other requirements relating to all aspects of business and personal conduct within PNG and the countries with which the Company interacts; | ||
• | integrity, honesty, transparency and respect in all interactions (whether internal or with groups outside the Company) including with Lihirian and other representative groups in relation to issues important to the community; | ||
• | excellence in the management of environmental responsibilities to ensure minimisation of any adverse effects on the environment or impact on the local community; | ||
• | adoption of the highest standards of business administration, accountability and corporate governance, including the ethical use of all Company resources, funds, equipment, information and time; | ||
• | fairness, within the framework of commitments to local community groups, to potential and existing employees in all areas of recruitment, training and administration of employee benefits; | ||
• | initiative and personal commitment by all employees, contractors and agents working on behalf of the Company, to the highest standards of work performance and the effective achievement of Company objectives; and | ||
• | accountability and willingness to take responsibility. |
(a) | review the performance of the external auditors at least annually and be responsible for recommending to the Board their appointment, re-appointment or termination; |
(b) | review the scope of the annual audit program, or audit plan and approve the scope of the audit services to be provided; | |
(c) | review any engagement fees or terms proposed by the external auditors; |
(d) | consider whether the external auditor’s provision of non-audit services to the Company and any other relationship between the external auditor and the Company (if any) is compatible with maintaining the independence and objectivity of the external auditor and maintaining the quality of the audit services provided; |
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(e) | if applicable, take appropriate action in response to the external auditor’s report to satisfy itself of the external auditor’s independence for the purposes of making a recommendation to the Board. |
2006 Fees | 2005 Fees | 2004 Fees | ||||||||||
Services provided | $000 | $000 | $000 | |||||||||
Audit fees | 455 | 354 | 262 | |||||||||
Audit-related fees | 112 | 111 | 103 | |||||||||
Tax fees | 79 | 129 | 27 |
• | comfort letters; | ||
• | statutory audits; | ||
• | attest services; | ||
• | consents; and | ||
• | assistance with and review of documents filed with the SEC. |
• | employee benefit plan audits; | ||
• | due diligence related to mergers and acquisitions; | ||
• | accounting assistance and audits in connection with proposed or consummated acquisitions; | ||
• | internal control reviews; and | ||
• | consultations concerning financial accounting and reporting standards. |
• | tax compliance services, including the preparation of original and amended tax returns; | ||
• | tax consultations, such as assistance and representation in connection with tax audits and appeals, tax advice related to mergers and acquisitions, employee benefit plans and requests for rulings or technical advice from taxing authorities; and | ||
• | tax planning services. |
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“Alteration” | Change in the mineral composition of a rock | |
“Anhydrite” | Mineral form of calcium sulfate | |
“Argillic alteration” | Alteration composed of clay minerals | |
“Arsenopyrite” | A sulfide mineral of iron and arsenic | |
“Autoclave” | Vessel used for chemical reactions at high temperature and pressure; for example, to oxidize sulfide ore | |
“Autogenous threshold” | The level of sulfur feed at which the heat generated by oxidation of the sulfides is sufficient to propagate the reaction. | |
“Ball mill” | A mill using metal balls as the grinding medium | |
“Bench” | The horizontal floor along which mining progresses in a pit, also used to describe the horizontal segment between two such floors. The thickness of such a segment is referred to as the “bench height”. As the pit progresses to lower levels, safety benches are left in the walls to catch any rock falling from above. | |
“Brecciation; breccia” | Fracturing of pre-existing rocks by natural forces; a rock type formed in this manner | |
“Bullion” | Gold or silver in bars or ingots | |
“Calcining” | To reduce to a powder or friable state by heat | |
“Caldera” | Large basin shaped, typically circular crater resulting from volcanic activity | |
“Carbon-in-leach” | Method of extracting gold from solution using carbon | |
“Concentrate” | Material that has been processed to increase the content of contained metal or mineral relative to the contained waste | |
“Counter-current decantation” or “CCD” | The clarification and concentration of slurry material by the use of several thickeners in series, with the washing solution flowing in the opposite direction to the slurry | |
“Cut-off grade” | In resource/reserve estimation, the lowest grade of mineralized material that can be economically extracted | |
“Cyanidation” | A standard method of extracting gold and silver from crushed or ground mineralized rock using sodium cyanide | |
“Cyanide leaching” | The extraction of a precious metal from an ore by its dissolution in a cyanide solution | |
“Dilution” | Waste which is commingled with ore in the mining process | |
“Dore” | A mixture of gold and other metals, mostly silver, usually the raw metal produced from a precious metal mine | |
“Electro-winning” | The process of removal of gold from solution by the action of electric currents | |
“Elution” | The process of desorption (taking of gold from carbon) | |
“Epithermal” | A term applied to deposits formed at shallow depths from ascending solutions of moderate temperatures | |
“Exsolution” | To be removed from solution | |
“Feasibility study” | A technical and financial study of a project at sufficient level of accuracy and detail to allow a decision as to whether the project should proceed | |
“Flocculant” | An additive introduced to promote aggregation in a solution. |
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“Flotation” | The process of concentrating ground mineral particles by attaching them to air bubbles in a slurry using chemical reagents and recovering the mineralized froth generated by aeration | |
“Free gold” | Gold not chemically or physically entrapped and hence amenable to relatively simple extraction processes. | |
“Friable” | Said of a rock or mineral that crumbles naturally or is easily broken, pulverized, or reduced to powder, such as soft or poorly cemented sandstone. | |
“Fumaroles” | Vents in a volcanic region from which gases and vapors emanate at high temperatures | |
“GAAP” | Generally accepted accounting principles. | |
“Geochemistry” | The study of the variation of chemical elements in rocks and soils; a method of exploration based on this | |
“Geotechnical” | Pertaining to the engineering properties of rocks and soils | |
“Geothermal” | Pertaining to the heat of the earth’s interior | |
“Grade” | The metal (or mineral) content per unit of rock | |
“Grinding” | Reducing mineralized rock to the consistency of fine sand by crushing the abrading in a rotating steel grinding mill | |
“Gyratory Crusher” | A primary crusher consisting of a vertical spindle, the foot of which is mounted in an eccentric bearing within a conical shell. The top carries a conical crushing head revolving eccentrically in a conical maw. | |
“Hydrological” | Pertaining to the science of hydrology | |
“kPa” | A unit of pressure – an abbreviation for “kilopascals, gauge”. | |
“Joint venture” | An arrangement in which two entities unite to form a new, jointly-owned entity to achieve a specific purpose. | |
“Lime” | Calcium oxide; artificially made from limestone | |
“Limestone” | Rock composed mainly of calcium carbonate | |
“Lithology” | The physical characteristics of rock | |
“Mafic” | Descriptive of rocks containing or made up of ferro-magnesian minerals (usually dark in color) | |
“Magma; magmatic” | Liquid molten rock; pertaining to processes and rocks involving magma | |
“Marcasite” | Iron sulfide mineral (a form of pyrite) | |
“Metallurgy” | The science and technology of metals, usually pertaining to the processing of metals and minerals in mining | |
“Mill feed grade” | The grade of material feed to the mill, equivalent to received at mill | |
“Milling/mill” | The comminution of the ore, although the term has come to cover the broad range of machinery inside the treatment plant where economically valuable minerals are separated from the ore | |
“Mineable” | The portion of a resource for which extraction is technically and economically feasible | |
“Mineral deposit” | A mineralized underground body which has been intersected by a sufficient number of closely-spaced drill holes and/or underground sampling to support sufficient tonnage and ore grade to warrant further exploration or development; a mineral deposit or mineralized material does not qualify as a commercially mineable ore body (Reserves), as prescribed under standards of the Commission, until a final and comprehensive economic, technical, and legal feasibility study based upon the test results is concluded. | |
“Net smelter returns” | The value received for a mineral after refining, less the cost of transporting the mineral to the refinery and the cost of refining |
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“Open pit” | Surface mining in which the ore is extracted from a pit. The geometry of the pit may vary with the characteristics of the ore body. | |
“Ore” | Material that contains one or more minerals, at least one of which has commercial value and which can be recovered at a profit | |
“Ore body” | A continuous well defined mass of material of sufficient ore content to make extraction economically feasible | |
“Ore grade” | The average amount of the valuable metal or mineral contained in a specific mass of ore; for gold, this is usually expressed as troy ounces per short ton (2,000 pounds avoirdupois) or grams per tonne | |
“Ounces” | Troy ounces of 31.103 grams, or 1.097 Avoirdupois ounces | |
“Outcrop” | That part of a rock formation exposed on surface | |
“Oxide ore” | Gold ore that has been subjected to oxidation through natural weathering and surface water percolation to the extent that the minerals are readily treatable by standard processes | |
“Phyllic alteration” | Hydrothermal alteration of rocks involving the secondary formation of quartz and sericite | |
“Pit shell” | Designed outline of an open pit mine containing all the open pit ore reserves | |
“Pleistocene” | A subdivision of geologic time, about 10,000 — 2 million years before the present | |
“Potassic alteration” | Hydrothermal alteration of rock involving the secondary formation of potash feldspar, commonly the mineral orthoclase, usually with biotite | |
“Pressure oxidation” | A method of processing refractory sulfide ore | |
“Propylitic alteration” | Hydrothermal alteration of basic rocks involving the secondary formation of chlorite, epidote, calcite and sulfide | |
“Pyrite” | Iron sulfide mineral | |
“RC hole” | A reverse circulation drill hole produced by percussion drilling in which rock cuttings are recovered instead of core. “Reverse circulation” refers to the air flow which flows downward around the outside of the drill pipe, returning with the rock cuttings through the drill bit face and stem. | |
“Reactive sulfur” | In mineral processing involving pressure oxidation, sulfur in the form of sulfide | |
“Refining” | The final stage of metal production in which final impurities are removed from the molten metal by introducing air and fluxes. The impurities are removed as gases or slag | |
“Refractory ore” | Ore not amenable to standard processing techniques | |
“Sampling” | Taking small pieces of rock at intervals along exposed mineralization for assay (to determine the mineral content) | |
“SAG” | “Semi-autogenous grinding”, a method of comminution that utilizes the rock fragments to assist in the grinding process | |
“Seismic” | Pertaining to shock waves that pass through the earth | |
“Shotcreting” | Application by pressure spraying of a setting medium with the characteristics of concrete for stabilization of rock faces. | |
“Silt curtain” | A flooding barrier to be deployed offshore from watercourses, which causes temporary ponding of sediment laden fresh water within its confines to enhance settling, and mixing with sea water, as the turbid stream is forced underneath the barrier | |
“Slurry” | A fluid comprising fine solids suspended in a solution (generally water containing additives) | |
“Smelting” | Thermal processing whereby molten metal is liberated from beneficiated ore or concentrate with impurities separating as lighter slag | |
“Stockpile” | A store of unprocessed ore |
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“Stripping” | The process of removing overburden or waste to expose ore | |
In open pit mining, the ratio of waste material to ore, usually expressed as tonnes waste : | ||
“Stripping ratio” | tonnes ore | |
“Sulfide ore” | Ore characterized by the inclusion of metal in the crystal structure of a sulfide mineral. This type of ore is often refractory ore | |
“Superannuation fund” | A contributory pension fund. | |
“Surface mixed layer” | Uppermost layer of the ocean that is constantly mixed by wind and wave action | |
“Tailings” | The finely-ground waste product from ore processing | |
“Underground Mine” | Mining of an ore body beneath the earths surface where ore is recovered using trucks via a portal or hoisted via a shaft |
“US$/ oz. Gold” | US dollars per troy ounce of gold | |
“US$/ t ore” | US dollars per tonne of ore | |
“C” | Degrees Celsius | |
“g Au/t” | Grams of gold per tonne | |
“ha” | Hectares | |
“kg” | Kilograms | |
“kg Au/t” | Kilograms of gold per tonne | |
“kPa” | kilo Pascals | |
“kt” | kilo tonnes | |
“m2” | Square meters | |
“m3” | Cubic meters | |
“mtpy” | Million tonnes per year | |
“t/d” | Tonnes per day | |
“t/h” | Tonnes per hour |
“Celsius degrees” | (Fahrenheit degrees minus 32.0) times 5/9 | |
“1 cubic meter” | 35.314 cubic feet | |
“1 gram” | 0.03215 troy ounces | |
“1 gram Au/tonne” | 0.02917 troy ounces gold/short ton | |
“1 hectare” | 2.471 acres | |
“1 kilogram” | 2.205 pounds | |
“1 kilometer” | 0.62 statute miles | |
“1 kilopascal” | 0.145 pounds per square inch | |
“1 kilo tonne” | 1102.31 short tons | |
“1 meter” | 3.281 feet | |
“1 millimeter” | 0.039 inches | |
“1 square kilometer” | 0.3861 square miles | |
“1 square meter” | 10.764 square feet | |
“1 tonne” | 1.1023 short tons |
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PricewaterhouseCoopers | ||
ABN 52 780 433 757 | ||
6th Floor Credit House | ||
Cuthbertson Street | ||
PO Box 484 | ||
PORT MORESBY | ||
PAPUA NEW GUINEA | ||
Website: www.pwc.com.pg | ||
Telephone +61 2 8266 0000 | ||
Facsimile +61 2 8266 9999 |
Gold Limited
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April 13, 2007
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Year ended December 31, 2006, 2005 & 2004
2006 | 2005 | 2004 | ||||||||||||||
Note | $ 000 | $ 000 | $ 000 | |||||||||||||
Sales revenue | 307,744 | 225,200 | 221,465 | |||||||||||||
Gold lease rate fees | 2,765 | 5,016 | 4,595 | |||||||||||||
Fair value losses | (1,682 | ) | (5,390 | ) | 8,608 | |||||||||||
Other revenue | 1,627 | 45 | — | |||||||||||||
Total revenue | 6 | 310,454 | 224,871 | 234,668 | ||||||||||||
Operating expenses | ||||||||||||||||
Mining expenses | (107,551 | ) | (95,304 | ) | (89,687 | ) | ||||||||||
Exploration expenses | (5,976 | ) | (6,198 | ) | (5,306 | ) | ||||||||||
Processing costs | (47,875 | ) | (41,654 | ) | (41,524 | ) | ||||||||||
Power generation costs | (27,000 | ) | (27,413 | ) | (29,237 | ) | ||||||||||
General and administrative costs | (66,618 | ) | (57,884 | ) | (53,103 | ) | ||||||||||
Refining, royalty and management fees | (12,972 | ) | (6,813 | ) | (7,144 | ) | ||||||||||
Deferred mining costs | 56,349 | 25,048 | 37,865 | |||||||||||||
Costs deferred and transferred to inventories | 19,395 | 39,208 | 3,557 | |||||||||||||
Impairment reversal: Mine properties and deferred mining costs | — | — | 205,723 | |||||||||||||
Economic grade stockpile value recognised/(impaired) | ||||||||||||||||
Impairment reversal/(charge): Economic grade stockpile | — | — | 90,200 | |||||||||||||
Depreciation and amortisation | (37,444 | ) | (35,757 | ) | (32,929 | ) | ||||||||||
Total operating (expenses)/Income | 6 | (229,692 | ) | (206,767 | ) | 78,415 | ||||||||||
Operating profit | 80,762 | 18,104 | 313,083 | |||||||||||||
Interest income | 1,436 | 1,221 | 3,512 | |||||||||||||
Finance costs | 6 | (6,229 | ) | (3,588 | ) | (2,110 | ) | |||||||||
Profit from ordinary activities before taxation | 75,969 | 15,737 | 314,485 | |||||||||||||
Income tax (expense)/Benefit | 9 | (22,132 | ) | (5,949 | ) | 14,736 | ||||||||||
Net profit from ordinary activities after taxation | 53,837 | 9,788 | 329,221 | |||||||||||||
Earnings per share | 29 | |||||||||||||||
- Basic (cents/share) | 4.2 | 0.8 | 25.6 | |||||||||||||
- Diluted (cents/share) | 4.2 | 0.8 | 25.6 |
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As At December 31, 2006 and 2005
