Energy Resources Of Australia Ltd. Class A · ASX:ERA
Energy Resources Of Australia Ltd. Class A — Investor Presentation (October 2011)
51 slides from Energy Resources Of Australia Ltd. Class A's investor presentation, Oct 12, 2011
Slide 1: Presentation to the Financial Community: Capital Raising
Presentation to the Financial Community For personal use only Capital Raising 12 October 2011 Not for distribution in the United States or to US persons
Slide 2: Important notices
Important notices This presentation has been prepared by Energy Resources of Australia Ltd ABN 71 008 550 865 (ERA). It contains general information about ERA's activities as at the date of this presentation. It is information given in summary form and does not purport to be complete or contain all
Slide 3: Important notices: Forward-looking statements
Important notices Forward-looking statements This presentation includes forward-looking statements. All statements other than statements of historical facts included in this presentation, including, without limitation, those regarding the conduct and outcome of the Entitlement Offer, the use of proc
Slide 4: Acknowledge Traditional Owners
For personal use only Acknowledge Traditional Owners The mining operations of Energy Resources of Australia Ltd (ERA) are located on Aboriginal land and are surrounded by, but separate from, Kakadu National Park ERA respectfully acknowledges the Mirarr, Traditional Owners of the land on which the Ra
Slide 5: Outline
For personal use only Outline • Executive summary • ERA position and uranium market outlook • Overview of Ranger rehabilitation and water management • Overview of ERA’s growth initiatives • Capital raising details • Key risks • Selling restrictions / jurisdictions 4 Not for distribution in the Unite
Slide 6: Executive summary
Executive summary • ERA has today announced it will be undertaking a fully underwritten 12 for 7 renounceable For personal use only entitlement offer of $500 million, at an issue price of $1.53 per share • Proceeds raised will be used to fund: – Construction of Brine Concentrator and other water man
Slide 7: Executive summary: Decision to proceed with Ranger Deeps mine
Executive summary Decision to proceed with Ranger 3 Deeps mine For personal use only • Cash on hand as at 30 June 2011 • Net cash flow from on going operations INFLOWS • Proceeds from capital raising (excluding Ranger 3 Deeps mine) • Net cash flow from ongoing operations • Net cash flow from Ranger
Slide 8: Outline
For personal use only Outline • Executive summary • ERA position and uranium market outlook • Overview of Ranger rehabilitation and water management • Overview of ERA’s growth initiatives • Capital raising details • Key risks • Selling restrictions / jurisdictions 7 Not for distribution in the Unite
Slide 9: ERA is one of Australia's largest uranium producers
Located in the Northern Territory, ERA is one of Australia’s largest uranium producers • Experienced producer with strong exploration upside For personal use only – Experienced producer with over three decades of uranium mining experience – ERA’s Ranger mine is one of only three mines in the world t
Slide 10: Experienced producer with strong exploration upside
Experienced producer with strong exploration upside • Ranger Pit 3 operations expected to be completed by the end of For personal use only Jabiluka 2012 • Stockpiles will allow continued production following cessation of mining in Ranger Pit 3 • Following the announcement that the Heap Leach project
Slide 11: Ranger production forecast
Ranger production forecast (excluding potential Ranger 3 Deeps mine production)1 For personal use only Post 2016 production is dependent on the outcome of further studies on processing low grade ore Annual production forecasts until the end of 2016 are based on reserves of 16,000 tonnes of uranium o
Slide 12: ERA's deposits among largest and highest grade uranium inventories in Australia
ERA’s deposits represent some of the largest and highest grade uranium inventories in Australia For personal use only Resource size in U3O8 tonnes (‘000t) U3O8 (%) average resource grade Olympic Dam 2,486 Koongarra 0.800% Jabiluka 142 Kintyre 0.486% Ranger (excl. R3D) 99 Jabiluka 0.484% Carrapateena
Slide 13: ERA market capitalisation, grades and resources versus global peers
