Peninsula Energy Limited · ASX:PEN
Peninsula Energy — Investor Presentation (September 2018)
31 slides from Peninsula Energy's investor presentation, Sep 18, 2018
Slide 1: Lance Projects Low pH Feasibility Study
Lance Projects Low pH Feasibility Study Shareholder Meetings │September 2018 PENINSULA ENERGY LIMITED
Slide 2: Disclaimer & Competent Person
Disclaimer & Competent Person This presentation is provided on the basis that the Company nor its representatives make any warranty (express or implied) as to the accuracy, reliability, relevance or completeness of the material contained in the Presentation and nothing contained in the Presentation
Slide 3: Cautionary & Inferred Resources Notice
Cautionary & Inferred Resources Notice The Feasibility Study completed for the Lance Projects includes measured and indicated resources and an assumed resource conversion of 60% (inferred to indicated or greater). The purpose of the Feasibility Study is to demonstrate the Lance Projects economic via
Slide 4: Agenda
Agenda 1. Feasibility Study Summary 6. Value Enhancement Opportunities 2. Lance Projects Historical Context 7. Alternative Development Plan 3. Basis of Feasibility Study 8. FS Conclusion 4. Financial & Technical Outcomes 9. Next Steps for Peninsula 5. Feasibility Study Inputs 10. Why Invest in Penin
Slide 5: Executive Summary
1 . Executive Summary LOM • 33.4m lbs U3O8 Production • 17 year minelife • LOM AISC of $31.77/lb U3O8 Financial • NPV8 (Real) $157m at avg sales price of $49/lb U3O8 Metrics • NPV8 (Real) $254m at avg sales price of $57/lb U3O8 Three Stage Expansion Plan Expansion Production AISC Capacity Stage Year
Slide 6: Highlights
1. Highlights • Break-even price of $34/lb U3O8 – Low direct OPEX costs drive competitive cost structure • NPV8 (Real) $157 million; IRR of 30% • Cost Estimates +/- 5 to 10% range of accuracy – Comprehensive cost analysis based on knowledge gained from current production operations at the Lance Proj
Slide 7: Lance Projects Operating History
2. Lance Projects Operating History 90 Actual Alkaline (HH1 to HH9) vs Expected Alkaline in 2014 Study 80 • Production commenced Dec-2015 70 60 • Current mining operations use an Percent Recovered 50 alkaline lixiviant 40 30 • Just over 350,000 lbs U3O8 mined 20 since production started 10 HH1-9 Avg
Slide 8: Basis of Feasibility Study
3. Basis of Feasibility Study • Change from alkaline (bicarbonate + oxidant) to low pH Chemistry • Low pH lixiviant will be mild concentration of sulfuric acid • FS uses lower average head grade than test results Plant & • FS confirms modifications will be low cost Wellfields • Current flow rate cap
Slide 9: Basis of FS – Stages & Expansions
3. Basis of FS – Stages & Expansions 3.5 3.0 7,500gpm 2.5 Production Rate (mlbs p.a.) Satellite 7,500gpm Fed by 2.0 Barber Ross then Kendrick Resin 1.5 processed at Full CPP 1.0 processing 3,750gpm Site flow rate capability Ross then capacity up 0.5 Kendrick Toll milling to 15,000gpm ends Toll milli
Slide 10: FS Outcomes – LOM Production Profile
4. FS Outcomes – LOM Production Profile 3.5 Production by Permit Area 3.0 Stage 3 Stage 3 2.5 U3O8 (million pounds) Stage 2 Stage 2 2.0 1.5 Stage 1 Stage 1 1.0 0.5 0.0 CY20 CY21 CY22 CY23 CY24 CY25 CY26 CY27 CY28 CY29 CY30 CY31 CY32 CY33 CY34 CY35 CY36 CY37 H2 CY19 Ross Kendrick Barber • Higher head
Slide 11: FS Outcomes – LOM OPEX