2006 | 2005 | |||||||||||
Note | $ 000 | $ 000 | ||||||||||
ASSETS | ||||||||||||
CURRENT ASSETS | ||||||||||||
Cash and cash equivalents | 7 | 47,032 | 127,836 | |||||||||
Derivative financial instruments | 10 | 269 | 543 | |||||||||
Inventories | 11 | 75,295 | 81,712 | |||||||||
Receivables | 12 | 4,641 | 5,347 | |||||||||
Prepayments | 5,514 | 3,696 | ||||||||||
Total current assets | 132,751 | 219,134 | ||||||||||
NON-CURRENT ASSETS | ||||||||||||
Derivative financial instruments | 10 | 2,419 | 4,236 | |||||||||
Inventories | 11 | 141,730 | 115,494 | |||||||||
Receivables | 12 | 400 | 476 | |||||||||
Deferred mining costs | 13 | 148,330 | 91,981 | |||||||||
Mine properties | 14 | 951,201 | 800,346 | |||||||||
Available-for-sale financial assets | 15 | 33,001 | — | |||||||||
Deferred income tax | 9 | 86,226 | 87,739 | |||||||||
Total non-current assets | 1,363,307 | 1,100,272 | ||||||||||
Total assets | 1,496,058 | 1,319,406 | ||||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||
CURRENT LIABILITIES | ||||||||||||
Derivative financial instruments | 10 | 61,537 | 40,793 | |||||||||
Accounts payable | 16 | 46,567 | 34,691 | |||||||||
Provisions | 17 | 6,427 | 5,349 | |||||||||
Current tax liability | 320 | — | ||||||||||
Borrowings | 18 | 62,535 | — | |||||||||
Total current liabilities | 177,386 | 80,833 | ||||||||||
NON-CURRENT LIABILITIES | ||||||||||||
Derivative financial instruments | 10 | 273,954 | 227,157 | |||||||||
Provisions | 17 | 14,261 | 12,424 | |||||||||
Borrowings | 18 | 218,580 | 215,520 | |||||||||
Total non-current liabilities | 506,795 | 455,101 | ||||||||||
Total liabilities | 684,181 | 535,934 | ||||||||||
SHAREHOLDERS’ EQUITY | ||||||||||||
Share capital | 19 | 1,027,069 | 1,027,504 | |||||||||
Reserves | 20 | (a) | (250,689 | ) | (225,692 | ) | ||||||
Accumulated profits/(losses) | 20 | (b) | 35,497 | (18,340 | ) | |||||||
Total shareholders’ equity | 811,877 | 783,472 | ||||||||||
Total liabilities and shareholders’ equity | 1,496,058 | 1,319,406 | ||||||||||
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Year ended December 31, 2006, 2005 & 2004
2006 | 2005 | 2004 | ||||||||||||||
$ 000 | $ 000 | $ 000 | ||||||||||||||
Total equity at the beginning of the financial year | 783,472 | 837,223 | 461,391 | |||||||||||||
Profit for the year | 20 | (b) | 53,837 | 9,788 | 329,221 | |||||||||||
Issue of share capital | — | — | 2,286 | |||||||||||||
Share issue transaction costs | — | — | (70 | ) | ||||||||||||
Shares reclassified as treasury shares | 19 | (435 | ) | — | — | |||||||||||
Changes in the hedging reserve — cash flow hedges (net of tax) | 20 | (a) | (30,431 | ) | (63,539 | ) | 44,395 | |||||||||
Fair value reserve | 20 | (a) | 17 | — | — | |||||||||||
Employee share rights (net of tax) | 20 | (a) | 5,421 | — | — | |||||||||||
Exchange difference on translation of foreign operations | 20 | (a) | (4 | ) | — | — | ||||||||||
Total equity at the end of the financial year | 811,877 | 783,472 | 837,223 | |||||||||||||
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Year ended December 31, 2006, 2005 & 2004
2006 | 2005 | 2004 | ||||||||||||||
Note | $ 000 | $ 000 | $ 000 | |||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||||||||||
Cash receipts from customers | 329,235 | 243,704 | 248,391 | |||||||||||||
Cash payments for consumables and supplies | (122,724 | ) | (107,551 | ) | (109,223 | ) | ||||||||||
Cash payments for services | (50,437 | ) | (42,428 | ) | (39,159 | ) | ||||||||||
Cash payments in relation to employees | (37,492 | ) | (32,712 | ) | (27,022 | ) | ||||||||||
Cash payments for mining activities | (9,123 | ) | (10,370 | ) | (14,262 | ) | ||||||||||
Cash payments for processing activities | (2,055 | ) | (2,775 | ) | (3,421 | ) | ||||||||||
Cash payments for power generation | (662 | ) | (1,273 | ) | (1,397 | ) | ||||||||||
Cash payments for other operating activities | (46,212 | ) | (36,392 | ) | (25,741 | ) | ||||||||||
Interest received | 1,436 | 1,882 | 3,512 | |||||||||||||
Interest and finance charges paid to third parties | (3,276 | ) | (2,543 | ) | (1,327 | ) | ||||||||||
Net cash flow from operating activities | 8 | 58,690 | 9,542 | 30,351 | ||||||||||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||||||||||
Drawdown of term debt | 65,595 | 245,520 | — | |||||||||||||
Repayment of term debt | — | (49,509 | ) | (14,039 | ) | |||||||||||
Hedge book restructure and fees | — | (62,200 | ) | — | ||||||||||||
Payment for treasury shares | (418 | ) | — | — | ||||||||||||
Issuance of ordinary shares | — | — | 2,286 | |||||||||||||
Share issue transaction costs | — | — | (70 | ) | ||||||||||||
Net cash flow from financing activities | 65,177 | 133,811 | (11,823 | ) | ||||||||||||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||||||||||
Purchase of property plant and equipment | (170,756 | ) | (99,492 | ) | (87,663 | ) | ||||||||||
Proceeds on disposal of fixed assets | 92 | 416 | 64 | |||||||||||||
Payments for investments | (34,007 | ) | — | — | ||||||||||||
Net cash flow from investing activities | (204,671 | ) | (99,076 | ) | (87,599 | ) | ||||||||||
Net increase/(decrease) in cash held | (80,804 | ) | 44,277 | (69,071 | ) | |||||||||||
Cash and cash equivalents at beginning of year | 127,836 | 83,559 | 152,630 | |||||||||||||
Net increase/(decrease) in cash held | (80,804 | ) | 44,277 | (69,071 | ) | |||||||||||
Cash and cash equivalents at end of year | 7 | 47,032 | 127,836 | 83,559 | ||||||||||||
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(i) | Consolidation | |
The consolidated financial statements of Lihir Gold Limited (“the Company”) include the accounts of the Company and its majority owned subsidiaries (“the Group”). Subsidiary undertakings, which are those entities in which the Company has an interest of more than one half of the voting rights or otherwise has power to exercise control over the operations, are consolidated. Subsidiaries are consolidated from the date on which control is transferred to the Company and are no longer consolidated from the date that control ceases. All intercompany transactions, balances and unrealised gains and losses on transactions between group companies are eliminated. Where necessary, accounting policies for subsidiaries have been changed to ensure consistency with the policies adopted by the Company. | ||
(ii) | Exploration and evaluation expenditure | |
The Company charges exploration and evaluation costs against earnings as incurred. | ||
(iii) | Development properties | |
A property is classified as a development property when a mine plan has been prepared, proved and probable reserves have been established, and the Company has decided to commercially develop the property. Development expenditure is accumulated separately for each area of interest in which economically recoverable mineral resources have been identified and are reasonably assured. | ||
All expenditure incurred prior to the commencement of commercial levels of production from each development property is carried forward to the extent to which recoupment out of revenue to be derived from the sale of production from the relevant development property, or from sale of that property, is reasonably assured. | ||
No amortisation is provided in respect of development properties until they are reclassified as “Mine Properties”, following the commencement of commercial production. For the years ended December 31 2006, 2005 and 2004 the Company has had no properties in the development stage. | ||
Upon commencement of commercial production, costs incurred in removing overburden and other waste material are classified as deferred mining costs. Details of the accounting policy are outlined in note 1 (vi). | ||
(iv) | Mine properties | |
Mine properties represent the accumulation of all development expenditures incurred by or on behalf of the Company in relation to areas of interest in which mining of a mineral reserve has commenced. | ||
When future economic benefits are established by further development expenditure in respect of a mine property after the commencement of production upon extraction of saleable materials, such expenditure is carried forward as part of the cost of that mine property. Otherwise such expenditure is classified as part of the cost of production. | ||
The cost of each asset is depreciated or amortised over its expected useful life to reflect the continued use of the assets through to the end of the mining or processing period. The mining period is determined for each area-of-interest, with an area-of-interest defined as an individual ore body or pit.. | ||
Depreciation and amortisation of mine costs is determined using total proven and probable reserves. Total proven and probable reserves are used as the existing plant, infrastructure and other mining properties will be used in the development of all of the Company’s proven and probable reserves. No future costs have been included in the depreciable base. | ||
Depreciation and amortisation of costs is provided for using the units-of-production method. The units-of-production basis results in a charge proportional to the depletion of estimated recoverable gold ounces contained in proved and probable ore reserves. Under this process, production of a unit commences when the ore is extracted from the ground. The amortisation charge is allocated to inventory throughout the production processes from the point at which ore is extracted from the pit until the ore is processed into gold dorè. | ||
Where a change in estimated recoverable gold ounces contained in proved and probable ore reserves is made, depreciation and amortisation of mine properties is accounted for prospectively. |
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(v) | Determination of ore reserves and remaining mine life | |
The Company estimates its ore reserves and mineral resources based on information compiled by Competent Persons (as defined in accordance with the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves as revised December 2004 (the JORC code). Reserves determined in this way are taken into account in the calculation of depreciation, amortisation, impairment and restoration, deferred mining costs, rehabilitation and environmental expenditure. | ||
In estimating the remaining life of the mine for the purpose of amortisation and depreciation calculations, due regard is given, not only to the amount of remaining recoverable gold ounces contained in proved and probable ore reserves, but also to limitations which could arise from the potential for changes in technology, demand, product substitution and other issues which are inherently difficult to estimate over a lengthy time frame. | ||
Where a change in estimated recoverable gold ounces contained in proved and probable ore reserves is made, depreciation and amortisation is accounted for prospectively. | ||
(vi) | Deferred mining costs | |
The Company’s mining operations at Lihir Island comprise a single mine with three contiguous open pits to extract ore from a single orebody. In conducting these mining operations it is necessary to remove overburden and other waste materials to access the orebody. The costs of removing waste materials are referred to as “stripping costs”. | ||
During the initial development of a mine, stripping costs would be capitalized as development costs. Capitalization of development costs ceases when saleable material is extracted from the mine; at this same time, depreciation of the capitalized development costs begins. Depreciation is calculated on a units-of-production basis over the life of the mine. The development stage is also referred to as preproduction. In the case of the mine at Lihir Island, the preproduction phase ceased in 1997 when commercial production commenced. | ||
Removal of waste materials will continue until mining operations cease. This is referred to as “production stripping” and commences when saleable material starts to be extracted from the mine. Production stripping costs are charged to the income statement on an estimated “life-of-pit strip ratio” basis. This ratio is the proportion of waste material to ore estimated to be extractable from the relevant pit in the mine. The “life-of-pit” has been determined as the most effective method of matching stripping costs to the associated ounces mined. | ||
As ore is extracted from each pit of a mine, the ratio of waste material to ore may vary from time to time from the expected average life-of-pit strip ratio. If the actual ratio for an accounting period is higher than the estimated life-of-pit ratio, a portion of stripping costs is capitalized and deferred for recognition in the income statement during a later period; if the ratio is less than the estimated life-of-pit ratio, then a portion of capitalized stripping costs is charged to the income statement. | ||
In this way, stripping costs expensed in the income statement should reflect the life-of-pit stripping ratio. Any change in the estimated life-of-pit stripping ratio is accounted for prospectively. | ||
Capitalized production stripping costs are classified as “Deferred Mining Costs”. Capitalized development stripping costs would be reflected in “Deferred Expenditure” within “Mine Properties”. | ||
The Company applied the transitional provisions in EITF 04-6 “Accounting for Stripping Costs Incurred during Production in the Mining Industry” for the fiscal year beginning on January 1, 2006 in order to conform with the consensus. This resulted in a GAAP difference between IFRS and US GAAP; please refer to further discussion at Note 34. | ||
(vii) | Capitalisation of financing costs | |
Interest and other financing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalised as part of the cost of that asset. To the extent that funds are borrowed specifically for the purpose of obtaining a qualifying asset, the amount of borrowing costs eligible for capitalisation on that asset is determined as the actual borrowing costs incurred on that borrowing during the period. Capitalisation of borrowing costs ceases when all the activities necessary to prepare the qualifying asset for its intended use or sale are substantially complete. Interest earned on the temporary investment of borrowed funds is deducted from interest paid on the borrowed funds in arriving at the amounts so capitalised. These costs are amortised using the units-of-production method based on estimated recoverable gold ounces contained in proved and probable ore reserves. | ||
For the year ended December 31, 2006 an amount of $0.7 million was capitalised (2005: $1.8 million; 2004: nil). This capitalisation relates to the gold loan drawn down (refer note 18) to the extent that the funds are applied to the construction of the flotation plant. | ||
(viii) | Mine buildings, plant and equipment | |
Mine buildings, plant and equipment are stated at cost less accumulated depreciation and impairments losses/(reversals). Repairs and maintenance expenditures are charged against earnings as incurred. Major improvements and replacements that extend the useful life of an asset are capitalised. The Company applies |
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the cost model in the subsequent measurement of its property, plant and equipment. This means that no revaluations are permitted under the Company’s asset measurement policy and that property, plant and equipment are therefore carried at cost less any accumulated depreciation and any accumulated impairment losses/(reversals). | ||
The cost of each item of buildings, machinery and equipment is depreciated over its expected useful life. For the majority of assets this is accomplished using the units-of-production method based on estimated recoverable gold ounces contained in proved and probable ore reserves, although some assets are depreciated using a percentage based on time. Each item’s economic life has due regard to both physical life limitations and to present assessments of economically recoverable reserves of the mine property (where appropriate) and to possible future variations in those assessments. Estimates of remaining useful lives are made on a regular basis for all assets, with annual reassessments for major items. | ||
The total net carrying values of mine buildings, plant and equipment at each mine property are reviewed regularly and, to the extent to which these values exceed their recoverable amounts, that excess is fully provided against in the financial year in which this is determined. (Refer to note 1 (x)). | ||
Major spare parts purchased specifically for particular plant and equipment are included in the cost of the plant and equipment and are depreciated over the expected useful life of the item of plant and equipment. | ||
Approximately 90% of all fixed assets are depreciated based on the units-of-production method, using recoverable ounces of gold contained in proved and probable ore reserves as the determinant. Based on the 2004 ore reserve statement less depletion to date, the remaining life of mine is expected to be approximately 35 years with processing of economic grade ore being completed in 2041. Assets which have an estimated useful life that is shorter than the 35 year total production period are depreciated on a straight-line basis over the shorter period. Examples of such assets include the Company’s mining fleet, equipment and other similar assets. Certain assets, such as the Company’s processing plant and related infrastructure, which are expected to have an estimated useful life equivalent to the remaining life of mine, are depreciated over that period on a units-of-production basis. |