Comparison of ERA’s current market capitalisation, uranium grades and resource base, versus selected global peers For personal use only 600 High Cameco High 500 Areva U3O8 Resources ('000 tonnes) 400 ERA¹ 300 Extract Paladin Energy 200 First Uranium Uranium One 100 Denison Mines 0 0.00% 0.05% 0.10%
Slide 14: Positive uranium market outlook in the longer term
Positive uranium market outlook in the longer term • Near term impact of Fukushima For personal use only – Immediate loss of demand in Japan – Germany moving from life extension to probable early shutdown – Some slowing of reactor builds in the short term, while countries assess safety learnings – N
Slide 15: Outline
For personal use only Outline • Executive summary • ERA position and uranium market outlook • Overview of Ranger rehabilitation and water management • Overview of ERA’s growth initiatives • Capital raising details • Key risks • Selling restrictions / jurisdictions 14 Not for distribution in the Unit
Slide 16: Rehabilitation provision
For personal use only Rehabilitation provision • ERA is committed to ensuring the Ranger Project Area is rehabilitated to the required and agreed standard • The Ranger s41 Authority requires ERA to cease all mining and processing operations at the Ranger Project Area by 2021, with rehabilitation to
Slide 17: Rehabilitation Costs
Rehabilitation Costs • The current financial statement provision for rehabilitation is $550 million on a net present cost basis (as announced in ERA’s 2011 Half Year financial statements) – Equivalent to an amount of $680 million on a 2011 real Australian dollar undiscounted basis – Determined using
Slide 18: Significant investment in water management
Significant investment in water management • Investment of $80 million to conduct feasibility study on Brine Concentrator and procurement of long lead items as announced in April 2011 (total capital For personal use only expenditure for project estimated to be $220 million) – Targeted commissioning
Slide 19: Outline
For personal use only Outline • Executive summary • ERA position and uranium market outlook • Overview of Ranger rehabilitation and water management • Overview of ERA’s growth initiatives • Capital raising details • Key risks • Selling restrictions / jurisdictions 18 Not for distribution in the Unit
Slide 20: ERA to explore for significant resource upside at Ranger Deeps
ERA to explore for significant resource upside at Ranger 3 Deeps • Current Ranger 3 Deeps mineral resource has 34,000 tonnes of contained uranium oxide (at cut-off grade of Ranger 3 Deeps target areas 0.15% uranium oxide), which is one of the most For personal use only significant uranium deposits r
Slide 21: Ranger Deeps – indicative milestones
For personal use only Ranger 3 Deeps – indicative milestones Milestones Target Date Exploration decline approved (by ERA Board and NT Government) Completed Award site preparation work October 2011 Targeted commencement of draft Environmental Impact Statement and associated studies 2012 Box cut excav
Slide 22: Pathway to potential production at Ranger Deeps
For personal use only Pathway to potential production at Ranger 3 Deeps Prove up business Stakeholder Approval to proceed case for mine consultation with Ranger 3 Deeps development exploration decline • Construct exploration decline • Continue to fulfill (which will act as the production commitments
Slide 23: ERA to optimise expanded exploration program
ERA to optimise expanded exploration program • Past drilling has identified targets of interest across the Ranger Project Area For personal use only – There remains highly prospective underground exploration targets – Future exploration will focus on deeper drilling to target similar deposits to Ran
Slide 24: Expanded exploration program on Ranger Project Area
Expanded exploration program on Ranger Project Area • 2011 Ranger exploration program well progressed and further For personal use only Jabiluka significant exploration activity planned for 2012 to 2014 • Estimated expenditure of $40 million for 2012 to 2014 • Three prospective areas being targeted:
Slide 25: Georgetown deep structural target
Georgetown deep structural target • Potential repeat of a mineralised structure has been intersected to the east of the Ranger 3 Deeps resource For personal use only • Three significant zones of mineralisation have been intersected to date Mineralised structures Exploration Decline Ranger 3 Deeps No
