Peninsula Energy Limited · ASX:PEN
Peninsula Energy — Investor Presentation (May 2018)
31 slides from Peninsula Energy's investor presentation, May 25, 2018
Slide 1: Company Presentation cover letter
25 May 2018 For personal use only Companies Announcement Office Via Electronic Lodgement COMPANY PRESENTATION Please find attached a copy of the presentation being made by Peninsula Energy Limited’s Managing Director/CEO Mr Wayne Heili at a shareholder information session to be held today in Perth a
Slide 2: May/June 2018 Investor Presentations
May/June 2018 Investor Presentations For personal use only Australia │ Wayne Heili, MD/CEO ASX:PEN
Slide 3: Disclaimer & Competent Person
Disclaimer & Competent Person For personal use only 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 containe
Slide 4: Peninsula Energy's Defining Strengths
Peninsula Energy’s Defining Strengths • Experienced technical, financial and commercial team For personal use only World Class Management • Generating improving quarter over quarter results Large Scale • Long-life Lance Project in USA Project • The Lance Project contains resources of 53.5 mlbs of U3
Slide 5: Agenda
Agenda For personal use only 1. Corporate Overview 2. Activity Summary 3. Lance Production Results 4. Unlocking the Potential at Lance 5. Global Uranium Market 6. U.S. Uranium Market 7. Investment Highlights Column Leach Test Apparatus at Lance 4
Slide 6: Corporate Overview
Corporate Overview Capital Structure Share Price & Volume History Ticker: ASX:PEN For personal use only Shares on issue* 234m Price (A$/share) Volume (m) Share price (18-May-18) A$0.270 0.50 2.0 Market capitalisation (18-May-18) A$63m 0.45 Enterprise Value (18-May-18) A$69m 0.40 1.5 0.35 Cash and Se
Slide 7: Activity Summary
Activity Summary • Lance Projects For personal use only • Production results improved for fourth consecutive quarter • Low pH transition actively underway • Corporate • Convertible note debt partly repaid and extended by 2 years • Sales & Marketing • 125,000 lbs U3O8 sold in 1Q18 (revenue of US$5.4m
Slide 8: Quarterly Cost Performance
Quarterly Cost Performance For personal use only • Spending discipline has resulted in substantially lower quarterly cash outflows Payments for: Actual Actual Actual Actual F'cast (US$'000) Jun Qtr CY17 Sep Qtr CY17 Dec Qtr CY17 Mar Qtr CY18 Jun Qtr CY18 Exploration & Evaluation 213 270 185 169 300
Slide 9: Unlocking Value from Sales Contracts
Unlocking Value from Sales Contracts For personal use only • US$19 million (net) generated through contract transaction • Advances cash receipts from future dates to present • Reduces delivery obligations during Lance transition process • Significant contract portfolio carries through year 2030 • Up
Slide 10: Strong Corporate Financial Position
Strong Corporate Financial Position Available Cash(1) Balances and Movement for 1Q18 For personal use only 35.0 30.0 25.0 US$' million 20.0 15.0 10.0 5.0 0.0 31 Dec 17 Contract Sales Uranium Production Explor. & Corp & Finance Misc US Surety 31 Mar 18 Sale Proceeds Purchases Costs Devel Other Costs
Slide 11: Lance - Improved Production Results
Lance - Improved Production Results • 12% Increase on prior Quarter Production For personal use only • 43,638 lbs produced, 73,864 lbs dried & drummed in the quarter • Production in first two mine units during 1Q18 • MU-1 production subsequently suspended • Header house #10 construction nearing comp
Slide 12: Two Approaches to Change the Outcome
Two Approaches to Change the Outcome For personal use only 1. Adjust to the Market 2. Adjust the Market 11
Slide 13: Approach #1: Adjusting to the Market
Approach #1: Adjusting to the Market Operating Above the Breakeven Point Just to Survive For personal use only $$ Higher cost per pound Term Price Spot Price Cost per lb mined Legacy Contract Pricing Breakeven point Term price - today Breakeven point $ Spot price - future Lower cost per pound Pounds
Slide 14: Unlocking the Full Potential of Lance
Unlocking the Full Potential of Lance • Low pH ISR transformation initiative For personal use only High ✓ Potential to transform the performance and cost profile Potential ✓ Permit to Mine amendment request submitted ✓ Permit and licence amendments expected mid-CY2019 Short Timeline ✓ Continued prod
Slide 15: Repositioning the Cost Curve
Repositioning the Cost Curve - The ISR Lixiviant Selection Paradigm • Alkaline Lixiviants For personal use only • pH > 7.0, oxidant required, bicarbonate levels vary • Low pH (acidic) Lixiviants • pH < 2.0 via sulfuric acid, aggressive chemistry, natural oxidant • Both work. How do you decide? A. Me
Slide 16: The Geography of Lixiviant Selection