Percentage | ||||||||
depreciated | Percentage | |||||||
as | depreciated | |||||||
Fixed asset classification | units-of-use | as straight line | ||||||
Deferred expenditure | 100 | % | — | |||||
Land & buildings | 100 | % | — | |||||
Plant & equipment | 85 | % | 15 | % | ||||
Total average | 90 | % | 10 | % |
The classification of “Land and Buildings” does not include freehold land as depreciable assets. As at December 31, 2006, the Company does not own any freehold land, and only occupies land by leasehold tenure. All lease costs are expensed as incurred. | ||
While it is expected that the Company will cease extracting ore at the end of the “mining” period in approximately 2021, it will continue to process stockpiled ore during the processing period until the end of the mine’s life in approximately 2042. Further, the Company’s annual impairment assessment of its long-lived assets, takes into consideration the expected change in activities between the mining and processing periods and the impact on net cash inflows during this period. At December 31 2005 the present value of net cash inflows estimated for the entire life of the mine did not indicate any impairment (refer note (x)). | ||
Assets depreciated using the straight-line method are depreciated over their useful life ranging from 3 - 10 years depending on the nature of the asset. The lives of major assets are reviewed annually. | ||
(ix) | Inventories | |
Cost comprises direct material, direct labour and transportation expenditure in bringing such inventories to their existing location and condition, together with an appropriate portion of fixed and variable overhead expenditure and depreciation and amortisation, based on weighted average costs incurred during the period in which such inventories are produced. Net realisable value is the amount estimated to be obtained from sale of the item of inventory in the normal course of business, less any anticipated costs to be incurred prior to its sale. | ||
Inventories of ore and metal are physically measured or estimated and valued at the lower of cost and net realisable value. | ||
In accordance with IAS 2 –“Inventories”, non-current ore stockpiles is defined as ore which is not scheduled to be processed in the twelve months after the balance sheet date. The Company believes the processing of these stockpiles will have a future economic benefit to the Company and accordingly values these stockpiles at the lower of cost and net realisable value. Net realisable value is assessed annually based on the product expected to be obtained from the ore at the estimated selling price less costs as calculated for other inventories of ore and metal, less all further costs to completion and all anticipated costs to be incurred prior to its sale. | ||
Inventories of consumable supplies and spare parts expected to be used in production are valued at the lower of weighted average cost, which includes the cost of purchase as well as transportation and statutory charges, and net realisable value. |
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As a result of the landslide that occurred on October 9, 2005, 38,079 ounces held within non-current ore stockpiles were expensed at cost in 2005. | ||
Depreciation and amortisation of assets specifically used in the extraction of ore is allocated to either stockpiles and deferred mining costs based on depreciation costs per tonne. Depreciation, depletion and amortization costs are allocated to economic grade stockpiles (EGS) on a contained gold pro-rata basis in the year the EGS material is placed on the stockpile. The EGS is tested for impairment by applying a net realisable value test in accordance with IAS 2 and the lower of cost and market principle under US GAAP. At December 31, 2006 no impairment of EGS was considered necessary. For production processes, depreciation and amortisation of assets specifically used in the processing of ore are allocated to work in progress and finished goods inventory based upon depreciation costs per contained ounces of ore produced for the period. | ||
(x) | Impairment of assets | |
In accordance with IAS 36 “Impairment of Assets”, mine properties and other non-current assets (other than stock) are reviewed for impairment losses at each balance date for indication that the carrying amount may not be recoverable. Impairments of assets are recognised whenever the carrying amount of an asset exceeds its recoverable value. In determining recoverable value, reasonable and supportable future cash flow projections of the economic conditions that will exist over the remaining life of each asset are developed. The recoverable amount is measured as the higher of fair value less costs to sell and value in use. Value in use is calculated by discounting future cash flows using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. | ||
The Company applies the cost model in the measurement and subsequent re-measurement of its mine buildings, plant and equipment and therefore does not apply the revaluation model to any of these assets. This means that all long-lived assets, which include deferred mining costs disclosed at Note 13 and mine properties (being buildings, plant and equipment, deferred expenditure and rehabilitation asset costs) as disclosed in Note 14 are carried at cost less any accumulated depreciation and any accumulated impairment losses, or impairment reversal. The reversal of any previous impairments is only permitted to the extent of the written down value that would have been recorded, had there been no impairment. | ||
In 1999 and 2000, impairment losses of $357.4 million were recognized (as detailed below) as the recoverable amount of the Company’s cash generating unit (consisting of mining properties and deferred mining costs) was less than its carrying amount. The recoverable amount was derived from value in use calculations based on discounted cash flows with primary assumptions detailed below. |
Long Term Gold Price | Discount Rate | Impairment/(Reversal) | ||||||||||
Year | $oz | % | $ million | |||||||||
1999 | $ | 325 | 7 | % | $ | 236.8 | ||||||
2000 | $ | 300 | 6 | % | $ | 120.6 | ||||||
2001 | $ | 280 | 6 | % | $ | 0 | ||||||
2002 | $ | 305 | 7 | % | ($ | 37.9 | ) | |||||
2003 | $ | 340 | 7 | % | ($ | 31.1 | ) | |||||
2004 | $ | 380 | 7 | % | ($ | 205.7 | ) | |||||
2005 | $ | 425 | 7 | % | $ | 0 | ||||||
2006 | $ | 500 | 7 | % | $ | 0 |
In 2001, after applying the primary assumptions detailed no further impairment was required. | ||
In 2004, 2003 and 2002, having applied the same principles as prior years and revisiting critical assumptions, including life of mine and remaining reserves, impairment reversals were credited to the income statement in accordance with IAS 36, based on the primary assumption detailed. In 2004, all previous remaining asset impairments were fully reversed to the extent allowed by IAS 36. | ||
In 2005 and 2006, having applied the same principles as prior years and revisiting critical assumptions, neither impairment reversal nor impairment loss was required to be recognised in accordance with IAS 36. | ||
The gold price assumption used by the Company is determined after consideration of numerous factors, including the current spot price of gold, recent trends in gold prices, views of price drivers and the market sentiments on gold prices including long-term gold price assumptions used by peers that report mid-year. The Company also benchmarks the long-term gold price estimate against other companies in the industry and a global gold price survey of gold companies issued in mid-December 2006. Recent gold price averages over 2-3 years were also considered. | ||
The critical assumptions used in the impairment assessment were based on extensive and rigorous analysis conducted by the Company, including consideration of assessments of proved and probable reserves conducted by competent persons, including the Company’s Chief Geologist and Chief Mining Engineer, independent reviews and other mine financial and operational assessments conducted by independent mine consultants. | ||
The following is a summary of factors considered: |
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2006 | 2005 | 2004 | ||||||||||||
Average spot price for the month of December | $ | 630 | $ | 510 | $ | 442 | ||||||||
Year-end spot price for December 31 | $ | 634 | $ | 517 | $ | 435 | ||||||||
3 year weighted average | $ | 486 | $ | 422 | $ | 384 | ||||||||
Bank/Analyst long-term forecasts | $ | 535 | $ | 424 | (Nov-Dec) | $ | 358 | (Oct) | ||||||
Global Gold Price Survey | $ | 515 | $ | 425 | $ | 375 | ||||||||
Rising trend for the last four years | +95 | % | +65 | % | +47 | % |
The gold price used for impairment and reserves purposes is based on the Company’s best estimate of the gold price that is reasonable and supportable. To avoid double counting of the Company’s derivative financial instruments recognized on the Company’s balance sheet, hedged prices or the cash flows from derivative financial instruments that are being used to hedge future revenues are not taken into account in determining future cash flows (in accordance with IFRS and FAS 133 paragraph 34). | ||
The key change to the Company’s critical assumptions in 2006 was a revision to the gold price to $475/oz. This represents a $50/oz increase on the Company’s 2005 assumptions, and an $95/oz increase on the Company’s 2004 assumptions. | ||
The ore reserves used in the Company’s impairment calculations for 2006 are based on the Company’s December 31 2004 reserves statement less depletion, which confirms proved and probable reserves of 17.5 million ounces (2005: 17.5 million ounces). A revised reserve statement was published in January 2007 (refer to note 33). | ||
(xi) | Restoration, rehabilitation and environmental expenditure | |
In accordance with IAS 37 “Provisions, Contingent Liabilities and Contingent Assets”, a provision is raised for anticipated expenditure to be made on restoration and rehabilitation to be undertaken after mine closure. These costs include the costs of dismantling and demolition of infrastructure or decommissioning, the removal of residual material and the remediation of disturbed areas. The provision is only raised in respect of damage incurred up to balance date. | ||
The amount of any provision recognised is the full amount that has been estimated based on current costs required to settle present obligations, discounted using a pre-tax discount rate, reflecting current market assessments of the time value of money and those risks specific to the liability, of 6.05% (2005: 6.2%, 2004: 6.5%). Although estimates of future costs are reassessed annually, given the prolonged period to mine closure, it is possible that estimates of ultimate restoration, rehabilitation and environmental liabilities could change as a result of changes in regulations, the extent of environmental remediation required and the means of reclamation or cost estimates. | ||
When the liability is initially recorded a corresponding asset, which represents future economic benefits, is raised. | ||
The unwinding of the effect of discounting the provision is recorded as a finance cost in the income statement. The carrying amount capitalised is amortised using the units of production method. | ||
Site rehabilitation and closure involves the dismantling and demolition of infrastructure not intended for subsequent community use, the removal of residual materials and the remediation of disturbed areas. Community requirements and long-term land use objectives are also taken into account. | ||
(xii) | Leases | |
Leases of property, plant and equipment where substantially all the risks and benefits incidental to the ownership of the asset, but not the legal ownership are assumed by the Company, are classified as finance leases. Finance leases are capitalised, recording an asset and liability equal to the present value of the minimum lease payments, including any guaranteed residual values. Leased assets are amortised over the shorter of their estimated useful lives or the lease term. Lease payments are allocated between the reduction of the lease liability and the lease interest expense for the period. | ||
Lease payments for operating leases, where substantially all the risks and benefits remain with the lessor, are charged as expenses in the periods in which they are incurred. | ||
Penalties paid for early settlement of leases are expensed. | ||
(xiii) | Receivables | |
Receivables are carried at original invoice amount less provision made for impairment of these receivables. A provision for impairment of receivables is established when there is evidence that the Company may not be able to collect all amounts due according to the original terms of receivables. |
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(xiv) | Investments | |
The Group investments comprise marketable equity securities. The Group classifies its investments as available-for-sale financial assets. They are included in non-current assets unless management intends to dispose of the investment within 12 months of balance sheet date. | ||
Investments are initially recognized at fair value plus transaction costs. Changes in the fair value of monetary securities classified as available-for-sale are recognized in equity. When securities classified as available-for-sale are sold or impaired, the accumulated fair value adjustments recognized in equity are included in the income statement as gains and losses from investment securities. | ||
The fair values of quoted securities are based on current bid prices. The Group assesses at each balance date whether there is objective evidence that a financial asset or group of financial assets is impaired. In the case of equity securities classified as available-for-sale, a significant or prolonged decline in the fair value of a security below its cost is considered in determining whether the security is impaired. If any such evidence exists for available-for-sale financial assets, the loss – measured as the difference between the acquisition cost and the current fair value, is removed from equity and recognized in the income statement. | ||
(xv) | Borrowings | |
Borrowings are recognised initially at the proceeds received, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost. In compliance with the provisions of IAS 39, the gold loan (note 18) is accounted for as borrowings on an historical cost basis. Although the gold loan contains an embedded derivative, and would ordinarily be subject to cash flow hedge accounting, an exemption within the Standard allows the Company to account for the loan on an historical cost basis because subsequent repayment will be by physical delivery of gold ounces. | ||
(xvi) | Accounting for derivative financial instruments and hedging activities | |
The Company uses derivative financial instruments to hedge some of its exposure to fluctuations in gold prices. In order to protect against the impact of falling gold prices, the Company enters into hedging transactions which provide a minimum price to cover non-discretionary operating expenses and sustaining capital. The majority of the Company’s production is un-hedged, which allows it to take advantage of increases in gold prices. | ||
Derivative financial instruments are initially recognised in the balance sheet at cost and are subsequently re-measured at their fair values. On the date a derivative contract is entered into, the Company designates the contract as a hedge against specific future production. The method of recognising the resulting gain or loss is dependent on the nature of the item being hedged. | ||
Derivatives that are designated against future production qualify as cash flow hedges and are deemed highly effective. Changes in the fair value of these derivatives are recognised in equity. Amounts deferred in equity are transferred to the income statement and classified as revenue in the same periods during which the hedged gold sales affect the income statement. | ||
Certain derivative instruments do not qualify for hedge accounting under the specific rules in IAS 39. Changes in the fair value of any derivative instruments that do not qualify for hedge accounting under IAS 39 are recognised immediately in the income statement. | ||
When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting under IAS 39, any cumulative gain or loss existing in equity at that time remains in equity and is recognised when the committed or forecasted production is ultimately recognised in the income statement. If the committed or forecast production is no longer expected to occur, the cumulative gain or loss reported in equity is immediately transferred to the income statement. | ||
The Company only sells refined product and spot sales are not based on any provisional terms and do not contain any embedded derivatives. The Company’s forward contracts (derivatives) are accounted for as cash flow hedges in accordance with IAS 39. | ||