Slide 26: Outline
For personal use only Outline • Executive summary • ERA position and uranium market outlook • Overview of Ranger rehabilitation and water management • Overview of ERA’s growth initiatives • Capital raising details • Key risks • Selling restrictions / jurisdictions 25 Not for distribution in the Unit
Slide 27: Capital raising overview
Capital raising overview • Fully underwritten accelerated renounceable entitlement offer to raise $500 million For personal use only Entitlement Offer size – 327.0 million shares to be issued – Approximately 171% of issued share capital • Entitlement Offer price of $1.53 per share Entitlement Offer
Slide 28: Use of proceeds
Use of proceeds Proceeds of capital raising will be used as follows: $ million For personal use only Brine Concentrator 220 Ranger 3 Deeps exploration decline 120 Ranger 3 Deeps mine evaluation studies 55 Expanded exploration on Ranger Project Area 40 Other water management initiatives 52 Transactio
Slide 29: Indicative Cash flow
Indicative Cash flow Decision to proceed with Ranger 3 Deeps Mine For personal use only $M1 • Cash on hand as at 30 June 2011 185 • Net cash flow from on going operations INFLOWS • Proceeds from capital raising 500 (excluding Ranger 3 Deeps mine) • Net cash flow from ongoing operation • Net cash flo
Slide 30: Offer timetable
For personal use only Offer timetable Key events Date Announcement of trading halt 12 October 2011 Institutional Entitlement Offer 12 October 2011 to 13 October 2011 Institutional shortfall bookbuild 13 October 2011 to 14 October 2011 Trading halt lifted 17 October 2011 Record date 7:00 pm (AEDT) 17
Slide 31: Pro-forma balance sheet
Pro-forma balance sheet (A$ million) 30 June 2011 Equity raise Pro-forma Cash 185 4871 672 For personal use only Inventories 177 177 Property, plant and equipment 778 778 Investment in trust fund 58 58 Other assets 266 266 Total assets 1,464 1,951 Debt 0 0 Rehabilitation provision 550 550 Other prov
Slide 32: Investment highlights
Investment highlights • Experienced producer with strong exploration upside – Experienced producer with over three decades of uranium mining experience – ERA has identified highly prospective and under explored regions within the Ranger Project Area For personal use only – Expanded exploration progr
Slide 33: Key risks
Key risks There are various risks associated with investing in ERA, and many of these risks are outside the control of ERA. There can be no guarantee that ERA will achieve its stated objectives or intentions, that forecasts will be met or that forward-looking statements will be realised. Set out bel
Slide 34: Q&A
For personal use only Q&A 33 Not for distribution in the United States or to US persons
Slide 35: Outline
For personal use only Outline • Executive summary • ERA position and uranium market outlook • Overview of Ranger rehabilitation and water management • Overview of ERA’s growth initiatives • Capital raising details • Key risks • Selling restrictions / jurisdictions 34 Not for distribution in the Unit
Slide 36: Key risks: Introduction and operational risks
Key risks Introduction A number of risks and uncertainties, which are both specific to ERA and of a more general nature, may affect the future operating and financial performance of ERA and the value of ERA shares. You should carefully consider the following risk factors, as well as the other inform
Slide 37: Key risks: Tailings Storage Facility and water treatment
Key risks Tailings Storage Facility and water treatment For personal use only ERA will seek regulatory approval to increase the maximum operating level for the Tailings Storage Facility at the Ranger mine, following the completion of the construction of the Tailings Storage Facility wall lift which
Slide 38: Key risks (cont'd)
Key risks (cont’d) Nor is there any guarantee that ERA will be able to secure and/or maintain title to ERA’s exploration and mining tenements. In particular, ERA's right to occupy the Ranger Project Area expires on 8 January 2021 and its ability to renew this right is limited by legislation. The cur
Slide 39: Key risks: Resource estimates and rehabilitation