4. FS Outcomes – LOM OPEX • Tight +/- 5% range of accuracy* Operating Costs (+/-5%) US$ Per lb U3O8 • Sulfuric acid cost assumption - $162/t Wellfield 6.08 landed at site Processing Costs 3.04 • Toll milling ends when Stage 2 is Site and US G&A 3.32 commissioned Restoration & 2.80 Rehabilitation • I
Slide 12: FS Outcomes – LOM CAPEX
4. FS Outcomes – LOM CAPEX Capital Costs $USM $US/lb Low pH – Transition 5.3 0.16 Stage 2 - Plant & CAPEX cost estimates maintain 43.1 1.29 Wellfield Expansion an element of conservatism – Stage 3 – Barber Satellite opportunities to reduce LOM 70.3 2.10 & Wellfield Expansion wellfield development co
Slide 13: FS Outcomes - All-in Sustaining Cash Costs
4. FS Outcomes - All-in Sustaining Cash Costs 45 40.58 40 35 Wellfield CAPEX, 31.77 13.36 31.52 30.36 30 Wellfield CAPEX, Wellfield CAPEX, Wellfield CAPEX, US$/lb U3O8 25 10.25 Royalties, 5.83 12.31 10.52 20 R&R, 3.06 Royalties, 5.93 G&A, 3.66 Royalties, 5.73 Royalties, 5.94 15 R&R, 2.80 R&R, 2.36 R
Slide 14: FS Outcomes – Uranium Price Upside
4. FS Outcomes – Uranium Price Upside $350 NPV vs Variable Uranium Price $303 $300 $254 $250 NPV8 (REAL) (US$'M) $206 $200 $157 $150 $108 $100 $59 $50 $10 $0 $35 $40 $45 $50 $55 $60 $65 VARIATION IN URANIUM PRICE A $10/lb increase in uranium price assumption for currently uncontracted production inc
Slide 15: FS Inputs – Mineral Resources
5. FS Inputs – Mineral Resources1 Resource % under Target at start of Wellfield Percentage Amount (million lbs U3O8) low pH Pattern* % Recovered Extracted Extracted* Measured & Indicated 15.5 90% 90% 81% 12.8 Inferred 38.1 60% 90% 54% 20.6 Total 53.6 62% 33.4 • Resource increased to 53.9m lbs U3O8 (
Slide 16: FS Inputs – Metallurgical Tests
5. FS Inputs – Metallurgical Tests • Advancing Understanding Through Laboratory Research • Rigorous scientific effort – Systematic research methods • Advanced microscopy techniques • Low pH leach testing – 6 bottle roll extraction tests – 2 column tests • Groundwater restoration simulations • Ion ex
Slide 17: FS Inputs – Metallurgical Tests Mild Acid Agitated Leach Tests Column Test #1
5. FS Inputs – Metallurgical Tests 6 Mild Acid Agitated Leach Tests Column Test #1 >90% recovery in 30 Pore 65% recovery in 10 PV Volumes (PV) Average grade 80mg/L U3O8; peak 298mg/L Average grade of Groundwater restoration demonstration 228mg/L U3O8 Additional Column Tests Column Test #2 Grade & re
Slide 18: FS Inputs – Metallurgical Tests
5. FS Inputs – Metallurgical Tests (Mild Sulfuric Acid) Target a pH level of approx. 2.0 Standard Units during mining Acid requirement assumptions for FS determined by 2 methods • Mass balance calc for consuming host rock carbonates • Controlled addition during lab leach testing Both methods confirm
Slide 19: FS Inputs – Low pH Transformation
5. FS Inputs – Low pH Transformation Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 CY19 CY19 CY20 CY20 CY20 CY20 CY21 CY21 CY21 CY21 CY22 CY22 First HH in MU1 Operate Low pH Low pH Operations Progress Report Remaining HHs in MU1 Operate Low pH MU2 HHs Operate Low pH Initial Restoration in 1 MU1 HH Restoration
Slide 20: Value Enhancement Opportunities
6. Value Enhancement Opportunities • No efficiency gains built into FS Wellfield • Possible owner-operator drilling Costs • Leverage buying power for bulk development campaigns • FS uses lower average head grade than test results OPEX • Higher head grade = faster recovery & lower LOM OPEX • Lower ac
Slide 21: An Alternative Development Plan