While the Company has a fixed schedule of deliveries designated for its forward contracts, the Company is sometimes able to roll-over these contracts with its hedging counterparties, subject to normal credit approvals. As cash flow hedges, any subsequent changes in the fair value are effective are deferred through Other Comprehensive Income (“OCI”). The amounts deferred in OCI are recognized when the forecasted delivery occurs. There is no direct cash cost associated with a rollover, rather it is the strike price (negotiated to include a usually insignificant cost component) for the contract, that increases. | ||
At the inception of the transaction, the Company documents the relationship between hedging instruments and hedged items, as well as its risk management objective and strategy for undertaking various hedge transactions. This process includes linking all derivatives designated as hedges to specific forecast gold sales. The Company also documents its assessment, both at the hedge inception and on an ongoing basis, whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged items. |
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In assessing the fair value of non-traded derivatives and other financial instruments, the Company obtains a valuation from an independent external party. | ||||
Forward contract prices are not directly used in the Company’s reserve determination. | ||||
(xvii) | Share capital | |||
Ordinary shares are classified as equity. Incremental external costs directly attributable to the issue of new shares, other than in connection with a business combination, are shown in equity as a deduction, net of tax, from the proceeds. Share issue costs incurred directly in connection with a business combination are included in the cost of acquisition. Where the Company or its subsidiaries purchases the Company’s equity share capital, the consideration paid including any attributable incremental external costs net of income taxes is deducted from total shareholders’ equity as treasury shares until they are cancelled. Where such shares are subsequently sold or reissued, any consideration received is included in shareholders’ equity. | ||||
(xviii) | Share based payments | |||
The Group makes equity-settled share-based payments only. There are two types of share-based payments provided by the Group: | ||||
• | The Executive Share Plan, which provides benefits to the executives of the company; and | |||
• | Share issues made to local landowners through Mineral Resources Lihir Limited (MRL). | |||
The Group provides benefits to employees in the form of share-based payments, whereby employees render services in exchange for rights over shares (equity-settled transactions). | ||||
The costs of the equity-settled transactions outlined above are measured by reference to the fair value of the equity instrument at the date at which they are granted. | ||||
The fair value of share rights granted under the Executive Share Plan is recognized as an employee benefit expense with a corresponding increase in equity. The fair value is measured at grant date and recognized over the vesting period. | ||||
The fair value at grant date is independently determined using a Monte Carlo option pricing model that takes into account the term of the share right, the exercise price, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk-free interest rate for the term of the share right. | ||||
The fair value of the share rights granted is adjusted to reflect market vesting conditions, but excludes the impact of non-market vesting conditions (net present value of the company, individual performance hurdles). Non-market vesting conditions are included in assumptions about the number of share rights that are expected to become exercisable. At each balance date, the entity revises its estimate of the number of share rights that are expected to become exercisable. The employee benefit expense recognized each period takes into account the most recent estimate. | ||||
The amount recognizable as an expense is adjusted to reflect the actual number of equity instruments that vest, except where forfeiture is due to market related conditions. | ||||
The Group also issues shares under the 2003 Heads of Agreement (“Agreement”) between the Company and MRL (representing the equity held for the local landowners). These shares are to be potentially issued to MRL and relate to payment for the uninterrupted right to mine under the mining lease. An alternative additional local royalty arrangement is also being considered. | ||||
The fair value of any shares issued to MRL under the Agreement is recognised as an intangible asset with a corresponding increase in equity. The fair value is measured at the date the liability to issue the shares arose. The asset is amortised over the life of mine reserves using a units-of-production method. | ||||
(xix) | Revenue recognition | |||
The Company’s revenue comes from the sale of refined gold in the international market. Generally, gold doré bars are sent to a refiner to produce bullion that meets the required market standard of 99.95% pure gold. Under the terms of refining agreements, the gold doré bars are refined for a fee, and the Company’s share of the refined gold is credited to its bullion account or delivered to buyers. | ||||
Sales are recognised as revenue only when there has been a passing of title and risk to the customer, and: | ||||
(a) | the product is in a form suitable for delivery and no further processing is required by, or on behalf of, the Company; | |||
(b) | the quantity and quality (grade) of the product can be determined with reasonable accuracy; | |||
(c) | the product has been dispatched to the customer and is no longer under the physical control of the Company (or property in the product has earlier passed to the customer); | |||
(d) | the selling price can be measured reliably; |
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(e) | it is probable that the economic benefits associated with the transaction will flow to the Company; and | |||
(f) | the costs incurred or to be incurred in respect of the transaction can be measured reliably. | |||
In the case of the Company’s sales of gold bullion using forward contracts, the Company accounts for these as cash flow hedges in accordance with IAS 39. For spot gold transactions, sales are recorded based on the contract terms agreed with the customer before delivery of the refined gold bullion. The terms are fixed and determinable in that there are no provisional terms, do not contain any embedded derivatives, and specifically include the agreed trade date, the agreed ounces of gold to be sold on that date, the agreed price per ounce and the agreed settlement date. All these terms are determinable before delivery of the refined gold to the customer. Revenue is not recognized on these contracts until all of the above conditions for revenue recognition are met. To the extent that any of these conditions are not met, the gold bullion remains in inventory. | ||||
Aside from contracts transacted as deliveries into hedge commitments the Company has 4 counterparties with whom it normally transacts spot sales. Generally the terms of each individual sale is similar in that title passes when the gold is delivered to the counterparty and the Company no longer has possession of the gold. Settlement of the sale is normally effected on the day of delivery unless separately agreed arrangements are made for a specific sale. Contractual arrangements for all of the Company’s sales may vary depending on the counterparty, but all contracts specify the agreed sale price, the delivery date and delivery requirements. | ||||
The Company does not use any estimates nor apply any assumptions in recognising revenue, nor does the Company’s sales arrangements contain any provisional pricing. | ||||
(xx) | Interest Income | |||
Interest income is recognised on a time proportion basis using the effective interest rate method. | ||||
(xxi) | Cash and cash equivalents | |||
For the purpose of the statement of cash flows and balance sheet, cash includes: | ||||
(a) | cash on hand and at call deposits with banks or financial institutions, net of bank overdrafts; and | |||
(b) | investments in money market instruments with less than 90 days to maturity from the date of acquisition. | |||
(xxii) | Employee benefits | |||
The amounts expected to be paid to employees for their pro-rata entitlement to annual and sick leave are accrued annually and measured at the amounts expected to be paid when the liabilities are settled having regard to period of service and statutory obligations. Long-service leave entitlements are determined in accordance with the requirements for other long-term employee benefits. | ||||
The Company contributes a portion of the employee’s salary package to defined contribution plans for its employees of the employee’s individual selection for expatriate employees and the PNG NASFUND for PNG national employees. A defined contribution plan is a pension plan under which the Company pays fixed contributions into a separate entity (a fund) and will have no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees benefits relating to employee service in the current and prior periods. For defined contribution plans, the Company pays contributions to a privately administered pension plan on a mandatory basis. Once the contributions have been paid, the Company has no further payment obligations. The regular contributions constitute net periodic costs for the year in which they are due and as such are included in staff costs. | ||||
(xxiii) | Provisions | |||
Provisions are recognised when the Company has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation, and a reliable estimate of the amount can be made. | ||||
(xxiv) | Dividends | |||
Dividends are recorded in the Company’s financial statements in the period in which they are approved by the Company’s directors. | ||||
(xxv) | Income tax | |||
Tax effect accounting procedures are followed using the liability method for all temporary differences arising between the tax bases of assets and liabilities and their carrying values for financial reporting purposes. Income tax on temporary differences is set aside to the deferred tax liability and deferred tax asset accounts at current enacted tax rates. Deferred tax assets relating to deductible temporary differences and tax losses are only carried forward as an asset to the extent that it is probable that future taxable profit will be available against which the deductible temporary differences and tax losses can be utilised. |
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(xxvi) | Foreign currency translation | |
As the Company’s revenue is denominated in US dollars and the majority of its fixed asset purchases and costs are in US dollars or currencies related to US dollars, the Company’s directors have adopted the US dollar as the Company’s measurement and reporting currency. | ||
Foreign currency transactions (other than US dollars) are initially translated into US currency at the rate of exchange at the date of the transaction. At the date of the balance sheet, amounts payable and receivable in foreign currencies are translated to US dollars at rates of exchange current at that date. Resulting exchange differences are brought to account in determining the profit or loss for the year. | ||
Where a foreign operation has a functional currency other than US dollars, the results and financial position of the foreign operation are translated as follows: |
(a) | assets and liabilities are translated at the closing rate at the date of the balance sheet; | ||
(b) | income and expenses are translated at exchange rates at the date of the transactions; | ||
(c) | all resulting exchange differences are recognized as a separate component of equity. |
(xxvii) | Segment reporting | |
A business segment is a group of assets and operations engaged in providing products or services that are subject to risks and returns that are different to those of other business segments. | ||
A geographical segment is engaged in providing products or services within a particular economic environment and is subject to risks and returns that are different from those of segments operating in other economic environments. Within the geographical segment risks associated with sales revenues are different from those associated with assets and liabilities. | ||
(xxviii) | Comparative figures | |
Where necessary, comparative figures have been adjusted to conform to changes in presentation in the current year. | ||
(xxix) | Rounding of amounts | |
The Financial Statements have been rounded to the nearest thousand dollars. | ||
(xxx) | Significant risks and uncertainties | |
The Lihir mine is subject to the provisions of the PNG Mining Act 1992 which governs the granting of mining rights and the conditions upon which those rights may be terminated. In particular, the Company is party to a mining development contract, dated March 17, 1995 (the “Mining Development Contract”) with the PNG Government, which sets forth the terms upon which the Company may exercise its rights under the Special Mining Lease which governs the Lihir mine. Under certain limited circumstances, the PNG Government may terminate the Mining Development Contract and therefore, the Special Mining Lease. Any such termination would prohibit the continued operation of the Lihir mine. | ||
(xxxi) | Critical accounting estimates and judgments | |
The preparation of Financial Statements in accordance with International Financial Reporting Standards requires management to make estimates and assumptions concerning the future that affect the amounts reported in the financial statements and accompanying notes. Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Actual results may differ from those estimates. | ||
The most significant estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year relate to the recoverability of long-lived assets and non-current ore stockpiles, the provision for restoration and rehabilitation obligations and the recoverability of deferred tax assets. The resulting accounting estimates will, by definition, seldom equal the related actual results. Management believes the assumptions that they have adopted are reasonable and supportable. | ||
Key estimates and assumptions made in the preparation of these financial statements are described below: | ||
Recoverability of long-lived assets |
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Recoverability of non-current ore stockpiles | ||
Provision for restoration and rehabilitation obligations | ||
Recoverability of deferred tax assets | ||
As noted above, judgments are made in designing and applying the Company’s accounting policies, including the above policies and the policy for deferred mining costs, described in note 1 (vi). Other than these items and the disclosures made elsewhere in these financial statements, there were no other items of critical judgment that warrant separate disclosure. |
(i) | In August 2005, the International Accounting Standards Board (“IASB”) issued International Financial Reporting Standard (“IFRS”) 7 “Financial Instruments: Disclosures”. IFRS 7 revises and enhances IAS 30 “Disclosures in the Financial Statements of Banks and Similar Financial Institutions” and IAS 32 “Financial Instruments; Disclosures and Presentation”. IFRS 7 is applicable to annual periods beginning on or after January 1, 2007. The group has not elected to early adopt IFRS 7. |
(ii) | In November 2006, the IASB issued IFRS 8 “Operating Segments”. IFRS 8 replaces IAS 14 “Segment Reporting” and aligns segment reporting with the requirements of Statement of Financial Accounting Standard (SFAS) 131. IFRS 8 is applicable to annual periods beginning on or after January 1, 2009. The group has not elected to early adopt IFRS 8. |
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• | compliance with the 1998 World Bank Environmental Health and Safety Guidelines; | |
• | providing the Facility Agent and the Independent Engineer each year with the annual life of mine plan and a certificate detailing the debt service cover ratio and the loan life cover ratio for the relevant period; and | |
• | a restriction on committing to forward sales or derivative hedging instruments which would create a commitment of more than (i) 10% of its proven and probable reserves, and (ii) 80% of its annual exposure to foreign exchange and interest rate market risks. |
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2006 | 2005 | 2004 | ||||||||||
$ 000 | $ 000 | $ 000 | ||||||||||
Operating profit before taxation has been determined after crediting / (charging): | ||||||||||||
SALES AND OTHER REVENUE | ||||||||||||
Gold sales at spot | 384,363 | 263,919 | 245,397 | |||||||||
Realisation of hedging instruments | (59,486 | ) | (25,233 | ) | (6,764 | ) | ||||||
Gold lease rate fees | 2,765 | 5,016 | 4,595 | |||||||||
Fair value losses | (1,682 | ) | (5,390 | ) | 8,608 | |||||||
Realisation of deferred hedging income | 661 | 661 | 661 | |||||||||
Realisation of deferred hedging costs | (17,794 | ) | (14,147 | ) | (17,829 | ) | ||||||