Key risks (cont’d) Resource estimates Resource estimates are expressions of judgment based on knowledge, experience and resource modelling. As such, resource estimates are inherently imprecise and rely, to some extent, on interpretations made which may prove to be inaccurate. Although qualified prof
Slide 40: Key risks: Ore reserves
Key risks (cont’d) The current rehabilitation cost estimate has been prepared based on the schedule of activities outlined on slide 16. Any significant change in this schedule may adversely impact the actual rehabilitation costs. Once the pre-feasibility study has been completed, ERA expects to be a
Slide 41: Key risks: Cost saving program and uranium market
Key risks (cont’d) Cost saving program ERA is seeking to achieve targeted cumulative cost savings of $150 million over the next three and half years, of which $60 million is targeted by the end of For personal use only 2012. ERA has undertaken a business review to identify and quantify the anticipat
Slide 42: Key risks: Access to capital risk
Key risks (cont’d) Access to capital risk The future capital requirements of ERA will depend on many factors, including its business development activities. In particular, if the Ranger 3 For personal use only Deeps exploration decline is successful and ERA wishes to proceed to develop the Ranger 3
Slide 43: Key risks: Regulatory risks and stakeholder matters
Key risks (cont’d) Regulatory risks and stakeholder matters General regulatory risks For personal use only Uranium mining in Australia is extensively regulated by Commonwealth and State and Territory Governments. The areas of uranium mining that are regulated include exploration, development, produc
Slide 44: Key risks (cont'd)
Key risks (cont’d) The Ranger and Jabiluka Minesite Technical Committees (MTCs) – made up of the organisations noted above - are the key forums for approvals on environmental matters relating to Ranger and Jabiluka. For personal use only Regulatory approvals will be required to commence any producti
Slide 45: Key risks (cont'd)
Key risks (cont’d) Any application for a renewal of the right to explore, mine and process uranium oxide at the Ranger Project Area beyond January 2021 will require an amendment to the AEA to be passed by the Commonwealth Parliament. The conduct of mining and processing operations beyond January 202
Slide 46: Key risks: Dividend policy and equity markets
Key risks (cont’d) Dividend policy For personal use only ERA has paid no dividends on Shares since its interim dividend of $0.08 per share in August 2010. ERA expects to retain all earnings and other cash resources in the short term for the future operation and development of its business. Payment o
Slide 47: Outline
For personal use only Outline • Executive summary • ERA position and uranium market outlook • Overview of Ranger rehabilitation and water management • Overview of ERA’s growth initiatives • Capital raising details • Key risks • Selling restrictions / jurisdictions 46 Not for distribution in the Unit
Slide 48: Selling restrictions / jurisdictions
Selling restrictions / jurisdictions International Offer Restrictions This document does not constitute an offer of new ordinary shares ("New Shares") of the Company in any jurisdiction in which it would be unlawful. New Shares may not be offered or For personal use only sold in any country outside
Slide 49: Selling restrictions / jurisdictions: Hong Kong
Selling restrictions / jurisdictions Hong Kong WARNING: This document has not been, and will not be, registered as a prospectus under the Companies Ordinance (Cap. 32) of Hong Kong (the "Companies Ordinance"), nor has For personal use only it been authorised by the Securities and Futures Commission
Slide 50: Selling restrictions / jurisdictions: Norway
Selling restrictions / jurisdictions Norway This document has not been approved by, or registered with, any Norwegian securities regulator pursuant to the Norwegian Securities Trading Act of 29 June 2007. Accordingly, this For personal use only document shall not be deemed to constitute an offer to
Slide 51: Selling restrictions / jurisdictions: United Arab Emirates
Selling restrictions / jurisdictions United Arab Emirates Neither this document nor the New Shares have been approved, disapproved or passed on in any way by the Central Bank of the United Arab Emirates, the Emirates Securities and For personal use only Commodities Authority or any other governmenta
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