7. An Alternative Development Plan • Run at Stage 1 capacity rates for LOM (3,750gpm flow rate) • No expansion or enhancement to existing process plant • No Barber or Satellite Plant • Low CAPEX option for sustainable free cash flow generation • Provides expansion timing discretion and optionality K
Slide 22: Conclusion
Conclusion PENINSULA ENERGY LIMITED 22
Slide 23: Feasibility Study Take-Away Points
8. Feasibility Study Take-Away Points • Over 12 months of laboratory tests completed Technical • More rigorous test basis than prior alkaline FS Basis • Almost 50% of global uranium mined using this method Favourable • Carbonate content <2.0% - great for use of mild acid Ore Body • 53.9m lbs U3O8 re
Slide 24: Next Steps for Peninsula
9. Next Steps for Peninsula • Wyoming Agreement State 1 October 2018 Amendment • Source material license amendment application Progression • Finalise implementation plan with WDEQ Strategic • Engage independent advisor to review financing options Review • Encompass review & advice on balance sheet s
Slide 25: Why Invest in Peninsula
10. Why Invest in Peninsula • Robust low pH FS outcome at conservative price assumptions – Current market value does not reflect our potential – Ability to improve a number of cost areas • Low technical risk transformation of an operating project – Not changing mining method – Only changing leach ki
Slide 26: Contact Details
Contact Details REGISTERED OFFICE Unit 32/33, Level 3, 22 Railway Road Subiaco, Western Australia 6008 Australia www.pel.net.au info@pel.net.au FURTHER INFORMATION Wayne Heili Managing Director +61 8 9380 9920 David Coyne Finance Director / CFO +61 8 9380 9920 PENINSULA ENERGY LIMITED 26
Slide 27: Appendix – Resources & Competent Person Statement
Appendix 1 – Resources & Competent Person Statement Lance Projects Resource Estimate as at 31 December 2017 Tonnes Classification U3O8(kg) Grade (ppm U3O8) U3O8(lbs) (million) Measured 3.7 1.8 489 3.9 Indicated 9.1 5.4 466 11.9 Inferred 36.1 17.3 463 38.1 Total 48.9 24.5 473 53.9 1) JORC Table 1 inc
Slide 28: Appendix – Recovery Curves
Appendix 2 – Recovery Curves 100% 120 100% 180 MINE UNITS 1 & 2 - H/G & Recovery Curves NEW MINE UNITS - H/G & Recovery Curves 90% 90% 160 100 80% 80% 140 70% 70% 80 120 Cumulative Recovery Head Grade (mg/L) Cumulative Recovery Head Grade (mg/L) 60% 60% 100 50% 60 50% 80 40% 40% 40 60 30% 30% 20% 20
Slide 29: Appendix – PEN as a Uranium Investment Opportunity
Appendix 3 – PEN as a Uranium Investment Opportunity Peninsula Current active uranium mining company Existing long term contracts Conservative FS price assumptions Low initial CAPEX Tight cost estimate ranges Low CAPEX expansion capability Direct exposure to s232 outcomes PENINSULA ENERGY LIMITED 29
Slide 30: Appendix – Substantial Long Term Sales Contracts
Appendix 4 – Substantial Long Term Sales Contracts • Long term sales contracts underpin Peninsula’s business • CY2018 forecast deliveries of 225,000 lbs of U3O8 5-Year Sales Profile (*) U3O8 (Klbs) 500 450 400 350 300 250 200 150 100 50 0 2018 2019 2020 2021 2022 (*) Committed deliveries only and ex
Slide 31: Appendix – Flexible Sales Strategy
Appendix 5 – Flexible Sales Strategy • Maximising returns by blending production with spot purchases • 2017 deliveries were filled by Lance production and purchases • Remaining deliveries for 2018 through 2020 have flexible origin clauses allowing seller optionality 2017 Sales Composition 2018-2020
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