Other revenue | 1,627 | 45 | — | |||||||||
Total revenue | 310,454 | 224,871 | 234,668 | |||||||||
OPERATING EXPENSES | ||||||||||||
Refining and related costs | (928 | ) | (751 | ) | (780 | ) | ||||||
Royalties on sales | (6,356 | ) | (4,862 | ) | (4,864 | ) | ||||||
Management fees | — | (1,125 | ) | (1,500 | ) | |||||||
Operating consumables | (124,087 | ) | (108,914 | ) | (103,542 | ) | ||||||
Contracted services | (53,953 | ) | (45,944 | ) | (43,729 | ) | ||||||
Staff costs | (42,350 | ) | (33,523 | ) | (27,561 | ) | ||||||
Mining levy | (3,020 | ) | (6,389 | ) | (8,461 | ) | ||||||
Insurance | (6,297 | ) | (4,744 | ) | (5,221 | ) | ||||||
Air travel | (4,979 | ) | (4,896 | ) | (4,419 | ) | ||||||
Operating lease rentals | (1,387 | ) | (687 | ) | (2,015 | ) | ||||||
Consultants | (7,209 | ) | (5,262 | ) | (3,883 | ) | ||||||
Donations and community assistance | (8,257 | ) | (5,370 | ) | (3,636 | ) | ||||||
Net foreign exchange gains / (losses) | (1,212 | ) | 1,358 | (5,900 | ) | |||||||
Provisions for stores stock obsolescence | (817 | ) | (982 | ) | (963 | ) | ||||||
Provision for doubtful debts | (366 | ) | (354 | ) | (389 | ) | ||||||
Deferred mining costs | 56,349 | 25,048 | 37,865 | |||||||||
Costs deferred and transferred to inventories | 19,395 | 42,128 | 3,557 | |||||||||
Inventory write-off: Economic grade stockpile | — | (2,920 | ) | — | ||||||||
Impairment reversal: Mine properties and deferred mining costs | — | — | 205,723 | |||||||||
Impairment reversal/(charge) Economic grade stockpile | — | — | 90,200 | |||||||||
Profit/(loss) on disposal of assets | 61 | (2,492 | ) | — | ||||||||
Other expenses | (6,835 | ) | (10,329 | ) | (9,138 | ) | ||||||
Depreciation and amortisation mine properties | (37,444 | ) | (35,757 | ) | (32,929 | ) | ||||||
Total operating expenses | (229,692 | ) | (206,767 | ) | 78,415 | |||||||
FINANCE COSTS | ||||||||||||
Interest expense on gold loan | (1,526 | ) | (438 | ) | 3,512 | |||||||
Non-cash interest expense on rehabilitation | (671 | ) | (608 | ) | — | |||||||
Other finance costs | (4,032 | ) | (2,542 | ) | (2,110 | ) | ||||||
Total finance costs | (6,229 | ) | (3,588 | ) | 1,402 | |||||||
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2006 | 2005 | |||||||
$ 000 | $ 000 | |||||||
Cash at bank and on hand | 21,408 | 2,596 | ||||||
Short term deposits with financial institutions | 25,624 | 125,240 | ||||||
47,032 | 127,836 | |||||||
2006 | 2005 | 2004 | ||||||||||
$ 000 | $ 000 | $ 000 | ||||||||||
Reconciliation of cash flow from operating activities to operating profit after tax | ||||||||||||
Operating profit after tax | 53,837 | 9,788 | 329,221 | |||||||||
Add back non-cash items: | ||||||||||||
Depreciation and amortization | 37,444 | 35,757 | 32,929 | |||||||||
Fair value losses | 1,682 | 5,390 | (8,608 | ) | ||||||||
Impairment reversal – mine properties and deferred mining costs | — | — | (205,723 | ) | ||||||||
Impairment (reversal)/charge – economic grade stockpiles | — | — | (90,200 | ) | ||||||||
Amortisation of deferred hedging income | (661 | ) | (661 | ) | (661 | ) | ||||||
Amortisation of deferred hedging costs | 17,795 | 14,147 | 17,829 | |||||||||
Provision for doubtful debts | 366 | 354 | 389 | |||||||||
(Profit)/loss on disposal of assets | (61 | ) | 2,492 | (49 | ) | |||||||
Increase in deferred mining non-cash | (6,668 | ) | (3,297 | ) | (3,115 | ) | ||||||
Change in operating assets and liabilities: | ||||||||||||
Increase/(decrease) in provision for income taxes payable | 340 | — | — | |||||||||
Increase/(decrease) in provision for deferred income tax | 21,792 | 5,949 | (14,736 | ) | ||||||||
(Increase)/decrease in debtors and prepayments | 131 | 689 | 1,187 | |||||||||
Increase in inventories | (19,819 | ) | (46,762 | ) | (3,236 | ) | ||||||
Increase in deferred mining costs cash | (49,681 | ) | (21,751 | ) | (34,750 | ) | ||||||
Increase/(decrease) in creditors | (722 | ) | 5,029 | 8,504 | ||||||||
Increase in provisions | 2,915 | 2,418 | 1,370 | |||||||||
Net cash flow from operating activities | 58,690 | 9,542 | 30,351 | |||||||||
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2006 | 2005 | 2004 | ||||||||||
$ 000 | $ 000 | $ 000 | ||||||||||
INCOME TAX EXPENSE | ||||||||||||
Current tax | 311 | 1,295 | (111,412 | ) | ||||||||
Under / (over) provided in prior years | 29 | — | — | |||||||||
340 | 1,295 | (111,412 | ) | |||||||||
Deferred tax | 23,327 | 4,654 | 96,676 | |||||||||
Under / (over) provided in prior years | (1,535 | ) | — | — | ||||||||
21,792 | 4,654 | 96,676 | ||||||||||
Total income tax expense | 22,132 | 5,949 | (14,736 | ) | ||||||||
Profit before tax | 75,969 | 15,737 | 314,485 | |||||||||
Prima facie income tax expense on operating profit at 30% | 22,791 | 4,721 | 94,345 | |||||||||
Tax effect of amounts which are not deductible (taxable) in calculating taxable income | ||||||||||||
- Expenses not deductible for tax purposes | 922 | 8 | 2,391 | |||||||||
- Section 72A double deductions | (75 | ) | (75 | ) | (60 | ) | ||||||
23,638 | 4,654 | 96,676 | ||||||||||
Recognition of previously unrecognized deferred tax asset | — | — | (111,412 | ) | ||||||||
Under (over) provided in prior years | (1,506 | ) | 1,295 | — | ||||||||
Tax expense / (benefit) | 22,132 | 5,949 | (14,736 | ) | ||||||||
2006 | 2005 | |||||||
$ 000 | $ 000 | |||||||
DEFERRED INCOME TAX | ||||||||
Deferred tax assets: | ||||||||
- Deferred tax asset to be recovered within 12 months | 20,658 | 14,268 | ||||||
- Deferred tax asset to be recovered after more than 12 months | 152,476 | 138,580 | ||||||
173,134 | 152,848 | |||||||
Deferred tax liabilities: | ||||||||
- Deferred tax liabilities to be recovered within 12 months | (2,581 | ) | (6,538 | ) | ||||
- Deferred tax liabilities to be recovered after more than 12 months | (84,327 | ) | (58,571 | ) | ||||
(86,908 | ) | (65,109 | ) | |||||
Balance at beginning of year | 87,739 | 84,812 | ||||||
Credited / (charged) to the income statement | (21,792 | ) | (5,949 | ) | ||||
Tax charged to equity | 20,279 | 8,876 | ||||||
Balance at end of year | 86,226 | 87,739 | ||||||
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Provisions | ||||||||||||||||||||||||
Deferred tax assets: | Inventory | of assets | Derivatives | Tax losses | Other | Total | ||||||||||||||||||
At January 1 2006 | 1,590 | 6,185 | 78,952 | 65,613 | 508 | 152,848 | ||||||||||||||||||
Credited / (charged) to the income statement | (1,590 | ) | 898 | 505 | 231 | (159 | ) | (115 | ) | |||||||||||||||
Credited / (charged) to equity | 7 | 20,385 | 9 | — | 20,401 | |||||||||||||||||||
At December 31 2006 | — | 7,090 | 99,842 | 65,853 | 349 | 173,134 | ||||||||||||||||||
Accelerated | ||||||||||||||||||||||||
tax | Consumable | Deferred | Prepaid | |||||||||||||||||||||
Deferred tax liabilities: | depreciation | stores | mining | insurance | Other | Total | ||||||||||||||||||
At January 1 2006 | (30,976 | ) | (6,414 | ) | (27,594 | ) | (125 | ) | — | (65,109 | ) | |||||||||||||
Charged/(credited) to the income statement | (8,791 | ) | 4,003 | (16,905 | ) | (46 | ) | 62 | (21,677 | ) | ||||||||||||||
(Credited)/charged to equity | — | — | — | — | (122 | ) | (122 | ) | ||||||||||||||||
At December 31 2006 | (39,767 | ) | (2,411 | ) | (44,499 | ) | (171 | ) | (60 | ) | (86,908 | ) | ||||||||||||
2006 | 2005 | 2005 | ||||||||||
Derivative financial instruments | $ 000 | $ 000 | $ 000 | |||||||||
Current assets | ||||||||||||
- Forward contracts | 269 | 543 | 298 | |||||||||
- Put Options | — | — | 175 | |||||||||
269 | 543 | 473 | ||||||||||
Non-current assets | ||||||||||||
- Forward contracts | 2,419 | 4,236 | 19,382 | |||||||||
1,751 | ||||||||||||
2,419 | 4,236 | 21,133 | ||||||||||
Current liabilities | ||||||||||||
- Forward contracts | 35,984 | 36,531 | 40,915 | |||||||||
- Calls options sold | 25,553 | 4,262 | 10,884 | |||||||||
61,537 | 40,793 | 51,799 | ||||||||||
Non-current liabilities | ||||||||||||
- Forward contracts | 251,745 | 192,224 | 179,615 | |||||||||
- Call options sold | 22,209 | 34,933 | 23,777 | |||||||||
273,954 | 227,157 | 203,392 | ||||||||||
- F-19 -
Table of Contents
Forward Sales | Put Options Bought | Call Options Sold | ||||||||||
Ounces | Price | Ounces | Price | Ounces | Price | |||||||
0-3 months | 47,500 | $327.56 | 19,000 | $315.00 | 19,000 | $307.00 | ||||||
3-6 months | 10,000 | $339.40 | 19,000 | $315.00 | 19,000 | $307.00 | ||||||
6-9 months | 15,000 | $326.40 | 19,000 | $315.00 | 19,000 | $307.00 | ||||||
9-12 months | 42,500 | $333.20 | 19,000 | $315.00 | 19,000 | $307.00 | ||||||
2008 | 145,000 | $327.12 | — | $0.00 | — | $0.00 | ||||||
2009(1) | 240,000 | $371.67 | — | $0.00 | — | $0.00 | ||||||
2010(1) | 240,000 | $371.67 | — | $0.00 | — | $0.00 | ||||||
2011(1) | 120,000 | $371.67 | 13,000 | $375.00 | 13,000 | $375.00 | ||||||
2012 | — | $0.00 | 26,000 | $375.00 | 26,000 | $375.00 | ||||||
2013 | — | $0.00 | 26,000 | $375.00 | 26,000 | $375.00 | ||||||
860,000 | $358.62 | 141,000 | $342.66 | 141,000 | $338.35 | |||||||
(1) | The gross price for the forwards in these years is shown. The price net of fees is $350.00. |
- F-20 -
Table of Contents
2006 | 2005 | 2004 | ||||||||||
$ 000 | $ 000 | $ 000 | ||||||||||
Forward contracts | (63,153 | ) | (53,476 | ) | (40,183 | ) | ||||||
Deferred hedging gains | 1,930 | 1,965 | 6,117 | |||||||||
Deferred taxation | 17,876 | 12,075 | 15,682 | |||||||||
(43,347 | ) | (39,436 | ) | (18,384 | ) | |||||||
2006 | 2005 | |||||||
$ 000 | $ 000 | |||||||
CURRENT | ||||||||
Stores | 47,636 | 43,567 | ||||||
Less: Provision for obsolescence | (6,116 | ) | (5,299 | ) | ||||
41,520 | 38,268 | |||||||
Production work in progress | 2,094 | 2,824 | ||||||
Finished goods | 4,804 | 4,584 | ||||||
Ore stockpiles | 26,877 | 36,036 | ||||||
75,295 | 81,712 | |||||||
NON-CURRENT | ||||||||
Ore stockpiles | 141,730 | 115,494 | ||||||
141,730 | 115,494 | |||||||
- F-21 -
Table of Contents
2006 | 2005 | |||||||
$ 000 | $ 000 | |||||||
CURRENT | ||||||||
Other amounts receivable from third parties | 7,586 | 7,926 | ||||||
Less: Provision for doubtful debts | (2,945 | ) | (2,579 | ) | ||||
4,641 | 5,347 | |||||||
NON-CURRENT | ||||||||
Other amounts receivable from third parties | 400 | 476 | ||||||
400 | 476 | |||||||
2006 | 2005 | |||||||
$ 000 | $ 000 | |||||||
NON-CURRENT | ||||||||
Deferred mining costs | 148,330 | 91,981 | ||||||
148,330 | 91,981 | |||||||
Tonnes deferred (000’s tonnes) | 72,089 | 46,041 | ||||||
Strip ratio | 2.91 | 2.91 |
2006 | 2005 | |||||||
$ 000 | $ 000 | |||||||
Carrying amount at start of year | 91,981 | 66,933 | ||||||
- Overburden costs attributed to ore mined during the period (cash) | (42,227 | ) | (50,782 | ) | ||||
- Overburden costs attributed to ore mined during the period (non-cash) | (5,667 | ) | (7,698 | ) | ||||
- Total costs of material mined during the period (cash) | 91,908 | 72,533 | ||||||
- Total costs of material mined during the period (non-cash) | 12,335 | 10,995 | ||||||
Carrying amount at end of year | 148,330 | 91,981 | ||||||
- F-22 -
Table of Contents
2006 | 2005 | |||||||
$ 000 | $ 000 | |||||||
CAPITAL WORKS IN PROGRESS | ||||||||
Cost brought forward | 66,895 | 65,966 | ||||||
Additions | 180,711 | 99,492 | ||||||
Transfers | (42,587 | ) | (98,563 | ) | ||||
Costs carried forward | 205,019 | 66,895 | ||||||
PLANT AND EQUIPMENT | ||||||||
Cost brought forward | 670,024 | 620,652 | ||||||
Transfers from capital works in progress | 26,747 | 55,437 | ||||||
Additions | 7,003 | — | ||||||
Disposals | (2,544 | ) | (6,065 | ) | ||||
Cost carried forward | 701,230 | 670,024 | ||||||
Depreciation brought forward | (225,568 | ) | (202,284 | ) | ||||
Charge for the year | (24,463 | ) | (27,005 | ) | ||||
Disposals | 2,513 | 3,721 | ||||||
Depreciation carried forward | (247,518 | ) | (225,568 | ) | ||||
Net book value | 453,712 | 444,456 | ||||||
LAND AND BUILDINGS | ||||||||
Cost brought forward | 117,697 | 80,132 | ||||||
Transfers from capital works in progress | 1,107 | 37,565 | ||||||
Cost carried forward | 118,804 | 117,697 | ||||||
Depreciation brought forward | (25,280 | ) | (22,824 | ) | ||||
Charge for the year | (3,075 | ) | (2,456 | ) | ||||
Depreciation carried forward | (28,355 | ) | (25,280 | ) | ||||
Net book value | 90,449 | 92,417 | ||||||
DEFERRED EXPENDITURE | ||||||||
Cost brought forward | 277,342 | 271,781 | ||||||
Transfers from capital works in progress | 14,733 | 5,561 | ||||||
Disposals | (1,182 | ) | — | |||||
Cost carried forward | 290,893 | 277,342 | ||||||
Depreciation brought forward | (84,595 | ) | (78,346 | ) | ||||
Charge for the year | (9,773 | ) | (6,249 | ) | ||||
Disposals | 1,182 | — | ||||||
Depreciation carried forward | (93,186 | ) | (84,595 | ) | ||||
Net book value | 197,707 | 192,747 | ||||||
REHABILITATION | ||||||||
Cost brought forward | 6,207 | 6,242 | ||||||
Additions / (deductions) | 616 | (35 | ) | |||||
Cost carried forward | 6,823 | 6,207 |
- F-23 -
Table of Contents
2006 | 2005 | |||||||
$ 000 | $ 000 | |||||||
Amortisation brought forward | (2,376 | ) | (2,329 | ) | ||||
Charge for the year | (133 | ) | (47 | ) | ||||
Amortisation carried forward | (2,509 | ) | (2,376 | ) | ||||
Net book value | 4,314 | 3,831 | ||||||
Total mine properties | 951,201 | 800,346 | ||||||
2006 | 2005 | |||||||
$ 000 | $ 000 | |||||||
Other listed securities: | ||||||||
Equity securities | 33,001 | — | ||||||
33,001 | — | |||||||
2006 | 2005 | |||||||
$ 000 | $ 000 | |||||||
CURRENT | ||||||||
Trade creditors and accruals | 46,140 | 33,950 | ||||||
Amounts payable to related parties | — | 476 | ||||||
Other payables | 427 | 265 | ||||||
46,567 | 34,691 | |||||||
2006 | 2005 | |||||||
$ 000 | $ 000 | |||||||
CURRENT | ||||||||
Employee provisions | 6,427 | 5,349 | ||||||
6,427 | 5,349 | |||||||
NON CURRENT | ||||||||
Employee provisions | 3,164 | 2,616 | ||||||
Rehabilitation provision | 11,097 | 9,808 | ||||||
14,261 | 12,424 | |||||||
- F-24 -
Table of Contents
2006 | 2005 | |||||||
$ 000 | $ 000 | |||||||
Employee provisions current | ||||||||
Annual leave | 2,883 | 2,427 | ||||||
Sick leave | 625 | 559 | ||||||
Service bonus | 1,267 | 2,092 | ||||||
Short term incentives | 1,207 | 193 | ||||||
Long service leave current | 445 | 78 | ||||||
6,427 | 5,349 | |||||||
2006 | 2005 | |||||||
$ 000 | $ 000 | |||||||
Employee provisions non-current | ||||||||
Long service leave | 2,188 | 2,192 | ||||||
Service bonus | 976 | 424 | ||||||
3,164 | 2,616 | |||||||
2006 | 2005 | |||||||
$ 000 | $ 000 | |||||||
Rehabilitation provision | ||||||||
Carrying amount at start of year | 9,808 | 9,235 | ||||||
- additional / (reduction in) provision for changes in estimated cash outflows | 414 | (1,868 | ) | |||||
- additional provision due to ground disturbance | 204 | 451 | ||||||
- life of mine variation | — | 1,382 | ||||||
- interest charge | 671 | 608 | ||||||
Carrying amount at end of year | 11,097 | 9,808 | ||||||
2006 | 2005 | |||||||
$ 000 | $ 000 | |||||||
CURRENT | ||||||||
Project financing facility | 26,940 | — | ||||||
Ballarat Goldfields facility | 35,595 | — | ||||||
62,535 | — | |||||||
NON CURRENT | ||||||||
Project financing facility | 218,580 | 215,520 | ||||||
218,580 | 215,520 | |||||||
- F-25 -
Table of Contents
Delivery (in ounces) | First Quarter | Second Quarter | Third Quarter | Fourth Quarter | Full Year | |||||||||||||||||||
2007 | — | — | 30,000 | 30,000 | 60,000 | |||||||||||||||||||
2008 | 30,000 | 30,000 | 15,000 | 25,000 | 100,000 | |||||||||||||||||||
2009 | 50,000 | 35,000 | 30,000 | 15,000 | 130,000 | |||||||||||||||||||
2010 | 40,000 | 25,000 | 15,000 | 20,000 | 100,000 | |||||||||||||||||||
2011 | 40,000 | 50,000 | — | — | 90,000 |
Tranche A) | A$45 million to finance the acquisition of Ballarat Goldfields NL shares under the Private Placement pursuant to the Share Subscription agreement (note 15) including associated transaction costs, interest and fees in relation to the facility and any transaction costs associated with the merger; | |
Tranche B) | an amount of A$5 million to be made available to cover expenses following successful completion of the merger. |
- F-26 -
Table of Contents
Ballarat | Ballarat | Revolving | Revolving | |||||||||||||||||||||||||||||
Goldfields | Goldfields | Gold | Gold | Credit | Credit | |||||||||||||||||||||||||||
Facility | Facility | Loan | Loan | Facility | Facility | Total | Total | |||||||||||||||||||||||||
US$ 000 | US$ 000 | US$ 000 | US$ 000 | US$ 000 | US$ 000 | US$ 000 | US$ 000 | |||||||||||||||||||||||||
Repayment Maturity | 2006 | 2005 | 2006 | 2005 | 2006 | 2005 | 2006 | 2005 | ||||||||||||||||||||||||
Current | ||||||||||||||||||||||||||||||||
Less than one year | 35,595 | — | 26,940 | — | — | — | 62,535 | — | ||||||||||||||||||||||||
Non-current | ||||||||||||||||||||||||||||||||
Between one and two years | — | — | 44,900 | 26,940 | — | — | 44,900 | 26,940 | ||||||||||||||||||||||||
Between two and three years | — | — | 58,370 | 44,900 | — | — | 58,370 | 44,900 | ||||||||||||||||||||||||
In excess of three years | — | — | 85,310 | 143,680 | 30,000 | — | 115,310 | 143,600 | ||||||||||||||||||||||||
— | — | 188,580 | 215,520 | 30,000 | — | 218,580 | 215,520 | |||||||||||||||||||||||||
Total | 35,595 | — | 215,520 | 215,520 | 30,000 | — | 281,115 | 215,520 | ||||||||||||||||||||||||