The Geography of Lixiviant Selection For personal use only • Countries that use Alkaline Lixiviants for Uranium ISR • United States • Countries that use Low pH (acidic) Lixiviants • Kazakhstan • Australia • Uzbekistan • Russia • Countries that use both Alkaline and Low pH (acidic) Lixiviants • China
Slide 17: Kazakh Production Growth
Kazakh Production Growth For personal use only Kazakh Acceleration Rate: “Zero to Sixty” in 18 years 16
Slide 18: Low pH Leads the Way
Low pH Leads the Way • All 1st quartile cost uranium operations globally are in-situ recovery For personal use only (ISR) facilities that utilize a low pH lixiviant • 96% of the uranium recovered by ISR methods worldwide in 2015 came from facilities using low pH solutions (WNA 2017) Low pH ISR Produ
Slide 19: Status of Transition
Status of Transition For personal use only 1. Comprehensive License Amendment Application submitted on 6-Apr-18 – State Permit to Mine amendment application 90-day acceptance review underway 2. Wyoming assuming duties/roles of NRC for Source Material Licensing – Transition to Agreement State on sche
Slide 20: Uranium Market Overview
Uranium Market Overview For personal use only • Uranium Market Insight • Spot market appears well supplied • Production restraint has occurred • Future utility demand projections remain strongly positive • Market rebalancing is occurring now • Producer inventory drawdown • Producer buying will test
Slide 21: Weakness In Global Production
Weakness In Global Production For personal use only Weak market leads to decline of global uranium production Source: TradeTech Production restraint has become a common theme globally 20
Slide 22: Uranium in Politics
Uranium in Politics For personal use only Increasing Political Activity Involving Nuclear Fuel Trade 1. Section 232 of the US Trade Expansion Act Petition • US Dept. of Commerce expected to take up investigation • Potential remedies could bolster price for US production 2. US Dept of Energy suspensi
Slide 23: Approach #2: Adjusting the Market
Approach #2: Adjusting the Market For personal use only • Can that be done? • How can it be done? • The role of Government? Source: The Ux Consulting Company, LLC 22
Slide 24: Section Petition
Section 232 Petition For personal use only “The entire U.S. nuclear industry is in crisis.” • US producers have closed mines and laid off workers • The sole US conversion facility has been idled • There is no longer any domestic enrichment capacity • The lead US supplier of reactor technologies went
Slide 25: Section Petition Goals
Section 232 Petition Goals The intended purpose of Section 232 of the Trade Expansion Act For personal use only of 1962 is to protect the essential national security industries whose survival is threatened by imports. 1. Relief from imports of uranium products 2. Reverse the erosion of our critical
Slide 26: Forms of Relief
Forms of Relief For personal use only • The U.S. Government is asked to take action in support of the critical domestic nuclear industries • Import quotas • Buy American policy for US government agencies • Tariffs on imports • Subsidies, tax breaks, other ideas? • The Department of Commerce investig
Slide 27: Moving Along the Curve to Lower Costs
Moving Along the Curve to Lower Costs Can a fair solution generate enough demand for the industry to be For personal use only profitable again? Term Price Spot Price $$ Higher cost per pound Cost per lb mined Today: High cost, Low production rate Higher demand = Higher production rates Lower cost ba
Slide 28: Karoo Projects – South Africa
Karoo Projects – South Africa • All development and progression activities suspended For personal use only Divestment ✓ No satisfactory offers made to Peninsula during sale process Status ✓ Reflects market view of hard rock uranium assets today Retention ✓ Fully explored by Peninsula Option ✓ Cost o
Slide 29: Peninsula Energy's Defining Strengths
Peninsula Energy’s Defining Strengths • Experienced technical, financial and commercial team For personal use only World Class Management • Generating improving quarter over quarter results Large Scale • Long-life Lance Project in USA Project • The Lance Project contains resources of 53.5 mlbs of U3
Slide 30: Contact Details
For personal use only 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 29
Slide 31: Appendix - Lance JORC Resource
Appendix 1 - Lance JORC Resource For personal use only Tonnes Classification U3O8(kg) Grade (ppm U3O8) U3O8(lbs) (million) Measured 3.7 2.0 489 4.3 Indicated 10.0 5.1 466 12.7 Inferred 37 17.5 463 36.5 Total 50.7 24.6 473 53.5 ¹JORC Table 1 included in an announcement to the ASX released on 27th Mar