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PALABORA MINING COMPANY LIMITED - Palabora Europe Limited Pension Fund

Release Date: 28/06/2013 16:15
Code(s): PAM     PDF:  
Wrap Text
Palabora Europe Limited Pension Fund

PALABORA MINING COMPANY LIMITED
(Incorporated in the Republic of South Africa)
Registration number – 1956/002134/06
JSE Code: PAM         ISIN: ZAE000005245
(“Palabora” or “the Company”)

PALABORA EUROPE LIMITED PENSION FUND

Palabora shareholders are advised that the Company wishes to provide the following
additional disclosure to note 26 “Retirement benefit obligations” and note 36
“Contingent liabilities” of Palabora’s consolidated annual financial statements for the
year ended 31 December 2012.

IFRS required disclosure

“Palabora Europe Limited (PEL), a wholly-owned subsidiary of Palabora participates
in a group pension arrangement of Rio Tinto Pension Fund (the Fund) in the United
Kingdom. Members who joined the Fund before 1 April 2005 participate on a Defined
Benefit basis and those who joined the Fund on or after 1 April 2005 participate on a
Defined Contribution basis. The assets of the Fund are held in a trust. The
contributions paid by PEL are accounted for as if the Fund was a Defined
Contribution arrangement as PEL is unable to identify its share of the underlying
assets and liabilities in the Fund. Contributions of £0.531 million (ZAR6.888 million)
were made by PEL to the Fund during the year ended 31 December 2012 (2011:
£0.05 million, ZAR0.588 million). The last trustee funding valuation was conducted
with an effective date of 31 December 2011. The requirement for PEL to pay
contributions is reviewed on a six monthly basis and PEL’s contributions to the Fund
recommenced in 2010. An annual valuation of the Fund was carried out by
independent qualified actuaries as at 31 December 2011 under International
Accounting Standards 19 "Employee Benefits" and on this basis the Fund had a
surplus of $133.4 million (ZAR1 092 million). The existence of this surplus did not
affect the rate at which PEL pays contributions as this is determined by the normal
trustee funding actuarial valuation.

Potential future defined benefit liability

In terms of section 75 of the United Kingdom Pensions Act 1995, should one
employer with defined benefit liabilities cease to have active employees whilst at
least one other employer with defined benefit liabilities continues to do so in the
same defined benefit plan, which would occur if PEL ceased to be a part of the Rio
Tinto group, then PEL would cease to participate in the Fund. Upon ceasing to
participate in the Fund, a debt would be triggered under section 75 of the United
Kingdom Pensions Act 1995, payable to the Fund. The debt can only be known after
the date on which it is triggered and will depend on market conditions at that date.
Based on professional advice, the debt, as at 31 December 2012, was estimated to
be £6.84 million (ZAR106.5 million). Accordingly, PEL (and, on a consolidated basis,
Palabora) has a contingent liability for this potential future liability”

Phalaborwa
28 June 2013

Sponsor
One Capital
For further information, please contact:

Dikeledi Nakene, CFO
Office: +27 (0) 15 780 2277

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