Weighted average interest rate | 8.1 | % | — | 2.6 | % | 2.0 | % | 7.3 | % | — | 2.3 | % | 2.0 | % |
2006 | 2005 | 2004 | ||||||||||
$ 000 | $ 000 | $ 000 | ||||||||||
(a) Issued and paid up capital | ||||||||||||
Ordinary shares | ||||||||||||
Opening balance | 1,027,504 | 1,027,504 | 1,025,288 | |||||||||
Shares reclassified as treasury shares(1) | (435 | ) | — | — | ||||||||
Shares issued | — | — | 2,286 | |||||||||
Share issue transaction costs | — | — | (70 | ) | ||||||||
Closing balance | 1,027,069 | 1,027,504 | 1,027,504 |
2006 | 2005 | 2004 | ||||||||||
Number of shares ’000 | ||||||||||||
(b) Issued and paid up capital | ||||||||||||
Opening balance | 1,284,225 | 1,284,225 | 1,282,334 | |||||||||
Shares reclassified as treasury shares | (176 | ) | — | — | ||||||||
Shares issued | — | — | 1,891 | |||||||||
Closing balance | 1,284,049 | 1,284,225 | 1,284,225 |
- F-27 -
Table of Contents
2006 | 2005 | 2004 | ||||||||||
$ 000 | $ 000 | $000 | ||||||||||
(a) Reserves | ||||||||||||
Hedging reserve – cash flow hedges | (256,123 | ) | (225,692 | ) | (162,153 | ) | ||||||
Share based payments reserve | 5,421 | — | — | |||||||||
Fair value reserve | 17 | — | — | |||||||||
Foreign currency translation reserve | (4 | ) | — | — | ||||||||
(250,689 | ) | (225,692 | ) | (162,153 | ) | |||||||
Movements: | ||||||||||||
Hedging reserve – cash flow hedges | ||||||||||||
Balance January 1 | (225,692 | ) | (162,153 | ) | (206,548 | ) | ||||||
Forward contracts | (40,563 | ) | (65,119 | ) | (38,062 | ) | ||||||
Call options sold | (9,478 | ) | (1,593 | ) | (4,840 | ) | ||||||
Deferred hedging gains / (losses) | (774 | ) | (5,703 | ) | 17,221 | |||||||
Deferred taxation | 20,384 | 8,876 | 70,076 | |||||||||
Balance December 31 | (256,123 | ) | (225,692 | ) | (162,153 | ) | ||||||
Share based payments reserve | ||||||||||||
Balance January 1 | — | — | — | |||||||||
Share rights expensed | 5,543 | — | — | |||||||||
Deferred taxation | (122 | ) | — | — | ||||||||
Balance December 31 | 5,421 | — | — | |||||||||
Fair value reserve | ||||||||||||
Balance January 1 | — | — | — | |||||||||
Treasury share mark-market revaluation | 17 | — | — | |||||||||
Balance December 31 | 17 | — | — | |||||||||
Foreign currency translation reserve | ||||||||||||
Balance January 1 | — | — | — | |||||||||
Currency translation differences arising during the year | (13 | ) | — | — | ||||||||
Deferred taxation | 9 | — | — | |||||||||
Balance December 31 | (4 | ) | — | — | ||||||||
(b) Accumulated Profits/(losses) | ||||||||||||
Movements in retained profits / (losses) were as follows: | ||||||||||||
Balance January 1 | (18,340 | ) | (28,128 | ) | (357,349 | ) | ||||||
Net profit for the year | 53,837 | 9,788 | 329,221 | |||||||||
Balance December 31 | 35,497 | (18,340 | ) | (28,128 | ) | |||||||
- F-28 -
Table of Contents
2006 | 2005 | 2004 | ||||||||||
$ 000 | $ 000 | $ 000 | ||||||||||
Garnaut, Ross | 210 | 122 | 121 | |||||||||
Siaguru, Anthony (deceased April 16 2004) | — | — | 21 | |||||||||
Kamit, Winifred | 70 | 44 | — | |||||||||
Loudon, Geoff | 70 | 44 | 45 | |||||||||
Cassidy, Peter | 70 | 44 | 45 | |||||||||
Swan, Neil (resigned October 1 2005) | — | 476 | 456 | |||||||||
Arthur Hood (appointed October 1 2005) | 1,064 | 121 | — | |||||||||
Bruce Brook (appointed December 4 2005) | 70 | 3 | — | |||||||||
John O’Reilly (resigned December 31 2006) | 70 | 4 | — |
2006 | 2005 | 2004 | ||||||||||
$ 000 | $ 000 | $ 000 | ||||||||||
Short-term employee benefits | 2,227 | 2,750 | 1,555 | |||||||||
Post-employment benefits | 178 | 293 | 232 | |||||||||
Termination benefits | 1,106 | — | — | |||||||||
Share-based payments | 885 | — | — | |||||||||
4,396 | 3,043 | 1,787 | ||||||||||
(c) | The number of employees, not including directors, whose remuneration and benefits exceeded the equivalent of PNG Kina 100,000 for 2006 fall into the following bands: |
Remuneration and benefit band | Number of employees | |||||||||||
$ | 2006 | 2005 | 2004 | |||||||||
$30,001 - $40,000 | 48 | 11 | 6 | |||||||||
$40,001 - $50,000 | 25 | 7 | 5 | |||||||||
$50,001 - $60,000 | 17 | 6 | 7 | |||||||||
$60,001 - $70,000 | 14 | 2 | 6 | |||||||||
$70,001 - $80,000 | 7 | 3 | 5 | |||||||||
$80,001 - $90,000 | 11 | 4 | 3 | |||||||||
$90,001 - $100,000 | 8 | 5 | 5 | |||||||||
$100,001 - $110,000 | 7 | 10 | 6 | |||||||||
$110,001 - $120,000 | 10 | 4 | 7 | |||||||||
$120,001 - $130,000 | 6 | 9 | 9 | |||||||||
$130,001 - $140,000 | 7 | 5 | 3 | |||||||||
$140,001 - $150,000 | 5 | 9 | 1 | |||||||||
$150,001 - $160,000 | 5 | 7 | 7 | |||||||||
$160,001 - $170,000 | 6 | 6 | 5 | |||||||||
$170,001 - $180,000 | 6 | 7 | 3 | |||||||||
$180,001 - $190,000 | 8 | — | — | |||||||||
$190,001 - $200,000 | 2 | 3 | 1 |
- F-29 -
Table of Contents
Remuneration and benefit band (continued) | Number of employees | |||||||||||
$ | 2006 | 2005 | 2004 | |||||||||
$200,001 - $210,000 | 1 | 3 | — | |||||||||
$210,001 - $220,000 | 5 | 3 | 2 | |||||||||
$220,001 - $230,000 | — | 2 | 1 | |||||||||
$230,001 - $240,000 | 3 | 1 | 1 | |||||||||
$240,001 - $250,000 | 1 | 1 | 1 | |||||||||
$260,001 - $270,000 | 1 | — | 1 | |||||||||
$270,001 - $280,000 | 1 | — | 1 | |||||||||
$280,001 - $290,000 | 1 | 1 | 1 | |||||||||
$320,001 - $330,000 | 1 | — | — | |||||||||
$390,001 - $400,000 | — | 1 | — | |||||||||
$450,001 - $460,000 | 1 | — | — | |||||||||
$470,001 - $480,000 | — | 1 | — | |||||||||
$700,001 - $710,000 | 1 | — | — |
2006 | 2005 | 2004 | ||||||||||
$ 000 | $ 000 | $ 000 | ||||||||||
(a) Assurance services | ||||||||||||
Audit services | ||||||||||||
PricewaterhouseCoopers, PNG Firm | 340 | 249 | 218 | |||||||||
PricewaterhouseCoopers, Other Overseas Firms | 115 | 105 | 147 | |||||||||
Total remuneration for audit services | 455 | 354 | 365 | |||||||||
Other assurance services | ||||||||||||
PricewaterhouseCoopers, PNG Firm | 58 | 52 | — | |||||||||
PricewaterhouseCoopers, Other Overseas Firms | 54 | 59 | — | |||||||||
Total remuneration for other assurance services | 112 | 111 | — | |||||||||
Total remuneration for assurance services | 567 | 465 | 365 | |||||||||
(b) Taxation services | ||||||||||||
PricewaterhouseCoopers | 79 | 129 | 27 | |||||||||
Total remuneration for taxation services | 79 | 129 | 27 | |||||||||
- F-30 -
Table of Contents
2006 | 2005 | |||||||
$ 000 | $ 000 | |||||||
Payable | ||||||||
- not later than one year | 971 | 356 | ||||||
- later than one year but not later than 2 years | 749 | 356 | ||||||
- later than two years but not later than 5 years | 1,302 | 546 | ||||||
- later than 5 years | 2,327 | 2,494 | ||||||
5,349 | 3,752 | |||||||
2006 | 2005 | |||||||
$ 000 | $ 000 | |||||||
Capital expenditure commitments contracted for: | ||||||||
Payable | ||||||||
- not later than one year | 68,264 | 86,287 | ||||||
68,264 | 86,287 | |||||||
- F-31 -
Table of Contents
Acquisition of Segment | ||||||||||||||||||||||||||||||||
Segment Sales Revenue | Segment Assets | Assets | Segment Liabilities | |||||||||||||||||||||||||||||
$ 000 | $ 000 | $ 000 | $ 000 | |||||||||||||||||||||||||||||
2006 | 2005 | 2006 | 2005 | 2006 | 2005 | 2006 | 2005 | |||||||||||||||||||||||||
Papua New Guinea | — | — | 1,411,486 | 1,288,666 | 185,913 | 99,410 | 310,782 | 259,806 | ||||||||||||||||||||||||
Australia | 273,464 | 175,019 | 84,572 | 30,740 | 34,802 | 82 | 324,672 | 231,853 | ||||||||||||||||||||||||
North America | 12,281 | — | — | — | — | — | ||||||||||||||||||||||||||
Europe | 25,310 | 47,260 | — | — | — | — | — | — | ||||||||||||||||||||||||
Asia | 13,823 | 16,407 | — | — | — | — | 48,727 | 44,275 | ||||||||||||||||||||||||
Unallocated (non-cash deferred hedging realisation) | (17,134 | ) | (13,486 | ) | — | — | — | — | — | — | ||||||||||||||||||||||
Total Group | 307,744 | 225,200 | 1,496,058 | 1,319,406 | 220,715 | 99,492 | 684,181 | 535,934 | ||||||||||||||||||||||||
- F-32 -
Table of Contents
2006 | 2005 | |||||||
$ 000 | $ 000 | |||||||
Rio Tinto Plc, until October 10 2005, supplied management services and bore expenses on behalf of the Company which were subsequently recharged to the Company | ||||||||
- Secondment of management | — | 995 | ||||||
- Technical services | — | 1,680 | ||||||
— | 2,675 | |||||||
LMC management fee | — | 1,125 | ||||||
Anthony Garnaut, a relative of a director, provided consulting services to the Company on an arms length basis. | — | 18 |
2006 | 2005 | 2004 | ||||||||||
$ 000 | $ 000 | $ 000 | ||||||||||
Net profit attributable to ordinary shareholders | 53,837 | 9,788 | 329,221 | |||||||||
Weighted average number of ordinary shares (thousands) | 1,284,049 | 1,284,225 | 1,284,082 | |||||||||
Basic EPS (cents/share) | 4.2 | 0.8 | 25.6 | |||||||||
Diluted number of ordinary shares (thousands) | 1,284,225 | 1,284,225 | 1,284,082 | |||||||||
Diluted EPS (cents/share) | 4.2 | 0.8 | 25.6 |
Name of subsidiary | % ownership interest | Country of incorporation | ||||
Niugini Mining Limited | 100% | Papua New Guinea | ||||
Niugini Mining Australia Pty Ltd | 100% | Australia | ||||
Lihir Management Company Limited | 100% | Papua New Guinea | ||||
Lihir Business Development Limited | 100% | Papua New Guinea | ||||
Lihir Services Australia Pty Ltd | 100% | Australia | ||||
Lihir Australian Holdings Pty Ltd | 100% | Australia |
- F-33 -
Table of Contents
Per Share | ||||||||||||||||||||||||||||||||||||
Right | Number | Number | Number | |||||||||||||||||||||||||||||||||
Exercise | Indicative | Issued | exercised | lapsed | ||||||||||||||||||||||||||||||||
Date of | Expiry | Price | value | Hurdle | Number at | during | during | during | Number at | |||||||||||||||||||||||||||
Grant | Date | $ | $ | Conditions | Jan-1-06 | Period | period | period | Dec-31-06 | |||||||||||||||||||||||||||
Aug-06 | Sep-15-15 | 0.00 | 2.35 | 1 | — | 45,147 | 40,632 | 4,515 | — | |||||||||||||||||||||||||||
Aug-06 | Sep-15-15 | 0.00 | 2.35 | 2 | — | 45,147 | — | — | 45,147 | |||||||||||||||||||||||||||
Aug-06 | Sep-15-15 | 0.00 | 2.21 | 3 | — | 67,719 | 67,719 | — | — | |||||||||||||||||||||||||||
Aug-06 | Sep-15-15 | 0.00 | 2.21 | 4 | — | 67,720 | 67,720 | — | — | |||||||||||||||||||||||||||
Oct-06 | Dec-31-15 | 0.00 | 2.37 | 1,2 | — | 8,028 | — | — | 8,028 | |||||||||||||||||||||||||||
Oct-06 | Dec-31-15 | 0.00 | 1.69 | 3 | — | 6,018 | — | — | 6,018 | |||||||||||||||||||||||||||
Oct-06 | Dec-31-15 | 0.00 | 0.73 | 4 | — | 6,020 | — | — | 6,020 | |||||||||||||||||||||||||||
Sep-06 | Dec-31-15 | 0.00 | 2.30 | 1,2 | — | 178,988 | — | — | 178,988 | |||||||||||||||||||||||||||
Dec-06 | Dec-31-15 | 0.00 | 2.16 | 3 | — | 113,343 | — | — | 113,343 | |||||||||||||||||||||||||||
Dec-06 | Dec-31-15 | 0.00 | 1.95 | 4 | — | 113,348 | — | — | 113,348 | |||||||||||||||||||||||||||
Dec-06 | Dec-31-15 | 0.00 | 1.05 | 3 | — | 12,409 | — | — | 12,409 | |||||||||||||||||||||||||||
Dec-06 | Dec-31-15 | 0.00 | 0.79 | 4 | — | 16,530 | — | — | 16,530 | |||||||||||||||||||||||||||
Dec-06 | Dec-31-15 | 0.00 | 1.19 | 3 | — | 4,120 | — | — | 4,120 | |||||||||||||||||||||||||||
Dec-06 | Dec-31-15 | 0.00 | 1.98 | 3 | — | 4,364 | — | — | 4,364 | |||||||||||||||||||||||||||
Dec-06 | Dec-31-15 | 0.00 | 1.53 | 4 | — | 4,364 | — | — | 4,364 | |||||||||||||||||||||||||||
Dec-06 | Dec-31-15 | 0.00 | 2.44 | 1,2 | — | 54,612 | — | — | 54,612 | |||||||||||||||||||||||||||
Dec-06 | Dec-31-15 | 0.00 | 1.32 | 3 | — | 40,959 | — | — | 40,959 | |||||||||||||||||||||||||||
Dec-06 | Dec-31-15 | 0.00 | 1.38 | 4 | — | 40,959 | — | — | 40,959 |
Weighted average price at | ||||||||||||
Date of grant | Number exercised | Exercise date | exercise date (i) | |||||||||
Aug-06 | 176,071 | Dec 1 2006 | $2.37 |
i. | Purchased over a 5 day period due to restrictions on the volume that could be traded on any one day. |
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i. | Exercise price: Nil | ||
ii. | Expected volatility: 43% | ||
iii. | Risk-free interest rate: 6.05% | ||
iv. | Expected life of right (years): 10 years | ||
v. | Weighted average share price at grant date: $2.07 | ||
vi. | Expected dividend yield: 0% |
2006 | 2005 | |||||||
$US ‘000 | $US ‘000 | |||||||
Executive share plan | 488 | — |
1. | Individuals are set key performance indicators (KPI’s) based around the Company’s performance in developing corporate management and structures in line with Board policies to raise the long-term value of the Company, including through project and geographic diversification. The performance condition will be assessed by the Board. | ||
2. | This performance condition will be assessed by the Board against changes in the net present value of the Company. This assessment is to have regard to the amount and timing of net expected cash flows, as indicated by reserves, costs and other relevant factors. | ||
Certain potential sources of change in the company’s net present value will not be included in the assessment of this performance condition as they have been assessed by the Board to be beyond the individuals control and the control of the management team generally. The sources for which adjustments are to be made to date are changes in the gold price, variations in the hedge delivery programme, hydrocarbon pricing (HFO, diesel and lubricants), inflation and changes in exchange rates between the US dollar and the Australian dollar or PNG kina. | |||
3. | This performance condition will be assessed by the Board by reference to the performance of the: |
– | Company’s “total shareholder return” or TSR over the performance period from the VWAP Month Employed until the testing date using the VWAP (volume weighted average share price) for the either 20 trading days up to and excluding September 16 2006/07 for the Managing Director’s share rights or for December 2006 for all other share rights; and | ||
– | Average “total shareholder return” of the Comparator Group using the Comparator Group’s VWAP for the same time periods as applicable above. |
– | is greater by 10% or more, all of the rights subject to this condition will vest; or | ||
– | does not exceed the Comparator Group’s, no rights subject to this condition will vest; or | ||
– | is greater by less than 10% a straight-line calculated proportion of the rights subject to this condition will vest. |
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Total shareholder return or TSR is, broadly, share price growth and dividends reinvested, excluding the impacts of franking credits and taxations. | |||
Comparator Group (Sept 05 grant and Jan 06 grants) Prior to March 2006: Newmont, Barrick, Newcrest, Anglo Gold, Oxiana, Goldfields (South Africa), Placer Dome, Rio Tinto Limited, Harmony and Croesus | |||
After March 2006: Newmont, Barrick, Newcrest, Anglo Gold, Oxiana, Goldfields (South Africa), Kingsgate and Sino Gold. | |||
Comparator Group (Sept 06 grant): Newmont, Barrick, Newcrest, Anglo Gold, Oxiana, Goldfields (South Africa), Kingsgate and Sino Gold. | |||
4. | This performance condition will be assessed to the extent to which the Company’s “total shareholder return” increases over the performance period using the VWAP Month for each participant as the starting share value for the TSR until the testing date using the VWAP for either 20 trading days up to and excluding September 16 2006/07 for the Managing Director’s share rights or for December 2006 for all other share rights. | ||
If the company’s TSR over the performance period increases by: |
– | 15% or more, the participant is entitled to all of the TSR growth share rights vesting; | ||
– | 5% or less, the participant will not be entitled to any TSR growth share rights vesting; or | ||
– | More than 5% but less than 15%, the participant will be entitled to a pro rated number of TSR growth share rights vesting calculated on a straight line basis. |
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$M | ||||
Equity Instruments issued (111,995,996) | 312.7 | |||
Cash | 33.0 | |||
Direct costs | 3.4 | |||
Cost of acquisition | 349.1 | |||
Comprising: | ||||
Mine Properties | 27.5 | |||
Intangibles | 356.4 | |||
Deferred Mining Costs | 19.8 | |||
Net working capital | 25.1 | |||
Deferred tax | (79.7 | ) | ||
Total | 349.1 | |||
a. | Project financing | |
Prior to 1997, certain equity issuance and other offering costs were capitalized as a part of mine properties for IFRS purposes. US GAAP requires equity issuance costs to be offset against shareholders’ equity. | ||
b. | Borrowing cost capitalization as part of mine properties | |
Under IFRS, interest incurred on funds that are borrowed specifically for the purpose of obtaining a qualifying asset is capitalized. | ||
Under US GAAP SFAS 34 “Capitalization of Borrowing Cost”, the amount of interest cost to be capitalised for qualifying assets is intended to be that portion of the interest cost incurred during the assets’ acquisition periods that theoretically could have been avoided (for example, by avoiding additional borrowings or by using the funds expended for the assets to repay existing borrowings) if expenditures for the assets had not been made. | ||
c. | Depreciation of mine properties | |
Depreciation expense as calculated under US GAAP differs from depreciation expense as calculated under IFRS due to the difference in the carrying values of mine properties. The carrying value of mine properties as determined under IFRS was $951 million, $800 million, and $739 million, as of December 31, 2006, 2005 and 2004, respectively. The carrying value of mine properties as determined under US GAAP was $697 million, $536 million, and $464 million, as of December 31, 2006, 2005, and 2004, respectively. The difference in carrying values of mine properties results from the differences described in Notes 34(a), 34(b), and 34(d). The reduced carrying values result in adjustments to depreciation expense of $9.2 million, $9.2 million, and $3.0 million for 2006, 2005, and 2004 respectively. | ||
d. | Impairment: Mine properties | |
Under IAS 36, the impairment test for determining the recoverable amount of a non-current asset is the higher of net selling price and its value in use. Value in use is the net present value of cash flows expected to be realised from the asset, assessed based on the current condition of the asset. Under IFRS, impairment losses may be reversed in subsequent periods. | ||
Under SFAS 144, an impairment loss is recognized if the carrying amount of a long-lived asset (asset group) exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset (asset group). An impairment loss is measured as the excess of the carrying amount of the long-lived asset (asset group) over its fair value. Fair value has been estimated using present value techniques. Under US GAAP, impairment reversals are not permitted. | ||
No impairments or impairment reversals occurred in 2006 or 2005. In 2004, as a result of significant changes in the critical assumptions used to determine the value in use, including increases in the life of mine and reserves and increases in the estimated long term gold price, the directors resolved to partially reverse impairments recognized in 2000 and 1999 to the value of $205.7 million. In determining the value in use, the Company used the long term gold price assumptions of $380 for the year ended 2004 and a pre-tax real discount rate of 7%. As a result of the reversal in 2004, all the impairments recognized in 2000 and 1999, excluding the amount that would have been depreciated of $82.7 million, have been reversed for IFRS as the impairment write-back is limited to the amount that would have been the written down value of the assets had there been no impairment. |
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Under SFAS 144, a long-lived asset (asset group) is tested for recoverability whenever events or changes in circumstances indicate that its carrying amount may not be recoverable. An impairment loss is recognized if the carrying amount of a long-lived asset (asset group) is not recoverable and exceeds its fair value. The carrying amount of a long-lived asset (asset group) is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset (asset group). An impairment loss is measured as the excess of the carrying amount of the long-lived asset (asset group) over its fair value. Fair value has been estimated using present value techniques. Under US GAAP, impairment reversals are not permitted. | ||
e. | Impairment: Economic grade stockpile | |
Under IAS 2, the carrying value of ore stockpiles are assessed each year and carried at the lower of cost and net realisable value. Reductions in the carrying value from cost to net realizable value are recognized as an expense in the period incurred through the recognition of impairment provisions. Subsequent increases in net realizable value are recorded through the reversal of previously recognized impairment provisions up to original cost. | ||
Under US GAAP, the economic grade stockpile is carried at the lower of cost or market. Market means current replacement cost, except that market should not exceed net realizable value. Losses are recognized in the period incurred. Under US GAAP, subsequent increases in net realizable value or reversal of previously recognized losses are not permitted. | ||
In 2004, following the improvement in the gold price environment and improvements to the plant and operating conditions, the directors resolved to reverse previously recognized impairments on the basis that the current estimated net realizable value was higher than zero cost previously recognized under IFRS. The reinstatement to cost resulted in a non-recurring gain of $90.2 million in 2004. Under US GAAP, the cost of the existing stockpile at December 31, 2004 continues to be recorded at zero. | ||
No impairments or impairment reversals were recognized in 2006 or 2005. | ||
f. | Stripping costs incurred during production | |
Under IFRS, the Company defers stripping costs as described in Note 1(vi). Stripping costs include direct expenditures for stripping, drilling, blasting and related depreciation expense. In March 2005, the Financial Accounting Standards Board (FASB) ratified Emerging Issues Task Force (EITF) Issue No. 04-6, “Accounting for Stripping Costs Incurred during Production in the Mining Industry”. EITF No. 04-6 addresses the accounting for stripping costs incurred during the production phase of a mine and refers to these costs as variable production costs that should be included as a component of inventory to be recognized in costs applicable to sales in the same period as the revenue from the sale of the inventory. As a result, capitalization of post-production stripping costs is appropriate only to the extent product inventory exists at the end of a reporting period. The guidance in EITF No. 04-6 is effective for the first reporting period in fiscal years beginning after December 15 2005, with early adoption permitted. The Company elected to adopt EITF No. 04-6 effective January 1 2006. In line with this, all deferred stripping costs have been expensed as a cost of inventory. The impact of the change on January 1 2006 was a cumulative effect adjustment to decrease opening retained earnings by $52.4 million. This was represented by a write off of deferred stripping costs ($92.0 million) and other adjustments to the balance sheet comprising increases in ore stockpiles ($16.2 million), gold in process ($0.4 million) and finished goods ($0.4 million) and decreases in deferred tax liability ($27.6 million) and deferred tax asset ($5.0 million). | ||
The following table shows on a pro forma basis the effect that adoption of EITF No. 04-6 would have on net income (after tax) under US GAAP for the fiscal years ended December 31, 2005 and 2004 respectively: |
2005 | 2004 | |||||||
$‘000 | $‘000 | |||||||
Net income under US GAAP as previously reported | 21,845 | 141,614 | ||||||
Pro forma adjustment to income if the policy of not deferring stripping costs had been adopted as of January 1, 2004 | (12,806 | ) | (21,258 | ) | ||||
Pro forma net income | 9,039 | 120,356 | ||||||
Proforma Net Income Earnings Per Common Share — Basic ($ per share) | 0.01 | 0.09 | ||||||
Proforma Net Income Earnings Per Common Share — Diluted ($ per share) | 0.01 | 0.09 | ||||||
Impact of the adjustment: | ||||||||
Net Earnings Per Common Share – Basic ($ per share) | (0.01 | ) | (0.02 | ) | ||||
Net Earnings Per Common Share – Diluted ($ per share) | (0.01 | ) | (0.02 | ) |
g. | Cumulative effect of change in accounting policy in 2004 | |
In 2004, the Company changed its method of accounting for deferred mining costs. Up until 2004, deferred mining in relation to the Minifie pit was determined on a phase basis consistent with the characteristics of that pit. From January 1, 2004, the Company changed the amortisation basis to deferred mining costs on a pit basis, principally to more accurately reflect the costs of accessing future ore reserves from the Lienetz pit, which is the pit relating to current mining operations. The impact of this change is reflected in the 2004 reconciliation. | ||
h. | Deferred income taxes and valuation allowances | |
The accounting for the deferred income taxes under IFRS and US GAAP is substantially consistent, except for the accounting for valuation allowances. Under IFRS, deferred tax assets are not recognized unless realization of the deferred tax assets is probable. Under US GAAP, deferred tax assets are recognized and to the extent that realization of the deferred tax assets is not considered more likely than not (greater than 50% likelihood of realization) are subject to a valuation allowance. | ||
As of December 31, 2004, the Company determined that based on the weight of available evidence including increased long term gold price, improved operating conditions and plans, and three years of cumulative book earnings under both IFRS and US GAAP, that the valuation allowances provided against deferred tax assets |
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(temporary differences, tax credits and incentives, and tax loss carry forwards) should be reversed because realization of the deferred tax assets was more likely than not. The difference in the deferred tax amounts recognized under IFRS and US GAAP is a result of the GAAP differences described above. | ||
In regards to the classification of deferred taxes between current and non-current, for IFRS purposes all deferred tax asset and liabilities are classified as non-current.. Under US GAAP, the classification of a deferred tax between current and non-current is dependent upon when the deferred tax is expected to be utilised/owed. For example, if the deferred tax asset is expected to be able to reduce the next year’s tax expense, then it would be classified as a current deferred tax asset. As a result of the classification differences, a reclass was required in the reconciliation of the IFRS financial statements for US GAAP. | ||
For US GAAP purposes, current and non-current deferred tax assets and liabilities must be separately disclosed. | ||
i. | Deferred tax benefit under US GAAP | |
Impairment reversals of mine properties and economic grade stockpiles are not permitted under US GAAP. In 2004, this resulted in an increase to the net deferred tax asset under US GAAP. Previously, the Company recognized a full valuation allowance against the deferred tax asset related to this temporary difference. This has been fully reversed in 2004 following the Company’s determination that there will be sufficient future taxable income to utilise the benefit and the tax loss carry-forwards. Also included in this line is the deferred tax effect of the IFRS to USGAAP reconciling items for 2005 and 2006. | ||
j. | Deferred mining costs: | |
Under both IFRS and US GAAP (through 2005), the Company deferred stripping costs as described in Note 1 (vi). Stripping costs included direct expenditures for stripping, drilling, blasting and related depreciation expense. Until April 17, 2000, all mining operations were outsourced to a third party. Subsequent to that date, the Company began conducting direct mining operations on its own behalf. As disclosed in the 2004 financial statements, beginning from April 17, 2000 and through 2002, certain of these mining costs were expensed in the income statement in error rather than being included in deferred mining costs pursuant to the Company’s accounting policy. In 2004, the error was identified and the Company restated the previously issued 2002 US GAAP reconciliations to include the deferral of the direct costs incorrectly expensed. | ||
Under IFRS, the financial statements were not restated because the correction of this error would not have an impact on net income or shareholders’ equity at and for the year ended December 31, 2002 because any additional mining costs capitalized in 2002 would have resulted in a corresponding reduction in the reversal of the impairment loss recognized in that year. | ||
k. | Subsequent event | |
As discussed in Notes 18 and 33, Lihir completed the acquisition of an Australian gold mine development company, Ballarat. The acquisition became effective on February 26, 2007. Under US GAAP, as this acquisition occurred prior to the issuance of these financial statements, but after the balance sheet date, thus the acquisition is considered a significant non-adjusting subsequent event that requires disclosure. | ||
Management will continue to assess the impact of SFAS 141 “Business Combinations” and it is likely that GAAP differences will arise in relation to this acquisition. | ||
l. | Recently Issued Accounting Pronouncements | |
In November 2004, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standard (SFAS) No. 151, “Inventory Costs — an amendment of ARB No. 43”. SFAS 151 adopts the IASB view related to inventories that abnormal amounts of idle capacity and spoilage costs should be excluded from the cost of inventory and expensed when incurred. SFAS 151 was effective for fiscal years beginning after June 15, 2005 and was to be applied prospectively. Adoption of SFAS 151 did not have an impact on the Company’s financial statements. | ||
In December 2004, the FASB issued SFAS No. 123 (Revised), “Share-Based Payment” (SFAS 123R). SFAS 123R supersedes Accounting Principles Board opinion No. 25. Under US GAAP, the Group has applied the fair value recognition provisions of SFAS 123R since January 1, 2006. As this is the first year the share plan was established, there are no additional adjustments required in the current period as a result of this application. | ||
In May 2005, the FASB issued “Accounting Changes and Error Corrections” (SFAS 154), which deals with all voluntary changes in accounting principles and changes required by an accounting pronouncement if that pronouncement does not include specific transition provisions. SFAS 154 replaces APB Opinion 20, “Accounting Changes”, and SFAS 3, “Reporting Accounting Changes in Interim Financial Statements”. This Statement requires retrospective application of a change in accounting principle to prior periods’ financial statements, unless it is impracticable to determine either the period-specific effects of the cumulative effect of the change, in which case the change in principle is applied as if it were adopted prospectively from the earliest date practicable. Corrections of an error require adjusting previously issued financial statements. SFAS 154 was effective for accounting changes and correction of errors made in fiscal years beginning after December 15, 2005. This standard is consistent with the entity’s accounting policy under IFRS and there was no impact of adopting this standard. | ||
In June 2006, the FASB issued FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes” (FIN 48). FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with Statement of Financial Accounting Standards No. 109, “Accounting for Income Taxes.” FIN 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. FIN 48 |
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is effective in fiscal years beginning after December 15, 2006. We are currently evaluating the effect that the adoption of FIN 48 will have on our US GAAP consolidated results of operations and financial condition and have not yet reached final conclusions. | ||
In June of 2006, the FASB ratified the consensus reached by the Emerging Issues Tax Force in Issue No. 06-3, “How Taxes Collected from Customers and Remitted to Governmental Authorities Should Be Presented in the Income Statement (That is, Gross versus Net Presentation)” (EITF 06-3). The scope of EITF 06-3 includes any tax assessed by a governmental authority that is directly imposed on a revenue-producing activity between a seller and a customer and may include, but is not limited to, sales, use, value added, and some excise taxes. EITF 06-3 also concluded that the presentation of taxes within its scope on either a gross (included in revenues and costs) or net (excluded from revenues) basis is an accounting policy decision subject to appropriate disclosure. EITF 06-3 is effective for periods beginning after December 15, 2006. The Company currently presents these taxes on a net basis. | ||
In September 2006, the FASB issued, “Fair Value Measurements” (SFAS 157), which establishes a framework for measuring fair value and expands disclosures about fair value measurements. SFAS 157 is effective for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years. We have not yet determined the impact of SFAS 157 will have on our US GAAP consolidated results of operations and financial condition. | ||
In September of 2006, the Securities and Exchange Commission (“SEC”) issued Staff Accounting Bulletin No. 108, “Considering the Effect of Prior Year Misstatements when Qualifying Misstatements in Current Year Financial Statements” (SAB 108). SAB 108 provides interpretive guidance on the consideration of the effects of prior year misstatements in quantifying current year misstatements for the purpose of a materiality assessment. SAB 108 is effective for companies with fiscal years ending after November 15, 2006 and is required to be adopted by the Company in the fiscal year ending December 31, 2006. The adoption of SAB 108 did not have a material effect on the Company’s consolidated financial statements. | ||
In February 2007, the FASB issued “The Fair Value Option for Financial Assets and Financial Liabilities Including an Amendment of FASB 115” (SFAS 159). SFAS 159 provides an alternative measurement treatment for certain financial assets and financial liabilities, under an instrument-by-instrument election, that permits fair value to be used for both initial and subsequent measurement, with changes in fair value recognized in earnings. While SFAS 159 is effective beginning January 1, 2008, earlier adoption is permitted as of January 1, 2007, provided that the entity also adopts all of the requirements of SFAS 157. We are currently evaluating whether we will adopt SFAS 159 early, and the impact SFAS 159 may have on our consolidated financial statements. |
2006 | 2005 | |||||||||
Reference | $’000 | $’000 | ||||||||
Shareholders’ Equity in accordance with IFRS | 811,877 | 783,472 | ||||||||
Project financing costs | a | (11,470 | ) | (11,470 | ) | |||||
Mine properties – capitalized interest | b | 5,831 | 5,272 | |||||||
Depreciation of mine properties | c | 13,353 | 4,127 | |||||||
Mine properties – impairment provision reversal | d | (256,414 | ) | (256,414 | ) | |||||
EGS – impairment | e | (90,200 | ) | (90,200 | ) | |||||
Adjustment to beginning balance for adoption of EITF 04-6 | f | (74,927 | ) | — | ||||||
Adjustment to beginning balance for adoption of EITF 04-6 (Deferred income tax) | f | 22,478 | — | |||||||
Additional deferred charges to inventory | f | 25,839 | — | |||||||
Recognition of deferred waste as a charge | f | (56,349 | ) | — | ||||||
Deferred income tax | h | 110,823 | 107,656 | |||||||
Shareholders’ Equity under US GAAP | 500,841 | 542,443 |
2006 | 2005 | 2004 | ||||||||||||||
Reference | US $’000 | US $’000 | US $’000 | |||||||||||||
Net income under IFRS | 53,837 | 9,788 | 329,221 | |||||||||||||
Mine properties – capitalized interest | b | 559 | 3,661 | — | ||||||||||||
Depreciation of mine properties | c | 9,226 | 9,205 | 2,974 | ||||||||||||
Mine properties – Impairment reversal | d | — | — | (205,723 | ) | |||||||||||
EGS –Impairment reversal | e | — | — | (90,200 | ) | |||||||||||
Deferred mining costs | j | — | — | (3,123 | ) | |||||||||||
Adjustment of deferred charges to inventory | f | 25,839 | — | — | ||||||||||||
Recognition of deferred waste as a charge | f | (56,349 | ) | — | — | |||||||||||
Deferred tax benefit adjustment for US GAAP | i | 3,167 | (808 | ) | 108,465 | |||||||||||
Net income under US GAAP | 36,279 | 21,845 | 141,614 | |||||||||||||
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2006 | 2005 | |||||||||
Consolidated Balance Sheet under US GAAP | Reference | $’000 | $’000 | |||||||
Assets | ||||||||||
Current assets | ||||||||||
Cash and cash equivalents | 47,032 | 127,836 | ||||||||
Derivative financial instruments | 269 | 543 | ||||||||
Inventories | f | 95,959 | 81,712 | |||||||
Receivables | 4,641 | 5,347 | ||||||||
Prepayments | 5,514 | 3,696 | ||||||||
Deferred tax assets | h | 49,451 | 14,268 | |||||||
Total current assets | 202,866 | 233,402 | ||||||||
Non-current assets | ||||||||||
Derivative financial instruments | 2,419 | 4,236 | ||||||||
Inventories | e, f | 73,760 | 25,294 | |||||||
Receivables | 400 | 476 | ||||||||
Deferred mining costs | f | — | 91,981 | |||||||
Mine properties | a, b, c, d | 702,501 | 541,861 | |||||||
Available-for-sale financial assets | 33,001 | — | ||||||||
Deferred tax assets | h | 172,717 | 215,260 | |||||||
Total non-current assets | 984,799 | 879,108 | ||||||||
Total assets | 1,187,664 | 1,112,510 | ||||||||
Liabilities and shareholders’ equity | ||||||||||
Current liabilities | ||||||||||
Derivative financial instruments | 61,537 | 40,793 | ||||||||
Accounts payable | 46,567 | 34,691 | ||||||||
Provisions | 6,427 | 5,349 | ||||||||
Income tax payable | 320 | — | ||||||||
Current Deferred tax liability | 2,582 | 6,538 | ||||||||
Borrowings | 62,535 | — | ||||||||
Total current liabilities | 179,968 | 87,371 | ||||||||
Non-current liabilities | ||||||||||
Derivative financial instruments | 273,954 | 227,157 | ||||||||
Provisions | 14,261 | 12,424 | ||||||||
Borrowings | 218,580 | 215,520 | ||||||||
Deferred tax liability | 60 | 27,595 | ||||||||
Total non-current liabilities | 506,855 | 482,696 | ||||||||
Total liabilities | 686,823 | 570,067 | ||||||||
Shareholders’ equity | ||||||||||
Share capital | 1,027,069 | 1,027,504 | ||||||||
Reserves | (250,689 | ) | (225,692 | ) | ||||||
Accumulated losses | a, b, c, d, e, f, g | (275,539 | ) | (259,369 | ) | |||||
Total shareholders’ equity | 500,841 | 542,443 | ||||||||
Total liabilities and shareholders’ equity | 1,187,664 | 1,112,510 |
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2006 | 2005 | |||||||||||
Reference | $’000 | $’000 | ||||||||||
Deferred tax assets: | ||||||||||||
The balance comprises temporary differences attributable to : | ||||||||||||
Inventory | 14,192 | — | ||||||||||
Provisions | 7,090 | 6,185 | ||||||||||
Depreciation and Impairment | 34,843 | 78,270 | ||||||||||
Tax losses | 65,853 | 65,613 | ||||||||||
Other | 349 | 508 | ||||||||||
Amount recognized directly in equity | ||||||||||||
Derivatives qualified as cash flow hedges | 99,841 | 78,952 | ||||||||||
222,168 | 229,528 | |||||||||||
Deferred tax liabilities | ||||||||||||
The balance comprises temporary differences attributable to : | ||||||||||||
Amounts recognized in profit or loss | ||||||||||||
Deferred mining costs | — | 27,594 | ||||||||||
Prepaid insurances | 171 | 125 | ||||||||||
Consumables | — | 6,414 | ||||||||||
Other | 60 | — | ||||||||||
Derivative financial instruments | 2,411 | — | ||||||||||
2,642 | 34,133 | |||||||||||
Net Deferred tax assets | 219,526 | 195,395 |
2006 | 2005 | 2004 | ||||||||||||||
Statement of changes in equity under US GAAP | Reference | $’000 | $’000 | $’000 | ||||||||||||
Paid up capital | ||||||||||||||||
Balance at January 1 | 1,027,504 | 1,027,504 | 1,025,288 | |||||||||||||
Shares issued | — | — | 2,286 | |||||||||||||
Share issue transaction costs | — | — | (70 | ) | ||||||||||||
Shares reclassified as treasury shares | (435 | ) | — | — | ||||||||||||
Balance at December 31 | 1,027,069 | 1,027,504 | 1,027,504 | |||||||||||||
Reserves | ||||||||||||||||
Balance at January 1 | (225,692 | ) | (162,153 | ) | (206,548 | ) | ||||||||||
Share based payments reserve | 5,543 | — | — | |||||||||||||
Fair value reserve | 17 | — | — | |||||||||||||
Foreign currency translation reserve | (13 | ) | — | — | ||||||||||||
Changes in fair value of derivatives that qualify as cash flow hedges | (50,815 | ) | (72,415 | ) | (25,681 | ) | ||||||||||
Deferred tax benefit | 20,271 | 8,876 | 70,076 | |||||||||||||
Balance at December 31 | (250,689 | ) | (225,692 | ) | (162,153 | ) | ||||||||||
Accumulated losses | ||||||||||||||||
Balance at January 1 | (259,369 | ) | (281,214 | ) | (422,828 | ) | ||||||||||
Net income / (loss) | 36,279 | 21,845 | 141,614 | |||||||||||||
Change in accounting policy | f | (52,449 | ) | — | — | |||||||||||
Balance at December 31 | (275,539 | ) | (259,369 | ) | (281,214 | ) | ||||||||||
Shareholders’ equity under US GAAP | 500,841 | 542,443 | 584,137 | |||||||||||||
EPS under US GAAP | ||||||||||||||||
Net Income | 36,279 | 21,845 | 141,614 | |||||||||||||
Net Earnings Per Common Share – Basic ($ per share) | 0.03 | 0.02 | 0.11 | |||||||||||||
Net Earnings Per Common Share – Diluted ($ per share) | 0.03 | 0.02 | 0.11 |
- F-42 -
Table of Contents
(in thousands) | 2006 | 2005 | 2004 | |||||||||||||
Basic | 1,284,049 | 1,284,225 | 1,284,082 | |||||||||||||
Diluted | 1,284,225 | 1,284,225 | 1,284,082 |
- F-43 -
Table of Contents
2006 | 2005 | 2004 | ||||||||||
$’000 | $’000 | $’000 | ||||||||||
Provision for Doubtful Debts | ||||||||||||
Balance, beginning of year | 2,578 | 2,225 | 1,836 | |||||||||
Additions: charges to costs and expenses | 367 | 353 | 389 | |||||||||
Write-off’s | — | — | — | |||||||||
Balance, end of year | 2,945 | 2,578 | 2,225 | |||||||||
Provision for Stores Stock Obsolescence | ||||||||||||
Balance, beginning of year | 5,299 | 4,317 | 3,354 | |||||||||
Additions: charges to costs and expenses | 817 | 982 | 963 | |||||||||
Write-off’s | — | — | — | |||||||||
Balance, end of year | 6,116 | 5,299 | 4,317 | |||||||||
Deferred Tax Valuation Allowance | ||||||||||||
Balance, beginning of year | — | — | 169,139 | |||||||||
Additions: (credited)/charged against income tax | — | — | (109,333 | ) | ||||||||
Additions: credited to equity | — | — | (59,806 | ) | ||||||||
Balance, end of year | — | — | — | |||||||||
- F-44 -
Table of Contents
(Registrant)
Title: Managing Director
Table of Contents
Exhibit 1 | Constitutionof Lihir Gold Limited, effective as of April 28, 1998 (incorporated by reference to Lihir’s annual report on Form 20-F for the fiscal year ended December 31, 2000). | |
Exhibit 4 (a) | Syndicated Facilities Agreementbetween Lihir, ABN AMRO Australia Limited, ABN AMRO Bank N.V. (Australia Branch), Australia and New Zealand Banking Group Limited, Bayerische Hypo-und Vereinsbank AG, BNP Paribus, Bank of Western Australia Limited, Commonwealth Bank of Australia, Macquarie Bank Limited, National Australia Bank Limited, Natexis Banques Populaires, Societe General, Société Génerale Australia Branch, WestLB AG, and Westpac Banking Corporation dated September 13, 2005 incorporated by reference to Lihir’s annual report on Form 20-F for the fiscal year ended December 31, 2005). | |
Exhibit 4 (b) | Refinancing Coordination Deed 2005between Lihir, ABN AMRO Australia Limited, ABN AMRO Bank NV, Commonwealth Bank of Australia, Macquarie Bank Limited, Société Génerale and Société Génerale Australia Branch, dated September 13, 2005. (incorporated by reference to Lihir’s annual report on Form 20-F for the fiscal year ended December 31, 2005). | |
Exhibit 4 (c) | Amending Deed (Security Trust Deed)between Lihir Niugini Mining Limited, Niugini Mining (Australia) Pty Ltd, ABN AMRO Australia Limited, ABN AMRO Bank NV, Commonwealth Bank of Australia, Macquarie Bank Limited, Société Génerale and Société Génerale Australia Branch, Mitsui & Co. Precious Metals Inc., and J. Aron & Company dated September 13, 2005 (incorporated by reference to Lihir’s annual report on Form 20-F for the fiscal year ended December 31, 2005). | |
Exhibit 4 (d) | Lihir Gold Security Trust Deedbetween Lihir, Niugini Mining Limited, Niugini Mining (Australia) Pty Ltd, ABN AMRO Australia Limited, ABN AMRO Bank NV, Citibank N.A., and J. Aron & Company dated November 22, 2000 (incorporated by reference to Lihir’s annual report on Form 20-F for the fiscal year ended December 31, 2000). | |
Exhibit 4 (e) | Lihir Gold Limited Offshore Chargebetween Lihir and ABN AMRO Australia Limited dated September 13, 2005 (incorporated by reference to Lihir’s annual report on Form 20-F for the fiscal year ended December 31, 2005). | |
Exhibit 4 (f) | Lihir Gold Deed of Security (PNG) 2005between Lihir and ABN AMRO Australia Limited dated September 13, 2005 (incorporated by reference to Lihir’s annual report on Form 20-F for the fiscal year ended December 31, 2005). | |
Exhibit 4 (g) | Lihir Gold Mortgage of Bullion Accountbetween Lihir and ABN AMRO Australia Limited dated September 13, 2005 (incorporated by reference to Lihir’s annual report on Form 20-F for the fiscal year ended December 31, 2005). | |
Exhibit 4 (h) | Special Mining Lease, dated as of March 17, 1995, between Lihir and the PNG Government (incorporated by reference to Lihir’s Form F-1 filed September 6, 1995). | |
Exhibit 4 (i) | Mining Development Contract, dated as of March 17, 1995, between Lihir and the PNG Government (incorporated by reference to Lihir’s Form F-1 filed September 6, 1995). | |
Exhibit 4 (j) | Share Sale and Purchase Agreementbetween Rio Tinto Western Holdings Limited and Lihir dated October 10, 2005 (incorporated by reference to Lihir’s annual report on Form 20-F for the fiscal year ended December 31, 2005). | |
Exhibit 4 (k) | Technical and Procurement Services Agreementbetween Technological Resources Pty Ltd, Rio Tinto Services Limited and Lihir dated October 10, 2005 (incorporated by reference to Lihir’s annual report on Form 20-F for the fiscal year ended December 31, 2005). | |
Exhibit 4 (l) | General Termination and Release Deedbetween Lihir, Lihir Management Company Ltd, Rio Tinto Western Holdings Ltd and Rio Tinto plc dated October 10, 2005 (incorporated by reference to Lihir’s annual report on Form 20-F for the fiscal year ended December 31, 2005). | |
Exhibit 4 (m) | Compensation Agreement for Land, Crops, Water and Air, dated as of April 26, 1995, between Lihir Management Company, Lihir Mining Area Landowners Association Incorporated, Block Executives (for and on behalf of the Landowners), Catholic Mission (Kavieng Property Trust) and the United Church in PNG and the Solomon Islands (incorporated by reference to Lihir’s Form F-1 filed September 6, 1995). |
Table of Contents
Exhibit 4 (n) | Putput and Ladolam Relocation Agreementdated as of April 26, 1995, between Lihir Management Company, Lihir Mining Area Landowners Association Incorporated and the persons named in various schedules to the agreement (incorporated by reference to Lihir’s Form F-1 filed September 6, 1995). | |
Exhibit 4 (o) | Integrated Benefits Package Review Status Statementbetween Nimamar Rural Local Level Government, Lihir Mining Area Landowners Association, the State of Papua New Guinea, New Ireland Provincial Government and Lihir dated November 9, 2005 (incorporated by reference to Lihir’s annual report on Form 20-F for the fiscal year ended December 31, 2005). | |
Exhibit 4 (p) | Amended and Restated Lihirian Equity Settlement Agreement dated January 27, 2006 between Mineral Resources Development Company Limited, Mineral Resources Lihir Limited and the European Investment Bank Bank (incorporated by reference to Lihir’s annual report on Form 20-F for the fiscal year ended December 31, 2005). | |
Exhibit 4 (q) | Patent and Know-How License Agreementdated August 5, 1995 between Sherritt Inc and Lihir Management Company Limited for and on behalf of Lihir, together with amendment thereto dated August 18, 1995 (incorporated by reference to Lihir’s annual report on Form 20-F for the fiscal year ended December 31, 2003). | |
Exhibit 4 (r) | Number not used | |
Exhibit 4 (s) | Agreement for the Servicesof Professor Ross Garnaut as Chairman of Lihir, dated April 26, 2004 between Lihir and Maccullochella Pty Ltd. (incorporated by reference to Lihir’s annual report on Form 20-F for the fiscal year ended December 31, 2003). | |
Exhibit 4 (t) | Facility Agreementbetween Lihir Australian Holdings Pty Limited and Australia and New Zealand Banking Group Limited dated October 17, 2006. | |
Exhibit 4 (u) | Deed of Chargebetween Lihir Australian Holdings Pty Limited and Australia and New Zealand Banking Group Limited dated October 19, 2006. | |
Exhibit 4 (v) | Parent Deposit Agreementbetween Lihir Gold Limited and Australia and New Zealand Banking Group Limited dated February 12, 2007. | |
Exhibit 4 (w) | Management Services Agreement (PNG)between Lihir Services Australia Pty Limited and Lihir Gold Limited dated May 9, 2006. | |
Exhibit 4 (x) | Management Services Agreement (Australia) between Lihir Services Australia Pty Limited and Lihir Gold Limited dated May 9, 2006. | |
Exhibit 4 (y) | Merger Implementation Agreementbetween Lihir Gold Limited, Lihir Australian Holdings Pty Limited and Ballarat Goldfields NL dated October 17, 2006. | |
Exhibit 4 (z) | Share Subscription Agreementbetween Lihir Australian Holdings Pty Limited and Ballarat Goldfields NL dated October 17, 2006. | |
Exhibit 4 (aa) | Deed Pollbetween Lihir Gold Limited the holders of fully paid ordinary shares in Ballarat Goldfields N.L. dated December 12, 2006. | |
Exhibit 8 | Significant subsidiaries | |
Exhibit 12 (a) | 302 Certification by Chief Executive Officer | |
Exhibit 12 (b) | 302 Certification by Chief Financial Officer | |
Exhibit 13 (a) | 906 Certification by Chief Executive Officer | |
Exhibit 13 (b) | 906 Certification by Chief Financial Officer |
Table of Contents
• | Niugini Mining Limited, incorporated under the laws of Papua New Guinea, became a 100% owned subsidiary of Lihir on February 2, 2000. |
• | Niugini Mining (Australia) Pty Limited, incorporated under the laws of Australia, is a 100% owned subsidiary of Niugini Mining Limited. |
• | Lihir Management Company Limited, incorporated under the laws of Papua New Guinea, became a 100% owned subsidiary of Lihir on October 10, 2006. |
• | Lihir Business Development Limited, incorporated under the laws of Papua New Guinea, is a 100% owned subsidiary of Lihir Management Company Limited. |
• | Lihir Services Australia Pty Limited, incorporated under the laws of Australia on September 2, 2005, became a 100% owned subsidiary of Lihir on November 7, 2005. |
• | Lihir Australian Holdings Pty Limited, incorporated under the laws of Australia on September 4, 2007, became a 100% owned subsidiary of Lihir on October 16, 2007. |
• | Ballarat Goldfields NL, incorporated under the laws of Australia, became a 100% owned subsidiary of Lihir Australian Holdings Pty Limited on March 8, 2007, with effective control being February 26, 2007. |
• | Berringa Resources Pty Limited, incorporated under the laws of Australia, is a 100% owned subsidiary of Ballarat Goldfields NL. |
• | Ballarat West Goldfields Pty Limited, incorporated under the laws of Australia, is a 100% owned subsidiary of Ballarat Goldfields NL. |
• | New Resources Pty Limited, incorporated under the laws of Australia, is a 100% owned subsidiary of Ballarat Goldfields NL. |
• | Corpique (No. 21) Pty Limited, incorporated under the laws of Australia, is a 100% owned subsidiary of Ballarat Goldfields NL. |